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WASHINGTON (CN) — A D.C. Circuit panel ruled Tuesday that the Trump administration can claw back nearly $16 billion in green energy grants, overturning a federal judge’s injunction that required the Environmental Protection Agency and Citibank to continue making the payments.
The panel determined in a 2-1 ruling that U.S. District Judge Tanya Chutkan exceeded her authority by issuing the injunction. The judges found that since the dispute was contractual, only the Court of Federal Claims has jurisdiction over the case.
“While the district court had jurisdiction over the grantees’ constitutional claim, that claim is meritless,” U.S. Circuit Judge Neomi Rao wrote in the opinion. “Moreover, the equities strongly favor the government, which on behalf of the public must ensure the proper oversight and management of this multi-billion-dollar fund.”
Rao noted that, under the Tucker Act, the grants amount to a contract with the federal government and thus any disputes can only be heard by the Federal Claims court, which can only award damages to a party. Several federal judges in Washington have ruled similarly in other cases challenging the Trump administration’s sudden grant cancellations.
The grants, part of the Greenhouse Gas Reduction Fund program authorized under former President Joe Biden’s Inflation Reduction Act, were awarded to fund clean energy projects across the country. Climate United received $6.97 billion, Coalition for Green Capital $5 billion and Power Forward $2 billion.
Congress repealed the Greenhouse Gas Reduction Fund Program as part of Trump’s “Big, Beautiful Bill” on July 4.
Rao, joined by fellow Trump appointee U.S. Circuit Judge Gregory Katsas, found that Trump’s election sparked a wave of concern throughout the EPA, leading to last-minute changes in December 2024 to rush out grants and make it more difficult for the incoming administration to terminate the grants.
“The record includes a widely publicized video in which an EPA employee was recorded describing how ‘until recently’ his role was to make sure proper ‘processes are in place to … prevent fraud and to prevent abuse,’ but after the election of President Donald Trump, EPA was ‘just trying to get the money out as fast as possible before they come in and … stop it all,’” Rao wrote. “The employee compared the situation to ‘throwing gold bars off the Titanic.’”
Following Trump’s inauguration, the EPA reviewed the grants and raised concerns about conflicts of interest, the political connections of chosen grantees, the lack of government oversight and the last-minute amendments to many grant agreements.
In February, the FBI recommended Citibank place an administrative freeze on grantees’ accounts, and the EPA referred the issue to the Office of Inspector General for investigation, before terminating the grant agreements.
EPA Administrator Lee Zeldin issued three immediate termination letters to the grant recipients, “based on substantial concerns regarding program integrity, the award process, programmatic fraud, waste and abuse and misalignment with the agency’s priorities.”
Zeldin specifically highlighted an “absence of adequate oversight controls,” “improper or speculative allocation of funds” and “circumvention and defeat of key oversight mechanisms in the disbursement of federal funds.”
According to the grantees, after their accounts were frozen in mid-February, the EPA offered to meet with Climate United about the freeze 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 to 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.
Chutkan, nominated by Barack Obama, granted the temporary restraining order on March 18, then granted a preliminary injunction on April 15, finding that the EPA had never explained its freeze of the funds or why the programs’ wholesale cancellation was necessary.
U.S. Circuit Judge Cornelia Pillard, an Obama appointee, decried the majority’s decision in a 61-page dissent and said her colleagues failed to contend with the government’s actual behavior and made the “wrong conclusion at every step.”
“Embracing a misguided and breathtakingly expansive conception of the Tucker Act, 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,” Pillard wrote.
She said that the Trump administration’s campaign against the Greenhouse Gas Reduction Fund was based on “spurious” criminal and civil investigations, involved a pressure campaign against Citibank to freeze accounts without probable cause and an effort to terminate every grant just 24 hours before an initial court hearing.
“The injunction the district court put in place is eminently supported by plaintiffs’ likelihood of success on both their APA and constitutional claims, the irreparable harm that will befall them, and the unlawful nullification of Congress’s duly enacted policy — all of which inure to the detriment of the American people,” Pillard said.
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