California sued Trump for canceling $1.2 billion in energy programs Congress already funded

California Attorney General Rob Bonta led 13 state attorneys general in filing a federal lawsuit on Feb. 18, 2026 against the Trump administration for terminating $1.2 billion in energy and infrastructure grants that Congress had already appropriated. The coalition filed in the U.S. District Court for the Northern District of California, naming DOE Secretary Chris Wright and OMB Director Russell Vought as defendants.

OMB Director Russell Vought announced on Oct. 1, 2025, the list of states where grant cancellations would occur. Details the next day showed $7.5 billion in canceled grants from 315 projects — every single one going to a grantee in a state that voted for the Democratic presidential candidate in the 2024 election. Illinois Attorney General Kwame Raoul separately called the pattern unconstitutional selective enforcement of the spending power.

California's ARCHES hydrogen hub was selected in 2023 as one of seven national hydrogen hubs and signed a $1.2 billion DOE agreement in July 2024. After the Trump administration canceled the award in October 2025, ARCHES halted development and laid off its entire full-time staff, eliminating a program designed to accelerate renewable hydrogen technology before construction even began.

A federal court had already ruled against the administration on a related case: U.S. District Judge Amit Mehta wrote in January 2026 that "defendants freely admit that they made grant-termination decisions primarily — if not exclusively — based on whether the awardee resided in a state whose citizens voted for President Trump in 2024." The ruling found the targeted cancellations unconstitutional.

The Impoundment Control ActImpoundment Control Act1974 law prohibiting the president from refusing to spend appropriated funds without formal rescission approved by Congress.Key ConceptImpoundment Control Act1974 law prohibiting the president from refusing to spend appropriated funds without formal rescission approved by Congress.Open conceptBookmark of 1974 is at the center of the legal dispute. Congress passed the ICA after President Nixon withheld billions from programs he opposed. The law requires presidents who want to cancel appropriated funds to formally notify Congress; if Congress doesn't approve within 45 days, the money must be released. The Trump administration did not follow ICA notification procedures before terminating the energy grants.

The canceled programs were projected to create more than 200,000 jobs and save nearly $3 billion annually in health costs by reducing air pollution — particularly in communities already suffering poor air quality. California estimated that cutting ARCHES alone eliminated thousands of jobs in clean energy manufacturing and construction before the program had deployed a dollar.

Senators Alex Padilla and Adam Schiff of California called the cancellations "unlawful" and requested an independent audit by the Energy Department's inspector general, which the DOE watchdog agreed to conduct.

The energy grants were authorized under the Inflation Reduction Act and the Infrastructure Investment and Jobs Act — both signed with bipartisan congressional majorities. The administration argued it had executive discretion to terminate grants before funds were drawn; the states argued that appropriated and formally awarded funds are legally obligated and can't be unilaterally canceled.

The lawsuit was California's 58th against the Trump administration since Jan. 20, 2025. As of early 2026, a single earlier California lawsuit challenging a broad federal funding freeze had preserved approximately $168 billion in federal funding flowing to the state. Bonta had filed 57 total lawsuits and won 35 preliminary injunctions and other emergency relief by that point.