The dispute began in August 2025 when New York Attorney General Letitia James led a coalition in suing the DOE over a new rule limiting reimbursement for key administrative and staffing costs to ten percent of a project’s total budget.
The coalition argued the cap threatened millions of dollars in funding for state energy programs.
In September 2025, the U.S. District Court for the District of Oregon ruled in favor of the states and struck down the DOE’s “indirect costs” policy.
The DOE initially appealed that decision but has now withdrawn the policy and dismissed the appeal.
In a statement, Attorney General James said the federal government was acknowledging that it cannot ignore the law to cut funding that Congress has already approved.
The resolution ensures states will continue to receive full federal funding for these programs.
James called the outcome a major victory for families in New York and across the country who rely on these programs to lower their bills, strengthen infrastructure, and prepare for extreme weather.