The U.S. Department of Energy broke the law last month when officials attempted to cap the amount of federal funding states could receive to cover the staff and administrative costs of sustainable energy and energy efficiency projects, a federal judge found.
Federal Judge Mustafa Kasubhai of the U.S. District Court in Oregon sided this week with Oregon Attorney General Dan Rayfield and 18 other Democratic attorneys general who sued the U.S. Department of Energy and its leader, Chris Wright, in August over attempts to cut funding for such projects. Kasubhai found the Trump administration violated the Administrative Procedure Act, violating reimbursement regulations established by the federal energy department.
Kasubhai gave his ruling from the bench and no written order has yet been filed with the court.
States argued that a new federal energy department rule mandating that “indirect” and “fringe” costs for State Energy Program projects — such as staff salaries, health insurance and pensions — cannot exceed 10% of overall project costs was arbitrary, against the law and would lead to needless job losses and project terminations. Officials from the U.S. Department of Energy and Department of Justice did not immediately respond to a request for comment Thursday evening.
The federal grants help state energy agencies pay for the design, development and execution of renewable energy projects and energy efficiency programs. The grants fund electric vehicles for state and local governments and public transit, state-sponsored home weatherization programs, energy affordability programs for low-income residents, emergency preparedness and state energy planning.
Last year, Oregon received about $786,000 in federal grants through the program, according to Rayfield’s office. Most of the money paid for on-the-ground project costs, but nearly half — about $333,000 — went to indirect and fringe costs, such as project staff salaries, as well as health and retirement benefits.
“The court’s decision means Oregon can keep these energy programs running the way they were meant to,” Rayfield spokesperson Jenny Hansson said in an email. “This is about making sure we have the resources to do the job and prevent the Trump administration from increasing energy prices on Oregonians.”
Other federal agencies have recently attempted to impose similar overhead caps on federally funded projects at colleges that receive grants from the National Institutes of Health, National Science Foundation and Department of Defense. All have been blocked in court.
Rayfield was joined in the latest suit by the attorneys general of California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Michigan, Minnesota, Nevada, New Mexico, New York, North Carolina, Washington, Wisconsin and the District of Columbia, as well as Kentucky Gov. Andy Beshear and Pennsylvania Gov. Josh Shapiro.
This week’s ruling coincides with the Trump administration yanking $7.5 billion in funding this week for energy projects in Democratic states, including the Pacific Northwest Hydrogen Hub in Oregon and Washington. Democratic leaders vowed to challenge that action.