A federal court has ruled that thirteen states can proceed with their lawsuit challenging the termination of multi-billion dollar clean energy programs, rejecting the government’s attempt to transfer the case to a specialized court.
U.S. District Judge Rita Lin denied motions from the Department of Energy and the U.S. Office of Management and Budget to dismiss the case, determining that the states had demonstrated the terminations represented final agency action and established their right to seek judicial relief.
The lawsuit, filed in February by states including California, Colorado, and Washington, alleges violations of the First and Fifth Amendments, the Administrative Procedure Act, and constitutional separation of powers principles. The states contend that the federal government exceeded its authority by terminating congressionally approved clean energy programs without legislative approval.
Judge Lin found merit in the states’ arguments, writing that the complaint plausibly alleged Congress had imposed a clear and mandatory duty requiring the Department of Energy to establish the programs in question. The judge determined that the agency had allegedly violated this duty by refusing to implement the programs.
The government had attempted to split the litigation, seeking to transfer claims related to past funding cuts to the Court of Federal Claims while keeping future termination claims in federal court. The Court of Federal Claims specializes in monetary claims against the federal government. However, Judge Lin rejected this approach in Thursday’s ruling, describing the government’s position as potentially resulting in a “radical and deeply troubling contraction” of federal district courts’ traditional jurisdiction.
The judge noted that no contractual terms supported treating the case as a contract dispute appropriate for the Court of Federal Claims. During oral arguments, government attorneys were unable to identify any contractual language that would affect the merits of the states’ claims.
Judge Lin also addressed a hypothetical scenario presented by the government during oral arguments, which suggested that if grant recipients who had criticized the president had their funding canceled, they could only seek monetary damages in the Court of Federal Claims for First Amendment violations. The judge firmly rejected this interpretation, stating that such recipients would be entitled to seek preliminary injunctions to restore the status quo regardless of the significance of their First Amendment injury.
The disputed clean energy funding originated from congressional appropriations through the Infrastructure Investment and Jobs Act and Department of Energy allocations via the Inflation Reduction Act. The programs were intended to support the construction of new renewable energy facilities and related infrastructure.
On January 20, 2025, two executive orders were issued concerning clean energy programs: one halting funding for renewable energy projects and another excluding wind, solar, and hydrogen energy sources from a declaration for immediate action on national energy infrastructure needs.
In May, Energy Secretary Christopher Wright announced the termination of 24 carbon capture projects, reportedly characterizing the action as creating $3.6 billion in savings for American taxpayers. The plaintiff states argue these funds are being improperly withheld in violation of congressional directives.
The states also allege that the budget office has withheld funds designated for the Office of Clean Energy Demonstrations, which oversees $21 billion allocated for clean energy projects. During federal budget negotiations in September 2025, Office of Management and Budget Director Russell Vought publicly announced plans to terminate nearly $8 billion in clean energy funding, specifically targeting projects in sixteen states.
The affected states listed included California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maryland, Massachusetts, Minnesota, New Hampshire, New Jersey, New Mexico, New York, Oregon, Vermont, and Washington. Rhode Island and Wisconsin subsequently joined eleven of these states in filing the lawsuit.
Leave a Reply