Judge Agrees to Maintain Green Bank Grants as Case Proceeds (1)

A federal judge on Tuesday issued a preliminary injunction stopping the Trump administration’s effort to claw back $20 billion in green grants.

The ruling is another blow to the White House, which has been trying to reclaim the money as part of its broader campaign to unwind Biden-era policies that don’t line up with its own philosophy. The Trump administration filed an appeal on Wednesday.

Judge Tanya S. Chutkan of the US District Court for the District of Columbia also denied the Trump administration’s request to stay the proceedings pending appeal, holding the motion was filed prematurely. She said an opinion explaining the court’s rationale is forthcoming.

Under the three-page order Citibank N.A. is enjoined from transferring or otherwise moving funds out of accounts established in connection with the grants of Coalition for Green Capital, Climate United Fund, and Power Forward Communities. Citibank must disburse any funds properly incurred before the mid-February suspension of the groups’ funds, the order said.

The EPA is barred from unlawfully suspending or terminating the groups’ grant awards, issuing notices of executive control or termination, and limiting access to the funds, the order said.

The grants, part of the 2022 Inflation Reduction Act, are meant to provide seed capital for green energy projects, especially in communities that have been historically overlooked.

But the recipients’ efforts to invest in clean energy projects and attract private financing have already been disrupted by the EPA’s earlier funding freeze, according to Richard Kauffman, CEO of the Coalition for Green Capital.

To illustrate, Kauffman wrote in a March 21 declaration to the court that the Coalition was in talks with a renewable energy company about a potential investment, reaching agreement in principle on a term sheet and a letter of intent. But the company suspended negotiations March 17 “as a result of recent events,” Kauffman wrote.

Beth Bafford, CEO of Climate United Fund, said the decision “gives us a chance to breathe after the EPA unlawfully—and without due process—terminated our awards and blocked access to funds that were appropriated by Congress and legally obligated.”

Climate United was “hired to do a job that we’ve done for decades: investing in communities and strengthening markets,” Bafford said. “We want to get back to work.”

Green banks sued in early March after EPA ordered Citibank to halt disbursement of climate grant dollars. Plaintiffs said the Trump administration had violated the Constitution, Administrative Procedure Act, and other statutes. EPA sent a formal notice of termination for the grants shortly after.

Chutkan on March 18 issued a temporary restraining order telling Citibank to preserve the funds. She extended that order by one week on April 1, giving her time to decide whether to issue a preliminary injunction.

Four state green banks, all of which were subrecipients of a $5 billion grant to the Coalition for Green Capital, also joined the fight against EPA and Citibank in late March, accusing defendants of a “highly irregular and illegal” scheme to claw back money that had already been committed.

Chutkan grilled EPA’s legal counsel at a hearing over whether the agency acted lawfully by ordering Citibank to freeze funds and subsequently sending a termination notice to the grant recipients.

“It’s certainly lawful,” EPA counsel Marcus Sacks said at the hearing. But “I don’t know if it’s the best course of action and one that in retrospect we would all wish the agency had followed.”

Separately, the US District Court for the District of Rhode Island on Tuesday temporarily ordered the Trump administration to restore grant funding nationwide.

In that case, Judge Mary S. McElroy found that the federal government had blocked climate funding to six nonprofit groups without a reasonable explanation, and that various federal agencies and department had asserted powers that are “nowhere to be found in federal law.”

Holwell Shuster & Goldberg LLP represents the Coalition for Green Capital. Foley Hoag LLP represents Power Forward Communities. Jenner & Block LLP represents the Climate United Fund.

The case is Climate United Fund v. Citibank N.A., D.D.C., No. 1:25-cv-00698, 4/15/25.