US President Donald Trump signed an executive order on Monday directing federal agencies to eliminate subsidies for wind and solar energy projects.
The presidential order, titled “Ending Market Distorting Subsidies for Unreliable, Foreign Controlled Energy Sources,” coincides with the One Big Beautiful Bill Act, which recently passed in the House and the Senate. Within 45 days of the Bill’s enactment, the Treasury Department is ordered to “strictly enforce the termination of the clean electricity production and investment tax credits,” which are governed by Internal Revenue Code sections 45Y and 48E. These provisions are used to give companies tax breaks for investing in clean energy projects. The Interior Department is tasked with reviewing and revising regulations that provide preferential treatment to wind and solar facilities over other energy sources.
This comes as part of a broader energy policy overhaul that aims to increase American energy production to advance national security and economic interests. In January, President Trump signed an executive order declaring a “national energy emergency.” In February, another executive order created a “National Energy Dominance Council.” Monday’s order further clarified the administration’s position:
[R]eliance on so-called “green” subsidies threatens national security by making the United States dependent on supply chains controlled by foreign adversaries. Ending the massive cost of taxpayer handouts to unreliable energy sources is vital to energy dominance, national security, economic growth, and the fiscal health of the Nation.
Two legal avenues are likely available to challenge Monday’s order. First, legal challenges could emerge under World Trade Organization rules or bilateral trade agreements if the implementation of the order targets specific countries or creates barriers to international commerce. Second, the Interior Department’s mandate to eliminate “preferential treatment” for wind and solar facilities may be challenged under the Administrative Procedure Act, which allows courts to hold agency actions unlawful if they are deemed “arbitrary” or “capricious.”
While details of any future litigation are unknown, Monday’s executive order is likely to be challenged by energy companies, environmental groups, and affected states. This comes amidst a series of ongoing legal challenges to recent executive orders. In April, a coalition of 21 Democratic attorneys general (AGs) filed a lawsuit in an attempt to stop a presidential executive order that cuts funding for several federal agencies, including the Institute of Museum and Library Services. In January, 22 AGs filed a lawsuit challenging an executive order that significantly restricts the limits of birthright citizenship.
