Feeling the Heat: Renewable Energy Industry Under the Microscope

This episode is based on a May 5th Womble Bond Dickinson webinar featuring Kristina Moore and Veronica Renzi.

The temperature is rising for the Renewable Energy Sector as well as related funding sources, such as green banks. The heat is coming from several sources, including:

• An expansive fight over obligated federal funding.
• Congressional investigations into companies receiving federal financial support.
• The potential elimination of tax incentives augmented under the Inflation Reduction Act (IRA).
• Rising tariffs.

All these issues are significant factors impacting the renewable energy sector. The IRA, passed under the Biden Administration, remains a particular target for Republican lawmakers, who seek to reclaim as much funding as they can.

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Feeling the Heat: Renewable Energy Under the Microscope

About the authors
Kristina M. Moore
Veronica Renzi

Transcript

Welcome to Womble Perspectives, where we explore a wide range of topics, from the latest legal updates to industry trends to the business of law. Our team of lawyers, professionals and occasional outside guests will take you through the most pressing issues facing businesses today and provide practical and actionable advice to help you navigate the ever changing legal landscape.

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Kristina Moore

 Good afternoon. Wanted to welcome you all to Feeling the Heat: Renewable Energy Industry Under the Microscope, with myself, Kristina Moore, a partner here at Womble Bond Dickinson, and my partner, Veronica Renzi. I've spent over 25 years at the center of law, politics and the media, with a focus on the energy sector, when I was on Capitol Hill for nearly 14 years as senior counsel. focusing on energy and environmental policy. Including fuel economy standards and the, the current debate that we are having today. Veronica, do want to give a, brief overview of your career?

Veronica Renzi

Thanks so much, Kristina. Good afternoon, everyone. And Kristina, thanks for sharing all of that background information, about all of the experience that you have with respect to congressional investigations, both on the Hill and now in private practice at our firm, Womble Bond Dickinson. I represent individuals and corporations under congressional scrutiny by Congress, in all aspects of that scrutiny. I'm a former federal prosecutor in United States District Court for the District of Columbia, having served as an AUSA in Washington, DC. I've also spent some time focusing on the energy industry, and I'm very excited to be here today with all of you to talk about developments in what is a very fast-paced investigation and, you know, various legal matters. Turning it back to you, Kristina.

Kristina Moore 

Thanks so much. So, right now in the renewable energy industry, if you're in it, you know it there is a ton of pressure facing the industry and, and financiers and backers of the industry which include an expansive fight over obligated funding. We've been observing and engaging in that fight since January, since the beginning of the Trump Administration, the second Trump Administration. There's also been a series of congressional investigations that have been launched, into renewable energy companies, and, and more broadly, companies that had received federal support during the Biden years. We've also seen right now, the current debate over the potential elimination of tax incentives that were augmented under the Inflation Reduction Act, again, passed under the Biden Administration. And certainly not least among these, you have the tariffs and that tariff conversation that you know, right now there is that 90-day pause, but certainly it's possible for tariffs to, to, to go back into effect in July. And of course, the tariffs against Chinese products are continuing today. So all significant pressures that are impacting the renewable energy industry. However, today gonna focus in on two. So today, we're gonna focus in on congressional investigations related to the GGRF which was created under the the IRA in order to support and incentivize financing of renewable energy products. And then we're also gonna talk about the potential elimination of tax incentives that were augmented under the IRA. So, there is a common denominator here. The Inflation Reduction Act was passed under the Biden Administration, and certainly was a, a significant investment in the industry and what we're seeing is the, the current administration as well as Congress really deploying on all fronts in order to reclaim as much funds as they, as they can. So we're gonna focus our conversation on that today. Over to you, Veronica, for congressional investigations.

Veronica Renzi

Thanks, Kristina. So in terms of the specifics of how we got here I'm sure a lot of our guests today are aware of the video that was posted and publicized by a well-known conservative organization called Project Veritas on December 5th, 2024. The video they released was an undercover video of an EPA employee appeared to be at a party bragging about throwing gold bars off the Titanic related to the EPAs announcement regarding the rapid distribution of 20 billion in taxpayer funds before the inauguration day of President Trump. That video got a lot of news coverage and certainly brought greater attention to, to, to the facts involved and also congressional, related congressional action. On January 27th, 2025, the EPA halted the disbursement of federal aid as part of an order from the White House Office of Management and Budget to halt loan and grant distribution.On March 3rd, 2025, the EPA formally referred the alleged financial mismanagement, conflicts of interest, and oversight failures as alleged regarding the Greenhouse Gas Reduction Fund to the acting inspector general. Department of Justice and the Federal Bureau of Investigation, it has been reported, have active and ongoing investigations that apparently started earlier this year regarding the Greenhouse Gas Reduction Fund after EPA administrator, Lee Zeldin, announced his desire to claw back funding, as Kristina was referring to earlier. March 8th, also of this year, several grant recipients filed suit against the EPA and Citibank for illegally withholding withholding funds and sought a court order requiring Citibank to release the frozen funds and an injunction preventing the EPA from interfering with grants, disbursements, and declaratory relief as well, confirming that the EPA's actions were wrong. The grant recipients just a couple of weeks ago were granted a temporary restraining order by the U.S. District Court for the District of Columbia, halting the EPA's termination of the grant agreements and preventing Citibank from transferring funds out of the grantee bank accounts. A week ago today, a federal appellate court expedited the Trump's pardon me, expedited the Trump Administration's appeal in an effort to rescind 20 billion in climate grants that the lower court ordered this month be restored. A three-judge panel from the DC Court of Appeals also said that the money should remain as it is now, held in the accounts at Citibank. There's a briefing scheduled for this month, and argument will be heard on May 19th about the fate of these funds. Kristina, anything else you'd like to add to that in terms of how we got here?

Kristina Moore

So, you know, I, I mentioned at the top of the, the conversation that I had been involved in the Solyndra investigation, and this would have been, like, gosh, 2000 I'm forgetting, '11 or '12 during the the, the Obama administration. And for those in the industry, you'll recall that Solyndra was a cutting-edge renewable energy company that had received a loan from the Department of Energy and ended up defaulting on that loan. That was a significant investigation, you know, where there were charges of, of cherry-picking winners and losers and that, you know, I, I think the reverberations of that investigation still are felt today. And I can tell you that, that many of my former colleagues on the Hill you know, had said at the beginning of this administration, beginning of this Congress, that they were indeed looking for the next "Solyndra," the next story that, that looks like government favoritism towards a particular industry or particular business based on relationships. And I do think that is an important backdrop of, of what we're seeing here. With that, Veronica, I'll, I'll turn it back over to you to go into a bit more detail on what's happening with Congress and the investigations.

Veronica Renzi

Kristina, thank you for those insights. I had a couple quick questions about Solyndra. Do you recall how long the investigation was, at least publicly?

Kristina Moore

Yeah, yeah. And it started with an IG inspector general, EPA inspector general investigation, and that's really what tipped off you know, House Oversight and Energy and Commerce. Both committees were very active in pursuing the story and, and, and trying to get to the bottom of, of what occurred. As I'm remembering, it was, you know, at least the, the, the whole Congress , you know, that it took. And I, I think we wrapped up that Congress issuing reports on it.

Veronica Renzi

That's very informative. And when you say there are still reverberations today what do you mean by that?

Kristina Moore

Solyndra's still a significant term. It has its own meaning, right? Beyond what, what the company was. I, I think there was an, in DC policy circles they certainly remember it and, and no one wants to, to be that next household name because of a Congressional investigation.

Veronica Renzi

Thanks for that information, Kristina. So Congress has been very active in terms of investigating the things that Kristina and I have been talking about today, and specifically with respect to the Greenhouse Gas Reduction Fund. on March 20th, 2025 House Oversight sent a letter, sent a letter to EPA administrator Lee Zeldin, investigating the Biden administration's policies and allocation of funding, including the Inflation Reduction Act's Greenhouse Gas Reduction Fund and requesting a briefing with committee staff. The letter of March 20th from the Committee on Oversight and Government ... also alleges essentially conflicts of interest and favoritism, as Kristina was just talking about in the Slender investigation, just similar in terms of the topics with respect to the greenhouse gas reduction fund. On April 10th Energy and Commerce sent letters to grant recipients, or rather Energy and Commerce has sent letters to grant recipients as recently as April 10th, 2025, requesting answers to specific questions about the greenhouse gas reduction fund. So in other words written questions requesting written responses, what we normally see congressional investigations. Of course, we don't know the future, but that, that can be the beginning of an extensive congressional inquiry that can involve several other layers and steps. Of course, we don't know what will happen here. There were several prior letters sent from Energy and Commerce in 2024 including to the EPA regarding the greenhouse gas reduction fund prior to all the litigation we mentioned earlier this year, and the video that was released by Project Veritas. In other words, this has been a somewhat longstanding point of inquiry for Congress. Kristina, anything else on that?

Kristina Moore

No, I think you've done a, a fantastic job capturing the current Well, with that, we're gonna hit a, a slight pause on talk about congressional investigations and move over to budget reconciliation. the top things to know about budget reconciliation is that it's a procedural process that requires both houses of Congress to pass a budget resolution first in order to move to budget reconciliation. And the key advantage of working through budget reconciliation is that you avoid a Senate filibuster. You only needs 51 votes in order to pass the legislation. So what we see is, and, and you might have heard President Trump talking about one big, beautiful bill. He's referring to one big, beautiful budget reconciliation bill. It's just that makes it too, too wordy to, to say all of that. But what we have seen is both the House and the Senate moving forward to coalesce around a strategy that would allow for one big, beautiful bill that includes all of the president's top priorities. That's ranging from homeland security issues, around immigration, but also the extension of the Tax Cuts and Job Acts TCJA, that was passed in his first administration and is set to expire this year. But in order to, if you will, fund the extension of the tax cuts as well as add additional tax cuts to that I know there's been talk around something called SALT that's very important to states that, that have high prices around homes and, and interest payments around homes. It's a key topic, as well as tax cuts for wages and I'm sorry, for, for tips and for overtime. That all is ladders up to the extended tax cut conversation happening. But in order for Congress to move forward with tax cuts, they also have to find some cost savings. And so the budget resolution had provided instructions to all of the committees and, you know, in the, in the House and the Senate to find offsets to find savings in order to to have a balanced bill move, move through Congress. This has a lot of headlines around Medicare and Medicaid funding have come from this process, but also a lot of conversation around the Inflation Reduction Act and the tax incentives that were included in the IRA. And that's what we're gonna talk about today. So to bring you up to speed in April, the, both the House and the Senate passed a, a unified, a budget resolution, and now they are moving forward through budget reconciliation. In terms of what's at stake for the renewable energy industry, you've got production tax credits 45Y and 45E and then you have the manufacturing tax credits 45X. The chairman of Ways and Means, Chairman Smith, had very, you know, publicly let folks know both in Congress and in industry that if, when it comes to the IRA, he, everything was gone unless he couldn't eliminate it. And that essentially created a mandate for any industry benefiting from the tax incentives to make sure that they were advocating on behalf of the tax incentives that mattered to their industry. And what we are seeing is a significant effort, you know, certainly from the renewable energy industry focusing around arguments about the importance of keeping every electron on the grid. And we're talking about that, you know, because of the need to meet the rapidly escalating demand that's been driven by AI and data centers. So the two are kind of coming to a head at the same time. And right now, the solar and renewable energy industry has actually been doing an excellent job of meeting the, the rapid rapid electrification necessary in order to meet demand coming from data centers. And so, that's been a key talking point on Capitol Hill around these manufacturing and production tax credits. And as well, there's been a, a large focus around the importance for a predictable investment environment. And the reason why that is such a, a key phrase is because a lot of companies made investment decisions onshoring, you know, bringing work from overseas and manufacturing the different components the supply chain here in the United States and employing American workers. And so those investment decisions were made based on, on the IRA as it stood and, and, and certainly are at stake. So, we've seen a tremendous amount of lobbying activity. In terms of what we're hearing 45X does seem to be well-recognized and well-regarded among a, among a significant number of Republicans. We're also hearing that should that tax credit proceed to, to continue into you know, can after the budget reconciliation, that it will probably have some modifications. So, we're we're hearing a lot about FEOC which is the foreign entity of concern language that could limit the amount of foreign ownership that's coming from a, a a country of concern. Right now, the latest number I've been hearing is 25% ownership could subject a company to FEOC controls. And there's also been some talk, but less, around transferability of of the tax credits. And so even if these tax credits move forward they, they will be modified. In terms of timeline, so it's very much a hurry-up offense. Last time Congress considered budget reconciliation, it took until November for the legislation to be passed. However, President Trump has requested that the that the, that the budget reconciliation be on his desk by July 4th. I'm sure there's no coincidence around that date and, and our celebration of independence. But he wants to sign budget reconciliation by July 4th and to have that, that political win at that momentous occasion. And in order to do that that created certain deadlines in the House and the Senate. For the House the Speaker of the House, Johnson, who you see here has created a timeline of Memorial Day for for the House to complete consideration of budget reconciliation. Backing up from that date, we expect that the House Energy and Commerce Committee and the Ways and Means Committee will be holding markups next week on their legislation that are ... that's currently being debated today. We, no one has no one outside of Congress has seen, that I'm aware of, has seen actual language. So, it's still anybody's guess in terms of what the actual provisions will be. And there is some thought that that perhaps several days in advance of markup a legislation could be, could be shared externally in order to, if you will, you know, get, get ... flush out people's positions, right? to, you know, for folks that think that the the language is untenable to make sure they come out of the woodwork and express those feelings. But there's also another school of thought that the text will be available publicly just, you know, kind of hours before markup actually occurs in order to minimize you know, efforts to change the language. So, what ... we're not quite sure what we're gonna see. Could be scenario A, could be scenario B, could be a combination thereof, or something we haven't thought of yet. Once the House passes the budget reconciliation, it moves over to the Senate. My understanding is that Majority Leader Thune has set a deadline of June, you know, end of June, for the Senate to complete their deliberations most likely within the first three weeks of June because it the legislation has to come back over to the House in order to have a a unified version be passed, right? Assuming that the Senate is gonna change the provisions of the House, the House has to adopt the Senate language at the end of the day in order to get it over to the President's desk by July 4th. So that's the current timeline that we are facing. A lot of changes in a very short amount of time with a lot of significant repercussions on, the other side of July

Veronica Renzi

Well, folks, thank you so much for joining us this afternoon. This is intended as a high-level summary of the, of the issues discussed.

Kristina Moore

Thank you for listening to womble perspectives. If you want to learn more about the topics discussed in this episode, please visit the show notes where you can find links to related resources mentioned today. The show notes also have more information about our attorneys who provided today's insights.

Thank you for listening to Womble Perspectives. If you want to learn more about the topics discussed in this episode, please visit The Show Notes, where you can find links to related resources mentioned today. The Show Notes also have more information about our attorneys who provided today's insights, including ways to reach out to them.

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