On September 18, 2026, the U.S. District Court for the District of Rhode Island ruled that the Environmental Protection Agency’s (EPA) termination of the $7 billion Solar for All program was unlawful under the Administrative Procedure Act (APA) and vacated the EPA’s action. Four days later, on September 22, 2026, the U.S. District Court for the District of Columbia reached the same conclusion in a separate challenge against the EPA brought by Harris County, Texas. Together, the decisions make clear that EPA could not rely on the One Big Beautiful Bill Act (OBBBA) to terminate grants that had already been obligated under the Solar for All program. This blog post explores the reasoning underlying the courts’ decisions and what, if anything, they might tell us about the likely outcome of other cases challenging the Trump administration’s termination of federal climate grants.
Background: From the Inflation Reduction Act to Solar for All’s Termination
Section 60103 of the 2022 Inflation Reduction Act (IRA) established the Greenhouse Gas Reduction Fund (GGRF), appropriating $27 billion to EPA for grants intended to reduce greenhouse gas emissions and air pollution. Of that, Congress appropriated $7 billion for the Solar for All program, through which EPA was to provide competitive grants to states, municipalities, Tribes, and eligible nonprofit organizations to support low-income and disadvantaged communities to deploy or benefit from zero-emission technologies.
By September 2024, EPA had selected 60 Solar for All grantees, finalized the grant awards, and obligated the entire $7 billion appropriation. Before President Trump took office on January 20, 2025, grant agreements had already been executed and grantees were already moving forward with work. Harris County, for example, executed its initial grant agreement with EPA in July 2024 and began drawing down funds in December 2024 under an approved workplan spanning a five-year grant period.
Then, in July 2025, Congress enacted the OBBBA. Section 60002 of the OBBBA did two things. It (1) repealed the provision added by section 60103 of the IRA that established and funded the GGRF and (2) rescinded “the unobligated balances” of funds made available under that provision. As Judge Chutkan of the U.S. District Court for the District of Columbia later explained, the repeal and rescission provisions “do different work”: the former ended EPA’s authority to make new grants, while the latter determined which appropriated funds Congress took back.
Shortly thereafter, in August 2025, the EPA concluded that the OBBBA eliminated the agency’s authority to continue administering the Solar for All program and terminated the program along with all the grants made under it. EPA’s position was, in effect, that the OBBBA made continued operation of the Solar for All program legally impermissible.
The termination prompted several legal challenges from Solar for All grantees, including Harris County, and other downstream beneficiaries that had relied on or expected to benefit from their programs, such as Rhode Island AFL-CIO, a state labor organization that “invested significant time and resources to prepare for the Solar for All implementation” through workforce development planning and apprenticeship programs.
Broadly, the challengers argued that EPA had misinterpreted the OBBBA. They alleged that although Congress repealed EPA’s authority to make new GGRF grants and rescinded unobligated funds, it did not authorize EPA to terminate grants for which funds had already been obligated.
Rhode Island AFL-CIO brought claims under the APA and alleged that EPA had acted ultra vires and violated the separation of powers and Presentment Clause. Harris County also brought APA claims and alleged Constitutional violations of the Appropriations Clause and separation of powers, in addition to actions in excess of statutory authority.
Those challenges ultimately produced the two September 2026 decisions discussed in this post.
Litigation: Two Courts Reject EPA’s Interpretation
The first decision came on September 18, 2026, in Rhode Island AFL-CIO v. EPA. The plaintiffs included the Rhode Island AFL-CIO, Solar United Neighbors, solar companies, and other organizations and individuals that expected to benefit from Solar for All funding. They moved for summary judgment, asking the court to declare EPA’s termination of Solar for All unlawful and set it aside. As the plaintiffs were not themselves the direct recipients of the federal grants, EPA argued in its cross-motion for summary judgement that they lacked standing and that their claims belonged in the Court of Federal Claims rather than district court. Judge Mary McElroy rejected those arguments.
EPA’s jurisdictional argument reflects a broader dispute that has emerged in litigation over federal grant cancellations. As previously discussed in this blog, the federal government has frequently argued that challenges to grant terminations are contractual disputes that must be heard in the Court of Federal Claims rather than federal district court. Courts have accepted that argument in some federal funding cases, such as in Arizona v. EPA, but not here. Judge McElroy reasoned that the Rhode Island plaintiffs’ challenge was different. They were not parties to the Solar for All grant agreements and instead asserted statutory and constitutional claims challenging EPA’s program-wide termination decision. As such, their claims were not contractual.
Turning to the merits, Judge McElroy concluded that the OBBBA did not authorize EPA to terminate Solar for All grants for which funds had already been obligated. Although Congress repealed EPA’s authority under section 60103 to make new GGRF grants, the OBBBA separately rescinded only “unobligated balances” made available under that provision. Judge McElroy therefore concluded that Congress intended already-obligated Solar for All grants to remain in place. Judge McElroy also pointed to the legislative record, including statements by several members of the House Energy and Commerce Committee explaining that the OBBBA provision applied only to unobligated balances and would not affect grants for which funds had already been obligated.
EPA’s termination decision therefore rested on an incorrect interpretation of the OBBBA. Judge McElroy concluded that EPA had acted “contrary to law” and “in excess of its statutory authority,” in violation of the APA. The court granted the plaintiffs’ motion for summary judgment and vacated EPA’s termination decision.
Four days later, on September 22, 2026, Judge Tanya Chutkan of the District of Columbia District Court reached the same basic conclusion in Harris County, Texas v. EPA. In that case, EPA again argued, among other things, that Harris County’s claims were essentially contractual and therefore belonged in the Court of Federal Claims. Judge Chutkan disagreed, concluding that Harris County’s “rights arise from statute rather than from the terms of its grant agreement.” In determining whether a case is, “at its essence,” a contract claim, courts apply the two-prong Megapulse test, looking to both to the (1) source of the rights asserted and (2) the type of relief sought. To deprive a district court of jurisdiction, both prongs must be satisfied, meaning that a plaintiff’s “asserted right” must be “based in contract” and the plaintiff must seek “‘in essence’ more than $10,000 in monetary relief from the federal government.” Here, Judge Chutkan explained, Harris County’s rights arose from the APA, Clean Air Act (CAA), and OBBBA and existed independently of the grant agreement. Harris County also sought vacatur of EPA’s program-wide decision to terminate Solar for All and an order preventing EPA from implementing that allegedly unlawful policy, rather than damages or an order requiring EPA to reinstate its individual grant. That distinction may be significant for other challenges to federal funding cancellations as discussed below.
On the merits, Judge Chutkan concluded, like Judge McElroy, that the OBBBA did not authorize EPA to terminate already-obligated grants. The repeal of the GGRF ended EPA’s authority to make new grants, while the separate rescission clause addressed only “unobligated balances.” Reading the statute to reach already-obligated funds, Judge Chutkan reasoned, would render that distinction meaningless. She accordingly held that EPA’s decision was “arbitrary and capricious, contrary to law, and in excess of statutory authority under the APA.”
Notably, however, Judge Chutkan rejected Harris County’s ultra vires and constitutional claims. Like its APA claims, those claims alleged that EPA had terminated Solar for All in contravention of the CAA and OBBBA. However, the court explained that ultra vires review is available only when “there is no alternative procedure for review of the statutory claim.” Since the APA provided a mechanism for reviewing EPA’s statutory interpretation, ultra vires review was unavailable here. The court likewise declined to recognize a freestanding cause of action for Harris County’s constitutional claims, which were premised on the same underlying statutory violations.
The Significance of the Two Decisions
As noted above, these two cases illustrate an important distinction between challenging the termination of an individual grant and challenging the agency policy that produced those terminations. In both cases, plaintiffs challenged EPA’s underlying program-wide determination that the OBBBA required or authorized termination of Solar for All, rather than seeking enforcement of individual grant agreements. This resulted in both courts issuing vacaturs of the program-wide agency action, meaning that the EPA can no longer rely on its interpretation of the OBBBA as the legal basis for terminating Solar for All grants across the program.
The decisions do not, however, require EPA to immediately reinstate individual grants or resume disbursing funds. Judge McElroy concluded that vacatur was sufficient to prohibit EPA from continuing to implement its unlawful termination decision. Judge Chutkan similarly explained that vacatur deprived EPA’s termination decision of legal effect, while leaving EPA to determine how to proceed with individual grants consistent with the court’s ruling. Both courts denied the plaintiffs’ requests for separate injunctions to prevent EPA implementing its termination decision. Judge Chutkan noted that further relief could be considered if EPA continued closing out Solar for All grants on the ground that the OBBBA required or authorized their termination.
The decisions may also have implications for litigation over other GGRF programs. As previously reported, in August 2026, the D.C. Circuit’s en banc decision in Climate United Fund v. Citibank kept in place a preliminary injunction protecting $20 billion in other GGRF grants under National Clean Investment Fund (NCIF) and Clean Communities Investment Accelerator (CCIA). The judges divided, however, over the effect of the OBBBA’s repeal of the GGRF on grants that had already been obligated and disbursed.
On rehearing, five judges concluded that the OBBBA “likely does not affect the applicability of IRA [section] 60103 to grant funds that were obligated and disbursed to the Plaintiffs at the time of the OBBBA’s enactment.” Four judges took the opposite view, concluding that, following the repeal of section 60103, EPA “likely could now take actions to terminate Plaintiffs’ grants without violating” the IRA. Judge Millett agreed that EPA’s original termination likely violated section 60103, but concluded that, because the OBBBA rescinded the program’s dedicated administrative funds, EPA likely could not be required to expend other discretionary funds to continue administering the grants going forward. It is worth noting that the issues of continued implementation were not addressed in the two Solar for All decisions.
What Comes Next?
EPA has indicated that it is reviewing the decisions in the Solar for All and considering whether to appeal. Separate litigation concerning the termination of individual Solar for All grant agreements also remains pending in the Court of Federal Claims. However, those cases raise distinct contractual questions, including whether EPA breached individual grant agreements and whether grantees are entitled to damages resulting from their termination.
For communities that stood to benefit from Solar for All, the stakes extend beyond the legal question of statutory authority. The program was designed to lower energy costs, expand access to residential and community solar, create clean-energy jobs, and strengthen energy resilience in communities that have historically faced higher energy burdens and greater exposure to environmental harms. In Harris County, for example, local officials said the loss of the grant delayed efforts to develop solar initiatives intended to lower energy costs for low-income households and establish solar-powered community hubs that could provide resilience during power outages and state grid failures.
The court decisions therefore offer more than a resolution of a dispute over statutory interpretation. They provide a concrete example of how communities, local governments, and other affected stakeholders can leverage the courts to fight for the resources they were promised. At the same time, the litigation underscores the gap between securing a legal victory and ensuring distribution of tangible benefits on the ground that communities need. As Harris County Judge Lina Hidalgo put it after the decision, “The fight continues but this is a big step to getting our funding back.”
Charlotte is the Climate Justice Legal Fellow at the Sabin Center for Climate Change Law.
