The U.S. Court of Appeals for the District of Columbia Circuit on Tuesday blocked the Trump administration from rescinding $20 billion in climate grants.
In a three-page unsigned court opinion, a divided court overturned a panel’s earlier decision, saying the U.S. Environmental Protection Agency likely violated the Inflation Reduction Act when it attempted to terminate and claw back Greenhouse Gas Reduction Fund grants awarded to Climate United and other nonprofits. The grants were being used to fund “projects across the United States that support domestic clean energy development, build healthy and affordable housing, accelerate American-made electric vehicle manufacturing, and save hard-working Americans money on their bills,” Climate United said in a March 8 lawsuit filed after EPA froze the funding.
Six of the court’s 10 judges upheld a preliminary injunction rejecting the EPA’s attempts to terminate the grant program “based solely on a policy disagreement” with the statute and take back $6.97 billion in funds disbursed to Climate United. The judges said the EPA has not indicated it would not continue to take steps to repeal the funds if the injunction were lifted.
Congress authorized $19.97 billion through the IRA in 2022 to support beneficiaries — including local governments — in achieving climate, clean energy, infrastructure and equity goals, according to an amicus brief filed Feb. 9 by the National League of Cities and the U.S. Conference of Mayors. “Local governments have suffered, and remain at risk of further suffering” because they planned for projects and made budgetary decisions based on the grants, the brief states.
Last year, Congress repealed unspent EPA IRA funding in the One Big Beautiful Bill Act. EPA Administrator Lee Zeldin terminated GGRF funding awarded to eight National Clean Investment Fund and Clean Communities Investment Accelerator entities “as serious concerns were raised regarding self-dealing and conflicts of interest, unqualified recipients, and reduced government oversight,” an EPA spokesperson said in an emailed statement to Smart Cities Dive in December.
Four of the D.C. appeals court judges said a portion of the preliminary injunction was no longer warranted following the One Big Beautiful Bill Act’s repeal of the funding.
The EPA is reviewing Tuesday’s judgment and considering next steps, an EPA spokesperson said in an Aug. 4 email. The court leaves open what the EPA can do next, stating it is evenly divided on whether the temporary restrictions on the EPA should continue based on the remaining legal arguments presented to them.
"Today, the DC Circuit Court judges affirmed what we have always known: EPA took actions to unlawfully freeze and dismantle the National Clean Investment Fund grant program,” plaintiff Climate United said in an emailed statement. “Despite efforts to harm the awardees with false allegations and misinformation, there remains no legal basis for terminating our grant award and clawing back funds that were already disbursed in our bank accounts.
