Zeldin's EPA Blocked from Taking Back $20B in Climate Grants

A federal judge temporarily blocked the Environmental Protection Agency from suddenly canceling three multibillion-dollar clean energy grants on Tuesday.

U.S. District Judge Tanya Chutkan found that the EPA had likely violated the law by issuing identical termination letters to Climate United Fund, Coalition for Green Capital and Power Forward Communities, which said their grants were terminated, effective immediately.

The grants, part of the Greenhouse Gas Reduction Fund program authorized under President Joe Biden’s Inflation Reduction Act, were awarded to fund efforts for clean energy projects across the country. Climate United received $6.97 billion, Coalition for Green Capital $5 billion and Power Forward $2 billion.

Chutkan, a Barack Obama appointee, issued a temporary restraining order to ensure that the funds, held by Citibank, remain in the groups’ respective bank accounts and prevent the EPA from returning the money to the Treasury Department.

Justice Department attorney Marcus Sacks argued that the EPA had the right to address “program integrity” concerns such as “programmatic fraud, waste and abuse" — a refrain common in courts recently as the Trump administration defends funding freezes and cuts by the so-called Department of Government Efficiency.

Chutkan did not find the argument convincing, noting that the termination letters provided no clear legal justification and that the sudden suspension of funds risked irreparable harm for the green energy groups.

“By preserving the status quo, the court is not ‘forcing the government to undo its termination’ or allowing ‘grantees to access billions of dollars in grant funds,’ as EPA defendants argue,” Chutkan wrote in her opinion.

She added that the EPA could ultimately recover the funds, so long as it sought their return in a lawful manner.

Further, she said the temporary relief was supported by the public interest, as the government should abide by statutes governing the National Clean Investment Fund.

Sacks argued in court Monday that the EPA was not terminating the grants, a point that Chutkan found hard to believe considering EPA Administrator Lee Zeldin's public statements that he intended to take control of the grant funds disbursed under the Inflation Reduction Act.

Specifically, Zeldin said the “financial agent agreement with the bank needs to be instantly terminated,” and that the EPA would not rest until the grant funds had been recovered.

On Feb 23, Zeldin made clear in a Fox News interview what he thought about the Greenhouse Gas Reduction Fund program, stating “the entire scheme, in my opinion, is criminal.”

According to the plaintiffs, they first learned their funds had been frozen in mid-February when they placed their regular request to Citibank to release the funds but received no response.

They continued requesting access to funds until Citibank informed them on March 3 that it had forwarded the request to the EPA for further guidance. During this time, the EPA did not respond to similar requests from the plaintiffs.

The agency offered to meet with Climate United around Feb. 24, then rescheduled the meeting three times before ultimately canceling without explanation.

On March 4, the Treasury instructed Citibank not to disburse the funds through March 9, after which the EPA ordered the freeze be continued indefinitely.

Climate United sued, seeking a temporary restraining order on March 8, and Chutkan scheduled a hearing for March 12. On March 11, the EPA sent three termination letters to the green energy groups.

The case is the latest legal battle in the Trump administration’s effort to reverse Biden’s policy achievements, an effort that has primarily targeted funding allocated by federal agencies to battle climate change, provide humanitarian aid overseas and support Diversity, Equity and Inclusion programs stateside.

The federal courts have largely rejected these efforts, finding that by freezing trillions of dollars in funds allocated by Congress in such a blanket manner risks irreparable and unintended consequences.

Chutkan referenced a similar case, a challenge between the United States Conference of Catholic Bishops and the Department of State over canceled immigrant resettlement reimbursement funds, during Monday’s hearing.

In that case, U.S. District Judge Trevor McFadden, a Trump appointee, ruled that because the conference’s injury was financial in nature, they could seek monetary damages rather than receive a temporary restraining order to release the funds.

The Justice Department made similar arguments in the green energy case, comparing the dispute to a contract breach that should be addressed at the Court of Federal Claims.

Chutkan noted that she was not bound by her colleague’s decision and determined she had full jurisdiction in the case.