A federal court ruling last week could reopen the flow of $7 billion in frozen Solar for All funds, a program created by the Inflation Reduction Act to deliver more than $350 million in annual electric bill savings to more than 900,000 low-income and disadvantaged households over five years. The decision matters because the Trump administration's August 2025 termination of the program had already produced concrete harms: about 1,000 low-income households in Indiana were denied access to low-cost solar that would have cut their electric bills by at least 20%, and roughly 200 installation jobs representing about $9 million a year in wages were not created. U.S. District Judge Mary S. McElroy of the District of Rhode Island, a Trump appointee, ruled that the EPA's termination was "contrary to law and in excess of its statutory authority."
The legal mechanics center on the Administrative Procedure Act and the Constitution rather than contract law. The plaintiffs in the Rhode Island case—including Black Sun Light Sustainability, the Rhode Island AFL-CIO, the Rhode Island Center for Justice, Solar United Neighbors, and Sunpath Solar—are not direct Solar for All grant recipients. Nick Torrey, senior attorney with the Southern Environmental Law Center, emphasized that direct grantees have been forced to pursue recovery through the Court of Federal Claims after a prior Supreme Court decision. Instead, these plaintiffs argued they were harmed by being unable to continue work and pay costs undertaken in good faith that their grant-winning partners would have access to federal reimbursement. Judge McElroy noted the plaintiffs "lack any contractual relationship" with the EPA, grounding their claims in the APA and the Constitution.
The evidence of disruption is specific and documented. Sunpath Solar CEO Seth Gunning said his 25-employee company, part of a Georgia-based coalition awarded a $156 million Solar for All grant, "scaled our operations in preparation to do that same work for 10,000 households," including moving to a new facility and adding capacity. Denise Abdul-Rahman, founder and CEO of Black Sun Light Sustainability, said residents of Gary, Indiana, were denied solar-and-battery-equipped resiliency centers that could have helped them recover from a nearly two-week-long grid outage in August. She also cited households paying $300 to $400 a month in utility bills that lack resources to install solar without program support. EPA Administrator Lee Zeldin had claimed a July 2025 Republican-passed bill allowed cancellation, but the court rejected that interpretation, writing that "Congress's clear intent was that EPA continue to administer the already obligated SFA grants."
The ruling has broader sector implications because it follows another federal court decision that the EPA acted illegally in canceling $20 billion from the Greenhouse Gas Reduction Fund, a separate Biden-era clean-energy financing program. The EPA is seeking a stay in that case and told Canary Media it is "reviewing the decision and considering options for appeal" in the Solar for All matter. If the order stands, it could force the resumption of obligated grants and restore a pipeline of residential solar and battery installations aimed at energy-burdened households, while also signaling that courts may constrain executive branch efforts to unwind statutorily created clean-energy programs.
Important limitations remain. The ruling does not automatically release funds to direct grantees, who face a separate legal path through the Court of Federal Claims. The EPA has not said whether it will appeal, and a stay could delay disbursement. The source material does not specify a timeline for restored funding or how quickly projects could restart. What to watch next is whether the EPA appeals or seeks a stay, whether direct grantees secure relief in their own proceedings, and whether the administration's broader effort to cancel Greenhouse Gas Reduction Fund money faces similar judicial rejection.