Judge Bars Trump’s Epa From Taking Back $20b In Climate Grants — For Now

A federal judge temporarily blocked the Environmental Protection Agency’s attempt to recoup $20 billion in Biden-era climate grants — dealing the latest judicial setback for President Donald Trump’s attempt to assert unilateral control over spending.

Tuesday’s ruling by U.S. District Judge Tanya Chutkan prevents EPA from reclaiming money it had deposited at Citibank for the groups Climate United, Coalition for Green Capital and Power Forward Communities. But the decision did not revive those groups’ ability to draw from the funds, postponing that decision until after further court proceedings.

The EPA “gave no legal justification for the termination” of the contracts, wrote Chutkan, an appointee of President Barack Obama, saying the administration had only “vaguely” outlined its allegations that the grant program was marked by waste and potential conflicts of interest.

The fight over the EPA’s Greenhouse Gas Reduction Fund has become a major front in Trump’s battle to claw back hundreds of billions of dollars in former President Joe Biden’s climate and clean-energy agenda — with the administration seeking to override the spending decisions of past Congress that Trump disagrees with, despite decades of accepted legal tradition suggesting that this would violate the Constitution.

Meanwhile, the three nonprofit groups say they may be forced to lay off employees and cancel long-planned projects if they lose the grants that the Biden-era EPA had legally awarded to them.

But rather than declare a winner, Tuesday’s decision was merely aimed at preserving the status quo, Chutkan said. Her order does not immediately restore access to the groups’ accounts, nor does it officially kill EPA’s right to press for contract terminations in the future.

The nonprofits have said Citibank, which is stewarding the $20 billion program under a financial agreement with the agency, cut off access to their funds without explanation in mid-February. Climate United and other groups said the freeze may cause layoffs and disrupt planned projects.

The awards — $7 billion for Climate United, $5 billion for CGC and $2 billion for Power Forward Communities — are designed to spur private sector investment in energy efficient housing, clean energy and electric vehicle charging infrastructure projects, particularly in communities that struggle to attract private sector dollars. Five other nonprofit groups received the remainder of the $20 billion total.

EPA Administrator Lee Zeldin has repeatedly accused the Biden administration of hastily executing the program, pointing to a covertly shot video of a then-EPA employee in December who likened the efforts to finalize the agency’s green spending awards to “throwing gold bars” off the Titanic. But EPA had already obligated the $20 billion in climate grants months before a conservative activist group shot that video.

EPA lawyers also alleged in a Monday court filing that the grants are marred by “potentialconflicts of interests,” pointing to media reports indicating that former officials from the Obama and Biden administrations have been affiliated with some of the groups that received the grants.

But Chutkan had previously expressed skepticism of the Trump administration’s claims of wrongdoing. “Can you proffer any evidence that [the grant] was illegal, or evidence of abuse or fraud or bribery — that any of that was improperly or unlawfully done, other than the fact that Mr. Zeldin doesn't like it?” she asked during one court hearing this month.

She doubled down on that position in the Tuesday opinion.

“[B]ased on the record before the court, and under the relevant statutes and various agreements, it does not appear that EPA Defendants took the legally required steps necessary to terminate these grants, such that its actions were arbitrary and capricious,” she wrote. “And when questioned at the March 12 hearing, and as discussed further below, EPA Defendants proffered no evidence to support their basis for the termination or that the sudden terminations, or that they followed the proper procedures.”

EPA did not immediately comment on the ruling.

The $20 billion Greenhouse Gas Reduction Fund has attracted significant attention from the administration as Trump vows to repeal the Inflation Reduction Act, Biden’s 2022 climate law. The FBI and Justice Department are conducting their own investigations of the grants, and Zeldin requested that the EPA Office of Inspector General also probe the program.

Trump himself attacked one of the grants during his address to a joint session of Congress this month, calling it an example of “appalling waste” uncovered by his administration.

The fight to pull back the climate cash caused a rift within the Justice Department last month, when a senior federal prosecutor in Washington accused her superiors of pressuring her to launch a criminal investigation into the grant program despite a lack of evidence of wrongdoing. Denise Cheung, who headed the criminal division in the U.S. Attorney’s Office in D.C., resigned Feb. 18.

The EPA’s arguments to Chutkan focused on concerns about the fund’s operational structure. The agency alleged that grantees changed the award terms up until the last days of the Biden EPA in ways that limited oversight of grant spending by the incoming Trump administration. EPA’s Trump-era leaders have said the fund gives it too little say in how the eight nonprofits award shares of the taxpayer dollars to sub-grantees.

Climate United, however, said the terms of its agreement say the agency must identify legally defined examples of waste, fraud and abuse if it wants to cancel its grant.

Among his other allegations of conflicts of interest in the grant program, Zeldin has taken aim at CGC, a nonprofit representing so-called green banks that leverage public and philanthropic dollars to attract private investment for energy efficiency and clean energy projects. The Greenhouse Gas Reduction Fund under Biden was run by Jahi Wise, who had previously worked at CGC.

Zeldin has often pointed to —  and apparently inflated — the role of former Democratic Georgia gubernatorial candidate Stacey Abrams, who was a paid adviser to Rewiring America, one member of the Power Forward Communities coalition. Abrams was never paid by or received any grant dollars from Power Forward Communities, coalition CEO Tim Mayopoulos told POLITICO last month, and Rewiring America has said she is no longer affiliated with that group either.

Zeldin has also questioned why the Biden EPA would reward Power Forward Communities, a group established only in October 2023, with a $2 billion grant. But Mayopoulos has noted that its five member organizations, which until recently included Habitat for Humanity and United Way, have extensive experience and are spearheading the grant program.

“We have collectively deployed or invested over $100 billion in community-based housing, health, environmental, and economic development initiatives and created or preserved over 1.4 million affordable housing units,” Power Forward Communities wrote in the work plan it had submitted to EPA for its $2 billion share of the climate grants.

Climate United will file for a preliminary injunction to prevent EPA from terminating the contracts and restore access to funds as early as Tuesday, spokesperson Brooke Durham told POLITICO. She said the nonprofit was "encouraged by the decision" on Tuesday.