Four Solar For All Lawsuits: Two Distinct Forums and Legal Theories – Climate Law Blog

In 2022, the United States Congress passed the Inflation Reduction Act (IRA), appropriating an unprecedented amount of money for climate spending programs. One of the IRA’s flagship investments was the Greenhouse Gas Reduction Fund (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—primarily distributed and community solar—to 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, while also improving local air quality and helping to mitigate climate change, among other benefits.

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’s actions to dismantle SFA. This blog post discusses those cases and additional recent developments related to EPA’s termination of the SFA program. It builds on a previous post discussing a challenge to EPA’s termination of the NCIF and CCIA—Climate United Fund v. Citibank—and questions that have emerged about the remedies available in the court that will hear that case (see here).

Congressional and Judicial Developments Impacting Solar for All

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—mostly states and nonprofits—were using  the funds to create and implement financial and technical assistance offerings 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’s 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.

With President Trump’s return to the White House, the entire GGRF, including SFA, and many other federal funding programs, have come under attack. On January 20^th, 2025, President Trump signed an Executive Order entitled “Unleashing American Energy” 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 quickly challenged this so-called “Federal Funding Freeze.” Those cases resulted in federal district court’s issuing temporary restraining orders and preliminary injunctions that provided short-term relief for IRA and IIJA grantees; one court even issued a nationwide injunction prohibiting several agencies from withholding funds from grantees.

On February 26, 2025, EPA announced that it had fully restored SFA grant funds. During Summer 2025, however, two notable developments altered the stability and trajectory of the program.

First, Congress passed the One Big Beautiful Bill Act (H.R. 1) in July, which rescinded “the unobligated balances of amounts made available to carry out” 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–VA), Chair of the Environmental Subcommittee, mentioned several times in committee that the bill would not impact obligated funds. Talking about the effect of the provisions, Representative Griffith said, “I 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.” In a press-release, Senator Shelley Moore Capito (R-W.Va.) offered more support for that understanding, stating that the bill “return[ed] remaining taxpayer dollars” by rescinding “all of [SFA’s] unobligated dollars.” H.R. 1 also repealed Section 134 of the Clean Air Act (42 U.S.C § 7424)—the section that created the GGRF—but, since funds had already been obligated under that section, EPA continued to administer the SFA program through July.

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. Relying on Supreme Court decisions in other federal funding cases, including the Supreme Court’s order in American Public Health Association v. National Institutes of Health (APHA v. NIH), the D.C. Circuit held that the proper forum for plaintiffs’ claims was the Court of Federal Claims. The court reasoned that the plaintiffs’ suit was ultimately a breach of contract case, and dismissed the constitutional claim for lacking merit. (As this recent Sabin Center blog explains, that decision rested on flawed reasoning and is a prime candidate for rehearing en banc.)

EPA Terminates Solar for All

Following those developments, on August 7, 2025, EPA administrator Lee Zeldin posted on X (formerly Twitter) a video accompanied by the following text: “The 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[.]” According to court filings , EPA began terminating SFA Grant Agreements shortly after by sending grantees letters stating that EPA had “made the decision to terminate the [Solar for All] program.” EPA justified the termination of the program by characterizing H.R. 1 as having effectively rescinded the agency’s 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’ account. Some awardees have reported losing 90% of the fundings in their accounts.

A variety of plaintiffs filed four lawsuits challenging EPA’s termination of the SFA program. One case has been filed in the CFC and three in different federal district courts.  Although the plaintiffs’ 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—breach of contract in the CFC, and violations of the Administrative Procedure Act (APA) and the Constitution in the district courts.

State AGs Bring Breach of Contract Claims in the Court of Federal Claims

In Maryland Clean Energy Center, et al. v. United States, 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.  Under the Tucker Act, the Court of Federal Claims cannot provide injunctive relief in general breach of contract cases.

A key issue in the Maryland Clean Energy Center case is whether EPA validly terminated the plaintiff’s SFA Grant Agreements. Under SFA grant agreements and their governing regulations (2 C.F.R. § 200.339 and 2 C.F.R. § 200.340), there are only three valid grounds for termination: (1) when the grantee’s 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, the complaint’s central allegation is that EPA breached each plaintiff’s grant agreement by providing as its only justification for termination its interpretation of H.R. 1’s effect on the agency’s administrative authority and program funding. Plaintiffs are asking the court to compensate them for EPA’s express breach of each of the plaintiff’s contracts—an amount to be determined at trial.

The plaintiffs also claim that EPA breached its duty of good faith and fair dealing by “targeting each Plaintiff’s 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.”

District Court Lawsuits

Unlike the Court of Federal Claims suit, which seeks compensation for breach of contract, the district court plaintiffs challenge EPA’s 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:

• Rhode Island AFL-CIO, et al. v. EPA, et al., Docket No. 1:25-cv-00510 (filed October 6, 2025, D.R.I): In this case, the plaintiffs are several intended beneficiaries of SFA (i.e., groups that would have been able to take advantage of the financial and technical assistance programs developed by SFA awardees). The plaintiffs are challenging EPA’s termination of the SFA program under (1) the APA claims, alleging that EPA’s action was in excess of statutory authority and arbitrary and capricious; and (2) the Constitution, arguing that EPA violated the separation of powers doctrine and the Presentment Clause. The plaintiffs also filed a petition for review in the D.C. Circuit as a protective measure in case that court is deemed the proper venue.
• Harris County v. EPA, et al., Docket No. 1:25-cv-03646 (filed October 13, 2025, D.D.C): Similar to Rhode Island AFL-CIO, Harris County, Texas has filed a lawsuit challenging EPA’s decision to eliminate the SFA program. The County asserts that EPA’s decision (1) violates the APA because the agency acted contrary to the U.S. Constitution, in excess of statutory limits, and in an arbitrary and capricious manner; (2) violates the Constitution’s Appropriations Clause, Presentment Clause, and separation of powers; and (3) was ultra viresbecause EPA did not have a statutory or Constitutional authorization for its decision. On October 24, 2025, Harris County moved for a preliminary injunction, requesting the court to preliminarily  enjoin Defendants  from  “(1) dismantling Solar for All on [the alleged] erroneous and pretextual basis, and (2) deobligating, expending, or otherwise placing beyond this Court’s jurisdiction any funds obligated to Solar for All pursuant to Congress’s appropriation under Section 134(a)(1) of the Clean Air Act.”
• State of Arizona, et al. v. EPA, et al., Docket No. 2:25-cv-02015 (filed October 16, 2025, W.D. Wash.): The plaintiffs in this case are a nearly identical coalition of states as in Maryland Clean Energy Center, making them the only plaintiffs so far pursuing cases in both the Court of Federal Claims and District Court simultaneously. The States brought claims that EPA’s termination of the SFA program was (1) contrary to law, in excess of statutory authority, and arbitrary and capricious under the APA (5 U.S.C. § 706(2)(A)-(C); (2) in violation of the Constitution’s Appropriations Clause and separation of powers; and (3) ultra vires, in excess of the agency’s statutory authority. They also filed a protective petition for review in the D.C. Circuit.

Plaintiffs in all three cases make similar arguments for their APA claims. They allege that, in using Section 60002 of H.R. 1 as the only justification for termination, EPA acted contrary to the plain language of that section because it does not extinguish prior liabilities and rescinded only unobligated funds. They also contend that EPA’s reliance on its reading of Section 60002 was arbitrary and capricious because the record contains no evidence that the section abrogated EPA’s authority to administer already-obligated funds.

The Plaintiffs in these cases make compelling arguments for why their claims belong in federal district court, and should not be re-directed to the Court of Federal Claims.  As SFA grantees, the plaintiffs in Harris County and Arizona differentiate themselves from the Climate United plaintiffs by basing their claims on EPA’s post-H.R. 1 programmatic decisions instead of individual grant agreement terminations, and thus hope to avoid being forced into the CFC. That is, though these plaintiffs, (like plaintiffs in Climate United) have grant agreements with the federal government, they are challenging EPA’s programmatic decision to eliminate the SFA, and the Supreme Court has held that such programmatic actions can be challenged in federal district court (e.g., in APHA v. NIH). Meanwhile, the plaintiffs in Rhode Island are non-parties to SFA grant agreements who hope to avoid the forum debate altogether. Since they do not have grant agreements with the federal government, the lawsuit can’t (or shouldn’t) be deemed a contractual dispute, and therefore the plaintiffs can’t (or shouldn’t) be forced into the Court of Federal Claims.

Although Harris County seeks relief only for itself, plaintiffs in Rhode Island AFL-CIO and Arizona ask the courts to declare EPA’s termination of the SFA program illegal and unconstitutional, and issue injunctive relief directing EPA to reinstate it. It is not clear, however, what impact this would have on individual grant agreements. In APHA v. NIH, where federal grantees challenged the termination of public health research grants, Justice Barrett emphasized that vacating an agency policy “does not necessarily void decisions made under it.”

Conclusion

SFA’s future is very much in question. With EPA’s attempts to eliminate the program, the United States takes another step back from the bold, comprehensive climate action needed to confront the worsening impacts of climate change. EPA’s attempts to dismantle SFA are especially discouraging because the program represented an equitable approach to decarbonization. It provided local communities the opportunity to exercise more control over their energy future and simultaneously lower energy bills for their most vulnerable residents. Beneficiaries of the program could receive direct grants to install rooftop solar or make enabling upgrades, discounts to community solar subscriptions, low-interest loan assistance, and access to technical assistance, among other benefits. The various financial and technical assistance offered by each grantee exemplified the diversity and innovation that makes localism such an important component of our system of government.

While states and others have made strong arguments as to why EPA’s efforts to dismantle the program are unlawful, it remains to be seen how the courts will view those arguments. And even if they are ultimately receptive to plaintiffs’ arguments, significant damage has already been done in the meantime. Although judicial relief would be a second-rate outcome, it is now the best that can be hoped for.

Vincent M. Nolette is the Sabin Center’s Equitable Cities Climate Law Fellow.