EPA Allowed to Block Greenhouse Gas Grants, DC Circuit Says (3)

A federal appeals court on Tuesday ruled that the EPA can hold back billions of dollars in federal grants to reduce greenhouse gas emissions issued under the Biden administration.

The decision from the US Court of Appeals for the District of Columbia Circuit vacates an April lower court order that stopped the Environmental Protection Agency from clawing back $16 billion in green grants.

Judge Neomi Rao in her opinion concluded that the EPA didn’t violate the 2022 climate law that established the grants when it terminated them because the statute “does not limit the administrator’s discretion to withhold or terminate grants.”

The executive branch “often issues replacement contracts after terminating for convenience,” Rao wrote. Moreover, the EPA has repeatedly said it plans to recommit the funds, she said.

The July tax and spending bill, known as the “One Big Beautiful Bill,” fully repealed the program, presumably making it impossible for the unobligated balances to now be disbursed to other recipients.

The court also found that the grantees’ claims are contractual, meaning the district court didn’t have jurisdiction to hear them. That jurisdiction lies instead with the US Court of Federal Claims.

In Rao’s view, the lower court “disregarded the government’s interest in prudent management of the grant programs and the government’s representations that it planned to properly supervise, rather than abandon, the grantmaking process.”

At least one of the grant recipients, Power Forward Communities, has said it will appeal the decision.

In a dissenting opinion, Judge Cornelia Pillard wrote that the majority lets the government seize the grantees’ 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.”

Beth Bafford, CEO of Climate United—one of the grant recipients—said in a statement that “this is not the end of our road.”

“EPA unlawfully froze and terminated funds that were legally obligated and disbursed,” Bafford said. “This is another hurdle in our fight to lower energy costs for those who need it most while creating jobs for hardworking Americans, but we will continue to press on for communities across the country that stand to benefit from clean, abundant, and affordable energy.”

Similarly, Tim Mayopoulos, CEO of Power Forward Communities, said his group has long known that “this would likely be a protracted fight.” The group “is confident in the strength of its case,” Mayopoulos said.

The funding, known as the Greenhouse Gas Reduction Fund, was authorized by Congress in the climate law. The money was a key plank in President Joe Biden’s effort to build out renewable energy, bring down energy bills, and lower carbon emissions. Part of the strategy was to make those projects more attractive to private investors and investment banks.

EPA Administrator Lee Zeldin has said the agency has evidence of misconduct, conflicts of interest, and potential fraud. He has also said he will disburse money if directed to do so by the legislative branch.

“It’s fantastic to see reason prevail in the court system,” the EPA said in a statement. “EPA has a duty to be an exceptional steward of taxpayer dollars. Administrator Zeldin cancelled these grants due to well documented concerns about self-dealing and conflicts of interest, unqualified recipients, and intentionally reduced agency oversight.”

The grant recipients “were wrong about jurisdiction all along and wrong to act so entitled to these precious public funds that belong to hardworking American taxpayers,” the EPA said in its statement.

Zeldin also told Senate lawmakers in May that he would be willing to appeal the matter all the way to the US Supreme Court.

The case is Climate United Fund v. Citibank, D.C. Cir., No. 25-5123, decision 9/2/25.