On January 20, 2025, President Donald Trump signed multiple executive orders that signal a distinct shift in U.S. clean energy and climate policy in favor of fossil fuels, nuclear, geothermal, and other technologies. These executive orders also set into motion attempts to expedite certain environmental reviews and permitting, as well as providing for the potential that there may be expedited construction of high voltage interstate electricity transmission infrastructure—actions that may also benefit renewables. Finally, and most immediately, these executive orders and related memoranda discussed below are currently attempting to impede federal spending and incentives with respect to clean energy, environmental, and climate programs through multiple agencies. Over just a few days, there have been a flurry of executive actions and lawsuits regarding federal spending: as of the date of this writing, all federal spending as authorized under the Inflation Reduction Act of 2022 (IRA) and the Infrastructure Investment and Jobs Act (IIJA) is still temporarily paused pursuant to executive order.
As a general matter, we expect a rapidly evolving environment regarding these executive orders, related agency actions, and lawsuits challenging such actions. We provide this overview as of January 30, 2025, and caution that it may change quickly. If you are a federal grant or loan recipient, or federal contractor, and cannot access payment portals, have received stop-work orders, are otherwise concerned about the status of your federal award, or have questions related to the impact of these actions on federal clean energy tax credits, please reach out to a member of the Energy and Climate Solutions practice.
Key Takeaways
- Pause on Federal Funding: As described below, the recently promulgated executive orders and OMB memoranda ordered a broad halt to federal financial assistance, which can include grants, loans, loan guarantees, and more. As of January 28, 2025, a federal court issued an administrative stay, temporarily blocking agencies’ ability to pause disbursements under active federal awards until February 3, 2025. The administrative stay did not, however, pause other aspects of the OMB memoranda, which (as described more herein) ordered agencies to terminate existing awards, as permitted by applicable law. Then, on January 29, 2025, OMB rescinded the underlying memorandum. However, pursuant to a separate executive order, discussed below, all federal spending authorized under the IRA and IIJA remains temporarily paused. This may change depending upon the outcome of two separate federal lawsuits challenging the administration’s attempt to pause funding. As a practical matter, the administration’s executive orders and OMB memoranda have and may continue to draw lawsuits with respect to constitutional and statutory constraints on the executive’s control over federal spending.
- Federal Tax Credits: These actions do not, at this time, appear to effect federal clean energy tax credits. In other words, nothing in these executive orders and related memoranda from OMB calls into question the existing ability for taxpayers to utilize authorized clean energy federal tax credits. However, agency reviews conducted at the U.S. Department of Treasury (Treasury) and Internal Revenue Service (IRS) per the instruction of the executive order discussed below may lead to future proposals to rescind or revise implementing guidance, or other actions that may interfere with taxpayers’ ability to claim various credits. For example, in a spreadsheet accompanying the OMB memorandum discussed below, OMB directed Treasury to review multiple clean energy tax credits in an effort to identify programs that do not align with the new administration’s policy priorities as set forth in the initial set of executive orders. Furthermore, Congress may utilize the Congressional Review Act (CRA) to rescind recently promulgated guidance, such as the tech-neutral investment tax credit (ITC) and production tax credit (PTC) final regulations, which Wilson Sonsini recently overviewed here.
- Policy Shift in Favor of Fossil Fuels and Permitting Reform May Also Benefit Renewables: The suite of executive orders express a clear favor for coal, oil, natural gas, nuclear, geothermal, and hydropower generation resources over renewable resources, and includes directives that are designed to increase fossil fuel production and the export of liquefied natural gas (LNG). However, in putting a finger on the scale for these favored generation resources, these executive actions may benefit renewables. On the one hand, the executive orders could result in policies that explicitly favor non-renewable resources, e.g., creating a fast-track through Federal Energy Regulatory Commission (FERC) jurisdictional interconnection queues. On the other hand, increased global LNG demand could increase domestic gas prices and price volatility, which could increase the value proposition for renewables and storage. Similarly, the Unleashing American Energy executive order, described more below, expresses support for regulatory reform to facilitate the permitting and construction of interstate energy transportation and critical energy infrastructure. To the extent such legislation reform improves the nation’s ability to construct high voltage electricity transmission infrastructure, renewables could stand to indirectly benefit from that aspect of the executive order. Finally, the executive orders also may expedite certain federal environmental permitting and reviews. These actions, too, may benefit renewables.
Overview
- Immediate Pause of Clean Energy and Climate Federal Funding
- Executive Actions
- “Unleashing American Energy” Executive Order: This executive order immediately paused disbursement of funds appropriated through theIRA and IIJA. Furthermore, this executive order requires agencies to identify regulations, orders, guidance documents, policies, settlements, consent orders, and any other agency actions that impose “undue burden” on the “identification, development, or use of domestic energy resources.” This is wide in scope and applies to Treasury and IRS, as well as the Department of Energy (DOE), FERC, Environmental Protection Agency (EPA), and more. As mentioned previously, in an OMB directive issued pursuant to this executive order (discussed immediately below), OMB identified a list of programs that fall under the DOE as subject to review. This list includes the Loan Programs Office (LPO) Innovative Energy Technologies program, Clean Energy Demonstrations, Grid Infrastructure Deployment and Resilience, Manufacturing and Energy Supply Chain Demonstrations and Commercial Applications, and more. For ease of reference, the DOE programs listed in the spreadsheet have been extracted into Annex I, below. While the OMB order itself was rescinded, this list may provide insight into which programs, as a practical matter, may be targeted pursuant to this still effective executive order. With respect to federal clean energy tax credits in particular, we note that the significant majority of rulemaking and guidance documents implementing IRA-authorized tax credits is complete or finalized. This means that, even if Treasury or IRS were to identify specific regulations or guidance documents that fall under this executive order as being “unduly burdensome,” lawfully repealing them or modifying them would require compliance with administrative law requirements—essentially, a long process that could take years to play out, particularly with respect to final regulations, and even then, may very well not survive a challenge under Loper Bright, which now affords agencies with less leeway to re-interpret existing regulations. Wilson Sonsini maintains an IRA “Implementation Tracker,” with updates published monthly regarding IRA tax credit implementation, available here.
- OMB Memorandum (January 27, 2025): This memorandum, titled “Temporary Pause of Agency Grant, Loan, and Other Financial Assistance Programs” (M-25-13), required all federal agencies to temporarily pause “all activities related to obligation or disbursement of all Federal financial assistance, and other relevant agency activities that may be implicated by [President Trump’s] executive orders, including but not limited to…the green new deal[.]” As the “green new deal” is not a federal law, it is unclear what this is meant to reference. This memorandum was to be effective January 28, 2025, at 5 p.m. ET. The memorandum also directed all federal agencies to “cancel awards already awarded that are in conflict with the Administration’s priorities” to the extent allowable by law. While this memorandum was later rescinded, given the still effective executive order, and general posture of the new administration regarding reductions in federal spending, we note that federal agencies are still bound by the terms and conditions of awards, as well as regulations in effect at the time of the award’s execution.
- OMB FAQ (January 28, 2025): The following day, on January 28, 2025, OMB issued a FAQ stating that agencies must temporarily pause “grant, loan or federal assistance programs that are implicated by the President’s Executive Orders,” which include for the purposes of this overview, “Unleashing American Energy.” While this memorandum, along with M-25-13, stated expressly that it did not apply to assistance received by “individuals,” public reports and a lawsuit filed by multiple states (discussed below) nevertheless confirmed that state Medicaid payment systems, and systems for drawing down Head Start and the Child Care Development Block Grant Fund, for example, were not operational for at least some portion of time (and may be continuing) as of January 28, 2025, underscoring that the practical implication of these executive orders and OMB memoranda may be broader than what is expressly directed or authorized therein.
- Federal Injunction: A coalition of non-profits filed suit in the United States District Court for the District of Columbia, seeking a temporary restraining order barring OMB from taking any steps to implement, apply, or enforce Memo M-25-13. The court ordered an administrative stay, effective until February 3, 2025, and tailored the administrative stay to bar agencies from pausing disbursements of federal funds under all open awards. Twenty-three states equally filed suit in federal district court in Rhode Island challenging M-25-13.
- Recission of OMB Memorandum M-25-13: On January 29, 2025, OMB rescinded its prior order in a two-page memorandum, which was widely reported as halting orders to pause federal spending. That same day, the White House press secretary stated that this “is NOT a recission of the federal funding freeze. It is simply a recission of the OMB memo…The President’s EO on federal funding remain in full force and effect, which will be rigorously implemented.” In the hearing held for a motion for temporary restraining order pursuant to the lawsuit filed by state Attorneys General on January 29, 2025, the Chief Judge for the U.S. District Court for the District of Rhode Island asked the states to prepare an order that he is likely to authorize—this would enjoin any pause in federal funding, despite the recission of OMB Memo M-25-13.
- Executive Actions
- Environmental Permitting: The “Unleashing American Energy” executive order further directs the Council on Environmental Quality (CEQ) to propose rescinding its most recent National Environmental Policy (NEPA) regulations, convenes a CEQ working group to expedite permitting approvals, and requests recommendations with respect to facilitating the permitting and construction of interstate energy transportation and to provide “greater certainty in the Federal permitting process, including but not limited to streamlining the judicial review of the application of NEPA.”
- National Emergency Declaration: The “Declaring a National Energy Emergency” executive order declares a national energy emergency, which may authorize the President and executive agencies to further utilize emergency powers under various authorizing statutes for purposes such as “facilitating the identification, leasing, siting, production, transportation, refining, and generation of domestic energy resources.” For example, the executive order directs the EPA to use emergency powers and nationwide permits to expedite the granting of approvals under the Clean Water Act and Endangered Species Act for energy projects; likewise, agencies are directed to assess if eminent domain authorities or authorities afforded under the Defense Production Act can be utilized to facilitate domestic energy resource production. For these purposes, “energy” is defined to exclude renewables. Therefore, the emergency powers invoked in this executive order would not appear to support expanded development of renewables directly. In conjunction with the “Unleashing American Energy” executive order discussed above, this executive order has some potential to benefit renewables to the extent it facilitates expedited construction of high voltage interstate electricity transmission infrastructure. This executive order directs agencies to “identify and use all relevant lawful emergency and other authorities available to them to expedite the completion of all authorized and appropriated infrastructure.” As a result, it is possible that the DOE could expand its designation of National Interest Electric Transmission Corridors, thereby bringing more transmission projects under FERC’s Federal Power Act section 216 siting authority and giving the resulting permit holders to acquire rights of way through the use of eminent domain.
- Regulatory Freeze Pending Review: The “Regulatory Freeze Pending Review” executive order, which is standard for incoming Presidential administrations, orders agencies to not issue any rule until a new department or agency head appointed by the President reviews and approves the rule, in addition to withdrawing any rules that had been sent to the Federal Register and not yet published, and consider postponing the effective date of rules that have been published in the Federal Register, consistent with applicable law.
- Wind Energy: In a memorandum issued to various agencies, the White House ordered a pause on new or renewed wind energy leasing on the Outer Continental Shelf. The order went into effect on January 21, 2025, and states that it will remain in effect until revoked. Furthermore, this executive order directs the Secretary of the Interior to review existing wind leases and identify bases for rescission.
- Withdrawal from the Paris Agreement: This executive order initiated the United States’ withdrawal from the Paris Agreement.
- Pausing Approvals of Renewable Energy on Public Lands and Waters: In an order issued by the Department of Interior (DOI), DOI will not issue any leases, rights of way, contracts, or “any other agreement required to allow for renewable energy development” on public lands and public waters for 60 days, beginning January 20, 2025.
We anticipate further changes in the regulatory landscape, as well as statutory changes pursuant to proposed legislation in Congress with respect to federal clean energy tax credits in 2025. We continue to monitor those changes and will provide updates as they develop.
ANNEX I — Department of Energy Programs
[1] For a primer on laws applicable to clean energy federal grants, loans, and tax credits, please see “Executive and Congressional Control Mechanisms over IRA and IIJA Funding,” Environmental & Energy Law Program, Harvard Law School (January 2025), available at: https://eelp.law.harvard.edu/wp-content/uploads/2025/01/Executive-and-Congressional-Control-Mechanisms-over-IRA-and-IIJA-Funding.pdf.
[2] Off. of Mgmt. & Budget, Exec. Off. of the President, Temporary Pause of Agency Grant, Loan, and Other Financial Assistance Programs (Jan. 27, 2025), https://perma.cc/69QB-VFG8.
[3] Sarah Kliff, Noah Weiland, “Payment System That Provides Medicaid Funding to States Stops Working, Officials Say,” THE NEW YORK TIMES (January 28, 2025), available at: https://www.nytimes.com/2025/01/28/us/politics/medicaid-freeze.html.
[4] National Council of Nonprofits, et al., v. Office of Management and Budget, et al., Civil Action No. 25.239 (D.D.C. Jan. 28, 2025) (order granting administrative stay).
[5] “Request for Emergency Temporary Restraining Order,” State of New York et al., v. Donald Trump et al., No. 1:25-cv-00039 (D.R.I. Jan. 28, 2025).
[6] Memorandum on the Temporary Withdrawal of All Areas on the Outer Continental Shelf from offshore Wind Leasing and Review of the Federal Government’s Leasing and Permitting Practices for Wind Projects, (January 20, 2025) available at: https://www.whitehouse.gov/presidential-actions/2025/01/temporary-withdrawal-of-all-areas-on-the-outer-continental-shelf-from-offshore-wind-leasing-and-review-of-the-federal-governments-leasing-and-permitting-practices-for-wind-projects/.