AG Brown sues to stop federal cuts threatening state energy resilience, affordability

SEATTLE – Attorney General Nick Brown has joined 18 states and the District of Columbia in suing to block the U.S. Department of Energy (DOE) from slashing support for state energy grid resilience and energy efficiency, as well as energy affordability.

The new policy undermines these public efforts by limiting reimbursement for key administrative and staffing costs that have long been covered by these federal energy programs. By capping certain funding for these programs, DOE is jeopardizing states’ ability to keep them running. The states are asking the court to vacate this unlawful cap and restore the legally required reimbursement rates for these essential energy programs.

“The administration’s energy policies to date only threaten to make our power sources dirtier, less reliable, less efficient, and more expensive,” Brown said. “This policy will ultimately hurt consumers in every state, not just those in our coalition.” 

For decades, federal law has required agencies like DOE to negotiate agreements with states that set fair reimbursement rates for federally-funded, state-run programs. This includes the basic administrative or staffing costs needed to run them. These “indirect” and “fringe” costs have never been subject to a cap. On May 8, 2025, DOE announced a new policy that ignores this longstanding practice, capping indirect and employee benefit costs at 10 percent of a project’s total budget, regardless of previously negotiated rates. 

If allowed to stand, the cap would limit resources states rely on to keep programs operating and ensure federal dollars reach the people they are meant to help. It could force states to make cuts to staffing and operations, reducing their ability to deliver crucial energy services and potentially delaying or cancelling key projects. State budgets would face sudden shortfalls, and agencies would be forced to spend more time and money navigating DOE’s new budget rules, leaving fewer resources for direct consumer assistance. 

In Washington, the state energy plan is run through the state Department of Commerce, which estimates these costs are three times the cap proposed by DOE. If the new federal cap proceeds, it would force the state to scale back or delay high-impact community programs, including wildfire mitigation planning with utilities and critical energy infrastructure protection, as well an energy efficiency programs that reduce costs for businesses, utilities and local governments. 

The states argue that the new policy violates federal regulations that require agencies to honor negotiated indirect cost rates between states and the federal government. The coalition emphasizes that every court to rule on the merits of such blanket limits has found them unlawful, unjustified, and disruptive to essential public programs. 

The coalition is asking the court to vacate DOE’s new policy and bar implementation of any unlawful reimbursement caps. 

Joining Brown in filing this lawsuit, which was led by New York Attorney General Letitia James, Minnesota Attorney General Keith Ellison, and Colorado Attorney General Phil Weiser, are the attorneys general of California, Connecticut, Delaware, Hawaiʻi, Illinois, Maine, Maryland, Michigan, Nevada, New Mexico, North Carolina, Oregon, Wisconsin, and the District of Columbia, as well as the governors of Kentucky and Pennsylvania.

A copy of the complaint is available here.

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