{"id":27577,"date":"2025-10-31T08:24:45","date_gmt":"2025-10-31T13:24:45","guid":{"rendered":"https:\/\/blogs.law.columbia.edu\/climatechange\/?p=27577"},"modified":"2025-11-05T13:34:44","modified_gmt":"2025-11-05T18:34:44","slug":"four-solar-for-all-lawsuits-two-distinct-forums-and-legal-theories","status":"publish","type":"post","link":"https:\/\/blogs.law.columbia.edu\/climatechange\/2025\/10\/31\/four-solar-for-all-lawsuits-two-distinct-forums-and-legal-theories\/","title":{"rendered":"Four Solar For All Lawsuits: Two Distinct Forums and Legal Theories"},"content":{"rendered":"
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In 2022, the United States Congress passed the Inflation Reduction Act<\/a> (IRA), appropriating an unprecedented amount of money for climate spending programs. One of the IRA\u2019s flagship investments was the Greenhouse Gas Reduction Fund<\/a> (GGRF), a $27 billion program comprised of the National Clean Investment Fund (NCIF), the Clean Communities Investment Accelerator (CCIA), and Solar for All (SFA). SFA is a $7 billion program intended to expand access to greenhouse gas-reducing technologies\u2014primarily distributed and community solar\u2014to low-income and disadvantaged communities. If fully implemented, the Environmental Protection Agency (EPA) projected that SFA would reduce energy bills for more than 900,000 households<\/a>, while also improving local air quality and helping to mitigate climate change, among other be\"\"<\/a>nefits.<\/p>\n

Unfortunately, those benefits seem unlikely to be realized, as EPA has moved to terminate the SFA program and recently cancelled all the grants that had been awarded under it. Multiple cases have been brought in different courts by different plaintiffs challenging EPA\u2019s actions to dismantle SFA. This blog post discusses those cases and additional recent developments related to EPA\u2019s termination of the SFA program. It builds on a previous post discussing a challenge to EPA\u2019s termination of the NCIF and CCIA\u2014Climate United Fund v. Citibank<\/em>\u2014and questions that have emerged about the remedies available in the court that will hear that case (see here<\/a>).<\/p>\n

Congressional and Judicial Developments Impacting Solar for All<\/strong><\/p>\n

Before President Biden left office, EPA had already awarded all the SFA funds and entered into final, legally binding grant agreements with 60 awardees. These entities\u2014mostly states and nonprofits\u2014were using \u00a0the funds to create and implement financial and technical assistance offerings<\/a> to advance clean energy access in low-income communities, including by providing grants, loans, assistance with siting, permitting, and interconnection issues, and workforce development programs. SFA\u2019s implementation depended on community buy-in, from homeowners applying for grants to labor organizations developing solar installation apprenticeship programs, and many decisions were made in reliance on the program. The various groups involved have now been thrown into limbo, however.<\/p>\n

With President Trump\u2019s return to the White House, the entire GGRF, including SFA, and many other federal funding programs, have come under attack. On January 20th<\/sup>, 2025, President Trump signed an Executive Order entitled \u201cUnleashing American Energy<\/a>\u201d which, among other things, directed federal agencies to halt most disbursements of IRA (and Infrastructure Investment and Jobs Act (IIJA)) funding, including via the GGRF. Several lawsuits<\/a> quickly challenged this so-called \u201cFederal Funding Freeze.\u201d Those cases resulted in federal district court\u2019s issuing temporary restraining orders<\/a> and preliminary injunctions<\/a> that provided short-term relief for IRA and IIJA grantees; one court even issued a nationwide injunction<\/a> prohibiting several agencies from withholding funds from grantees.<\/p>\n

On February 26, 2025,\u00a0EPA announced\u00a0that it had fully restored<\/a> SFA grant funds. During Summer 2025, however, two notable developments altered the stability and trajectory of the program.<\/p>\n

First, Congress passed the One Big Beautiful Bill Act<\/a> (H.R. 1) in July, which rescinded \u201cthe unobligated <\/em>balances of amounts made available to carry out\u201d the GGRF. Because they had already been obligated, SFA funds were not impacted by the rescission. Legislative history demonstrates that there was a bipartisan understanding that the rescissions would not impact SFA (or other GGRF) funds that were obligated before President Trump took office. Representative Morgan Griffith (R\u2013VA), Chair of the Environmental Subcommittee, mentioned several times in committee<\/a> that the bill would not impact obligated funds. Talking about the effect of the provisions, Representative Griffith said, \u201cI just want to point out that these provisions that we are talking about only apply . . . to the unobligated balances. So if a grant was already given, as far as this bill is concerned, then that would still be going forward.\u201d In a press-release<\/a>, Senator Shelley Moore Capito (R-W.Va.) offered more support for that understanding, stating that the bill \u201creturn[ed] remaining taxpayer dollars\u201d by rescinding \u201call of [SFA\u2019s] unobligated dollars.\u201d H.R. 1 also repealed Section 134 of the Clean Air Act<\/a> (42 U.S.C \u00a7 7424)\u2014the section that created the GGRF\u2014but, since funds had already been obligated under that section, EPA continued to administer the SFA program through July.<\/p>\n

Second, the D.C. Circuit set aside a preliminary injunction that had been preserving funding for NCIF and CCIA plaintiffs in Climate United Fund v. Citibank<\/em><\/a>. Relying on Supreme Court decisions in other federal funding cases, including the Supreme Court\u2019s order in American Public Health Association v. National Institutes of Health<\/em><\/a> (APHA v. NIH<\/em>), the D.C. Circuit held that the proper forum for plaintiffs\u2019 claims was the Court of Federal Claims. The court reasoned that the plaintiffs\u2019 suit was ultimately a breach of contract case, and dismissed the constitutional claim for lacking merit. (As this recent Sabin Center blog<\/a> explains, that decision rested on flawed reasoning and is a prime candidate for rehearing en banc<\/em>.)<\/p>\n

EPA Terminates Solar for All <\/strong><\/p>\n

Following those developments, on August 7, 2025, EPA administrator Lee Zeldin posted on X (formerly Twitter) a video accompanied by the following text<\/a>: \u201cThe One Big Beautiful Bill eliminated the Greenhouse Gas Reduction Fund, which included a $7 billion pot called ‘Solar for All’ . . . Today, the Trump EPA is announcing that we are ending Solar for All for good[.]\u201d According to court filings<\/a>\u00a0, EPA began terminating SFA Grant Agreements shortly after by sending grantees letters stating that EPA had \u201cmade the decision to terminate the [Solar for All] program.\u201d EPA justified the termination of the program by characterizing H.R. 1 as having effectively rescinded the agency\u2019s legal authority to administer the program and its associated appropriations, despite the budget bill rescinding only unobligated funds. Within a week of announcing the termination, EPA began withdrawing funds from the awardees\u2019 account. Some awardees have reported losing 90% of the fundings in their accounts.<\/p>\n

A variety of plaintiffs filed four lawsuits challenging EPA\u2019s termination of the SFA program. One case has been filed in the CFC and three in different federal district courts.\u00a0 Although the plaintiffs\u2019 claims in each case rely on similar facts, the identity of the plaintiffs and the fora they have chosen significantly vary, with some going to the federal district courts and others to the Court of Federal Claims. Proceedings in both types of courts will test whether, and to what extent, SFA grantees and intended beneficiaries of their programs can obtain relief. But these cases are based on two different legal theories\u2014breach of contract in the CFC, and violations of the Administrative Procedure Act (APA) and the Constitution in the district courts.<\/p>\n

State AGs Bring Breach of Contract Claims in the Court of Federal Claims<\/strong><\/p>\n

In Maryland Clean Energy Center, et al. v. United States<\/em><\/a>, Docket No. 25-cv-1738 (filed October 15, 2025), a coalition of 22 state attorneys general and the District of Columbia are arguing that EPA unilaterally terminated competitive SFA grants in breach of contract, and are seeking money damages. The United States is the named defendant in this case because the Court of Federal Claims is the court that has jurisdiction over contract disputes against the federal government seeking monetary damages.\u00a0 Under the Tucker Act, the Court of Federal Claims cannot provide injunctive relief<\/a> in general breach of contract cases.<\/p>\n

A key issue in the Maryland Clean Energy Center <\/em>case is whether EPA validly terminated the plaintiff\u2019s SFA Grant Agreements. Under SFA grant agreements and their governing regulations (2 C.F.R. \u00a7 200.339<\/a> and 2 C.F.R. \u00a7 200.340<\/a>), there are only three valid grounds for termination: (1) when the grantee\u2019s noncompliance with the terms and conditions is substantial such that effective performance of the agreement is materially impaired; or there is adequate evidence of (2) waste, fraud, or abuse, or (3) material misrepresentation of eligibility status. EPA did not rely on any of these grounds. Instead, <\/em>the complaint\u2019s central allegation is that EPA breached each plaintiff\u2019s grant agreement by providing as its only justification for termination its interpretation of H.R. 1\u2019s effect on the agency\u2019s administrative authority and program funding. Plaintiffs are asking the court to compensate them for EPA\u2019s express breach of each of the plaintiff\u2019s contracts\u2014an amount to be determined at trial.<\/p>\n

The plaintiffs also claim that EPA breached its duty of good faith and fair dealing by \u201ctargeting each Plaintiff\u2019s Grant Agreement for unilateral termination based on an erroneous and bad faith interpretation of H.R. 1, directing Plaintiffs to stop work under the Grant Agreements, withdrawing funds already awarded to Plaintiffs (without prior notice or explanation), preventing Plaintiffs from spending money already awarded to them, and imposing new terms and conditions on Plaintiffs.\u201d<\/p>\n

District Court Lawsuits <\/strong><\/p>\n

Unlike the Court of Federal Claims suit, which seeks compensation for breach of contract, the district court plaintiffs challenge EPA\u2019s action under the APA and the Constitution. So far, three lawsuits challenging the termination of the SFA program have been filed in federal district courts:<\/p>\n