On his first day in office, President Trump signed the Unleashing American Energy executive order, which ordered agencies to stop disbursing funds from the Bipartisan Infrastructure Law and the Inflation Reduction Act — two of the signature legislative accomplishments of the Biden administration. The 90-day pause, which was ostensibly to review agency processes, created widespread confusion for key clean energy programs.
This week, just five days short of 90, a federal judge in Rhode Island ruled that the initial freeze was illegal. Judge Mary McElroy ordered several agencies — including the Environmental Protection Agency and the Department of Energy — to resume disbursements immediately, saying agencies do not “have unfettered power to hamstring in perpetuity two statutes passed by Congress during the previous administration.”
The case, Woonasquatucket River Watershed Council et al. v. USDA et al, was brought by six conservation and community groups that received grants under the two laws. However, McElroy applied her decision to all IRA and infrastructure law grantees, not just those who filed the suit.
McElroy was named to the bench by President Trump himself, during his first term.
So what happens now? Well, yesterday, the Office of Management and Budget issued a memo notifying agencies that they must “take immediate steps” to unpause funding. And according to Amy Turner of the Sabin Center for Climate Change Law at Columbia, funds started flowing promptly to at least some grantees; they were able to access their payment portals, which is how they submit for reimbursement.
But that doesn’t necessarily mean all the money will immediately start flowing. At least, Emily Hammond, an energy and administrative law professor at George Washington University who previously served as deputy general counsel for environment and litigation at DOE, certainly doesn’t expect it to.
“This order is a victory, but there are more challenges ahead for the plaintiffs because the Trump administration has shown little inclination to comply with court orders,” they said, pointing to its defiance of the Supreme Court in the unfolding case of the wrongly deported Maryland man Kilmar Abrego Garcia.
At least one DOE office, for instance, is still awaiting official guidance on how to respond to funding recipients wondering about their awards, Latitude Media has learned. According to an email sent to the Grid Deployment Office just yesterday, staff has been provided with template responses for any stakeholder questions. To anyone asking about the state of funding, staffers have been asked to reply that “DOE continues to conduct a department-wide review of programming to ensure activities align with Trump administration priorities.”
And while the Trump administration hasn’t yet appealed the decision, both Hammond and Turner said they wouldn’t be surprised if it did. “I would expect the administration to refuse to comply with the district court, and to seek immediate appeal of the preliminary injunction and request a stay of the injunction in the meantime,” said Hammond.
Even if it remains unappealed, the decision doesn’t apply to all types of IRA or BIL grants. Some grantees have their funding paused for individual reasons: the project has a diversity, equity, or inclusion element, for instance, or else an agency is accusing the grantee of waste, fraud or abuse.
“Those things may all be unlawful for other reasons, but this order does not cover those instances,” Turner said. According to the memo, in other words, agencies have the discretion to “make individualized funding decisions, consistent with your agency’s statutory and other authority.”
And regardless, the nearly three months of uncertainty have already taken a toll on the clean energy sector. In McElroy’s words, the agencies did not demonstrate “that they considered the consequences of their broad, indefinite freezes: projects halted, staff laid off, goodwill tarnished.” Small businesses were especially vulnerable: from government contractors helping other small companies apply for IRA grants, to startups for whom a paused grant is an existential question.
The major questions question
The decision also has broader implications for the legality of how the Trump administration operates.
In her decision, McElroy wrote that the indefinite freeze of their funds was “neither reasonable nor reasonably explained.” (Even though the 90-day deadline is imminent, given that the original executive order included language about needing OMB approval to get funds flowing again, Turner said she doesn’t believe “there was going to be anything magical about that date.”)
The decision cited the fairly new “major questions doctrine,” which has roots in conservatism and has courts presume that Congress will not delegate questions of major economic significance to regulatory agencies. McElroy wrote that agencies have narrower powers than the Trump administration has demonstrated, and recommends that courts be skeptical of agencies making sweeping claims of being able to pause grant funds.
When the Supreme Court ruled last June to overturn the Chevron doctrine — which gave federal regulators latitude to interpret vague laws — the assumption was that the major questions doctrine would take its place. Michael Gerrard, Turner’s colleague and the founder of Columbia’s Sabin Center, presciently told Latitude at the time that the rise of the major questions doctrine may be “a greater blow to the administrative state” than the Chevron decision.
There’s a certain irony here. The Chevron decision was widely seen as limiting the power of agencies — housed with long-time experts in their fields — while empowering both Congress and the court. And given how much climate policy has been shaped by regulatory agencies in the last few decades, the immediate reaction was that the decision would impede climate and energy policy.
However, now that the Trump administration is firing or otherwise encouraging those career workers to depart, the actions of the executive branch are rooted less in expertise, and more in a vindictiveness toward the policies of the previous administration. But according to Turner, the Chevron decision last summer “basically says we have to look very carefully at what Congress said.” And in the case of the IRA and BIL, through the passage of the legislation itself, Congress very recently said that agencies need to expend funds in a particular way.
Accordingly, McElroy’s decision suggests that the end of Chevron deference may actually help Biden’s major infrastructure victories stick around — at least for now, and at least according to the rule of law. As Turner said, the U.S. is experiencing “a constitutional crisis in which the executive branch, assisted at times by the judiciary, is taking significant power from the legislative branch and from the agencies.”
“So it’s hard to talk about the legal question when a lot of what’s happening is so far outside of the realm of legality,” she added.
