A federal court has ruled against the U.S. Department of Energy’s (DOE) policy that capped funding for state energy programs, a decision that preserves millions in support for New York and other states. The ruling came from Judge Mustafa Kasubhai of the U.S. District Court for the District of Oregon, who found that DOE’s cap on reimbursements for staffing and administrative costs was illegal under the Administrative Procedure Act.
“Once again, my office has successfully stopped the federal government from illegally cutting off funding that New Yorkers rely on,” said Attorney General Letitia James. “These programs help families save money on their energy bills, prepare their homes for extreme weather, and build a more resilient future. DOE’s cap on funding is unlawful and dangerous, and today’s ruling ensures that New York will continue to get the resources it needs to deliver cleaner, safer, and more affordable energy for our communities.”
Attorney General James led a coalition of 18 other attorneys general and two governors in challenging DOE’s attempt to limit reimbursement of indirect and fringe costs to 10 percent of a project’s budget. The coalition argued this would violate federal law by ignoring previously negotiated cost rates with states and would disrupt operations at state energy agencies.
Judge Kasubhai agreed with these arguments, stating that the funding cap violated reimbursement regulations tied to DOE grants.
For New York specifically, about $1.6 million in state energy program funding was at risk due to the policy. Without full federal support, essential services such as ensuring energy systems can withstand extreme weather or disasters could have been affected. Programs responsible for setting electricity prices, conducting market rule assessments, and running annual emergency drills were also threatened by potential staffing cuts or delays.
The lawsuit was co-led by attorneys general from Colorado, Minnesota, and Oregon along with Attorney General James. Additional participants included attorneys general from California, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Nevada, New Mexico, North Carolina, Washington State, Wisconsin as well as the District of Columbia and governors from Kentucky and Pennsylvania.
