How IRA and BIL grantees can prepare for termination of the Green New Deal
Since January 20, 2025, the federal government has been actively reviewing, suspending, and terminating certain contracts and grants that are not aligned with the Trump Administration’s policy goals. The United States Agency for International Development (USAID), for example, has issued stop-work and suspension orders across a significant portion of its contract and grant portfolio.
As discussed below, recipients of energy and infrastructure grants under the Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act, also referred to as the Bipartisan Infrastructure Law (BIL), may soon see similar suspension and termination actions.
Although the federal funding “freeze” for many federal grants was rescinded, the federal government appears to be reviewing energy- and infrastructure-related grants and determining a path forward, including potentially terminating grants inconsistent with the Trump Administration’s stated policy goals.
This alert discusses the Executive Order (EO) that directed federal agencies to take such action, as well as the steps that recipients of IRA and BIL grants may consider taking in the interim.
“Terminating the Green New Deal”
On January 20, 2025, President Donald Trump issued EO No. 14154, “Unleashing American Energy,” outlining the Administration’s policy goals and directives for energy and infrastructure development.
Section 7 of the EO, titled, “Terminating the Green New Deal,” states that federal agencies “shall immediately pause the disbursement of funds appropriated” through the IRA and BIL. Section 7 also requires federal agencies to “review their processes, policies, and programs for issuing grants, loans, contracts, or any other financial disbursements of such appropriated funds” for consistency with law and the policy outlined in the EO.
By April 20, 2025, agencies are required to submit reports “detail[ing] the findings” of their reviews to the Directors of Office of Management and Budget (OMB) and the National Economic Council (NEC), including “recommendations to enhance their alignment” with the Trump Administration’s policy goals.
On January 27, 2025, the OMB issued a memorandum stating that federal agencies “must temporarily pause all activities related to obligation or disbursement of all Federal financial assistance,” including grants supporting “the Green New Deal.” On January 28, 2025, the OMB clarified that “the pause does not apply across-the-board,” but does apply to, among other programs and activities, the Green New Deal.
The following day, the OMB rescinded the January 27, 2025 memorandum, with the White House Press Secretary explaining on social media that “[t]his is NOT a rescission of the federal funding freeze” and that President Trump’s EOs “on federal funding remain in full force and effect, and will be rigorously implemented.”
Thus, it appears that the review of grants and other financial assistance provided under the IRA and BIL is ongoing, and that, after the review is complete, federal agencies may terminate IRA and BIL grants that are inconsistent with the Trump Administration’s policy goals.
Next steps for IRA and BIL grantees
In light of the above developments, grant recipients under the IRA and BIL are encouraged to actively develop a plan for when the government’s review is complete.
The appropriate course of action will depend on, among other considerations, the specifics of the grant at issue, the instruction or directive from the agency, and the resultant impact on the grantee.
However, there are certain proactive steps grantees can consider, drawing on lessons from USAID’s recent mass suspension of contracts and grants:
1. Look to the awarding agency for instructions. Grantees are encouraged to continue performing in accordance with the terms and conditions in their respective grants until a grant officer or other authorized agency official directs them to stop. Section 7 of the “Unleashing American Energy” EO, standing alone, does not require that IRA and BIL grantees unilaterally suspend performance under their grants, absent such direction from an authorized agency official.
2. Review your grants. Unlike federal procurement contracts, which may contain a clause permitting the government to issue stop-work orders, grants typically do not contain such a clause. Certain agencies, however, have regulations that permit suspension in some circumstances. Thus, grantees are encouraged to review the grant, the Uniform Grant Guidance (2 C.F.R. Part 200), agency-specific grant regulations and policies, and any program-specific requirements to determinate what, if any, authority an agency has for suspending a grant. Moreover, agencies have been relying on 2 C.F.R. § 200.340(a)(4) to suspend and terminate grants. That regulation permits termination “if an award no longer effectuates the program goals or agency priorities.” That said, there are notice and process requirements in the Uniform Grant Guidance that an agency should follow when terminating a grant.
3. Check your subawards. If a grant is suspended or terminated, the grantee may need to promptly implement that order down its supply chain. Thus, grantees may benefit from reviewing their subaward agreements and subcontracts to determine what authority, such as a termination for convenience right, they may have for suspending or terminating subawards. Developing a plan for suspending or terminating lower-tier awards ahead of time can also help minimize the risk of disputes with subawardees and subcontractors.
4. Develop a plan in the event that your grant is suspended or terminated. Grantees who are at risk of suspension or termination can consider how they would proceed if a grant were suspended or terminated. For instance, if a grant were suspended, there may be reasonable costs that must be expended during the suspension period, while other costs could be eliminated or minimized. Thinking through the impact of a suspension or termination ahead of time could help streamline the process for implementing such an order, if received.
5. Evaluate how your grant fits within the Trump Administration’s stated goals. To advocate for a grant to continue with minimal disruption, consider whether the benefits of the grant may fit within the broader context of the Trump Administration’s policy goals. The “Unleashing American Energy” EO, for example, discusses (among others) the following goals: being the “leading producer and processor of non-fuel minerals, including rare earth minerals”; “ensuring that an abundant supply of reliable energy is readily accessible in every State and territory”; prioritizing “cost-effectiveness”; reducing energy costs; and creating “jobs and prosperity at home.” The EO also indicates a preference for technologies and resources related to “oil, natural gas, coal, hydropower, biofuels, critical mineral, and nuclear energy.”
6. Consider reaching out to congressional representatives. Since many IRA and BIL grants serve key public policy objectives, it may be worthwhile to consider reaching out to your congressional representatives. Upon hearing of concerns regarding the impact of a grant’s cancelation on a given state or district, United States Senate or congressional offices may be willing to engage with the relevant agency to propose a solution. It is encouraged to undertake such engagement before the grant is actually terminated, if possible. This may also be a worthwhile action to take for other forms of federal financial assistance (eg, loans from the United States Department of Energy).
7. Carefully review DEI-related certifications. Agencies have begun requesting that contractors and grantees provide certifications relating to diversity, equity, and inclusion (DEI) activities, programs, or policies being implemented under the contract or grant. Contractors and grantees are encouraged to carefully review and respond appropriately to any such requests.
8. Consider options in the event of termination. Some agencies’ grant regulations outline the processes to be followed for disputes over the award or administration of federal funding. For example, the Department of Energy’s grant regulations (2 C.F.R. Part 910) provide for informal, alternative, and formal dispute resolution procedures, as well as subsequent appeals thereof. Grantees are encouraged to understand the avenues for relief that are provided by the agency administering the award, as grantees are generally required to exhaust any available administrative remedies before seeking relief in the federal court system.
For more information
DLA Piper is assisting clients with a variety of issues related to the pause and termination of federal funding activities, including with stop-work and suspension orders, DEI-related certifications, requests for equitable adjustment, and claims. Please contact the authors if you have any questions.
This alert was originally published in Law360 on February 19, 2025.
