Federal Court Rules Department of Energy Funding Cap Illegal, Preserving Millions for Clean Energy and Climate Resilience Efforts
NEW YORK — New York Attorney General Letitia James celebrated a major legal triumph today as a federal court invalidated a U.S. Department of Energy (DOE) policy that posed a risk of cutting funding for vital state energy initiatives.
In a decision delivered from the bench, Judge Mustafa Kasubhai of the U.S. District Court for the District of Oregon ruled that the DOE’s limit on state reimbursement costs was unlawful, supporting Attorney General James and a coalition of multiple states. The court concluded that the policy breached the Administrative Procedure Act (APA) and jeopardized the staffing and functioning of energy programs crucial to New York and other states.
“Once again, my office has successfully stopped the federal government from illegally cutting off funding that New Yorkers rely on,” said Attorney General James. “These programs help families save on energy bills, prepare homes for extreme weather, and build a cleaner, more resilient future.”
The recently overturned DOE policy was set to impose a 10% limit on the reimbursement of indirect administrative and fringe costs—like employee benefits—related to state-managed energy programs. Court documents reveal that this cap ignored previously established cost agreements between the states and the federal government, putting millions in funding at risk.
In New York alone, this policy could have threatened around $1.6 million in yearly funding, potentially forcing the state to cut or postpone vital programs and eliminate 26 jobs. These initiatives include efforts to enhance energy efficiency, strengthen infrastructure against climate-related disasters, and ensure affordable power access for households in New York.
The lawsuit, initiated last month, was spearheaded by Attorney General James along with her counterparts from Colorado, Minnesota, and Oregon. In total, 19 attorneys general and the governors of Kentucky and Pennsylvania joined this legal action.
The coalition contended that the DOE’s funding cap breached federal grant regulations and would severely hinder the capacity of state energy offices to fulfill their responsibilities. The court concurred, determining that the DOE’s policy alteration lacked adequate justification and did not adhere to established federal protocols.
New York’s energy initiatives are vital for managing the state’s grid resilience, conducting emergency preparedness exercises, and overseeing policies that directly influence electricity pricing and energy market operations.
Without this ruling, Attorney General James cautioned, the federal cap could have led to stalled projects and hindered progress on the state’s climate and clean energy objectives.
