Courts Block DOE Cancellation of Clean Energy in Blue States
NEWS & RESEARCH
In October 2025, the Department of Energy (DOE) announced the termination of over 300 clean energy projects following a promise on social media by Office of Management and Budget (OMB) Director Russell Vought that the administration would cancel "Green New Scam funding." All grant recipients, who collectively lost nearly $8 billion in federal funding, were located in states that had voted for Kamala Harris in the 2024 presidential election. Recipients argued that the terminations were punitive, with the American Institute of Chemical Engineers saying that "One need not be a statistician to understand this partisan skew did not happen by chance." Energy Secretary Chris Wright denied the allegations, but U.S. District Judge Amit Mehta disagreed: In January 2026, he ruled that the terminations violated the Fifth Amendment's equal protection guarantee and ordered DOE to reinstate $28 million in funding for the seven grantees involved in the suit. That ruling paved the way for a second case, settled in June 2026, in which DOE agreed not to contest that "a primary reason" for the terminations was whether awardees were located in a blue state—resulting in the reinstatement of eleven additional grants worth $82.1 million across five states. The Washington Post reports that the DOE likely agreed to the settlement “to avoid a trial and a potentially lengthy and embarrassing discovery process, in which private communications around how the projects were targeted would be made public.”
SOURCES: Washington Post |E&E News by Politico | E&E News by Politico | Utility Drive
ANALYSIS & OPINION
In his rulings, the Judge Mehta found that similar awards in Republican-leaning states were not cancelled, illustrating that the DOE's termination of grants was driven by "partisan discrimination and retribution" rather than policy. The cases raise broader concerns that federal funding decisions under the current administration are a tool of political revenge. And while the two already-decided cases established that the DOE violated the Fifth Amendment's equal protection guarantee by targeting grant recipients based on their location in blue states, the agency's actions may be illegal on additional grounds. Still-pending cases argue that the DOE also violated the separation of powers by unilaterally rescinding congressionally appropriated funding—authority that belongs solely to Congress—and that its termination process violated the Administrative Procedure Act (APA), which requires federal agencies to follow established procedures and provide legitimate reasoning when taking action. The states suing under the APA argue that the terminations were "rushed and chaotic" and lacked any grant-specific rationale, making them "arbitrary and capricious" under the law.
SOURCES: Washington Post | Utility Drive | California Department of Justice
HOW TO FIX IT
Federal action:
Pass the Energy Bills Relief Act, which includes a provision that would require the DOE to reinstate any award terminated after January 19, 2025.
Pass legislation to strike or amend 2 C.F.R. §200.340(a)(4), an OMB regulation created in 2024, that allows federal agencies to cancel grants if they determine that the award "no longer effectuates program goals or agency priorities"—with no requirement for individualized justification. Congress could either remove the provision entirely or add guardrails requiring agencies to document the specific bases for any cancellation made on these grounds.
Litigation:
City of Saint Paul v. Wright: The January 2026 case, which led to the reinstatement of seven awards. The government said it would appeal the decision, but never filed to do so.
American Institute of Chemical Engineers et al. v. Wright et al.: The June 2026 case, in which the court ordered that eleven more grants be reinstated after the government agreed to a settlement acknowledging that the initial project terminations were based on their locations in blue states.
California et al. v. Wright: A broader, pending case filed in February 2026 by a coalition of 13 state attorneys general. Unlike the two already-decided cases, which focused narrowly on equal protection, this suit primarily challenges the terminations as a violation of the separation of powers and the APA.
Thakur v. Trump: A class action filed in June 2025 by University of California faculty and researchers, initially challenging grant terminations across multiple agencies on First Amendment, Fifth Amendment, and APA grounds. DOE was added as a defendant in November 2025, with plaintiffs arguing that the termination of blue-state grants—including a $1.2 billion award to California's ARCHES hydrogen program—violated the equal protection guarantee. The case is still pending.
Legislation: H.R. 7977 - Energy Bills Relief Act
