TL/DR –
A coalition of 23 US states has accused the Environmental Protection Agency (EPA) of illegally ending the $7bn Solar for All programme, affecting 900,000 low-income families. The states allege that 90% of the funds for the programme were illegally withdrawn, violating the Administrative Procedures Act and the Separation of Powers Doctrine. The EPA, which had already obligated $3bn to the states, argues that it acted within its rights and that any legal challenge should be heard in the Court of Federal Claims rather than a federal district court.
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A Coalition of States Challenge the EPA Over Termination of Solar Program
A group of states has implored a Washington federal judge to rule that the Environmental Protection Agency (EPA) unlawfully terminated a $7 billion initiative intended to bring solar power to over 900,000 low-income households throughout the U.S.
According to Andrew Hughes from the Washington State Attorney General’s Office, Congress had deliberately opted to leave the $7 billion appropriation for the Solar for All scheme, implying an intent for the project’s continuation.
The Original Program
In 2022, Congress initiated the Solar for All program under the Inflation Reduction Act, instructing the EPA to offer competitive grants to states and other entities for solar project deployment in disadvantaged and low-income areas. All program funds were awarded to the plaintiff states and other recipients by 2024, with these parties then commencing their project development.
However, in 2025, the EPA suddenly halted the program and retracted most of the previously awarded funds, including $3 billion allocated to the plaintiff states.
The Case Against the EPA
In October, these 23 states sued the EPA, alleging that its administrator, Lee Zeldin, had unlawfully withdrawn 90% of the already distributed funds following a misinterpretation of President Trump’s One Big Beautiful Bill Act. The cancellation of the solar energy program, they argue, violated the Administrative Procedures Act and the Separation of Powers Doctrine.
The states contend that the One Big Beautiful Bill Act did not rescind already committed funds, only those not yet committed to the solar program.
The Court Proceedings
Grant recipients also sued for damages in the U.S. Court of Federal Claims for the unlawful breach of the contracts governing the grant agreements.
District Judge Tiffany Cartwright questioned how the court should operate given a parallel challenge being heard in the Court of Federal Claims. Hughes responded that the case raises core Separation of Powers issues that will not be addressed by the Court of Federal Claims’ decision.
The EPA argued that it had the authority to terminate the program and that any appeal against the termination should be heard in the Court of Federal Claims, not federal district court.
The EPA’s Defense
Arguing before the court, the Justice Department’s I-Heng Hsu stated that the case boils down to a loss of grant funding, which the plaintiffs had no right to other than through their grants.
In response, Cartwright questioned why Congress did not simply nullify all the grants that had already been committed if that was the intent.
Hsu argued that the EPA needed to consider the intent of Congress when it passed the One Big Beautiful Bill Act and stated that the Court of Federal Claims could provide total relief for the plaintiffs’ claims.
The EPA also refuted the use of the term “claw back,” since the agency is not demanding a return of funds already received, but rather halting immediate access to the funds.
Judge Cartwright did not indicate when she would deliver her decision.
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