Judge blocks Trump's effort to claw back $20 billion clean energy grants

Natalia Merzlyakova AdobeStock

A federal judge Tuesday blocked the Environmental Protection Agency from canceling $20 billion worth of clean energy grants issued under the Biden administration, saying the Trump administration failed to prove fraud and waste.

The EPA froze the funds in February. In March, EPA administrator Lee Zeldin announced he would terminate the multi-billion grant agreements "based on substantial concerns regarding program integrity, the award process, programmatic fraud, waste, and abuse, and misalignment with the agency's priorities, which collectively undermine the fundamental goals and statutory objectives of the award." Zeldin said the FBI and Justice Department are investigating the program.

The grant recipients sued in federal court and asked for temporary restraining orders to block the terminations.

The climate grants are part of the $27 billion Greenhouse Gas Reduction Fund, a program established by President Joe Biden's 2022 Inflation Reduction Act. States and cities have received $7 billion for solar projects, while the remaining $20 billion went to eight nonprofit groups across the country to incentivize private investment in clean energy projects.

The Biden administration placed the funds with Citibank, where the grant recipients would draw on them. Three of the nonprofit groups set to receive the grants sued the EPA and Citibank in federal court.

Late Tuesday, U.S. District Judge Tanya Chutkan granted the temporary restraining order, ordering that Citibank preserve the funds in its accounts but not yet distribute the money.

"In the [grant] termination letters, EPA defendants vaguely reference 'multiple ongoing investigations' into 'programmatic waste, fraud, and abuse and conflicts of interest' but offer no specific information about such investigations, factual support for the decision, or an individualized explanation for each plaintiff," Chutkan wrote. "This is insufficient."

The judge also noted the grants were awarded under a statute authorized by Congress.

"EPA defendants' termination of these grants appears to contravene a duly enacted statute and interferes with plaintiffs' statutory rights to these funds," she said. "To be sure, agencies can decide to re-evaluate their programs, or they may decide to end agreements or federal awards. But those decisions must be made lawfully and in accordance with established procedures and relevant rules and regulations."

Chutkan set an April 2 hearing on the issue.

"Today's decision is a strong step in the right direction," said Beth Bafford, CEO of Climate United, a nonprofit group that was supposed to receive a $7 billion grant, in a statement. "In the coming weeks, we will continue working towards a long-term solution that will allow us to invest in projects that deliver energy savings, create jobs, and boost American manufacturing in communities across the country."