The Trump administration issued an executive order on July 7, 2025, titled Ending Market‑Distorting Subsidies for Unreliable, Foreign‑Controlled Energy Sources, aimed at accelerating implementation of the recently enacted One Big Beautiful Bill Act (OBBBA). The order directs the Department of the Treasury and the Department of the Interior to take swift action to enforce new limitations on clean energy tax credits and federal permitting, with potentially significant impacts on wind and solar developers.
The OBBBA, signed into law on July 4, 2025, dramatically limits the availability of clean energy tax credits by imposing new deadlines and compliance standards. Wind and solar projects must either begin construction before July 5, 2026 or be placed in service by December 31, 2027 to qualify for the investment tax credit (ITC) or production tax credit (PTC) under Sections 45Y and 48E of the Internal Revenue Code. This timeline is expected to force many developers to accelerate their project schedules to preserve eligibility for critical tax credits.
Projects must also satisfy expanded “foreign entity of concern” (FEOC) rules to qualify for tax credits. Projects that are owned or controlled by, or source components from, certain foreign entities may be deemed ineligible for tax credits, including entities controlled by or affiliated with the governments of China, Russia, North Korea, and Iran. These provisions create a complex compliance landscape, particularly for solar and battery developers who rely heavily on global supply chains and joint venture structures.
Last week’s executive order builds on these statutory provisions and requires the Department of the Treasury to issue guidance within 45 days clarifying and strictly enforcing the new standards. Specifically, the order seeks to “ensure that policies concerning the ‘beginning of construction’ are not circumvented” by developers, including by “restricting the use of broad safe harbors unless a substantial portion of a subject facility has been built.” This suggests that developers may not be able to rely on safe harbor mechanisms, such as the 5% cost test, that have traditionally given developers flexibility in securing tax credits. Projects that show only minimal or symbolic progress before deadlines may now be at risk of losing tax credit eligibility under a more rigorous enforcement regime. The order thereby introduces considerable uncertainty by signaling potential shifts in long-standing interpretive frameworks, including what constitutes “beginning of construction” or adequate separation from FEOCs, leaving developers and investors to move forward without clear rules in place.
In addition, the order directs the Department of the Interior to review all regulations, guidance, policies and practices under its jurisdiction within 45 days to determine whether any provide “preferential treatment” to wind and solar projects. The Department of the Interior must then revise any such regulations, guidance, policies, or practices to eliminate any such preferences.
On July 17, 2025, the Department of the Interior announced new guidance seemingly prompted by last week’s executive order. The memorandum circulated by Gregory Wischer, the department’s deputy chief of staff for policy, states, “All decisions, actions, consultations, and other undertakings…related to wind and solar energy facilities” will now require “final review” by Interior Secretary Doug Burgum and “subsequent review” by Deputy Secretary Kate MacGregor.
