EPA Court Victory Allows Termination of $20 Billion in Climate Grants

The U.S. Environmental Protection Agency secured a favorable ruling on Sept. 2 from the U.S. Court of Appeals for the District of Columbia Circuit. The court ruled that EPA has the authority to terminate $20 billion in grants awarded under the Greenhouse Gas Reduction Fund, a program established by the 2022 Inflation Reduction Act. The decision backs Administrator Lee Zeldin’s action earlier this year to cancel the funding, citing conflicts of interest, inadequate oversight, and program mismanagement.

In its statement, the agency stressed its responsibility to safeguard taxpayer dollars, pointing to evidence that raised doubts about the award process and recipient qualifications. The court’s opinion noted that grant agreements were revised shortly before the Biden administration left office in a way that made termination more difficult, suggesting questionable intent. Judges also pointed to the “gold bars” video, in which recipients appeared to celebrate the grants with gold bar imagery, a display the agency said reflected poor stewardship and reinforced its decision to cancel the awards.

The ruling rejected arguments that the Inflation Reduction Act prevented the agency from exercising discretion, emphasizing instead that the EPA retains authority to ensure proper execution and prudent management of public funds. The agency awarded the grants in 2024 under two programs: National Clean Investment Fund and Clean Communities Investment Accelerator. With a total investment of $27 billion, the Greenhouse Gas Reduction Fund sought to mobilize financing and private capital for projects aimed at reducing greenhouse gas emissions and air pollution nationwide.

Administrator Zeldin previously warned that the Biden administration had parked $20 billion at an outside financial institution, a move he argued deliberately weakened federal oversight and created unacceptable risks. Following an internal review and amid multiple federal investigations, the agency concluded that deficiencies in the program undermined statutory goals and threatened the lawful administration of the awards.

The court’s decision affirmed the EPA’s authority to end the grants, underscoring the agency’s discretion in managing federal funds. The court ruled that the claims of grantees, which challenged the termination, were contractual, determining that the dispute is primarily contractual and should be addressed in the U.S. Court of Federal Claims, rather than in district court.