The Trump administration secured a significant legal victory Tuesday when a federal appeals court sided with the Environmental Protection Agency in its effort to freeze billions of dollars and terminate contracts for nonprofits charged with running a “green bank” to finance climate-friendly projects.
The decision from the U.S. Court of Appeals for the District of Columbia Circuit, handed down in a 2-1 ruling, shifts the dispute away from the federal district court and into the U.S. Court of Federal Claims, which handles contract matters. For the nonprofits involved, including Climate United Fund, the ruling represents a major setback in their push to regain access to roughly $16 billion in frozen funds.
Associated Press
EPA Administrator Lee Zeldin, appointed under President Donald Trump, has been a vocal critic of the Biden-era program. He blasted the initiative as “a waste of taxpayer money,” accused the nonprofits of mismanagement, and sought to claw back funding already distributed. A lower court previously rejected Zeldin’s efforts, ruling that the EPA could not substantiate its claims and could not unilaterally cancel contracts without supporting evidence. But the appeals court reversed that decision, ruling that the district court had no jurisdiction to block the EPA’s actions.
Writing for the majority, Judge Neomi Rao, a Trump appointee, said the nonprofits’ arguments amounted to contract disputes that belonged in claims court, not in front of a district judge.
“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,” Rao wrote in an opinion joined by Judge Gregory Katsas, another Trump appointee. The ruling emphasized that the case did not involve constitutional issues, but rather stemmed from the contractual agreements between the EPA and the nonprofits.
The climate groups had sued the EPA, Zeldin, and Citibank—which was holding the grant money on behalf of the agency—saying the freeze had paralyzed their operations. They argued that the withheld funds had jeopardized their ability to support climate-focused projects and fulfill their core mission. By pushing the case to claims court, the nonprofits now face a narrower path, as they will likely be limited to seeking monetary damages rather than an injunction granting them immediate access to the money.
Climate United CEO Beth Bafford expressed disappointment but vowed to continue the fight.
“This is not the end of our road,” she said in a statement. “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.”
Judge Cornelia Pillard, appointed by President Barack Obama, issued a sharp dissent. She argued that the nonprofits presented evidence showing the EPA attempted to dismantle the program because it disagreed with its goals, all while failing to substantiate accusations of mismanagement. The agency, she wrote, had undermined the green bank “without presenting to any court any credible evidence or coherent reason that could justify its interference with plaintiffs’ money and its sabotage of Congress‘s law.”
The ruling will not take immediate effect, giving the nonprofits time to consider further appeals. For now, though, the decision stands as a high-profile win for the Trump administration’s EPA and a stinging blow to the climate groups that have been fighting to preserve the program.
This is a breaking news article. Updates to follow.
This article includes reporting by the Associated Press.
