On October 2, 2025, the Trump administration announced major funding cuts, canceling $7.56 billion in clean energy projects and freezing $18 billion for New York infrastructure, intensifying a political standoff during a government shutdown.
The U.S. Department of Energy (DOE) terminated 321 financial awards supporting 223 projects, which it stated would save taxpayers approximately $7.56 billion.
Administration Justification vs. Democratic Outcry
Energy Secretary Chris Wright stated the decision followed a "thorough, individualized financial review" and that the projects "did not adequately advance the nation’s energy needs, were not economically viable, and would not provide a positive return on investment of taxpayer dollars" . The DOE also indicated that 26% of the canceled awards, valued at over $3.1 billion, were rushed through in the final months of the Biden administration . White House Budget Director Russell Vought referred to the canceled funding as "Green New Scam funding" on social media.
In contrast, Democratic lawmakers and state officials condemned the move as political retribution. The vast majority of the canceled awards were for projects in states that voted for Kamala Harris in the 2024 presidential election and have Democratic governors and senators . California Governor Gavin Newsom stated that a $1.2 billion hydrogen energy project in his state was canceled, a move he said threatened 220,000 jobs. He accused the administration of setting energy policy based on the "highest bidder," vowing to continue pursuing a clean-energy strategy . Senator Chris Murphy of Connecticut called the action undemocratic, stating the president was "illegally suspending federal projects in states run by Democrats as a way to punish the political opposition".
Affected Projects
While the DOE has not published an official list, reports indicate the cuts target several major initiatives . These include a $1.2 billion clean hydrogen hub in California and a $1 billion hydrogen hub in the Pacific Northwest . A $464 million grant to Minnesota for improving connections between regional electrical grids was also canceled, a project aimed at reducing blackout risks and electricity costs . Other casualties are a $630 million grant for upgrading transmission lines in California and a $250 million grant to strengthen power lines on the Warm Springs Reservation in Oregon . Funding for a $326 million project at Colorado State University to reduce methane leaks from oil and gas wells was also terminated . Award recipients have 30 days to appeal the termination decisions, and some have already begun this process .
Separately, the U.S. Department of Transportation (USDOT) froze roughly $18 billion in funding for two of the nation's largest infrastructure projects: the Gateway Hudson Tunnel and the Second Avenue Subway extension.
Stated Reasons
The administration justified the freeze by stating it needs to review whether New York's contracting processes, particularly those related to Diversity, Equity, and Inclusion (DEI), comply with the Constitution and civil rights laws . A USDOT spokesperson said that due to the government shutdown, the department has been forced to furlough the civil rights staff needed to conduct this review, thus pausing the disbursement of funds.
New York's Democratic leaders have rejected this reasoning, calling it a pretext for political retaliation. Governor Kathy Hochul described the move as "political payback and an attack on New York," accusing the administration of using "culture wars" to justify actions that hurt the state . Senate Minority Leader Chuck Schumer stated that obstructing these projects is "stupid and counterproductive because they create tens of thousands of great jobs and are essential for a strong regional and national economy" . House Minority Leader Hakeem Jeffries dismissed the threat from Budget Director Vought, calling him the "poster child for privilege and mediocrity".
Impact on Critical Projects
The funding freeze directly targets two monumental projects. The $16 billion Gateway Program aims to build a new rail tunnel under the Hudson River, a critical piece of infrastructure for the Northeast Corridor that connects New York and New Jersey . The Second Avenue Subway extension project planned to use a recent $3.4 billion federal grant to expand service into East Harlem . The freeze immediately affects a $300 million disbursement for the subway project . Although work continues for now, experts warn that delays could add tens of millions of dollars to the Hudson River project's budget and set a dangerous precedent that makes private contractors wary. The administration's decision is expected to be challenged in court.
These funding actions are a central part of the escalating standoff over the federal government shutdown that began on October 1, 2025 . President Trump had previously hinted at such moves, stating that "a lot of good can come down from shutdowns" and that "We can get rid of a lot of things that we didn't want, and they'd be Democrat things" . The decisions reflect a governing approach that frames political opposition in stark terms, with the administration taking decisive action against projects in Democratic strongholds during a period of shuttered government operations.