Solar Grant Recipients Battle to Recoup Funds on Multiple Fronts

Solar energy funding recipients challenging the termination of a $7 billion program are testing a key Trump administration defense in grant cancellation lawsuits by suing simultaneously in multiple forums in an apparent effort to see what sticks.

More than a dozen states are suing the Environmental Protection Agency for breach of contract under the Tucker Act in the US Court of Federal Claims, amid an administration push to have such case heard there. But they’re also bringing constitutional and Administrative Procedure Act claims in federal district court.

The AFL-CIO and Harris County, Texas, also filed APA and constitutional claims in separate district courts, as well as petitions to review cancellation of the Solar for All grants in the US Court of Appeals for the DC Circuit.

“They are approaching this by whatever means they see as viable to try and secure funding that they are legally entitled to,” said Justin Balik, vice president for states for Evergreen Action, a climate change advocacy group.

The federal district and appeals courts that have considered the issue remain divided on whether the matter is one of breach of contract or a violation of administrative and constitutional law.

How the Solar for All cases play out will have a broader impact on states seeking restoration of funds for infrastructure projects across different agencies, Balik said.

“If the federal government, which is one of the largest contracting entities that there is in the country, isn’t going to keep good on its contracts, that’s not something that sits well with states who depend on the federal government for a number of supports,” he said.

Ended ‘for Good’

The Solar for All program, part of the Inflation Reduction Act, aimed to fund solar panel installations in over 900,000 homes across the country with a focus on lower-income communities.

But following Congress’ August passage of the One Big Beautiful Bill Act, the EPA sent uniform cancellation letters to grant recipients, indicating the new measure “repeals the underlying authority for the Solar for All Program” under the Clean Air Act.

The repeal of grant appropriations, combined with the rescission of the administrative appropriation, meant the EPA can’t continue oversight for “waste, fraud, or abuse of these grants,” agency said.

That same day EPA Administrator Lee Zeldin also announced on X that the agency was “ending Solar for All for good,” stating the program was a grift with “all of the middlemen taking their own cut.”

Zeldin’s comments echo the agency’s justification for the mass cancellation of $20 billion in grants awarded under the Greenhouse Gas Reduction Fund. The agency hasn’t yet submitted its own evidence of fraud in the cases challenging those cancellations.

Tucker Act Factor

The grant recipients disagree that the OBBBA fully ended Solar for All, but they’ll have to get over the jurisdictional hurdle before getting into the merits.

The government so far has a mixed record on claims that cases like these belong in the Court of Federal Claims under the Tucker Act, an 1887 law directing all contract disputes against the federal government to this venue.

In September the US Court of Appeals for the DC Circuit allowed the EPA to withhold the billions in the greenhouse gas fund, ruling the IRA didn’t limit the agency’s ability to reroute the funding.

The Fourth Circuit has placed on hold lower courts’ orders to restore funds, and in October a panel of that court scrutinized environmental groups’ constitutional claims in a similar green grants case.

However, the First Circuit rejected the government’s interpretation of the Tucker Act in a case over teacher development grants, and the Trump administration lost in a high-profile dispute with Harvard after a Massachusetts federal judge said the university’s First Amendment rights supersede the interpretation of contract terms.

Nicholas Bagley, a law professor at the University of Michigan and former Justice Department attorney, said despite recent shadow docket orders from the US Supreme Court, it remains unclear how the Tucker Act should factor into grant termination litigation.

“Is it a provision that’s really about anytime you’re seeking money damages from the government? That’s the most most expansive reading. A narrow reading is it’s really about contracts and other government obligations that are mandatory, in which case such grant would normally not fit the bill.”

The simultaneous filing strategy in the Solar for All cases may cover all the bases for how courts could interpret the Tucker Act. If they’re successful will depend on whether issue preclusion binds other jurisdictions once one court issues a ruling, Bagley said.

The doctrine, which prevents parties from relitigating a common issue even if the previous case was brought under a different statute or claim, “could end up mattering a lot” in these split-up grant cases, he said.

Carve-Out

The Solar for All grant recipients also are hoping that the language of the OBBBA helps their cases.

The OBBBA specifically carved out already-awarded funds from rescission, with Section 6002 limiting future appropriations for the Solar for All program and rescinding only “unobligated funds.” That means only $19 million in administrative costs out of the total $7 billion appropriated were actually scrapped, they said.

Even then, the EPA still could carry out the program, as Congress previously offered other sources of administrative funding, they said.

Alice Kaswan, a professor at the University of San Francisco Law School, said the EPA can’t necessarily hold on to money that Congress appropriated and didn’t rescind.

“They still have promised this money to these organizations under what was their—at that time—congressional authority, and just because they can no longer do their part of the bargain, doesn’t mean that the other side isn’t entitled to their share of the bargain,” Kaswan said.