Trump’s climate spending freeze is already causing serious economic harm

For David Funk, president of Zero Emissions Northwest, the Trump administration’s order to halt the flow of funds from the Inflation Reduction Act and 2021 bipartisan infrastructure law is already hitting home — not just for him and his employees but for the rural businesses they serve.

The Spokane, Washington-based consultancy has secured $3.7 million in grants from a nearly two-decade-old U.S. Department of Agriculture program meant to help rural businesses save energy and generate their own power. Those grants were helping pay for $10 million in projects, ranging from a controlled-atmosphere apple-storage facility to the replacement of decades-old refrigeration systems at grocery stores. The projects were expected to save the farmers, communities, and rural small businesses involved more than $20 million in long-term energy costs.

But last week, USDA informed Funk that it was freezing all reimbursements from the program, which was authorized to provide $1 billion in grants under the Inflation Reduction Act. The affected businesses, located in politically conservative parts of Idaho and eastern Washington, are now facing more than $250,000 in delayed reimbursements for $1.9 million in projects.

Those businesses ​“have been investing millions of dollars into these projects that they were confident were going to be paid by the federal government,” Funk emphasized in a Friday interview. Now, Funk is unable to get a straight answer out of USDA on if and when clients will be able to access the money again. Zero Emissions Northwest furloughed all of its employees in response last week.

Zero Emissions Northwest is just one of many entities thrown into chaos by the Trump administration’s unprecedented freeze of hundreds of billions of dollars of congressionally mandated climate and energy spending. Hundreds of nonprofits, governments, and businesses have received funding under the Inflation Reduction Act and infrastructure-law programs over the last three years.

Most of that funding has already been obligated, or legally committed under contract, meaning recipients like the rural businesses Funk’s organization helps felt confident spending money and making long-term investment plans based on the belief — now very much in doubt — that the federal government would honor its commitments.

Last week, legal challenges yielded a series of federal court decisions that ordered temporary halts to the administration’s funding freezes, which have gone far beyond climate and clean energy. But even after two court directives to restart spending, it remains unclear whether federal agencies are actually complying — and how deep the damage already is for grantees like Zero Emissions Northwest.

The executive order cutting off this funding, entitled ​“Unleashing American Energy,” demands that federal agencies pause all Inflation Reduction Act and infrastructure-law climate and energy spending. It also states that this freeze can only be lifted if the heads of the White House Office of Management and Budget and the National Economic Council determine that doing so aligns with the administration’s overall energy goals.

“We feel that our projects unleash American energy — on-site generation, energy conservation, and energy efficiency,” Funk said. ​“What we were enabling and unlocking for these businesses was their ability to control costs and risks related to their business.”

The cascading impact of frozen funds, stalled projects, and uncertain pathways to recovering money already spent could end up forcing some of these projects to be canceled, he said.

“We have farmers who are feeling pain right now because they’re scrambling to fill the gaps,” he said. ​“They were expecting $40,000 or $50,000 to be coming in this month because that’s what we told them.”

No clear end in sight

Hundreds of billions of dollars of congressionally mandated funding are now the subject of a tug-of-war between Trump administration political appointees at federal agencies and the state attorneys general and business, consumer, and environmental advocacy groups filing lawsuits to fight them.

The scale of the grants in dispute ranges from thousands of dollars for energy upgrades for individual homeowners and small businesses to millions of dollars for school districts and state agencies. Multi-billion-dollar grants for power grid and energy projects could eventually be impacted.

A federal judge on Friday ordered the federal government to temporarily end any activities to ​“pause, freeze, impede, block, cancel, or terminate” funding in response to a legal challenge from Washington, D.C., and 22 states, all but one led by Democratic governors. The lawsuit argues the executive order violates Congress’ constitutional power over federal spending. But the judge’s order only applies to the parties to the lawsuit, potentially leaving Republican-led states subject to ongoing spending freezes.

It’s unclear how federal agencies are responding to Friday’s order, which followed a Tuesday directive from another federal judge temporarily halting the implementation of a White House Office of Management and Budget (OMB) memo released last Monday that could have held back trillions of dollars in federal spending. The Trump administration rescinded the OMB memo on Wednesday.

Multiple sources on Sunday shared copies of a new memo instructing federal agencies on complying with Friday’s court order. On Monday, the Trump administration filed a ​“notice of compliance” with the federal court that issued the order, stating that President Donald Trump’s attorneys provided written notice of the order to attorneys in the Office of the White House Counsel.

The memo states that “[a]ll Defendants — including their employees, contractors, and grantees — must immediately comply with the Court’s Order.” But it also states that “[a]gencies may exercise their own authority to pause awards or obligations, provided agencies do so purely based on their own discretion — not as a result of the OMB Memo or the President’s Executive Orders — and provided the pause complies with all notice and procedural requirements in the award, agreement, or other instrument relating to such a pause.”

It’s likely that these legal challenges to Trump administration efforts to withhold spending authorized by Congress will quickly reach the U.S. Supreme Court, legal experts say.

The grants in limbo

As legal uncertainty looms, hundreds of billions in funding for everything from grid resilience to rural energy projects hangs in the balance.

The U.S. Environmental Protection Agency has confirmed that it is withholding funds for congressionally mandated programs, including the $7 billion Solar for All program. EPA officials have directed Canary Media to contact the U.S. Department of Justice for comment on these matters. A Department of Justice spokesperson declined to comment.

“We are disappointed that this pause is coming so close to our anticipated launch,” said Alicia Brown, director of Georgia Bright, a public-private partnership that won a $156 million Solar for All grant. The funding was slated to lower the cost of financing new rooftop and community solar projects that will be committed to reducing low-income households’ energy bills ​“We remain hopeful that a path forward can be found to deliver the promised benefits to Georgia residents without significant delay,” Brown said.

Zealan Hoover, former senior advisor and director of implementation at the EPA under the Biden administration, told Canary Media on Monday afternoon that the EPA’s online portal for grantees to draw funding and receive reimbursements for expenses incurred for work done under their contracts had not yet been restored. That portal has been inoperative for at least a week.

As for the USDA, grants for energy-efficiency projects like those Funk is working on aren’t the only ones at risk. So are billions of dollars in grants and loans issued under a set of Inflation Reduction Act programs for rural electricity cooperatives, which provide power to the most sparsely populated areas in the country.

Tri-State Generation and Transmission Association, which serves parts of rural Colorado, New Mexico, Wyoming, and Nebraska, was awarded $2.5 billion in low-cost financing and grants to accelerate the closing of 1,100 megawatts of coal-fired generation and contract for 1,280 MW of power from newly built solar, wind and energy-storage hybrid projects.

In a Jan. 30 email, Tri-State spokesperson Mark Stutz declined to state whether USDA had shared information on the status of that funding. The cooperative has ​“executed our commitment letter” with USDA to receive the promised funding, Stutz wrote, and stands ready to ​“invest in new resources that drive rural economic development” and ​“help secure the American energy dominance that the Administration is prioritizing.”

The USDA did not respond to phone messages and emails requesting comment on Monday.

Even larger amounts of energy funding from the U.S. Department of Energy also remained in uncertain status as of Monday.

In a Friday letter, U.S. Rep. Marcy Kaptur of Ohio and Sen. Patty Murray of Washington, both Democrats, demanded that DOE Acting Secretary Ingrid Kolb respond to a detailed list of questions about what they described as ​“unlawful actions to halt programs that are imperative to the Department’s mission of ensuring America’s security and prosperity.”

“Today, our understanding is that much of the Departmental funding is still frozen,” the lawmakers wrote, detailing a list of directives issued by DOE that ​“halt a vast array of the Department’s essential programs — programs American families and businesses are counting on.”

The DOE did not respond to phone messages and emails requesting comment on Monday.

Kaptur and Murray singled out the Inflation Reduction Act’s $8.8 billion in home energy rebates, which are projected to spur efficiency and gas-to-electric heating and appliance retrofits that could ​“save households up to $1 billion per year on energy bills and support over 50,000 U.S. jobs. The President’s attempt to freeze the Home Energy Rebates Program means these costs will fall back on American consumers.”

Backers of the program had feared that Republicans in Congress may pass legislation undoing the spending this year but had not anticipated the Trump administration instructing the DOE to unilaterally restrict the flow of funds.

“Is this administration really going to stop programs that are aimed squarely at cutting electric bills for low-income Americans?” said Harry Godfrey, head of the federal investment and manufacturing working group of trade group Advanced Energy United. ​“Is Texas not going to get $690 million for rebate programs? Is Ohio not going to get $250 million, or Virginia $189 million?”

Similar questions pertain to more than $10 billion in grid-modernization grants authorized by the bipartisan infrastructure law, Godfrey said. Those include more than $600 million in grants to support Southeastern utilities recovering from Hurricane Milton and Hurricane Helene.

“I could be wrong, but I doubt those funds have gone out the door yet,” Godfrey said ​“Does this mean those communities won’t be receiving federal dollars to rebuild their grid?”

David Warm, communications director for Gainesville Regional Utilities in Florida, which was awarded up to $47 million in grants, told Canary Media that the DOE had sent a statement last week stating that ​“all funding-related actions are on pause while we await additional implementation guidance. We will provide updates as soon as we are able.”

Nicole Arnold, communications and public affairs manager for Randolph Electric Membership Corp. in North Carolina, which was awarded up to $11.4 million in grants, told Canary Media that the cooperative utility had ​“not received any direct communication from federal sources” regarding its grant. ​“We are committed to the long-term success of this project and will patiently await future communication on our grant.” 

A cutoff of communication, and a disappearance of data 

Adding to the uncertainty, the DOE and other federal agencies have been disabling access to websites and online portals set up to manage the grant programs in question.

As of Monday, the DOE website established to track progress on the home energy rebate program and the web page announcing the $2 billion in grid infrastructure grants that included rebuilding and hardening efforts in the Southeast have been redirecting visitors to the DOE’s new ​“Restoring Energy Dominance” home page.

Grantees have also reported that officials at federal agencies have refused to answer questions about the freeze, making it harder for them to plan.

That’s the experience of Tim Farquer, superintendent of Mercer County Schools, and administrative lead of Bus2Grid, a consortium involving 13 school districts in Illinois that have been awarded $15 million in DOE funds. They’re working on integrating electric school buses with on-site batteries and power control systems as microgrids to keep school buildings powered during grid outages.

That funding was issued as part of the bipartisan infrastructure law’s Renew America’s Schools program, Farquer said. But ​“when we try and go to our Renew America’s Schools web page, it takes you to the Department of Energy home page with a tanker hauling [liquefied natural gas],” he said.

“It’s my understanding that we have signed contracts and that the money has been obligated,” he said. But his and other school districts, as well as the University of Illinois-Chicago, the lead recipient of the grants, have ​“lost our communication with the Department of Energy because they’re on a gag order,” he said. Email and phone calls have gone unanswered.

“We’ve got a contractor who’s determining whether they’ll absorb the risk to send engineers onto the site and pay for all that work without 100% guarantee they’ll get reimbursed,” he said.

The Renew America’s Schools program may be doubly targeted by the Trump administration due to its status as one of the Biden administration’s Justice40 Initiative programs, created to support disadvantaged communities affected by pollution and environmental injustices.

Under Trump administration executive orders demanding a purge of all diversity, equity, and inclusion (DEI) policies and communications, federal agencies have deleted references to environmental justice and taken down websites dealing with programs associated with those efforts.

A Jan. 27 directive to all DOE personnel ordered halting all funding for DEI. The same order also called for a stop to implementing Community Benefits Plans, which establish a set of community and labor-force agreements that the Biden administration required for all DOE grant-funded projects. These plans are embedded in major industrial infrastructure projects funded by the bipartisan infrastructure law and Inflation Reduction Act, including the $7 billion in clean-hydrogen-hub projects and $3.5 billion in carbon-capture-hub projects.

A person familiar with DOE grantees’ communications with the DOE told Canary Media that the agency is telling them to remove Community Benefits Plans and any mention of DEI from their grant applications and then resubmit or renegotiate the awards.

Many of the Trump administration’s early actions, including the climate and energy spending freeze and erasure of DEI programs, were described in Project 2025, a policy blueprint developed by conservative think tank The Heritage Foundation.

For Jillian Blanchard, vice president of climate change and environmental justice at the Lawyers for Good Government, a nonprofit coalition of attorneys, law students, and activists, Project 2025 also hints at an unsettling end goal of the administration’s actions: The Trump administration may be putting grantees in a financial bind that prevents them from meeting their contractual obligations as a pretext for canceling those contracts.

Almost all contracts between federal agencies and grantees contain requirements that entities receiving federal funds continue to perform work and spend money on set deadlines, Blanchard said during a Friday webinar hosted by the Environmental Protection Network. Failure to meet those deadlines could open grantees to legal action aimed at canceling their contracts — even if the reason for not meeting those deadlines was the cutoff of federal funding.

“This administration has created this catch-22 for communities across America,” she said. ​“Local governments must either halt critical infrastructure projects and risk breaching their contracts or potentially going bankrupt or continue working without ever knowing if they’ll ever receive federal reimbursement. Either way, the administration wins, and the American people lose.”