DOE Concedes Its $7.56 Billion Clean Energy Grant Cuts Turned on State Politics, and Courts Start Restoring Awards

The Department of Energy has told a federal court that its October 2025 cancellation of clean energy grants was decided on the political identity of each recipient’s state. The admission, in a stipulation filed on 15 July 2026, puts about $7.56 billion of terminated awards on weak legal ground.

On 1 October 2025, the first day of the shutdown, OMB Director Russell Vought announced the cancellation of nearly $8 billion in funding across 16 states. DOE said the next day it had ended 321 awards for 223 projects worth about $7.56 billion. Every affected state had voted for Kamala Harris in 2024. The list included two of the seven regional hydrogen hubs, ARCHES in California, worth $1.2 billion, and the Pacific Northwest hub, worth about $1 billion.

What DOE has now admitted

The stipulation was signed by Jeff Novak, DOE’s principal deputy general counsel, in Thakur v. Trump, a case brought by University of California researchers in the Northern District of California. He stated that OMB’s termination decisions were “based solely on the political identity of the grant recipient’s state” and not on “any programmatic, statutory, cost-reduction, or performance-based factor.”

The filing gives the mechanics. In September 2025 DOE sent OMB 624 awards it recommended for termination. OMB cut that to 284. All but one of the 284 had a recipient or place of work in a state that voted for Harris and had two Democratic-caucusing senators. The 340 awards that survived were in states that voted for Trump or had at least one Republican senator. DOE’s own programme offices, the stipulation says, didn’t weigh state politics.

Energy Secretary Chris Wright told a House committee on 10 June that no decisions were made on politics. On 4 August Representatives Zoe Lofgren and Gabe Amo referred him to the Justice Department over that testimony.

The court record so far

Grantees who sued have been winning, though only for their own awards.

In January Judge Amit Mehta of the District of Columbia ruled in St. Paul v. Wright that the terminations of seven awards worth $27.6 million violated the Fifth Amendment’s equal protection guarantee. The government didn’t appeal by the 2 June deadline, so those awards are back. In June Mehta entered a stipulated judgment vacating 11 more terminations in a case led by the American Institute of Chemical Engineers. That one also went unappealed.

Bigger cases are pending. The Thakur case covers 13 DOE awards worth $1.26 billion, ARCHES among them, with a summary judgment hearing set for October. Thirteen state attorneys general, co-led by California, sued DOE and OMB in February, arguing that ending programs Congress funded breaches the separation of powers. The court refused to dismiss the case in July, and summary judgment briefing runs from January to April 2027. A cement start-up, Sublime Systems, is suing in the Court of Federal Claims over an $87 million grant cancelled in May 2025.

A wider ruling came on 17 July in New Jersey v. OMB, brought by 20 states and DC. The court held that the federal grant rule letting agencies end awards that no longer serve agency priorities, 2 CFR 200.340(a)(4), doesn’t allow terminations based on priorities set after the award was made. It doesn’t reopen grants already cancelled. OMB has proposed rewriting those grant rules.

DOE’s inspector general agreed in December 2025 to audit the cancellations after requests from California’s congressional delegation.

Hydrogen hubs in limbo

The hub programme shows how much is still undecided. Congress put $8 billion into regional hydrogen hubs in the 2021 infrastructure law, and DOE picked seven in October 2023 to share $7 billion. Two are cancelled. The other five, in Appalachia, the Gulf Coast, the Midwest, the Mid-Atlantic and the Heartland, appeared on the “retain or modify” list DOE sent Congress on 14 April: 1,951 awards worth more than $23 billion that the department plans to keep in some form. Only 18 of the October terminations made that list.

Retain or modify isn’t the same as funded. The administration’s fiscal 2027 budget request proposes cancelling $3.25 billion of unobligated hub money, and modification can mean a much smaller project. An earlier round in May 2025 had already cut 24 demonstration awards worth $3.7 billion, mostly carbon capture and industrial projects.

Why it matters past the grants

The cancellations were framed as savings for taxpayers. Under the Impoundment Control Act, though, money Congress appropriated can’t simply be withheld; a permanent cut needs a rescission Congress approves. The budget request to cancel $3.25 billion of hub money takes that route. The grant cuts also fit DOE’s wider turn away from wind, solar and hydrogen. Its loan office, renamed the Office of Energy Dominance Financing, cut about $9.5 billion of wind and solar lending in its own review and now lends mainly for nuclear, gas and the grid.

The legal exposure now lies with grantees who haven’t sued. Each winning case so far restores only the plaintiffs’ own awards. For everyone else, DOE’s admission is evidence they can use, as long as they still have a project left to rescue.