March 13, 2025 Story by: Editor
A federal judge on Wednesday strongly criticized the Environmental Protection Agency (EPA) for canceling $20 billion in climate grants, noting that the Trump administration had failed to present any evidence of wrongdoing.
However, it remained uncertain whether the judge would take immediate steps to assist grant recipients, who have warned that they will need to start laying off employees and defaulting on financial commitments by the end of the week.
On Tuesday night, EPA Administrator Lee Zeldin revoked the Greenhouse Gas Reduction Fund grants, including a $7 billion allocation to Climate United Fund. The organization had sued to access the funds, a request that became more complex after the EPA rescinded the grant less than 24 hours before a scheduled hearing.
“Can you proffer any evidence that [the grant] was illegal, or evidence of abuse or fraud or bribery — that any of that was improperly or unlawfully done, other than the fact that Mr. Zeldin doesn’t like it?” asked Judge Tanya Chutkan of the U.S. District Court for the District of Columbia.
Marc Sacks, a Justice Department attorney representing the EPA, repeatedly referred to the rationale outlined in the termination letter sent to Climate United and other organizations, stating that “the determination is based on the information contained in the termination letter.”
“That’s pretty circular,” responded Chutkan, who was appointed by former President Barack Obama.
She further inquired whether the EPA had accused Climate United of violating two federal regulations requiring compliance with the terms and conditions of the grant.
“I think the agency cited both of those regulations within their termination letter,” Sacks replied.
“I can cite cases all day long, but you have to have some kind of evidence or proof to back it up,” Chutkan countered.
The hearing was initially set to review Climate United’s request for a court order to restore funding after Citibank, which manages the funds, cut off access in mid-February. Court documents filed earlier Wednesday revealed that Citibank had acted at the recommendation of the FBI, and the EPA formalized that directive earlier this week.
The case took an unexpected turn when Zeldin announced Tuesday night that he was terminating not only Climate United’s grant but also seven others.
Adam Unikowsky, an attorney with Jenner & Block representing Climate United, expressed frustration, stating that the plaintiffs had agreed to a one-day delay requested by the EPA as a “professional courtesy.”
Chutkan suggested that the Trump administration had sought the additional time to undercut the case.
“There’s a question as to whether the request for an additional day was made in good faith,” she remarked. “I’m not even going to go into that, but I do have some questions here myself.”
The EPA’s decision to terminate the grants led to uncertainty about what exactly Chutkan was being asked to rule on and whether she had the authority to do so.
Sacks argued that the dispute over the grant termination was merely a contractual matter, which, under federal law, must be heard by the U.S. Court of Federal Claims.
Unikowsky contended that the issue was not a contract dispute but rather a question of whether the EPA adhered to legal procedures, which would fall under Chutkan’s jurisdiction.
Unikowsky stated that Climate United intends to amend its lawsuit to argue that the termination violated constitutional due process rights, the appropriation clause, the Administrative Procedure Act, and relevant federal regulations.
“You will not hear any mention of any breach of contract claim, nor will we seek money damages,” he clarified.
However, Sacks maintained that Chutkan lacked the jurisdiction to prevent the EPA from revoking the grants.
“I think that the government has the right to decide who it wants to contract with and when it no longer wants to contract,” he stated.
“Absolutely, absolutely,” Chutkan responded. “That’s not what’s at issue here. The government didn’t decide who it wanted to contract with. A new administration came in, didn’t like the contract anymore. That’s what new administrations do. But there are procedures that have to be followed. And it doesn’t appear, at least on the record before me, that those procedures have been followed.”
Chutkan also questioned Climate United about the extent of harm it would suffer without an immediate order reinstating the funding.
Unikowsky stated that the organization had already postponed payments to some employees and would need to begin furloughs by Friday, which could prompt staff to seek employment elsewhere. Additionally, the organization lacked funds to pay rent at the end of the month, and $392 million in “committed” funds for projects was now in jeopardy.
Chutkan, however, questioned whether the economic losses Climate United described met the threshold required for a temporary restraining order (TRO).
“Those are economic losses that may be recoverable, and that’s not really the purpose of a TRO,” she said. “The TRO was designed to allay imminent harm that is not recoverable.”
Ultimately, Chutkan directed Climate United to file its amended lawsuit by 5 p.m. on Monday. She also ordered the Justice Department to provide evidence supporting its allegations of wrongdoing, stating, “because I don’t have the credible evidence that’s required.”
It remained uncertain whether Chutkan would grant a temporary restraining order in the meantime.
“Obviously, I realize that time is of the essence, so I will try and issue some kind of ruling,” she concluded, without specifying a timeline.
The hearing occurred as the Coalition for Green Capital (CGC) became the second grant recipient to sue the EPA and Citibank on Wednesday. The organization named EPA, Zeldin, and EPA Acting Deputy Administrator Chad McIntosh in its lawsuit after the agency terminated its $5 billion grant.
Vincent Levy, an attorney with Holwell Shuster & Goldberg representing CGC, stated in the complaint that CGC had been unable to access its funds at Citibank since Feb. 18.
Levy argued that the EPA’s termination notice did not follow proper procedures and that it referenced “irrelevant statutory and regulatory authority,” making it “patently and plainly unlawful on its face.” He further contended that the termination letter “does not contain any findings with regard to CGC at all” and described the EPA’s actions as “arbitrary and pretextual,” emphasizing that the agency had not presented any specific evidence of waste, fraud, or abuse by CGC.
Initially, CGC had filed a lawsuit against Citibank in a federal court in New York. However, it withdrew that case earlier Wednesday and refiled an expanded version in a Washington court.
Source: Politico
