With $20 billion in awarded grants to reduce greenhouse gas emissions on the line, a federal appeals court sided with the U.S. Environmental Projection Agency Sept. 2, as awardees seek to stop the Trump administration from clawing back the funds.
In a 2-1 ruling, the appellate court panel in Washington, D.C. vacated the preliminary injunction that a district court judge had issued earlier this year, which ordered EPA and Citibank, which holds the money, to continue funding the grants. But writing for the panel, appeals court Judge Neomi Rao said that the lower court “abused its discretion” when it issued the injunction.
Grantees “are not likely to succeed” in their case because part of their claims are contractual and fall under the jurisdiction of the separate Court of Federal Claims, and because another part “is meritless,” Rao wrote in the opinion, joined by Judge Gregory Katsas.
Congress appropriated the money for the Greenhouse Gas Reduction Fund in the 2022 Inflation Reduction Act. Last year, EPA awarded $20 billion in grants through the fund’s National Clean Investment Fund and Clean Communities Investment Accelerator programs to eight recipients. The former fund’s grants were awarded to nonprofit groups so they could partner with private investors to finance clean technology projects, while the latter fund grants were intended to provide funding and technical assistance to various types of net-zero buildings, zero-emissions transportation and similar projects.
In February, EPA moved to freeze the funding, and later to terminate grant agreements, as Administrator Lee Zeldin claimed the funds had been handled in a way to obligate them without proper oversight.
“EPA has a duty to be an exceptional steward of taxpayer dollars,” a spokesperson for the agency said via email.
Five grantees filed a lawsuit challenging the move, arguing that EPA does not have the right to gut the fund created by Congress. After the appeals court decision, Beth Bafford, CEO of Climate United Fund, the lead plaintiff and recipient of the largest grant from the fund at $6.97 billion, said in a statement that the grantees “stand firm on the merits of our case: EPA unlawfully froze and terminated funds that were legally obligated and disbursed.”
Dissenting Judge Cornelia Pillard wrote that grantees had already been spending the money as Congress intended, and that the government “lacked probable cause” to freeze the funds.
“The freeze has already caused plaintiffs to default on promised loans and scuttled affordable housing and energy projects implementing Congress’ vision,” Pillard wrote. “EPA has done all that without presenting to any court any credible evidence or coherent reason that could justify its interference with plaintiffs’ money and its sabotage of Congress’s law.”
The circuit court panel remanded the case back to the district court. Bafford said that the groups “will continue to press on for communities across the country that stand to benefit from clean, abundant and affordable energy. This is not the end of our road.”
