Department of Energy Begins Investigating Financial Assistance Awards, Heightening Risk of Award Terminations

On May 15, 2025, U.S. Department of Energy (“DOE” or the “Agency”) issued a memorandum outlining the Agency’s new policy for evaluating financial assistance awards (e.g., grants, cooperative agreements, and technology investment agreements) to identify waste, fraud, and abuse. Businesses, universities, non-profit organizations, and other entities that have received DOE financial assistance awards now face increased risk of investigation and potential award termination, withholding of funding, and project modification.

The Agency announced that it is prioritizing review of awards for “large-scale commercial projects” and has already begun requesting additional information to evaluate 179 awards totaling over $15 billion in financial assistance. Among other things, DOE will evaluate awards on a case-by-case basis to determine whether they are (1) economically viable; (2) aligned with national and economic security interests; and (3) consistent with the Trump Administration’s policies and priorities. DOE’s new policy thus indicates the Agency will likely prioritize reviewing awards it deems financially precarious or inconsistent with President Trump’s goals to increase domestic coal, oil, and natural gas production.

In evaluating whether to modify or terminate an award, the Agency announced that it may rely on information previously submitted by award recipients or issue information requests concerning a project’s financial health, technological and engineering viability, compliance with award terms and conditions, and general market conditions. If the Agency determines that an award is not financially viable or is inconsistent with the Administration’s policy priorities, it may modify the project, withhold funding, or terminate the award. Notably, the Agency noted that a financial assistance recipient’s failure to provide timely, complete responses to the Agency’s written and verbal requests will constitute grounds for termination of the award.

DOE financial assistance reward recipients should consider several actions to prepare for potential DOE review of their rewards, including:

• Establishing proper internal controls and robust compliance programs to ensure award programs are consistent with all applicable laws and award terms and conditions; and
• Developing a plan for responding to DOE in the event the Agency initiates review, and maintain detailed records of correspondence with agency representatives.

Crowell attorneys, including former congressional and executive branch officials, are well-positioned to advise companies that may be subject to these or subsequent DOE investigations. We will be hosting a webinar on May 22, 2025, to discuss the potential legal and political exposure arising from congressional and agency investigations, and how to establish best practices for mitigating and responding to such investigations. Register here.