A federal appeals court has sided with the President Donald Trump administration, ruling that it can move forward with terminating over $16 billion in federal grants awarded to non-profit groups under the Joe Biden administration’s Inflation Reduction Act.
The decision is a significant setback for the climate groups involved and reignites a debate over the limits of presidential authority to impound congressionally appropriated funds.
The U.S. Court of Appeals for the District of Columbia Circuit, in a 2-1 decision, reversed a lower court’s injunction that had temporarily blocked the administration’s actions.
The majority opinion, written by Judge Neomi Rao, concluded that the non-profits’ claims were “essentially contractual” and did not belong in a federal district court. Instead, the court argued, the dispute should be heard in the U.S. Court of Federal Claims, a specialist court that handles monetary claims against the government.
The grants, part of the Inflation Reduction Act’s Greenhouse Gas Reduction Fund, were intended to finance climate-friendly projects through a “green bank” programme.
The money had been placed in accounts at Citibank, but access was frozen by the Environmental Protection Agency (EPA) under Administrator Lee Zeldin, who cited concerns about potential mismanagement and asserted that the program did not align with the administration’s priorities.
The ruling is a blow to the groups, which include the Climate United Fund, as moving the case to the claims court limits their options. While they can still seek monetary damages, the claims court lacks the authority to order the government to go forward with the grant program.
In a sharp dissent, Judge Cornelia Pillard argued that the administration was attempting to dismantle the programme for political reasons and had failed to provide credible evidence to justify its actions. She accused the EPA of “sabotage of Congress’s law” and said the decision undermined the separation of powers.
Legal experts say the case is testing the limits of presidential power, specifically the ability to withhold or cancel funds that Congress has already allocated.
The Impoundment Control Act of 1974 gives a president limited authority to impound funds, but only if they follow specific procedures and notify Congress.
The non-profits have been given a short window to consider an appeal, which could potentially take the case to the full D.C. Circuit Court or even the Supreme Court.
