Federal Judge Shuts Down EPA’s Bid to Reclaim Billions in Clean Energy Funding

A federal judge has issued a temporary block against the Environmental Protection Agency (EPA) from terminating three substantial clean energy grants. On Tuesday, U.S. District Judge Tanya Chutkan found that the EPA likely violated legal protocols when it sent out identical termination letters to Climate United Fund, Coalition for Green Capital, and Power Forward Communities.

The grants, part of the Greenhouse Gas Reduction Fund established under President Joe Biden’s Inflation Reduction Act, amounted to nearly $14 billion in total. Specifically, Climate United received $6.97 billion, Coalition for Green Capital $5 billion, and Power Forward $2 billion, intended to finance clean energy initiatives nationwide.

Judge Chutkan’s ruling includes a temporary restraining order to ensure that the funds, currently held by Citibank, remain accessible to the organizations involved. This measure is to prevent the EPA from reallocating the money to the Treasury Department. Justice Department attorney Marcus Sacks contended that the EPA had the authority to preemptively terminate the grants based on concerns of fraud and waste. However, Chutkan was not persuaded by this argument, citing the lack of clear legal justification in the termination letters and the risk of irreparable harm to the organizations.

The Judge emphasized that the court’s actions do not compel the EPA to reverse its decision but rather maintain the current financial status until a lawful procedure is established. She assured that the EPA could still reclaim the funds if pursued correctly. Furthermore, the temporary relief aligns with public interest, affirming the necessity to adhere to existing statutes governing the National Clean Investment Fund.

During the proceedings, Sacks claimed the EPA was not indeed terminating the grants, a statement that Chutkan found hard to accept given EPA Administrator Lee Zeldin’s remarks pointing toward a desire to regain control over the disbursed funds. Zeldin previously characterized the Greenhouse Gas Reduction Fund program as “criminal” during a Fox News interview in February.

The plaintiffs learned of the grant freezes in mid-February when attempting to access their funds through Citibank, which had failed to respond to their requests. Citibank eventually informed them that guidance was sought from the EPA, but the agency remained unresponsive to similar inquiries until a meeting was planned and subsequently canceled without explanation.

On March 4, the Treasury directed Citibank not to release the funds, following which the EPA mandated an indefinite freeze. Climate United sued for a temporary restraining order on March 8, prompting a hearing scheduled for March 12. Just prior to the hearing, the EPA sent out the termination letters.

This legal dispute marks another confrontation in ongoing tensions between the Trump administration’s initiatives and Biden’s climate policies. Critics assert that such funding freezes threaten the progress made in addressing climate change and supporting domestic equity programs. Judicial review has largely favored maintaining these funding streams, warning against blanket suspensions that could potentially lead to significant societal harm.

During the hearing, Chutkan pointed to a similar case involving the U.S. Conference of Catholic Bishops and the Department of State where a court addressed financial injuries. Despite arguments by the Justice Department suggesting the green energy dispute should be routed to the Court of Federal Claims, Chutkan affirmed her jurisdiction over the case.