judges side with trump epa over canceled inflation reduction act grants to nonprofits

Climate Funding Dispute: EPA Grant Cancellations Upheld

A recent appellate court ruling has intensified the ongoing debate surrounding $20 billion in climate funding authorized by Congress. The court sided with the Environmental Protection Agency (EPA) in its decision to terminate grants previously awarded to nonprofit organizations.

Grant Cancellations and Justifications

The legal challenge originated from EPA Administrator Lee Zeldin’s decision to revoke grants distributed under the Inflation Reduction Act. Zeldin asserted that these grants did not align with the agency’s present objectives and expressed concerns regarding potential fraud, though no supporting evidence was presented.

Previously, a district court had deemed Zeldin’s actions as “arbitrary and capricious.” However, the appellate court reversed this decision.

Court's Reasoning and Supporting Evidence

The two justices forming the majority, both appointed by former President Trump, affirmed the validity of Zeldin’s contract cancellations. They emphasized the government’s responsibility to ensure diligent oversight and effective management of grant funds.

Their decision was partly influenced by an undercover video released by Project Veritas, a conservative activist group known for producing selectively edited videos.

Financial Freeze and Impact on Nonprofits

Court documents revealed that in March, the EPA, in coordination with the FBI and the EPA Inspector General, directed Citibank to freeze funds already deposited into accounts managed by the nonprofits. These funds were primarily intended for loans, designed to be repaid and reinvested.

Climate United and Power Forward were among the nonprofits affected by these grant cancellations.

Project Commitments and Financial Strain

At the time of the March hearing, Climate United had already committed $392 million to various projects, including $63 million for solar energy initiatives in Oregon and Idaho, and an additional $31.8 million for solar projects in rural Arkansas.

Power Forward had committed $539 million, but the funding freeze prevented them from settling outstanding invoices to contractors.

Investigation Findings and EPA Arguments

Zeldin initially cited fraud as a primary concern. However, a comprehensive investigation conducted by the interim U.S. attorney in Washington, D.C., yielded no substantial evidence to support these claims, as reported by The New York Times.

Consequently, the EPA’s arguments before the appeals court centered on the contractual aspects of the grants. The majority of justices concurred that the case should be adjudicated by the U.S. Court of Federal Claims, rather than the broader federal court system.

Dissenting Opinion and Potential Appeals

The dissenting justice, appointed by former President Obama, argued that the EPA “has no lawful basis—nor even a nonfrivolous assertion of any basis—to interfere with funding that, pursuant to Congress’s instructions, already belongs to Plaintiffs.”

The plaintiffs are anticipated to appeal the ruling to the U.S. Supreme Court. Should this appeal fail, the EPA could potentially face liability for billions of dollars, according to internal legal assessments.