By Maryland Office of the Attorney General
Attorney General Anthony G. Brown today joined 17 other states in suing to block the U.S. Department of Energy (DOE) from imposing a new funding cap that cuts support for vital state-run clean energy and energy efficiency programs. The new DOE policy would limit funding for critical administrative and staffing costs, which have historically been covered by these federal energy grants.
In the lawsuit, the coalition argues that this funding cap puts the states’ ability to meet other grant goals at risk and forces the states to divert limited resources from other programs to cover these costs. The states ask the court to remove this unlawful funding cap and restore support for these essential energy programs.
“Maryland has set ambitious climate goals that promise a cleaner, healthier and safer future for our children – but this short-sighted federal policy would unlawfully limit our State’s ability to support projects that are crucial to meeting those goals,” said Attorney General Brown. “We’re filing this lawsuit to help our State meet its commitment to advancing clean energy, reducing harmful emissions and supporting Marylanders’ efforts to make energy improvements to their homes.”
For decades, federal law has required agencies like the DOE to negotiate agreements with states that set fair reimbursement rates for federally funded, state-run programs. This includes the basic administrative and staffing costs needed to run these programs. These costs have never been subject to a cap. On May 8, 2025, DOE announced a new policy that ignores these contractually binding rates, capping reimbursement for these costs at 10 percent of a project’s total budget, leaving states to make up the difference.
If allowed to continue, the cap would limit resources states rely on to keep programs operating and prevent federal dollars from reaching the people they are meant to help. It could force states to make cuts to essential operations and programs, reducing their ability to deliver crucial energy services and potentially delaying or cancelling key projects. State agencies would be forced to divert time and money from other ongoing projects, leaving fewer resources for helping consumers.
The states argue that the new DOE policy violates federal regulations that require agencies to honor indirect cost rates previously negotiated between the states and the federal government. The coalition emphasizes that every court that has ruled on the merits of a cap has found it unlawful, unjustified and disruptive to essential public programs.
The coalition asks the court to reject DOE’s new policy and stop the implementation of any unlawful funding caps.
Joining Attorney General Brown in filing this lawsuit are the attorneys general of New York, Minnesota, Colorado, California, Connecticut, Delaware, Hawai‛i, Illinois, Maine, Michigan, New Mexico, North Carolina, Oregon, Washington and Wisconsin, as well as the Governors of Kentucky and Pennsylvania.
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