San Francisco challenges illegal conditions on energy grants that help reduce fossil fuel emissions

San Francisco, CA (June 5, 2026) — San Francisco City Attorney David Chiu announced today that he sued the U.S. Department of Energy (DOE) over an unlawful condition in DOE’s new standard terms and conditions. These standard terms and conditions apply to all DOE funding, including funding San Francisco receives through DOE’s Clean Cities program. The Clean Cities program funds initiatives to reduce reliance on fossil fuels and promote alternative energy. The new DOE standard terms and conditions force grant recipients to implement the Federal Administration’s anti-equity policy preferences or lose access to all DOE grants including funding that helps combat climate change.

“Climate change is an existential crisis, and this funding has a proven record of cutting fossil fuel emissions,” said City Attorney Chiu. “San Francisco cares about our planet and is committed to taking steps to reverse climate change. The Administration is again using illegal funding conditions on critical grants to push its anti‑equity agenda.”

“A sustainable future that leaves behind communities already carrying the greatest burdens is not truly sustainable,” said Tyrone Jue, Director, San Francisco Environment Department. “Climate action must reduce harm, expand opportunity, and ensure public investments reach everyone.”

Background
In 1992, following successive energy crises, Congress recognized the need to reduce the nation’s dependence on imported oil and invest in alternative fuel sources. Through the Energy Policy Act of 1992, Congress required state and federal fleets to invest in alternative fuel vehicles and directed DOE to promote and incentivize state and local alternative fuel programs. The following year, DOE created the Clean Cities Program to support the adoption of alternative fuels and fuel vehicles.

Since joining the program in 1994, San Francisco has relied on Clean Cities funding to support the San Francisco Department of the Environment’s staffing, outreach, data tracking, and alternative fuel infrastructure planning. The funding has allowed San Francisco to facilitate installing over 1,600 electric vehicle (EV) chargers and cut gasoline use by 6.6 million gallons per year.

On April 1, 2026, DOE awarded San Francisco $130,000 in Clean Cities funding. San Francisco planned to use this award to facilitate the adoption of alternative fuels, educate and connect local communities to alternative fuel opportunities, and develop strategic programs and activities to promote and expand the use of alternative fuel vehicles.

On or before April 12, DOE posted new standard terms and conditions for all DOE funding, including San Francisco’s Clean Cities award. The new conditions refer to the President’s executive orders and illegally require recipients to certify that they do not operate programs promoting diversity, equity, and inclusion.

San Francisco also receives other DOE grants threatened by DOE’s unlawful standard terms and conditions. These awards contribute to energy conservation and planning, improve building performance standards, and support programs that cut emissions.

Since taking office, the President has issued several executive orders directing federal agencies to add unlawful conditions in funding opportunities that advance the President’s political agenda.

DOE’s actions force San Francisco to either forgo critical DOE funding, including funding that has a proven record of lowering fossil fuel emissions, or carry out a political agenda unrelated to the purpose of DOE’s grants.

The City’s lawsuit alleges DOE’s new standard terms and conditions violate the Administrative Procedures Act as well as the Constitution’s Separation of Powers and Spending Power doctrines.

San Francisco is seeking an injunction to prevent the new condition from being enforced, as well as a declaration from the Court stating that the new grant condition is unconstitutional and unlawful.

The case is City and County of San Francisco v. U.S. Department of Energy et al., U.S. District Court for the Northern District of California, Case No. 3:26-cv-05455. View the complaint.