A federal appeals court ruled Tuesday that EPA may void $20 billion in climate law grants that have been under contract for a year.
The ruling by a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit would allow EPA to claw back the balance of those grants now held in frozen accounts at Citibank. But the court barred EPA from removing the funds for one week after its opinion was issued to allow plaintiffs to petition for appeal.
The Greenhouse Gas Reduction Fund, or national “green bank,” is an EPA grant program created under former President Joe Biden’s 2022 climate law. And it has been one of the Trump administration’s top targets for rescission. The grants have been under contract since last August, and the funds are held at a commercial bank instead of the Treasury Department. Still, EPA declared them to be void in March, and the agency has been trying to claw the funds back ever since.
The appellate judges found that the nonprofit grantees challenging the Trump administration’s termination of their awards “are not likely to succeed on the merits because their claims are essentially contractual.”
The opinion, which voids an earlier injunction by a district judge, finds that the case should be heard by a federal claims court, not by the district court. The U.S. Court of Federal Claims can award damages to the plaintiffs if the agency is found to have wrongly terminated their grant contracts, but it cannot require EPA to go forward with the grant program if it decides to suspend it.
The Greenhouse Gas Reduction Fund would have expanded lending in areas such as renewable energy and electric transportation. Some of the funds from the original award funds have been spent, but EPA has estimated that the Citibank accounts now hold a total of nearly $17 billion.
The grantees are likely to appeal the panel’s decision to the full appellate court. Grantees said Tuesday morning they were still weighing their options.
Beth Bafford, CEO of Climate United Fund, said in a statement that the plaintiffs were “disappointed — albeit unsurprised” by the decision.
“This is another hurdle in our fight to lower energy costs for those who need it most while creating jobs for hardworking Americans, but we will continue to press on for communities across the country that stand to benefit from clean, abundant, and affordable energy,” said Bafford, whose group is the program’s largest grant awardee and the lead plaintiff on the lawsuit. “This is not the end of our road.”
Power Forward Communities, another green bank awardee and party to the suit, also said the result wasn’t surprising.
“We have known since this litigation started that this would likely be a protracted fight,” the nonprofit coalition said in an email to POLITICO’s E&E News. It added that it remained “confident” that the awardees would ultimately prevail.
The appeals decision comes after the Supreme Court ruled last month that the Trump administration could halt National Institutes of Health grants under contract that the administration deemed to be related to “diversity, equity and inclusion” efforts that it opposes. A district judge cited that case last week when dismissing a challenge by EPA environmental justice grantees whose awards also have been canceled.
The ”green bank” plaintiffs have argued their awards have been effectively paid to them already and that rescission is no longer possible. They also argue that EPA flouted the will of Congress by seeking to unilaterally eliminate a congressionally mandated program.
