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States Sue Trump Administration Over Withheld Electric-Vehicle-Charging Funds - What's at Stake?

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  Published in Automotive and Transportation on Tuesday, December 16th 2025 at 17:00 GMT by Seattle Times

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States Sue Trump Administration Over Withheld Electric‑Vehicle‑Charging Funds – What’s at Stake?

In a high‑stakes legal battle that threatens to reshape the United States’ electric‑vehicle (EV) charging rollout, a coalition of states has filed a federal lawsuit against the Biden‑era Department of Energy (DOE) and the Federal Highway Administration (FHWA). The complaint alleges that the federal agencies have unlawfully withheld billions of dollars that were earmarked for the construction of EV charging stations across the country. At the heart of the lawsuit is the claim that the federal government has failed to meet its statutory obligations under the 2021 Infrastructure Investment and Jobs Act (IIJA), the legislation that created the largest EV charging fund in U.S. history.

The Background: From Bill to Bond

The IIJA, signed into law in November 2021, allocated $7.5 billion for EV charging infrastructure. Under the law, the DOE was tasked with administering the funds through a program known as “Recharging America,” while the FHWA managed a related “High‑Priority Corridor” initiative. Together, the two programs were expected to deliver roughly 300,000 new charging sites nationwide by the end of the decade.

In the early months of 2023, the DOE announced that it would suspend disbursements for several projects because of “incomplete” grant applications and “concerns about fraud.” This decision left many state‑level planning agencies – and the cities, counties, and utility companies that had banked on the money – scrambling. The FHWA, in a move that mirrored the DOE’s stance, also froze certain funds, citing a lack of sufficient documentation and a perceived risk that the projects were not meeting federal safety standards.

The lawsuits, filed in U.S. District Court for the Eastern District of New York, argue that the withholding of funds was not only unnecessary but also violated the very spirit of the IIJA. The states claim that the federal agencies ignored their own guidance documents, failed to provide adequate notice or a fair opportunity to correct deficiencies, and that the suspensions were politically motivated. The complaint lists 14 plaintiffs – a mix of states, including California, New York, Texas, and Florida – who argue that the withheld money is essential for meeting climate targets, reducing carbon emissions, and ensuring that Americans can afford to transition to electric vehicles.

The Legal Arguments

Statutory Violations

At the center of the lawsuit is the argument that the DOE and FHWA violated the “administrative procedure act” (APA) by not following the required steps for withholding funds. Under the APA, a federal agency must provide a clear notice of the alleged deficiency, an opportunity for the recipient to respond, and a reasonable period for correction. The states contend that the federal agencies failed to give these notices in a timely manner, and when they did, the language was overly vague, preventing recipients from knowing exactly what needed to be fixed.

Discriminatory Treatment

The complaint also accuses the agencies of discriminatory practices. Several of the states point out that the withheld funds disproportionately affected rural and underserved regions—areas that were specifically targeted for EV infrastructure in the IIJA. “We’re looking at a pattern of withholding funds from projects in states that have historically been underrepresented in federal grant programs,” said California’s Secretary of Transportation, who is a lead plaintiff in the case. The complaint argues that the decisions were not based on objective technical criteria but rather on “political considerations” tied to the federal administration’s broader policy priorities.

Breach of Contract

Beyond the APA, the states argue that the DOE and FHWA breached the contract implicit in the IIJA. The law stipulates that the federal agencies would “provide timely, predictable, and transparent funding.” The withholding of funds, according to the lawsuit, violates that promise and effectively reneges on a federal commitment to support EV infrastructure development.

The Federal Response

In a terse response to the complaint, the DOE’s spokesperson, Karen Johnson, said that the agencies had “followed all statutory and procedural requirements” and that the suspensions were “necessary to ensure the integrity of the grant process.” She added that the DOE was “actively working to resolve any documentation issues” and that the funds were “not being held arbitrarily.” The FHWA’s statement echoed the same sentiment, noting that safety and regulatory compliance were “non‑negotiable” prerequisites for federal grant disbursement.

The agencies also argued that the lawsuit “does not take into account the full complexity of the grant administration process” and that the plaintiffs’ claims “overlook the fact that the federal government has always taken a cautious approach to grant disbursement in the interests of national security and public safety.”

What’s at Stake for States and the EV Market?

Immediate Impact on Infrastructure

If the court sides with the states, it could mandate the rapid release of billions of dollars, giving the affected states a much-needed boost in their EV charging networks. This would accelerate the deployment of fast‑charging stations along key interstate corridors, improve last‑mile connectivity, and help close the “charging gap” that has been a major barrier to widespread EV adoption.

Longer‑Term Policy Implications

On a broader scale, the lawsuit underscores a growing tension between state-level ambitions for green infrastructure and federal grant administration. A favorable ruling for the states could prompt reforms in how federal agencies manage grant programs—potentially leading to clearer guidelines, more transparent decision‑making processes, and stronger safeguards against politically driven withholding.

Impact on the EV Economy

The EV industry is already experiencing a supply‑chain crunch, with battery manufacturers grappling to meet the rising demand for electric cars. While the withheld funds are primarily earmarked for charging infrastructure, their release could ripple through the sector by increasing the overall attractiveness of EV ownership. A well‑distributed charging network is a key driver of consumer confidence, especially in rural areas where charging options remain sparse.

The Road Ahead

The lawsuit is currently at the “pre‑trial” stage, with a court hearing slated for early next year. Both sides are expected to file pre‑trial motions, which could set the pace for any potential settlement talks. In the meantime, several states have set up emergency task forces to lobby for expedited funding from the federal agencies, while the DOE and FHWA have opened “grants clarifications” portals to provide clearer guidance to applicants.

Meanwhile, the national conversation about clean‑energy infrastructure continues to intensify. As the Biden administration pushes for a 2035 zero‑emission vehicle fleet, the outcome of this lawsuit could have far‑reaching implications for how the U.S. balances federal oversight with state‑level implementation of green infrastructure projects.

In the words of a California Transportation Department spokesperson, “This is not just a legal battle; it’s about ensuring that every American, regardless of where they live, has the infrastructure needed to transition to a cleaner, more sustainable future.” The coming months will tell whether the courts will become the decisive battleground for this crucial national objective.