Maryland Joins Multi-State Lawsuit to Protect Clean Energy Funding

Maryland Attorney General Anthony G. Brown has initiated legal action alongside 17 other states and two governors to challenge a new funding cap imposed by the U.S. Department of Energy (DOE). This cap threatens to reduce federal support for essential state-administered clean energy and energy efficiency programs, which are critical for achieving the state’s climate objectives. The lawsuit contends that the DOE’s policy unlawfully restricts funding for administrative and staffing expenses that have historically been covered by federal energy grants, potentially jeopardizing states’ abilities to meet their program goals.

The coalition of states argues that the new federal policy forces them to divert limited resources from other vital programs to cover these now-capped administrative and staffing costs. The core of the legal challenge centers on the DOE’s decision to implement a 10 percent cap on reimbursements for these essential operational expenses, a move that bypasses previously negotiated and federally mandated fair reimbursement rates. For decades, federal law has required agencies like the DOE to establish agreements with states that ensure adequate funding for the administrative and staffing needs of federally funded, state-run programs. These costs have historically not been subject to any funding limitation.

The lawsuit, filed by Attorney General Brown and his counterparts from New York, Minnesota, Colorado, California, Connecticut, Delaware, Hawai‘i, Illinois, Maine, Michigan, New Mexico, North Carolina, Oregon, Washington, and Wisconsin, along with the Governors of Kentucky and Pennsylvania, asks the court to overturn the DOE’s new policy. The states assert that this policy violates federal regulations requiring agencies to honor indirect cost rates that have already been negotiated between the states and the federal government. The coalition highlights that previous legal challenges to similar funding caps have consistently resulted in findings of illegality, lack of justification, and disruption to public programs.

If the DOE’s funding cap is allowed to remain in effect, it could significantly limit the resources available to states for operating these crucial energy programs. This reduction in funding could hinder the delivery of essential energy services to residents and potentially cause delays or cancellations of key projects aimed at promoting clean energy and energy efficiency. State agencies might be compelled to reallocate personnel and financial resources away from other ongoing initiatives, thereby reducing the overall support available to consumers looking to make energy improvements to their homes or participate in clean energy projects. The states are seeking a judicial order to prevent the implementation of these unlawful funding caps and to reinstate the previously established support mechanisms for these vital programs.

Article by Mel Anara, based upon information from the Maryland Attorney General’s Office.

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