AG James v. DOE: Blockade on State Energy Funds

New York Attorney General Letitia James has taken the bold step of leading a coalition of 18 states and the District of Columbia in a lawsuit against the U.S. Department of Energy (DOE). The lawsuit seeks to block the imposition of a new funding cap on state-run energy programs, which threatens to undermine critical support for New York households.

The DOE’s proposed rule would limit reimbursement for essential administrative and staffing costs covered by federal energy programs, effectively strangling these vital initiatives. AG James asserts that such cuts would raise costs for New Yorkers and compromise access to critical benefits and savings.

“New Yorkers count on state energy programs to save money on their bills, prepare homes for extreme weather, and move toward clean, affordable energy,” said Attorney General James. “The Department of Energy’s cuts threaten to pull the rug out from under those efforts.”

New York State Energy Research and Development Authority (NYSERDA) President Doreen M. Harris echoed these concerns, emphasizing the importance of effective energy planning and emergency response services in the face of extreme weather conditions.

Under federal law, agencies like DOE have traditionally negotiated agreements with states to set fair reimbursement rates for federally funded programs, including indirect costs and employee benefits. The DOE’s May 8, 2025, policy, however, proposes a cap on these costs at 10 percent of a project’s total budget, ignoring established practices.

Should the cap be implemented, it would result in significant cuts to staffing and operations for states, potentially halting projects aimed at modernizing the electric grid, expanding renewable energy, and enhancing resilience against extreme weather. The New York State Energy Program (SEP) formula grant alone is expected to lose approximately $1.6 million under the new cap, creating a substantial cost burden for the state.