The Trump administration is taking the unusual step of trying to cut funding and eliminate programs it dislikes by using routine administrative actions to block billions in EPA grants that the previous administration signed binding contracts to pay.
The administration’s strategy involves a series of bureaucratic maneuvers to return previously committed EPA grant funds to the U.S. Treasury and to kill grant programs addressing climate change, equity and pollution reduction.
It comes as President Donald Trump’s budget chief, Russ Vought, is reported to be searching for unspent money at various agencies to ask Congress to rescind and seeking to expand executive power over the federal budget.
The strategy, described in internal EPA emails reviewed by POLITICO’s E&E News and previous interviews, raises legal concerns.
“It appears that this administration is trying to completely usurp Congress’ power of the purse and unwind everything that the last Congress passed,” said Jillian Blanchard, vice president for climate change and environment justice at Lawyers for Good Government, who is representing some grant recipients. “Their bureaucratic jujitsu is impressive, but it’s also illegal.”
The strategy involves a broad application of two administrative budget authorities. One is typically used to cancel contracts for failure to perform. The other allows an agency to recategorize money that is unspent when a contract is canceled or when a project is finished so it can be returned to the U.S. Treasury.
Instead of applying the authorities to individual grants based on unique circumstances, the Trump administration appears to be planning to use them to cancel hundreds of EPA grant agreements signed during the Biden administration and make them available for rescission through a process called de-obligation. EPA says the grants no longer match its priorities.
The situation raises questions for some legal experts about whether it would violate federal anti-impoundment law, which restricts a president’s ability to arbitrarily withhold or cancel spending mandated by Congress.
“I’m not aware of much in the way of precedent here when it comes to the de-obligation process,” Marquette University political scientist Paul Nolette said. “It doesn’t make it more legal because you call it de-obligating as opposed to rescission and so forth. It’s still essentially impoundment.”
The strategy exemplifies how the Trump administration is trying to exert more power over federal spending in ways that have not been tested since the Nixon administration, Nolette said.
In a final step to block any EPA attempt to spend newly unobligated grant money, the administration plans to ask Congress to rescind the money, which returns it to the general Treasury.
The White House Office of Management and Budget has asked Congress to rescind $9.4 billion in spending, including funds for National Public Radio and the Public Broadcasting Service. OMB more recently asked agencies including EPA to freeze more than $30 billion in planned spending.
The tax cut and federal spending package congressional Republicans hope to enact this summer could be a vehicle for the rescissions. The package would repeal the grant programs created by the 2022 Inflation Reduction Act and rescind unobligated balances, effectively killing climate and environmental pollution initiatives that Congress and President Joe Biden created.
But it’s unclear what that would mean for grants that EPA recently terminated, potentially illegally, and whose funding was subsequently de-obligated. Some courts have already ruled that the grant terminations were unlawful. Lawmakers such as Sen. Shelley Moore Capito (R-W.Va.) have objected to the cancellation of individual grants.
“This is somewhat of a gray area, but there is a risk that, if the terminations are upheld by the courts, the grant funds would then be considered unobligated and so rescinded under the reconciliation bill,” Romany Webb, deputy director of the Sabin Center for Climate Change Law at Columbia University, said in an email.
Internal EPA emails reveal strategy
Emails reviewed by E&E News hint that the administration plans to ask Congress to rescind funding lawmakers had previously mandated and for which EPA has signed contracts.
In the emails, which were made public this spring as part of a lawsuit, EPA officials discuss how they could de-obligate money that was awarded and under contract for projects such as sewage collection systems and rooftop solar arrays so it could be spent elsewhere. Congress can only rescind funding that is not obligated, meaning that an agency has not committed to spend the funds.
In a March 7 email exchange, eight EPA career officials discussed a request by EPA Associate Deputy Administrator Travis Voyles — a Trump appointee — to stop disbursing funds for eight climate and infrastructure grant accounts. The funding halt was accomplished by freezing payments from the federal government’s electronic payments system for grants, known as Automated Standard Application for Payments or ASAP.
“All, we just had a check-in with Travis and as part of a broader effort related to certain grant programs, please put a control on ASAP accounts for all grants funded under the following grant programs so recipients cannot draw funds,” wrote Daniel Coogan, the deputy assistant administrator for infrastructure and extramural resources in EPA’s Office of Mission Support, in one email.
Later in the same chain, EPA budget analyst Gary Lane asked a colleague when the grant funds would be de-obligated and was told that typically happens after grantees have turned in their close-out paperwork, known as final financial reports.
“We are trying to get a sense of timing of the [final financial report] process and thinking ahead in the event these funds are rescinded in future appropriations,” Lane wrote.
Vonda Jennette, director of EPA’s Research Triangle Park finance center in North Carolina, told Lane the process typically takes 120 days.
On March 10, EPA declared more than 400 grant awards funded by Biden-era laws terminated as part of a broader swing against Biden-era environmental policies. EPA said the grants did not align with Trump priorities and executive orders and that the Biden administration’s award process was rushed and faulty.
Many recipients — which include nonprofits and state and local governments — are suing EPA, saying that their grants could be terminated only for cause.
Officials for the city of Thomasville, Georgia, say they were assured by EPA staff early in the Trump administration that their funding was safe. “The quote we were given is, ‘It would take a literal act of Congress to not award this grant to you all,’” said Sheryl Sealy, assistant city manager for Thomasville, whose $9 million grant to build a new wastewater collection system was canceled in early May. “It’s disappointing when you have to pour so much money into something that no one ever really receives.”
In another email exchange, Coogan told Kimberly Patrick, EPA’s principal deputy assistant administrator of mission support, that agency grant officials were working with the agency’s Office of General Counsel and Department of Justice on issues related to the terminations.
“While we work through this process, we have holds in ASAP on accounts for all EJ programs identified in the termination list I shared,” Coogan wrote in response to a question about a grant to help West Virginia address “forever chemicals” contamination. “Happy to explain the reason/strategy on that but that needs to be a phone call/in-person.”
“There is a separate policy decision/ discussion on what to do with the $ from all the terminated and deobligated grants,” Coogan continued in the email to Patrick.
Molly Vaseliou, a spokesperson for EPA, accused POLITICO’S E&E News of “cherry-picking” the emails.
“This may be crazy, but internal deliberations are nothing more than government employees asking good faith questions on financial stewardship,” Vaseliou said in an email.
