A federal judge has temporarily blocked the Trump administration from cancelling $14 billion in climate grants awarded under President Biden, ruling that the government’s allegations of fraud were too vague to justify such a move.
The ruling, issued by US District Judge Tonya Chutkan, prevents the Environmental Protection Agency (EPA) from revoking grants that form part of a $20 billion programme. The judge also barred Citibank, which holds the funds on behalf of the EPA, from transferring the money.
EPA Administrator Lee Zeldin had accused the grant recipients of financial mismanagement and fraud, leading to a freeze on the funds. However, Chutkan dismissed these claims as unsubstantiated, stating that the EPA had failed to justify its decision.
“At this juncture, EPA Defendants have not sufficiently explained why unilaterally terminating Plaintiffs’ grant awards was a rational precursor to reviewing” the programme, Chutkan wrote in her ruling.
The decision was one of three setbacks for the Trump administration on the same day, highlighting a growing legal battle over government policy. The rulings came just hours after President Donald Trump called for the impeachment of another judge who had temporarily halted deportation flights, a move that drew rare public criticism from US Supreme Court Chief Justice John Roberts.
The lawsuit against the EPA, Zeldin, and Citibank was brought by Climate United Fund, the Coalition for Green Capital, and Power Forward Communities. The groups argued that the government had illegally frozen access to funds allocated last year through the Greenhouse Gas Reduction Fund—commonly known as a “green bank.” The scheme, created by the 2022 Inflation Reduction Act, aims to finance clean energy and climate-focused projects.
The three organisations, which received nearly $14 billion in total, warned that the funding freeze threatened their ability to support green projects and could lead to staff layoffs. They dismissed allegations of financial misconduct as baseless and sought a court order for Citibank to release the funds—an appeal that Chutkan declined. Instead, her ruling preserves the current status of the case while proceedings continue.
Climate United was awarded nearly $7 billion, while the Coalition for Green Capital and Power Forward Communities received $5 billion and $2 billion, respectively. The grant programme has been fiercely opposed by Republicans, who unanimously voted against the legislation that established it, denouncing it as an unaccountable “slush fund.”
Following the freeze, the EPA moved to terminate the grants, a decision that Tuesday’s ruling has now temporarily blocked.
Climate United CEO Beth Bafford welcomed the court’s decision, describing it as “a step in the right direction.”
“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,” she said.
However, Zeldin remained defiant, posting on social media that the grants had been awarded in a manner that deliberately limited government oversight.
“I will not rest until these hard-earned taxpayer dollars are returned to the US Treasury,” he stated.
He has also characterised the grants as a politically motivated scheme riddled with conflicts of interest and potential fraud.
“Twenty billion of your tax dollars were parked at an outside financial institution, in a deliberate effort to limit government oversight—doling out your money through just eight pass-through, politically connected, unqualified and, in some cases, brand-new” nonprofit organisations, Zeldin said in a previous online video.
Climate United and its co-plaintiffs argue that the termination is unlawful, insisting that there is no evidence of fraud, waste, or abuse. The case will continue as the court considers the broader legality of the EPA’s actions.
