San Francisco is taking the U.S. Department of Energy to federal court, arguing that the agency quietly slipped in new strings on grant money that could undercut the city’s long-running clean-energy push. City Attorney David Chiu filed the lawsuit yesterday on behalf of the City and County of San Francisco, saying the new conditions threaten local plans to electrify municipal fleets and build out charging infrastructure. The complaint, lodged in federal court in San Francisco, targets recent funding terms the city says go beyond what Congress ever authorized the agency to do.
What the city alleges
According to the complaint, the Department of Energy recently began requiring grantees to certify that they do not operate programs that promote diversity, equity, and inclusion. San Francisco argues that those conditions exceed the agency’s statutory authority and run afoul of the Constitution’s separation of powers as well as the Administrative Procedure Act. The filing also contends the policy shift could cost the city more than $130,000 in Clean Cities funding.
About Clean Cities
The Clean Cities program is a U.S. Department of Energy partnership created in 1993 to help communities cut petroleum use by promoting alternative fuels, fleet electrification and charging infrastructure. The initiative offers technical support and competitive grants to local coalitions and fleets and has backed projects across the country for more than three decades, per the U.S. Department of Energy.
Local impact in San Francisco
City officials say the threatened dollars are not theoretical. San Francisco reports installing more than 1,600 electric-vehicle chargers, work the city says helps reduce gasoline consumption by roughly 6.6 million gallons each year. The lawsuit points to an April Clean Cities award of about $130,000 that the city argues could be put at risk by the new grant terms.
Federal policy backdrop
The case lands amid a broader federal effort to insert new certification language into grants and contracts that restricts what the administration views as unlawful DEI activities. Legal analysts note that the General Services Administration has proposed a SAM registration certification, implementing Executive Order 14173, that would require financial-assistance recipients to attest that they comply with federal anti-discrimination rules. Critics argue that change could expose grantees to liability under the False Claims Act, according to analysis by Cooley LLP.
Where this fits in the courts
San Francisco’s lawsuit arrives as part of a broader wave of challenges to federal efforts to trim, cap or reshape clean-energy funding. States, universities and local governments have already sued over similar policy moves. Courts have issued mixed decisions on when agencies may attach new conditions to established grant programs, and judges will now be asked to decide whether the Department of Energy’s latest changes are lawful and sufficiently tied to the purpose of the awards, as recent coverage of those multi-party suits details, per Stateline.
Legal implications
The city’s challenge puts familiar questions about executive-branch power back before a federal judge: whether an agency can tack on conditions that materially alter who qualifies for grants, and whether such changes must go through notice-and-comment rulemaking or otherwise comply with the Administrative Procedure Act. If the court rules for San Francisco, the decision could narrow the extent to which federal agencies can attach broad social-policy certifications to environmental and infrastructure funding.
The case will proceed in federal court in San Francisco, where a judge will decide whether the Department of Energy’s new grant conditions stand or fall. The outcome could ripple beyond the city, affecting other local governments and regional coalitions that rely on federal clean-energy programs across the country.
