Highlights
- This Holland & Knight alert provides a U.S. Department of Energy (DOE) funding update with high-level information regarding recent developments for DOE grant funding and what to anticipate during the next few weeks.
- Despite the broader trend of terminations in government contracting, DOE has not yet issued sweeping termination notices. Instead, a new phase of project reviews focusing on financials and engineering is expected, emphasizing the importance of compliance with grant terms and advocacy to avoid termination risks.
- Several DOE offices have experienced significant staffing losses, with some losing up to 70 percent of their personnel, leading to potential communication delays with the department.
- Recent litigation updates include a preliminary injunction in Rhode Island preventing the freezing of Inflation Reduction Act and Infrastructure Improvement and Jobs Act funding, along with a temporary restraining order in Massachusetts against DOE enforcement of a 15 percent indirect rate cap for institutions of higher education, pending litigation outcomes.
In contrast to the recent influx of terminations in the broader government contracting and federal grants space, the U.S. Department of Energy (DOE) has not yet started to issue wide-ranging programmatic or sweeping termination notices, although Holland & Knight continues to closely monitor the growing pressure on loans and grants administered by DOE. Indeed, we understand DOE will soon initiate additional project reviews with an undetermined timeline. It is believed that DOE will scrutinize financials and engineering during this latest review with the potential aim of terminating funding. Accordingly, it is important to maintain advocacy pressure during this phase, building as much congressional and executive branch support for the project as possible.
Several DOE offices involved in clean technology funding experienced significant personnel loss during April 2025, with some offices losing up to 70 percent of their staff. As a result, many projects do not currently have a program manager assigned and are presumably in the process of being transitioned to new project teams. As DOE adjusts to its new workforce size, it is possible that communications will continue to go unanswered in the near term.
As a practical matter, funding recipients should pay attention to meeting the terms of their grant awards to minimize opportunities for government officials to terminate the project due to noncompliance. For example, grant awards with a start date of Jan. 1, 2025, typically have their first round of quarterly reporting due on April 30, 2025. Recipients should ensure they meet any reporting and deliverable deadlines specified in their award documents to reduce termination risks.
In the event a funding recipient does receive a termination notice, it is important to promptly review the notice, determine what next steps the notice requires and take action to preserve its rights. This could include negotiating with DOE for recission of the termination notice (in whole or in part), initiating grant closeout procedures or challenging the termination in court. It is strongly recommended to engage with legal counsel to assist with the termination process.
The president's budget request – which was released on May 2, 2025, but will be covered in a subsequent Holland & Knight blog – provides direction of the agency moving forward. Of particular note, the president's budget request includes the cancellation of more than $15 billion of funding but specifically notes that the cancellation of funding "would not impact any currently awarded projects." However, as expected, the budget request does target renewable energy projects and other Biden Administration priorities.
Related Litigation
Separately, as a brief update on relevant litigation, the judge in a Rhode Island case regarding the withholding of Inflation Reduction Act (IRA) and Infrastructure Investment and Jobs Act (IIJA) funding granted a preliminary injunction on April 15, 2025, meaning DOE and other agencies may not freeze funding pending the outcome of the litigation in that court. The government appealed this decision on April 30, 2025. The preliminary injunction is in addition to a similar one granted in February 2025 in Washington, D.C., which the government appealed on April 24, 2025.
In addition, a Massachusetts federal district court issued a temporary restraining order on April 16, 2025, related to the enforcement of a DOE Policy Flash that purported to cap indirect rates for institutions of higher education (IHEs) at 15 percent, despite any negotiated indirect rate agreements. The court held that DOE is not allowed to enforce the 15 percent rate cap for IHEs pending the court's decision on the IHEs' request for a preliminary injunction.
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