When the Green House Gas Reduction Fund was established under the Inflation Reduction Act, lawmakers not only earmarked a dollar amount that would be invested through the so-called green bank program, but where investments from the $20 billion fund should be made.
The bulk of the money, some 70%, was supposed to be spent in low-income and disadvantaged communities — communities where there are likely to be many Black people.
It now seems unsurprising, then that the Environmental Protection Agency, under its Trump-appointed Administrator Lee Zeldin, has gone after this huge environmental investment fund focused on frontline communities, moving to cancel it entirely earlier this year despite all the funds having already been awarded to various nonprofit groups. But last week, the EPA won a significant court ruling that says the agency was, in fact, justified in freezing the $20 billion in already obligated funds.
The U.S. Court of Appeals for the District of Columbia Circuit ruled 2-1 in favor of the EPA, with the majority decision by two Trump-appointed judges framing the issue as a contract dispute that belongs in federal claims court — which can only award monetary damages at most, and would not be able to restore access to the $16 billion in obligated grants that the plaintiffs were cut off from.
“In sum, district courts have no jurisdiction to hear claims that the federal government terminated a grant agreement arbitrarily or with impunity. Claims of arbitrary grant termination are essentially contractual,” Judge Neomi Rao wrote in the decision, which was also supported by Judge Gregory Katsas. Both judges were appointed during the first Trump Administration.
It’s a big change in tone compared to earlier discussions of the lawsuit, which was framed more in terms of the EPA undermining Congress’s power of the purse by attempting to claw back billions of dollars in funds that were appropriated through the Inflation Reduction Act back in 2022. But a dissent written by the third member of the court, Judge Cornelia Pillard, an Obama appointee, argued that this is far larger than a contract dispute.
“The majority allows the government to seize plaintiffs’ money based on spurious and pretextual allegations and to permanently gut implementation of major congressional legislation designed to improve the infrastructure, health, and economic security of communities throughout the country,” she wrote in her dissent.
The EPA under Zeldin has made claims of widespread waste and abuse under the Greenhouse Gas Reduction Fund program as the basis for freezing the funds. But in April, a lower court found that the Justice Department did not substantiate those claims, and a ruling required Citibank, which was holding the funds granted by the EPA, to make them available to the nonprofit group to which they had been awarded. The Trump Administration then appealed, leading the way to this new ruling in favor of the EPA.
The ruling, however, is not the final word in the case, and the nonprofit groups can and will appeal again. As Beth Bafford, the CEO of Climate United, one of the plaintiffs, said in a statement, “This is not the end of our road.”
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