Key Takeaways
- EPA is reportedly drafting termination letters purporting to cancel all 60 awards—totaling $7 billion—made under the Inflation Reduction Act's Solar for All program.
- The threatened terminations are the latest example of the Trump administration's broader efforts to claw back climate and infrastructure funding appropriated by Congress.
- If finalized, the terminations would almost certainly prompt swift litigation challenging EPA's action as contrary to the awards' terms and conditions, federal regulations and statutes, and the U.S. Constitution.
According to recent reporting, the U.S. Environmental
Protection Agency ("EPA") is currently drafting grant
termination letters purporting to cancel all 60
grants—totaling a combined $7 billion—awarded under the
Solar for All ("SFA") program. SFA is part of the Greenhouse Gas Reduction Fund
("GGRF"), a $27 billion program created by Congress as
part of the Inflation Reduction Act ("IRA"). The $7
billion in SFA funds were awarded to 60 recipients (including
states, municipalities, non-profit organizations, and federally
recognized tribes) following a grant competition in 2024. Those
recipients, in turn, are deploying the funds to assist
approximately 900,000 low-income and disadvantaged households
install rooftop or community-scale solar power systems, which are
projected to lower participating families' utility bills by
more than $350 million annually.
The EPA's purported basis for terminating the awards is not yet
known. The termination letters could be sent by the end of this
week.
This latest move is part of a larger series of efforts by the administration
to claw back IRA and Infrastructure Investment and Jobs Act funds
appropriated by Congress and, in many cases, already obligated
under binding contracts. Shortly after President Trump's
inauguration, EPA attempted to terminate $20 billion in awards made
pursuant to the two other GGRF programs, the National Clean
Investment Fund ("NCIF") and Clean Communities Investment
Accelerator ("CCIA"). Award recipients under those
programs quickly challenged the legality of those terminations and
obtained a preliminary injunction from the United States District
Court for the District of Columbia halting EPA's efforts. EPA
subsequently appealed that decision, and the case is pending before
the U.S. Court of Appeals for the D.C. Circuit. (Foley Hoag represents Power Forward Communities, Inc.,
the recipient of $2 billion in NCIF funding, in that
litigation.)
Until today, however, SFA recipients had largely avoided EPA's
termination efforts. While EPA temporarily froze the SFA grants earlier this
year, the agency later unfroze the funds, sparing the program from
the same termination fate as the NCIF and CCIA programs—at
least for a time. Indeed, lawyers for EPA expressly highlighted the
fact that it had not terminated any SFA awards during the
litigation regarding the NCIF and CCIA awards. This recent news
represents a considerable escalation on EPA's part.
EPA's termination efforts are likely to invite strong legal
challenges, including on many of the same grounds currently being
litigated in the cases brought by NCIF and CCIA recipients.
Although the reason EPA may give for terminating the SFA awards is
unclear, the awards' terms and conditions and federal
regulations limit the bases for termination. Under many, if not
all, of the awards, EPA may only terminate an award "when the
noncompliance with the terms and conditions is substantial such
that effective performance of the Assistance Agreement is
Materially Impaired or there is adequate evidence of Waste, Fraud,
or Abuse, or material misrepresentation of eligibility
status." And federal regulations provide that an agency may
terminate an award only "pursuant to the terms and conditions
of the Federal award." Further, wholesale termination of the
SFA program for reasons not provided by either law or contract may
prompt a variety of statutory and constitutional claims.
Our team is closely tracking these developments and is available to
assist entities with SFA grants facing potential termination.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
