A federal judge has ruled that the Environmental Protection Agency acted unlawfully when it moved to cancel the $7 billion Solar for All program earlier this year, ordering the agency to restore funding to the dozens of state, tribal and nonprofit grantees that had been counting on the money. The decision, issued this week, is the latest setback for the EPA’s effort to unwind billions in clean-energy grants awarded under the Inflation Reduction Act.
TL;DR: A federal judge ruled that the EPA acted unlawfully when it canceled the $7 billion Solar for All program, which funds residential solar for low-income households. The ruling orders the agency to restore the grants it terminated earlier this year. Grantees say the decision protects thousands of planned solar installations across all 50 states.
What the Program Does
Solar for All was created under the Greenhouse Gas Reduction Fund, a pool of climate financing established by the 2022 Inflation Reduction Act. In April 2024, the EPA awarded roughly $7 billion to 60 recipients — including state energy offices, tribal governments and nonprofit coalitions — covering every state, Washington D.C. and several U.S. territories. The money was intended to help low-income and disadvantaged households install rooftop and community solar systems, lowering electricity bills for families that typically cannot afford the upfront cost of panels.
The program arrived as solar panel costs have fallen sharply over the past decade, making residential solar increasingly viable for households that previously could not access it without subsidy.
Why the EPA Tried to Cancel It
Under Administrator Lee Zeldin, the EPA moved in 2025 to terminate Solar for All along with two related Greenhouse Gas Reduction Fund initiatives, the National Clean Investment Fund and the Clean Communities Investment Accelerator. The agency argued the grants were poorly managed, posed fraud risks, and no longer aligned with its priorities. EPA officials also froze disbursement of funds through the financial institutions holding the grant accounts, effectively halting projects that grantees had already begun planning.
Grantees, along with a coalition of state attorneys general and nonprofit organizations, filed suit, arguing the agency had no legal authority to unilaterally claw back congressionally appropriated funds that had already been obligated through binding grant agreements. They said the termination violated federal grant regulations and the Administrative Procedure Act, which requires agencies to provide a reasoned, evidence-based justification before reversing a prior decision.
The Ruling
In the decision, the court found that the EPA’s cancellation was “arbitrary and capricious” and failed to follow the procedural steps required before terminating an active federal grant. The judge noted that the agency had not identified specific evidence of fraud or mismanagement tied to individual grantees, relying instead on broad, unsubstantiated concerns to justify pulling funding from all 60 awardees at once.
The court’s order directs the EPA to reinstate the terminated grant agreements and restore access to the associated funds, though the agency is expected to appeal.
Attorneys for the plaintiffs said the ruling validates months of legal arguments that the administration overstepped its authority in trying to claw back money Congress had already appropriated. “These are contracts the federal government signed and grantees relied on to hire staff, order equipment and sign agreements with homeowners,” one attorney representing a coalition of grantees said in a statement following the ruling.
Impact on Grantees and Households
Several state energy offices had paused or scaled back outreach to low-income households after funds were frozen earlier this year, unsure whether promised installations would move forward. Nonprofit grantees in states including Illinois, Michigan and New Mexico had reported laying off staff or delaying contractor agreements while the litigation played out.
With the ruling now in place, grantees say they can resume signing up households and finalizing installation contracts, though some caution that funds may remain tied up if the EPA appeals or seeks a stay. The Greenhouse Gas Reduction Fund overall represented one of the largest federal investments in residential clean energy, and its fate has become a bellwether for how courts will treat other IRA-funded programs facing similar rollback attempts.
What Comes Next
The EPA has not yet indicated whether it will appeal the ruling to a federal appeals court. If the agency does not seek a stay, grantees are expected to begin receiving disbursements again within weeks. Legal observers say the case adds to a growing body of rulings finding that agencies cannot simply terminate previously awarded federal grants without following formal rulemaking or termination procedures, regardless of a change in administration priorities.
For now, the ruling is being treated by clean-energy advocates as a significant, if likely temporary, win — one that keeps billions of dollars earmarked for low-income solar access flowing, at least until any appeal plays out in the courts.
