The ongoing dispute surrounding $20 billion in climate funding, sanctioned by Congress, has taken a significant turn as an appellate court recently sided with the Environmental Protection Agency (EPA) in its decision to revoke grants previously allocated to nonprofit organizations during the Biden administration.
This legal conflict originated from the actions of EPA administrator Lee Zeldin, who decided to terminate grants that were part of the Inflation Reduction Act. Zeldin argued that these grants did not align with the EPA’s current objectives and raised unsubstantiated concerns regarding potential fraud.
Initially, a district court had deemed Zeldin’s actions as “arbitrary and capricious,” questioning the rationale behind the cancellation.
In a recent ruling, the two majority justices, both appointed by Trump, upheld Zeldin’s decision, asserting that the government has a responsibility to maintain proper oversight and management of grant funds. They referenced an undercover video produced by a conservative activist organization, which they claimed supported their ruling.
In March, court documents revealed that the EPA, in collaboration with the FBI and the EPA inspector general, had directed Citibank to freeze funds that had already been deposited into accounts managed by the nonprofits. These funds were primarily intended for loans, which were expected to be repaid and reused for further projects.
The grants in question were awarded to various nonprofit organizations, including Climate United and Power Forward. At the time of the March hearing, Climate United had already committed to $392 million in projects funded by these grants, including $63 million for solar energy initiatives in Oregon and Idaho, as well as $31.8 million for solar projects in rural Arkansas. Power Forward had pledged $539 million, and the freezing of funds left them unable to settle outstanding invoices with contractors.
While Zeldin cited fraud as a primary concern, a comprehensive investigation conducted by the interim U.S. attorney in Washington, D.C., reportedly found no substantial evidence to support these claims.
In light of the lack of evidence regarding fraud, the EPA’s arguments in the appeals court shifted focus to the contractual obligations associated with the grants. The majority of justices concurred that the case should be addressed by the U.S. Court of Federal Claims rather than the broader federal judiciary.
The dissenting justice, appointed by Obama, contended that the EPA lacked a legitimate basis to interfere with funding that, according to Congressional directives, rightfully belonged to the plaintiffs.
The plaintiffs are expected to appeal to the U.S. Supreme Court. Should they not succeed there, the EPA may still face liability for billions of dollars, as indicated by legal assessments from its own attorneys.