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- By Chez Oxendine
- Energy | Environment
Lawyers for three nonprofit “green banks” attempted to preserve a court injunction blocking the Environmental Protection Agency from terminating their grants during a hearing Monday at the US Court of Appeals for the District of Columbia.
The case centers on $20 billion in clean-energy funding, frozen in mid-February amid EPA questions about oversight and potential fraud, per prior Tribal Business News reporting. The agency later escalated on March 18 by terminating the grants entirely, prompting a flurry of lawsuits from affected grantees. District courts quickly enjoined the EPA from clawing back the funding, including $1.5 billion committed to Indian Country projects.
To quickly facilitate access to the funding under the Greenhouse Gas Reduction Fund, the Biden administration placed the money in accounts at Citibank, N.A. With the injunction in place, the money sits frozen in those accounts, untouchable by the grantees or the EPA.
Climate United lawyer Adam Unikowksy said the situation was growing dire for Climate United and other nonprofit green banks established under the GGRF, but maintaining the status quo was better than shunting the matter to federal claims court, which could take years to litigate.
“I think if the issue is still percolating in this court, potentially, this court could leave the stay in place,” Unikowsky said. “I think a stay would be appropriate.”
EPA claims contractual dispute
However, EPA lawyer David Roth argued that the issue was a contractual dispute, not a statutory dispute. As such, the matter should be decided in federal claims court, not the Court of Appeals or other traditional avenues.
“There’s all sorts of provisions in the contract about who can do what with the money and when,” Roth told the three-judge panel. “I think that the nature of the dispute is over the contractual provisions and the EPA’s ability to terminate under those contractual provisions.”
Climate United is one of three grantees under the National Clean Investment Fund, a $14 billion program under the GGRF
The small number of grantees, as well as their arrangement with Citibank, raised alarms at the EPA once President Donald Trump took office. The arrangement did not provide sufficient oversight over the funds, the EPA argued.
Judges question EPA’s concerns
Court of Appeals judges seemed to take issue with the EPA’s reasoning.
“What's missing?” asked Judge Cornelia T.L. Pillard, an Obama appointee. “What is the concern, given that these grantees are subject to very strict guardrails, and if the money's misused they're subject to criminal penalty?”
Roth said the agency did not believe it had sufficient oversight over subgrantees down the line, regardless of their access to information about primary grantees.
“The EPA has the ability to see the money flowing out of the accounts, but they don’t have, other than in particular circumstances, a way to see how subgrantees are spending it,” Roth said. “The further removed it is, the harder it is to understand what’s going on.”
Unikowsky argued that the injunction fell under the Court of Appeals as a statutory issue. He stated that Climate United had title over the funding as programmatic income, since it had been released to Citibank already and was not being pulled from the US Treasury. In addition, the EPA’s termination violated statutory obligations under the Inflation Reduction Act, which established the GGRF in 2022, Unikowsky said.
During the hearing, Judge Neomi Rao, a Trump appointee, repeatedly noted that Unikowsky conceded the EPA’s authority to terminate the grants, which favored Roth’s contractual argument.
Potential permanent impact
The judges asked what would happen if the injunction were lifted. When JUDGE suggested green banks might reorganize years later if they won in federal claims court, Unikowsky dismissed the possibility.
“We're just going to leave and aren't going to come back. Realistically, it's just not an option for these entities to shut down, fire or lay off their employees,” Unikowsky said. “They're probably not going to come back.”
Climate United CEO Beth Bafford told Tribal Business News the organization would continue to fight to resume funding their work.
“Today, the EPA should be celebrating new investments that create jobs, generate affordable domestic energy, and save hardworking Americans money. Instead, they are taking up a frivolous battle in court,” Bafford said in a statement. “This is bigger than our contract with the federal government. It’s about EPA’s lawless and indiscriminate subversion of Congress and due process to freeze our funds and terminate our grant agreement. We will continue to push forward so we can get back to doing this critical work.”
A ruling on the injunction has not yet been issued, and is expected in the next two weeks.
Tribal Business News reached out to the EPA, but had not heard back at the time this story was published.
