Appeals court rules to unfreeze $20 billion in federal climate grants
The U.S. Court of Appeals for the District of Columbia Circuit ruled on Tuesday to block the Trump administration from revoking $20 billion in climate grants. The court held that the EPA's actions to terminate and recover the grants may violate the Inflation Reduction Act.
The U.S. Court of Appeals for the District of Columbia Circuit ruled on Tuesday to block the Trump administration's attempt to revoke $20 billion in climate grants.
In an unsigned three-page opinion, a divided court overturned a previous panel's ruling, finding that the U.S. Environmental Protection Agency (EPA) may have violated the Inflation Reduction Act when it sought to terminate and claw back greenhouse gas reduction fund grants awarded to Climate United and other nonprofits. Climate United said in a lawsuit filed on March 8 that the grants were being used to fund "projects across the country that support domestic clean energy development, build healthy and affordable housing, accelerate American-made electric vehicle production, and help hardworking Americans save on their bills." The lawsuit was filed after the EPA froze the funds.
Six of the court's ten judges supported upholding the preliminary injunction, which rejected the EPA's actions to terminate the grant program and claw back $6.97 billion already disbursed to Climate United "based solely on policy disagreements." The judges stated that the EPA had not shown it would not continue to take steps to rescind these funds if the injunction were lifted.
Congress authorized $19.97 billion in 2022 through the Inflation Reduction Act to support beneficiaries, including local governments, in achieving climate, clean energy, infrastructure, and equity goals. This information comes from an amicus brief filed on February 9 by the National League of Cities and the U.S. Conference of Mayors. The brief noted that "local governments have already suffered losses and still face the risk of further losses" because they made project planning and budget decisions based on these grants.
Last year, Congress rescinded the EPA's unused Inflation Reduction Act funds in the One Big Beautiful Bill. EPA Administrator Lee Zeldin terminated greenhouse gas reduction fund grants awarded to eight entities under the National Clean Investment Fund and Clean Communities Investment Accelerator programs, citing "serious concerns about self-dealing and conflicts of interest, recipient ineligibility, and reduced government oversight," an EPA spokesperson said in an email statement to Smart Cities Dive last December.
Four judges on the D.C. Circuit Court of Appeals believed that parts of the preliminary injunction were no longer necessary after the One Big Beautiful Bill rescinded the funds.
An EPA spokesperson said in an email on August 4 that the agency was reviewing Tuesday's ruling and considering next steps. The court left open what the EPA could do next, stating only that the judges were evenly split on whether a temporary restriction on the EPA should continue, based on the remaining legal arguments.
"Today, the judges of the D.C. Circuit affirmed what we have always known: the EPA acted illegally in freezing and dismantling the National Clean Investment Fund grant program," plaintiff Climate United said in an email statement. "Despite attempts to harm grantees with false accusations and misinformation, there remains no legal basis to terminate our grant awards and claw back funds already deposited into our bank accounts."