Trump’s Clean Energy Funding Freeze
President Trump’s “Unleashing American Energy” executive order, issued on day one of his administration, calls upon federal agencies to “pause” their disbursement of federal funds for clean energy–related projects and initiatives called for under the IRA and the IIJA. Whether this pause is only temporary or will become permanent is unclear. The order prohibits agencies from disbursing funds until such time as they are authorized by Trump administration officials following a submission of agency reports on the consistency of the disbursements with a set of goals. Exec. Order 14,154, § 7.
Under the executive order, Trump budget and economic policy advisors will lift the funding freeze upon being satisfied that the expenditures are consistent with a broad set of goals ranging from “encouraging energy exploration and production on Federal lands and waters, including the Continental Shelf,” to “eliminat[ing] the electric vehicle (EV) mandate,” to “ensuring that the global effects of a rule, regulation, or action whenever evaluated, be reported separately from its domestic costs and benefits.” Id. § 2. Importantly, these goals differ significantly from the purposes of underlying the IRA and the clean energy portions of the IIJA, the source of the funding. The purpose of the IRA and the clean energy provisions of the IIJA are to transition away from reliance on fossil fuels and to instead encourage the production and dissemination of zero and low-carbon energy sources, from solar to wind to clean hydrogen and fuel cell technologies through the use of tax credits, grants, and loans to states, local governments, tribes, startups, nonprofits, businesses, and homeowners.
The broad scope of the executive order’s funding freeze encompasses IRA and IIJA funds already promised to recipients in signed loan and grant agreements. Prior to leaving office, the Biden administration’s Environmental Protection Agency and Departments of Energy, Transportation, and Agriculture obligated 84% of the IRA, Timothy Gardner, Biden Protects 84% of Clean Energy Grants from Being Clawed Back, Reuters, Jan 17, 2025, and 30% of the IIJA’s appropriated grant and loan funding. Timothy Cama et al., Trump Kicks off Potentially Messy Fight over Biden’s Infrastructure Money, Politico, Jan 21, 2025. Nevertheless, with some exceptions, even these obligated funds have been frozen in red states and blue states alike. Lisa Friedman, Brad Plumer & Harry Stevens, Trump Is Freezing Money for Clean Energy. Red States Have the Most to Lose., N.Y. Times, Feb. 10, 2025.
Legal action to unfreeze the freeze is ongoing. New York v. Trump, a lawsuit brought by the attorneys general (AGs) of 22 states and the District of Columbia, seeks to overturn federal funding frozen under a now-withdrawn memo by the administration’s Office of Management and Budget (OMB). This memo had ordered a pause on federal agency disbursement of funding under all programs that could be impacted by a host of executive orders issued by Trump during his first days in office, ‘“including, but not limited to, financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal.” Memorandum from OMB, Exec. Off. of the President, for Heads of Exec. Dep’ts and Agencies, M-25-13, at 2 (Jan. 27, 2025). The state AGs recently won a preliminary injunction, with the court finding their case justiciable based on their claims that the administration’s categorical funding freeze lacked statutory authority and a reasoned explanation. New York v. Trump, 2025 WL 715621, at *7–12, *16–17 (D.R.I. Mar. 6, 2025). In addition, a nonprofit organization that had won significant grant funding from the Biden administration to carry out the IRA’s mandate to jump-start solar power and energy-efficient affordable housing projects recently filed suit to demand that the EPA and Citibank (which serves as the financial agent for the IRA fund at issue) release the $7 billion in award money they are currently owed. Claire Brown, Climate Nonprofit Sues E.P.A. over Billions in Frozen Funds, N.Y. Times, Mar. 8, 2025.
In the wake of the withdrawn OMB memo, the administration has insisted that the executive orders provide independent authority for the funding freeze, Karoline Leavitt, Presidential Press Sec’y, X (formerly Twitter) (Jan. 29, 2025), perma.cc/99C4-5V6G, and the EPA has announced that the halt on spending under more than two dozen climate and clean energy infrastructure programs is the result of the presence of “potential inconsistencies” between the grants and “necessary financial and oversight procedural requirements or grant conditions.” Alex Guillén, EPA Says Spending Halt for Climate, Infrastructure Law Programs Is Different from Trump Freeze, POLITICOPRO, Feb. 11, 2025. Whether this is moving the goalpost or not, the end result is that clean energy funding appropriated by Congress, much of it obligated under contracts, is not flowing to recipients as expected, delaying the construction of zero carbon sources of energy and delaying action to address climate change.
Legal Bases for Challenging the Funding Freeze
While presidents have broad authority to pursue a policy agenda that conflicts with that of their predecessor and that of a prior Congress, their manner of carrying out their agenda must conform to the Constitution and our laws. That does not appear to be the case here. The following is a non-exhaustive list of the legal authorities that President Trump’s attempted funding freeze appears to violate, followed by an analysis of how they conflict with the Trump order and his agencies’ freeze upon IRA and IIJA clean energy disbursements.
Congress’s Constitutional Power of the Purse
The U.S. Constitution gives Congress the power to raise money by levying taxes and to spend money through appropriations under bills that originate in the U.S. House. U.S. Const., art. I, §§ 8, 9. Trump’s act of freezing funding appropriated by Congress under the IRA and IIJA, based upon policies articulated only in executive orders and not found in either statute, is a challenge to the exclusivity of Congress’s power under the Constitution to direct spending. Notably, Trump ran for office on a platform that held that the authority to impound appropriated funds was an “inherent” part of a president’s power to execute the law. Trump-Vance Campaign, Agenda47: Using Impoundment to Cut Waste, Stop Inflation, and Crush the Deep State (June 20, 2023).
To the contrary, there is ample evidence that the Constitution’s founders believed lodging the power of the purse in Congress, and only Congress, was a bulwark against tyranny. Madison wrote that “[t]he House of Representatives cannot only refuse, but they alone can propose, the supplies requisite for the support of government. They, in a word, hold the purse. . . . This power over the purse may, in fact, be regarded as the most complete and effectual weapon with which any constitution can arm the immediate representatives of the people.” The Federalist No. 58 (Madison). Partly this fear was the result of past experience; the colonies had withheld payment of the salaries of royal governors to protest actions of the British monarchy. Hist., Art & Archives, U.S. House of Representatives, Power of the Purse: Origins.
Supreme Court precedent supports an exclusive interpretation of Congress’s power of the purse. In Train v. New York, 420 U.S. 35, 43–44 (1975), a unanimous decision, the Court prohibited President Nixon from impounding Clean Water Act funds, finding no basis in the Act’s language for withholding funds or delaying their expenditure. Similarly, in Clinton v. United States, 524 U.S. 417, 436 (1998), the Court struck down the president’s use of a “line-item veto” to cancel an item of new direct spending as it had the effect of amending an act of Congress and hence violated the Presentment Clause. Although dating to a time before he ascended to the bench, Chief Justice Roberts is on record rejecting the claim that the president possesses inherent authority to impound congressionally appropriated funds. Memorandum from John G. Roberts Jr., for Fred F. Fielding, Impoundment Authority (Aug. 15, 1985).
The Impoundment Control Act of 1974
At the center of the debate over the president’s authority to impound appropriated funds is the Congressional Budget and Impoundment Control Act of 1974, Pub. L. No. 93-344, 88 Stat. 297 (ICA), passed in the wake of President Nixon’s repeated attempts to impound appropriated funds. Far from authorizing presidents to make such impoundments, however, the Act merely creates a procedural mechanism whereby the president can ask Congress to reduce or delay an appropriation.
The ICA addresses two ways that a president can seek to amend an appropriation after the appropriation is already law: the deferral of an appropriation, whereby the president seeks a delay in obligating funds during the fiscal year of the appropriation, 2 U.S.C. § 684, and the rescission of an appropriation, which cancels the budgetary authority. Id. § 683. Deferrals are limited to circumstances needed “to provide for contingencies,” to achieve “savings through greater efficiency in operations,” or “as specifically provided by law.” Id. § 684(b). No other bases are allowed. The president must accompany any deferral with a “special message” to Congress detailing how the deferral complies with these conditions, as well as the length of the deferral, which in no case can extend beyond the current fiscal year. Id. § 684(a)(6).
The distinction between deferrals rooted in policy disagreements—and, hence, prohibited—and deferrals based upon the need for more time to comply with other legal requirements—and, hence, lawful—explains the differing outcomes in two opinions by the Government Accountability Office (GAO), which administers the ICA. In the first, the GAO condemned the first Trump administration for withholding funds appropriated by Congress for security assistance to Ukraine. Off. of Mgmt. & Budget—Withholding of Ukraine Sec. Assistance, B-331564 (Comp. Gen. Jan. 16, 2020). Later, however, the GAO excused the Biden administration’s delay in obligated funds to build the border wall. U.S. GAO, Off. of Mgmt. & Budget & U.S. Dep’t of Homeland Sec.—Pause of Border Barrier Construction and Obligations, B-333110 (Comp. Gen. June 15, 2021). The GAO reasoned that the former was based upon the president’s policy disagreement with aiding Ukraine, while the latter was permissible as a programmatic delay needed to perform environmental reviews and conduct stakeholder consultation, as required by law. Id. at 2–3.
The Administrative Procedure Act and “Nonstatutory” Review
Under the Administrative Procedure Act (APA), 5 U.S.C. §§ 551–559, 701–706, agency actions are reviewable for compliance with the Constitution, federal statutes and regulations, and rational decision making under the “arbitrary and capricious” standard. Id. § 706. Under the latter, the agency “must examine the relevant data and articulate a satisfactory explanation for its action, including a ‘rational connection between the facts found and the choice made.’” Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). The APA also authorizes courts to compel agencies to act where their failure to do so is discrete and nondiscretionary. Norton v. S. Utah Wilderness All., 542 U.S. 55, 64 (2004); see also 5 U.S.C. § 551(13) (defining “agency action” to include “failure to act”).
The Supreme Court has held that an agency’s allocation of funds from a lump-sum appropriation is presumptively unreviewable under the APA. Lincoln v. Vigil, 508 U.S. 182, 192 (1993). Nevertheless, this is only a presumption, and courts have found it either does not apply or is overcome where the statute pursuant to which the grant is made cabins the agency’s discretion or the agency does so itself through regulations. Milk Train v. Veneman, 310 F.3d 747, 752 (D.C. Cir. 2002) (specific language in appropriations act provided a statutory reference point by which the court was able to review secretary’s disbursement determinations); Policy & Research, LLC v. U.S. Dep’t of Health & Hum. Serv., 313 F. Supp. 3d 62, 75–83 (D.D.C. 2018) (presumption overcome by agency grant regulations) (Ketanji Brown Jackson, J.).
The APA provides review only of final actions and only the actions of federal administrative agencies. The president is not subject to the APA, Franklin v. Massachusetts, 505 U.S. 788, 800–01 (1992), and courts are split over whether agency decisions implementing a presidential order are similarly exempt from APA review, and if so, when. Compare Ancient Coin Collectors Guild v. U.S. Customs & Border Prot., 801 F. Supp. 383, 403 (D. Md. 2011), with Sierra Club v. Clinton, 689 F. Supp. 2d 1147, 1157 (D. Minn. 2010).
Nevertheless, judicial review of a president’s executive order or of an agency acting pursuant to presidential order may nevertheless be available under the doctrine of “nonstatutory review,” which recognizes a district court’s inherent authority under 28 U.S.C. § 1331 to review executive action for violating the Constitution or for lack of statutory authorization. Chamber of Com. of U.S. v. Reich, 74 F.3d 1322, 1331 (D.C. Cir. 1996) (adjudicating a claim that a presidential executive order violated the National Labor Relations Act). See also Dalton v. Specter, 511 U.S. 462, 474 (1994) (judicial review of a claim that the president violated a statute available outside the APA when the statute limited president’s discretion).
OMB Grant Regulations
Once an agency obligates grant funding to a particular recipient, the agency is bound by the terms of the funding agreement itself as well as applicable regulations. All major federal grant-making agencies, including the EPA, have adopted the OMB’s grant regulations, known as the “Uniform Guidance.” 2 C.F.R. pt. 200. These regulations permit an agency to suspend or terminate a federal grant “if the recipient or subrecipient fails to comply with the U.S. Constitution, Federal statutes, regulations, or terms and conditions of the Federal award” or when “an award no longer effectuates the program goals or agency priorities.” 2 C.F.R. § 200.340. In all cases, the federal government must explain the basis for its termination decision and provide the recipient an opportunity to appeal. Id. § 200.341.
Breach of Contract Action for Damages
Where a federal grant agreement is a contract, the government’s violation of the grant terms can constitute a breach of contract entitling the grant recipient to an action for damages under the Tucker Act. 28 U.S.C. § 1491. In Thermalon Industries Ltd. v. United States, 34 Fed. Cl. 411, 414 (1995), the U.S. Federal Court of Claims upheld Tucker Act jurisdiction over a breach of contract claim by a National Science Foundation grant recipient, finding that the terms of the grant exhibited the traditional elements of a contract: mutuality of intent, unambiguous offer and acceptance, and a representative with authority to bind the government. Cf. Imaginarium v. United States, 166 Fed. Cl. 234, 245 (2023) (grant agreement and applicable statute and regulations failed to demonstrate a mutual intent to contract).
Putting It All Together
Given the legal authorities just described, it is hard to conclude anything but that the Trump administration’s clean energy funding freeze is inconsistent with the law. Current and potential future recipients of IRA and IIJA grants and loans appear to have viable claims for overturning the freeze or obtaining damages for the delay and potential cancellation of their grants or loans.
One option is that a recipient could attempt to sue the grant-awarding agency—the EPA or the Department of Energy, Agriculture, or Transportation—under the Tucker Act, alleging that the agency’s abrupt refusal to disburse funds under a grant or loan agreement constituted a breach of contract. The challenge here would be to establish the elements of an enforceable contract. The remedy would be damages, as opposed to unfreezing the flow of federal funding.
Alternatively, a recipient could file suit against the clean energy grant-making agencies under the APA, alleging the funding freeze violates the OMB Uniform Guidance, the Constitution, and/or the APA’s prohibition upon arbitrary and capricious agency action and seeking a court order enjoining the freeze. With respect to the applicable grant regulations, the recipient might argue that none of the reasons the Trump administration has thus far offered for the freeze—especially review for consistency with the “Unleashing” executive order’s pro-oil and gas production goals—justify terminating funding under the OMB Uniform Guidance regulations. With the exception of its freeze upon disbursement of $20 billion from the Greenhouse Gas Reduction Fund, which the administration apparently will seek to justify on the basis that the recipients allegedly engaged in criminal activity, see Lisa Friedman, Claire Brown & Charlie Savage, Climate Groups Were Counting on $20 Billion. Trump Won’t Let Them Access It., N.Y. Times, Mar. 4, 2025, the administration is not claiming the freeze results from the recipients’ failure to abide by award terms or conditions. Similarly, although termination is authorized where “an award no longer effectuates the program goals or agency priorities,” this authorization seems to contemplate static program goals with which the award, as a result of other factors, is now out of sync—and thus not to excuse the government for terminating a grant based on a new president’s policy disagreement with a previous Congress’s appropriations.
With respect to the Constitution, a grant recipient could allege that the agencies’ funding freeze violates separation of powers by interfering with Congress’s exclusive power of the purse. The freeze arrogates power over appropriations to the Executive, based not upon some sort of programmatic requirement, but rather, again, because the Trump administration disagrees with the clean energy goals of the IRA and IIJA.
A grant recipient also might allege that the funding freeze violates the APA’s prohibition upon arbitrary and capricious agency action because it lacks a reasoned justification backed up by facts and logic. Given the burgeoning demand for energy from artificial intelligence and other sources, it is not immediately clear that support for clean energy conflicts with oil and gas development, and at the very least the federal agencies implementing the executive order need to supply a reasoned explanation for cutting off grants and loans, something they have so far failed to provide. Similarly, the administration has provided no explanation for how the freeze on EV infrastructure promotes “true consumer choice,” given that charging stations arguably facilitate consumer choice by addressing the anxiety over vehicle range that keeps many would-be EV car purchasers from buying these vehicles.
A grant recipient also might consider pursuing claims directly against President Trump, alleging that his “Unleashing” executive order similarly violates separation of powers by interfering with Congress’s power of the purse. This claim could not be filed under the APA but instead would be based upon the nonstatutory review authorized under Chamber of Commerce v. Reich and other cases.
A claim that the clean energy funding freeze that President Trump ordered violates the ICA would seemingly be the most straightforward of the legal claims that could be made, as neither the president nor his administration has followed the procedural steps outlined in the ICA to authorize a deferral or recission of appropriated funds. Nevertheless, because the Act provides for enforcement actions by the Comptroller General of the General Accounting Office (GAO), 2 U.S.C. § 687, the question is raised whether a GAO action is the exclusive means of enforcing the statute, which would preclude such a claim by a grant recipient.
Implications for Clean Energy and Climate Change
The juxtaposition between the Trump administration’s freeze on clean energy funding and news reports demonstrating the ever more urgent need for climate action could not be more stark. The funding freeze comes just as Los Angeles seeks to recover from widespread wildfire damage that scientists attribute to the excessively dry conditions caused by climate change. The costs of climate change have reached record levels. Last year, 27 individual weather and climate disasters caused 568 direct or indirect fatalities and $187.2 billion in damages. Adam B. Smith, 2024: An Active Year of U.S. Billion-Dollar Weather and Climate Disasters, NOAA Climate.gov (Jan. 10, 2025).
The funding for clean energy appropriated under the IRA and the IIJA represents the most consequential congressional action on climate change, ever. In both Acts, Congress used its power of the purse, as opposed to its power to regulate interstate commerce. President Trump’s efforts to freeze that funding threatens to upend that progress.
Although not without its uncertainties, legal pathways exist to challenge the administration’s clean energy funding freeze. It remains to be seen whether these challenges can play out fast enough to render the funding freeze merely a pause in the IRA/IIJA rollout, or whether instead the executive order will inflict lasting damage to the United States’ ability to address climate change.
