Department of Energy ordered to unfreeze IRA funds

A Rhode Island judge on Tuesday ordered the Department of Energy to immediately resume disbursing funds awarded under the Inflation Reduction Act (IRA), including those for HVAC-focused rebate programs.

Why it matters: The IRA in 2022 earmarked nearly $9 billion for states to provide point-of-sale rebates to homeowners who make qualified HVAC upgrades. As of January 17, 2025, 12 states, including D.C., had launched their programs. 

What’s happening: President Trump on January 20 — the night of his inauguration — signed an executive order requiring the Department of Energy to “immediately pause the disbursement of funds” under the law for 90 days. 

• Nearly two-dozen states sued the administration in response, claiming the freeze is unlawful, with six nonprofits filing a separate lawsuit last month on identical grounds. 
• “Agencies do not have unlimited authority to further a President’s agenda,” wrote Judge Mary McElroy in her decision. “[The] sudden, indefinite freeze of all already awarded IRA money was arbitrary and capricious: it was neither reasonable nor reasonably explained.”

Zoom out: Five states — Arizona, California, Colorado, Georgia, and Rhode Island — either paused or delayed their HVAC programs during the freeze.

• “Due to the current federal Executive Orders… and communications from the U.S. Department of Energy, funding for all Efficiency Arizona programs is currently unavailable,” an Arizona state office wrote at the time.  
• The six other states with previously active programs appear to have remained operational despite the freeze, according to their websites.

What’s next: McElroy’s order requires all federal agencies to “take immediate steps to resume the processing, disbursement, and payment of already-awarded funding.”

• The Department of Energy didn’t respond to a request for comment.