Sunita Somvanshi
A federal judge has ordered the immediate release of more than $600 million in climate grants that have been frozen since mid-February, dealing a significant blow to the Environmental Protection Agency’s attempt to terminate $20 billion in funding from the Greenhouse Gas Reduction Fund.
U.S. District Judge Tanya Chutkan issued the ruling on April 16, 2025, after sharply criticizing the EPA during earlier hearings for failing to provide evidence of wrongdoing that would justify terminating the grants.
“Here we are, weeks in, and you’re still unable to proffer me any information with regard to any kind of investigation or malfeasance,” Judge Chutkan previously told Justice Department attorneys representing the EPA.
In her ruling, Judge Chutkan found that the EPA’s actions were “arbitrary and capricious” under the Administrative Procedure Act and failed to provide the reasoned explanation the law requires.
The grants were awarded to eight nonprofit groups during the Biden administration as part of the 2022 Inflation Reduction Act. The program was designed to function as a “national green bank,” using public money to attract private investment in projects that reduce greenhouse gas emissions, particularly in disadvantaged communities.
Shortly after taking office, EPA Administrator Lee Zeldin moved to terminate the grants, describing them as a “gold bar” scheme marred by conflicts of interest and potential fraud. Zeldin vowed: “I will not rest until these hard-earned taxpayer dollars are returned to the U.S. Treasury.”
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However, in a separate but related development, the D.C. Circuit Court of Appeals granted the EPA a stay on April 17, blocking the release of the funds pending appeal of Judge Chutkan’s preliminary injunction order.
The nonprofits that sued the EPA, including Climate United Fund, Coalition for Green Capital, and Power Forward Communities, claimed the terminations violated their contracts and the law. Their contracts only allowed termination in limited circumstances such as fraud or major performance failures.
“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,” said Climate United CEO Beth Bafford, just before the funding freeze.
The funding freeze has significantly strained the nonprofit recipients. United Way and Habitat for Humanity have already withdrawn from Power Forward Communities, citing the need to focus on their charitable missions rather than legal battles.
In a separate but related ruling on April 15, U.S. District Judge Mary S. McElroy in Rhode Island ordered five federal agencies, including the EPA, to immediately lift a freeze on billions in grants awarded under the 2021 Bipartisan Infrastructure Law and the 2022 Inflation Reduction Act. Judge McElroy emphasized that agencies lack authority to override clear congressional appropriations or indefinitely suspend funded statutes.The funding freeze has affected numerous local projects, including affordable housing in Clinton, Iowa, where a 119-year-old building was being converted with plans to install solar panels and a geothermal heating system. Other affected projects include a rental community in Michigan for people recovering from addiction, a health center in New Jersey, and a solar development on Ohio landfills intended to power an auto manufacturer.
