A federal appeals court ruled in a 2-1 decision that the Environmental Protection Agency (EPA) may proceed with its terminations of climate-related funding. The decision blocks a lower court ruling that would have prevented the EPA from recovering billions of dollars.
“The injunction harms the government and the public interest by preventing the Executive Branch from properly and prudently managing billions of dollars in public funds. The grantees have an interest in continued access to government funding,” Judge Neomi Rao wrote. “But the government and the public have a stronger interest in protecting the public fisc and eliminating the appearance of impropriety around these grant programs.
“If the grant terminations are later determined to be a breach of contract, the government may be required to pay damages to the grantees, which would substantially, if not entirely, redress the grantees’ interim injuries,” Judge Rao explained. “By contrast, if the government’s position is eventually vindicated, it will have no apparent means to recover funds spent down while the litigation has run its course.”
In March, U.S. District Judge Tanya Chutkan issued a temporary restraining order blocking the EPA from terminating the grants awarded to Climate United, Coalition for Green Capital, and Power Forward Communities, which were received through funds under the Inflation Reduction Act.
“Based on the record before the court, and under the relevant statutes and various agreements, it does not appear that EPA Defendants took the legally required steps necessary to terminate these grants, such that its actions were arbitrary and capricious,” Chutkan wrote in her order.
Upon announcing the programs’ cancellation in March, EPA Administrator Lee Zeldin said the terminations were “based on substantial concerns regarding program integrity, objections to the award process, programmatic fraud, waste and abuse, and misalignment with the agency’s priorities.”
