The Trump administration won an important legal battle Tuesday when a federal appeals court sided with the Environmental Protection Agency (EPA) in its effort to freeze billions of dollars and end contracts for nonprofits running a “green bank” to fund climate-friendly projects.
The U.S. Court of Appeals for the District of Columbia Circuit made the decision in a 2-1 ruling. It moves the case from federal district court to the U.S. Court of Federal Claims, which handles contract disputes. For the nonprofits, including Climate United Fund, this ruling is a big setback in their attempt to get back around $16 billion in frozen funds.
Why It Matters
EPA Administrator Lee Zeldin, appointed under President Donald Trump, has been critical of the Biden-era program. He called it “a waste of taxpayer money,” accused the nonprofits of mismanagement, and tried to recover funding that had already been given.
A lower court had previously rejected Zeldin’s efforts, saying the EPA could not prove its claims and could not cancel contracts without evidence. The appeals court reversed that decision, saying the district court did not have the authority to block the EPA.
What To Know
Judge Neomi Rao, a Trump appointee, wrote for the majority, saying the nonprofits’ arguments were actually contract disputes that should be handled in claims court, not district court.
The court said the case was about contracts between the EPA and the nonprofits, not constitutional issues.
The climate groups had sued the EPA, Zeldin, and Citibank (which held the grant money for the EPA), claiming the freeze stopped them from operating. They said withholding the money hurt their ability to support climate projects. Now, in claims court, they may only be able to ask for money damages, not immediate access to the funds.
Judge Cornelia Pillard, appointed by President Barack Obama, disagreed. She said the nonprofits had evidence showing the EPA was trying to end the program because it did not agree with its goals and had not proven mismanagement.
What People Are Saying
Rao and Judge Gregory Katsas, another Trump appointee, wrote, “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.”
Pillard wrote in her dissent, “Those unprecedented and unfounded actions were part of EPA’s hunt for reasons to shut down the congressionally mandated program and claw back the funding that had already been disbursed to Plaintiffs and committed to infrastructure projects.”
She added, “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 also said the lower court was right to block the grant terminations.
EPA press secretary Brigit Hirsch said the decision confirmed the EPA’s “duty to be an exceptional steward of taxpayer dollars.”
“It’s fantastic to see reason prevail in the court system,” she said.
Climate United CEO Beth Bafford said, “This is not the end of our road,” adding, “While we are disappointed by the panel’s decision, we stand firm on the merits of our case: EPA unlawfully froze and terminated funds that were legally obligated and disbursed.”
What Happens Next
The ruling will not take effect immediately, giving the nonprofits time to consider further appeals. For now, the decision is a major win for the Trump administration’s EPA and a setback for the climate groups trying to save the program.
