The Safe-Harbour Deadline Has Passed. What Boards Should Be Asking About What Got Preserved.

The statutory position is settled: under the One Big Beautiful Bill Act, wind and solar facilities that did not begin construction by 4 July 2026 must be placed in service by 31 December 2027 to remain eligible for the Section 45Y production credit or Section 48E investment credit. That deadline has passed.

What is less settled is the guidance governing how projects established that they had begun construction. On 6 June 2026, the US District Court for the District of Columbia vacated IRS Notice 2025-42 in full in Oregon Environmental Council v. IRS, No. CV-25-4400 (CKK), holding it arbitrary and capricious under the Administrative Procedure Act and remanding to the IRS. That was less than a month before the deadline the notice applied to.

For any board with credit-dependent value in its portfolio, that sequence creates a documentation question worth asking directly.

What the notice did and what the ruling changed

Since 2013, taxpayers established beginning of construction through one of two methods: the Physical Work Test, requiring physical work of a significant nature, or the Five Percent Safe Harbor, requiring 5% of total project cost to be paid or incurred.

Notice 2025-42, issued 15 August 2025 following Executive Order 14315 and effective for facilities that had not begun construction before 2 September 2025, eliminated the Five Percent Safe Harbor for most wind and solar facilities - retaining it only for low-output solar facilities of 1.5 MW or less - leaving the Physical Work Test as the sole route for everything else.

The June 2026 ruling vacated that notice nationwide. Per analysis published by Holland & Knight, Gibson Dunn, Troutman Pepper Locke and others, the court found the IRS had failed to account for more than a decade of industry reliance on the safe harbour, had not adequately justified treating wind and solar differently from other zero-emission technologies, and had not engaged with narrower alternatives raised in comments.

The deadline was statutory and held. The method for proving you met it was vacated three and a half weeks before it arrived.

The status question every board should verify first

An essential caveat, and it is the reason this post carries no assertion about the current position.

Commentary published at the time of the ruling - including from McGuireWoods, Kean Miller and Foley Hoag - anticipated that the government would seek a stay and appeal, and the court itself acknowledged there was almost no chance appellate rights would be resolved before the 4 July 2026 deadline. Whether an appeal has been filed, whether a stay has been granted, and whether the IRS has issued replacement guidance on remand are all questions that should be confirmed against the current docket and IRS publications rather than against commentary from June.

Any board relying on this should establish current status directly. The position may have moved.

What this leaves in practice

Three groups of projects sit in materially different positions, and the distinction is worth drawing explicitly.

Commentary at the time was near-unanimous that the Physical Work Test remained the more durable path for anything targeting the deadline, precisely because it is unaffected by how the litigation resolves. Several firms recommended dual-track documentation where both positions were arguable.

There is a separate technical point that is easy to miss. The beginning-of-construction test for the OBBBA's prohibited foreign entity provisions is anchored by statute to Notices 2013-29 and 2018-59 as in effect on 1 January 2025, under 26 U.S.C. § 7701(a)(51)(J). It rests on the statute rather than the vacated notice and should be analysed separately from the credit-timing question.

What execution against the deadline looked like

The mechanics are visible in public filings. PowerBank Corp's Form 6-K of 18 August 2026 discloses the repurchase of 13.9 MW of New York community solar projects, including Gainesville and a 6.9 MW Highway 28 project, with approximately $32.5m of construction value and around $13m of expected federal investment tax credits, noting physical work began before 4 July 2026 to preserve ITC eligibility under the Physical Work Test.

That is a clean example of the discipline the deadline demanded: physical work commenced, dated, and documented in a form that can be evidenced to a counterparty or a tax authority later.

The four questions worth asking

For boards and investment committees holding credit-dependent value, the useful discipline is narrow and specific.

Which method did each project actually rely on? Not which method was intended - which is evidenced in the records. Portfolios assembled through acquisition frequently contain a mixture, and the mixture is rarely documented centrally.

Can the physical work be evidenced with contemporaneous records? Dated photographs, executed contracts, delivery records and site logs. A position asserted in a memo without underlying records is weak in diligence and weaker on audit.

Where does the four-year continuity requirement bite? Both methods require continuous progress. The continuity safe harbour applies where a facility is placed in service within four years of construction starting. Delays do not extend that window.

Who owns this position going forward? If the litigation resolves adversely, or the IRS issues replacement guidance on remand, someone has to reassess. That accountability question is examined more broadly in interconnection certainty slipping into 2027.

Why this is a governance matter rather than a tax one

The technical analysis belongs with counsel and tax advisers. What does not delegate is the question of whether the organisation knows its own position across a portfolio, can evidence it, and has named someone to revisit it when the facts change.

Portfolios assembled through consolidation are particularly exposed here, because acquired projects arrive with documentation practices that were never designed to be compared. With platform consolidation active across both storage and community solar - Brookfield's agreed acquisition of Aypa Power announced 22 July 2026, MN8's agreement to acquire Greenbacker the same day - that exposure is growing rather than shrinking.

The value at stake is the difference between a project that keeps its credit and one that does not. On a portfolio, that is not a rounding error.