California v. Wright

The federal district court for the Northern District of California denied a request to transfer to the Court of Federal Claims (CFC) several claims in a suit by 13 states and a California State agency against the Secretary of Energy, the U.S. Department of Energy (DOE), the Director of the U.S. Office of Management and Budget (OMB), and OMB. The suit alleged that OMB took unlawful actions to eliminate energy and infrastructure programs and projects established and funded under the Infrastructure Investment and Jobs Act, the Inflation Reduction Act, and other laws. The complaint included requests for injunctive and declaratory relief to enjoin defendants from taking similar actions in the future and to restore the terminated programs, as well as a request to vacate the allegedly unlawful review process on a prospective basis. The court determined that 28 U.S.C. § 1500 barred transferring the claims challenging the past termination of grants to the CFC because those claims involved the same operative facts as those that would remain before the district court. It declined to rule on the defendants’ alternative motion to dismiss those claims because, under 28 U.S.C. § 1292, the defendants have 60 days to appeal the denial of their transfer motion, and adjudication of all implicated claims is stayed during that period or pending appeal. The court further denied the defendants’ motion to dismiss the remaining claims that sought to vacate the policy underlying the grant terminations and to enjoin future terminations. It determined that the ultra vires claim was not barred by sovereign immunity because it challenged “actions allegedly taken contrary to specific spending requirements set by Congress’s Appropriations Acts of 2024 and 2025” and implicated specific constitutional provisions, making it a fundamentally constitutional claim. That claim also did not represent a “disguised breach of contract claim” that must be brought in the CFC because it requested equitable relief, which could not be granted in the CFC, and was not based on the terms of the contract. It also found that the plaintiffs had Article III standing because vacating the underlying policy would redress nonspeculative pending injuries that would result from further award terminations. Finally, the court determined that the agency policy represented a final agency action that could properly be challenged under the Administrative Procedure Act as arbitrary and capricious because the language of the memo establishing the policy was not tentative or interlocutory and legal consequences could plausibly flow from it.

Thirteen states filed a lawsuit in the federal district court for the Northern District of California alleging that the Secretary of Energy, the U.S. Department of Energy (DOE), the Director of the U.S. Office of Management and Budget (OMB), and OMB took unlawful actions to eliminate energy and infrastructure programs and projects established and funded under the Infrastructure Investment and Jobs Act, the Inflation Reduction Act, and other laws. The plaintiffs alleged that the Trump administration utilized executive actions as a “back-up plan” to eliminate the energy and infrastructure programs and to terminate and abandon the plaintiffs’ awards under these programs after the administration failed to convince Congress to rescind previously obligated funds. The complaint alleged that those executive actions included a May 2025 Department of Energy memorandum (DOE Memo) setting forth DOE’s process for evaluating “financial assistance on a case-by-case basis to identify waste of taxpayer dollars, protect America’s national security and advance President Trump’s commitment to unleash affordable, reliable and secure energy for the American people.” The plaintiffs contended that DOE used the DOE Memo “as the pretext for terminating and abandoning Plaintiffs’ awards, thus advancing President Trump’s directives to eliminate clean-energy and infrastructure programs and place coercive pressure on Blue States.” The complaint alleged that the defendants’ actions harmed the plaintiffs, including by depriving them of funds to undertake projects to meet state climate goals. The complaint asserted that the defendants’ actions violated separation of powers; were contrary to law and arbitrary and capricious and in violation of procedure under the Administrative Procedure Act; and constituted ultra vires executive action. The complaint also asserted First Amendment and equal protection claims on behalf of a California limited liability company that was an awardee under a cooperative agreement. The plaintiffs requested declaratory and injunctive relief, including injunctions requiring DOE to cease any pending review pursuant to the DOE Memo, undoing termination or abandonment of any of the awards at issue in this case, and barring future action based on the DOE Memo. They also asked the court to vacate the DOE Memo.