In a lawsuit against the U.S. Department of Energy, Maryland Attorney General Anthony Brown joined two governors and 17 other states in contesting a new regulation that caps payment for staffing and administrative expenses in state-run clean energy programs. According to the organization, the cap could make it more difficult for states to accomplish climate targets and provide energy services, violate federal laws, and jeopardize vital operations.
Attorney General Anthony G. Brown joined 17 other states in a lawsuit today to prevent the U.S. Department of Energy (DOE) from enacting a new budget cap that reduces support for essential state-run clean energy and energy efficiency programs, according to the news release issued on Friday, August 15. Funding for essential staffing and administrative expenses, which have traditionally been paid by these federal energy funds, will be restricted under the new DOE policy.
The group claims in the lawsuit that this funding cap jeopardizes the states’ ability to accomplish other grant targets and compels them to take scarce resources away from other programs in order to pay for these expenses. The states request that the court lift this illegal budget cap and reinstate funds for these vital energy initiatives.
“This shortsighted federal policy would unlawfully limit our State’s ability to support projects that are crucial to meeting our ambitious climate goals that promise a cleaner, healthier, and safer future for our children,” Attorney General Brown stated. In order to fulfill our state’s commitment to promoting clean energy, cutting harmful emissions, and assisting Marylanders in their endeavors to upgrade their houses’ energy efficiency, we are bringing this complaint.
Federal law has mandated for decades that organizations such as DOE sign contracts with states to provide equitable reimbursement rates for state-run, federally supported programs. This covers the fundamental staffing and administrative expenses required to operate these programs. There has never been a cap on these expenses.
DOE established a new policy on May 8, 2025, that caps reimbursement for these expenditures at 10 percent of a project’s overall budget, ignoring these contractually mandated rates and forcing the states to cover the difference. The cap would restrict the resources states need to maintain programs and hinder federal funds from reaching the individuals they are intended to assist if it were permitted to remain in place.
States may be forced to reduce vital programs and operations, which would limit their capacity to provide vital energy services and possibly cause important projects to be postponed or cancelled. There would be fewer resources available to assist consumers since state agencies would have to take time and funds away from other existing projects.
The states contend that the new DOE policy is in violation of federal regulations that mandate agencies to adhere to indirect cost rates that were previously agreed upon between the federal government and the states. The coalition stresses that every court that has considered the merits of a cap has determined that it is illegal, unwarranted, and interferes with vital public programs.
The coalition requests that the court halt the implementation of any illegal funding caps and reject DOE’s new policy. The attorneys general of New York, Minnesota, Colorado, California, Connecticut, Delaware, Hawaii, Illinois, Maine, Michigan, New Mexico, North Carolina, Oregon, Washington, and Wisconsin, along with the governors of Kentucky and Pennsylvania, joined Attorney General Brown in bringing this lawsuit.
