Trump admin can't duck blue states' suit over canceled clean energy grants

A federal judge called the federal government's request to transfer the case to the Court of Federal Claims "deeply troubling."

by Carly Nairn, Court House News, July 6, 2026

SAN FRANCISCO (CN) — Thirteen Democrat-led states can continue pursuing their lawsuit accusing the Trump administration of terminating multi-billion dollar clean energy programs without congressional approval in federal court.

U.S. District Judge Rita Lin denied a motion to dismiss by the Department of Energy and the U.S. Office of Management, saying the states showed the terminations constituted final agency action and the states had a right to seek relief.

The states, led by California, Colorado and Washington state, sued in February, claiming violations of the First and Fifth Amendments, violations of the Administrative Procedure Act, and constitutional separation of powers principles. The states claim the government’s actions exceeded the extent of its authority.

“The complaint plausibly alleges that, by requiring DOE to establish the programs at issue, Congress imposed a clear and mandatory duty prohibiting DOE from refusing to establish those programs, which DOE allegedly flouted," Lin wrote.

The defendants had also hoped to move claims challenging past funding cuts to the Court of Federal Claims, while keeping claims over future terminations in federal court, but Lin denied the transfer in the Thursday ruling.

“To adopt defendants’ contrary position would amount to a radical and deeply troubling contraction in the traditional role of federal district courts,” Lin wrote.

The Court of Federal Claims specifically hears monetary claims against the government. The defendants had argued the states were actually bringing contract claims meant for that court.

“No contractual terms provide the basis for such a claim, which could just as easily have been brought by an affected community member or some other downstream beneficiary of the terminated programs who had no contractual relationship with the government,” Lin wrote. “Tellingly, at oral argument defendants were unable to point to any contractual language that would strengthen or weaken the merits of plaintiffs’ claim.”

The Joe Biden appointee pushed back on the government’s hypothetical at oral arguments that if the grants of someone who had criticized the president were canceled, they would only be able to seek monetary damages in the Court of Federal Claims for the First Amendment violation.

“According to defendants, the grantee would not be entitled to a preliminary injunction immediately restoring the status quo, no matter how significant their ongoing First Amendment injury might be. This is not the law," she added.

The clean energy funding, which would include building new renewable energy facilities, was appropriated through Congress by the Infrastructure Investment and Jobs Act and Department of Energy funding through the Inflation Reduction Act under the Biden administration.

Trump issued two executive orders related to clean energy programs on Jan. 20, 2025: one that halted funding for renewable energy projects, and one that didn’t include wind, solar, and hydrogen energy sources in a declaration for immediate action to address national energy infrastructure needs.

Department of Energy Secretary Christopher Wright announced in May the termination of 24 carbon capture projects, which he reportedly said amounted to “$3.6 billion in savings for the American people” — funds the plaintiffs said were now being held back in violation of congressional directive. The states also claim the budget office have withheld funds intended for the Office of Clean Energy Demonstrations, which administers $21 billion for such projects.

When the federal government was about to be shut down in September 2025, Russell Vought, the director of the Office of Management of Budget, posted online that the Energy Department would be terminating “nearly $8 billion in Green New Scam funding to fuel the Left’s climate agenda,” the states claim in their initial suit.

Vought subsequently wrote a memo, along the lines of Trump’s executive orders, eliminating funding for clean energy programs.

Vought’s post listed 16 “blue states” where projects would be defunded: California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maryland, Massachusetts, Minnesota, New Hampshire, New Jersey, New Mexico, New York, Oregon, Vermont and Washington state. Rhode Island and Wisconsin joined 11 of those states in the suit.

Attorneys representing both parties did not immediately respond to requests for comment.