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AM Briefing

Federal Court Tosses Out Trump’s Limits on Solar and Wind Tax Credits

On desalination, Japanese nuclear, and Latin American hydroelectricity

Wind and solar power.
Heatmap Illustration/Getty Images

Current conditions: Des Moines, Iowa, is bracing for thunderstorms through Thursday night • Temperatures in Touggourt, in northern Algeria, are soaring north of 103 degrees Fahrenheit • European forecasters expect the brewing El Niño conditions forming now could become the strongest ever recorded.


THE TOP FIVE

1. Federal court tosses out Trump’s strict limits on solar and wind tax credits

Last August, the Internal Revenue Service issued strict new rules for solar and wind developers hoping to tap the federal tax credits known as 45Y, for the production of carbon-free electricity, and 48E, for investment in green generating assets. For years, the U.S. government had required companies to invest 5% of the total cost of the project by a certain deadline to qualify for the rebates. But last summer, the Trump administration eliminated the 5% threshold and instead mandated that projects over 1.5 megawatts in capacity show evidence that physical construction has begun to be eligible for the writeoffs. In all, the new rules “could have been so much worse,” Heatmap’s Emily Pontecorvo wrote at the time. But requiring construction to start narrowed the scope of how many turbines and panels could be built before the two tax credits are phased out this July 4. With less than a month to go before the credits go away, a federal court has intervened to restore the original 5% rules. On Saturday, the U.S. District Court for the District of Columbia overturned the Internal Revenue Service’s strict new rules. The decision found that the Trump administration had repeatedly failed to back up its justifications for eliminating the 5% provision, consider reasonable alternatives, or demonstrate that the policy change wasn’t motivated by discriminatory views of the wind and solar sectors. “Evidence in the record leaves substantial doubt that the proffered explanation sincerely accounts for the agency’s decision,” the ruling reads. “A thorough review of the record undercuts the conclusion that the defendants made a reasoned decision to eliminate the 5% safe harbor for wind and large-scale solar projects based on concerns about stockpiling.”

While significant, the decision — which was effective immediately — doesn’t change the Trump administration’s restrictions on using tax credits for projects made with Chinese imports. And Crux Climate, the tax credit marketplace, cautioned that few developers may be able to spring into action to seize on the ruling in the next 26 days before the rebates officially end.

2. New York lawmakers pass one-year data center moratorium

New York State lawmakers passed a one-year moratorium on new data center construction that would pause permits on the facilities and require the state to create new rules on energy use, community investment, and labor standards for server farms. But News10, Albany’s ABC affiliate, warned that Governor Kathy Hochul, a Democrat, had not yet indicated whether she would sign the bill.

The move came as NBC News reported that Illinois Governor JB Pritzker, another Democrat, outlined plans to temporarily halt tax breaks to data centers ahead of a call to state lawmakers to come up with a new framework for how the facilities should be developed. The data center backlash, as Heatmap’s Robinson Meyer wrote, is becoming impossible to miss, with roughly 70% of Americans now opposing server farms built near their homes. More than 60% of Americans now support placing a moratorium on data center construction.

3. Arizona and Nevada could trade for desalinated Pacific Ocean water

San Diego’s desalination plant. Nelvin C. Cepeda/The San Diego Union-Tribune via Getty Images

Desalination, as my colleague Katie Brigham put it in March, is “having a moment.” It’s not hard to see why. The San Diego County Water Authority is generating so much water from a desalination plant the utility opened a decade ago that it has not only ended its own shortfalls, it has produced a surplus. Now, as a result, the California city is poised to sell some of its rights to Colorado River water to Arizona and Nevada under the first large-scale deal to trade water between the states entitled a share of what flows through the nation’s fifth-longest river. The agreement highlights how desalination could “help parched inland states fill a widening gap between water supply and demand,” The New York Times reported.

It’s a welcome development. Just last week, experts told the Utah News Dispatch that the Colorado River’s largest reservoirs are approaching a “system crash.”

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4. Rhode Island lawmakers rebuke governor’s climate cuts

New York’s Legislature might have backed its Democratic governor’s bid to weaken the state’s climate law, but Rhode Island is taking a different approach. Lawmakers in New England’s smallest state rejected Democratic Governor Dan McKee’s proposal to slash Rhode Island’s climate programs in the name of affordability. On Friday, E&E News reported that the state budget lawmakers advanced last week nixed the changes to clean energy policies.

5. Japan sets a target for building new reactors

In January, the United Kingdom, Norway, and several major European Union nations including Germany and Denmark agreed to a pact to build out a sweeping array of wind turbines in the North Sea, turning the waterway into “the world’s largest clean energy reservoir.” If the pledge holds, roughly 11% of the 222,000-square-mile sea could be covered in turbines. That’s the finding of a new study from Heriot-Watt University in Scotland. Under the current target, the North Sea would host a total of about 19,400 turbines by the middle of this century. By 2030, the U.K. alone is on track to have roughly 4,200 turbines, followed by Germany with about 2,700, and the Netherlands with 1,700, according to Renewables Now. The Dutch would claim the highest offshore wind density, with wind farms covering around 19% of its North Sea waters by 2050, followed by Belgium at 18%.

THE KICKER

President Sheinbaum drives an Olinia.Office of the President of Mexico

There’s been much ado about Chinese electric vehicles being built in Mexico. But on Sunday, Mexican President Claudia Sheinbaum unveiled the Olinia — a 100% domestically designed electric van that looks a bit like Toyota’s Kayoibako EV minivan. In a post on X, she proudly called it “the electric car created by young Mexican women and men.” The name harkens to the Nahuatl word for “movement.”

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Spotlight

A Giant Data Center Offers a Permitting Reform Test Case

What would happen to Project Jupiter if the Bipartisan American Affordability and Jobs Act is passed?

Project Jupiter.
Heatmap Illustration/Project Jupiter, Library of Congress

One of the nation’s largest data centers is struggling under permitting woes. So let’s play a game: would the bipartisan permitting bill in Congress make the path easier, or might the federal legislation be irrelevant to large hyperscalers under development today?

Meet Project Jupiter, a mega project in southern New Mexico in Dona Ana County under development by Oracle and OpenAI, with financial backing from SoftBank and political support from the Trump administration for being a part of Stargate, a major Trump administration public-private initiative boosting AI development. Project Jupiter would be one of the largest data centers in the country if completed and currently is expected to run on a microgrid powered by fuel cells converting gas to electricity, which the developers claim will burn much cleaner than a typical off-grid gas turbine power plant.

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Hotspots

The Trump Administration Is Still Messing with Offshore Wind Farms

And more of the week’s top news around project fights.

The United States.
Heatmap Illustration/Getty Images

1. New England (and Maryland) – The Trump administration is still messing with offshore wind farms, even while trying to pass a permitting reform deal. Examining the court filings reveals why they may feel empowered to do it — and I’m not sure how this ends.

  • Last Friday, in a legal case brought by anti-wind activists, the Justice Department submitted a motion in federal court to send the construction and operations plan for Orsted’s Revolution Wind project in New England back to the Interior Department for more analysis. On Wednesday, the DOJ entered a similar motion in another case challenging the construction and operations plan for U.S. Wind’s MarWin project off the coast of Maryland in a lawsuit brought by the state’s coastal community of Ocean City.
  • Trump’s actions led some to question whether the president was sabotaging the deal, and others to claim the media coverage itself was an attempt to kill it. Going further, supporters of the bipartisan bill claimed the DOJ's motions were precisely why the bill should become law, implying it would guard offshore wind farms against this sort of maneuver.
  • However, for the bill’s backers, it’s worth considering why the Trump administration believes it has the legal authority to do this. It’s also time to ask whether the bill would actually protect these wind farms against this tactic.
  • To answer those questions, you have to rewind. On May 1, 2025, the Interior Department withdrew a Biden solicitor’s opinion instructing the agency to “strike a rational balance” between wind power and fishing interests. This revocation document is technically not in effect at the moment; one year later, a federal court ruled the opinion was potentially illegal as a part of a preliminary injunction on five anti-renewables actions requested by solar and wind trade groups. The Trump administration is contesting that ruling, and the administration has filed a notice of appeal.
  • In August, despite that opinion being in doubt, a federal judge granted Trump permission under the Outer Continental Shelf Lands Act to remand the construction and operations plan for the now-defunct Atlantic Shores offshore wind farm in the waters of New Jersey. U.S. District Judge Jia Cobb specifically wrote that Atlantic Shores failed to demonstrate the federal government had limitations under OSCLA on revisiting these plans and that the injunction from the litigation on appeal “did not prohibit all reevaluation of agency action.”
  • In the recent Revolution and MarWin filings, Trump’s Justice Department argues the construction and operations plans should be remanded under OSCLA without being vacated. The DOJ motions include claims that previous decision documents did not adequately explain impacts to commercial fishing and other industries that use OSCLA waters. It’s not clear if the administration will win these motions.
  • The bipartisan permitting bill would bar the Interior Department and other federal agencies from taking “any new action that would revoke, rescind, withdraw, terminate, suspend, amend, or alter a federal authorization or permit in effect on or after September 16, 2026,” or “any other action to interfere with or prevent the construction or operation at full capacity of a project that has secured all necessary federal authorizations and permits.” The restriction exempts cases where “the agency is required to take such action by order of a court.” As I wrote in our lengthy piece explaining the bill, this provision has a damages component that allows companies impacted by violations to pursue financial compensation.
  • Here’s the billion-dollar question I expect we won’t have answered unless the bill language is enacted and then litigated: Would the court order exception apply to rulings that grant these motions? Or would the developers be able to sue for damages?

2. Columbia County, N.Y. – New York’s renewable energy permitting office has rejected an upstate solar farm on farmland as a House Democrat representing the area joined hands with the Trump administration in publicly railing against the project.

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Politics

Climate Races to Watch This November

These seven elections could change state energy policy.

Watching voting.
Heatmap Illustration/Getty Images

No matter how well Democrats do in the House and Senate in November, it’s unlikely to mean anything new on climate policy in Washington, D.C., for as long as Donald Trump remains in the White House.

That is not true when it comes to the other elections this year.

Several states are on the verge of a possible Democratic trifecta, meaning unified control of both chambers of the state legislature and the governor’s mansion. It’s a position that could enable such states to either top off existing climate and energy policies passed in the last decade or to make the first real run at climate legislation in recent history.

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