On Tuesday, a federal appeals court overturned a trial court injunction preventing the Environmental Protection Agency from terminating billions of dollars in grants given to lefty non-profits by the Biden Administration to promote greenhouse gas reductions and other climate policies. The recipients have denounced the decision, and plan to seek rehearing by the full federal appeals court, which is more progressive than the mostly conservative three-judge panel that issued the decision overturning the injunction.
The decision was a 2-to-1 ruling written by Judge Neomi Rao, a Trump appointee, in a case called Climate United Fund v. Citibank. Judge Rao’s opinion was joined in by Judge Greg Katsas, who was appointed by President Trump. Judge Nina Pillard dissented. She was appointed by President Obama.
Judge Rao summarizes her ruling as follows:
The Environmental Protection Agency awarded grants worth $16 billion to five nonprofits to promote the reduction of greenhouse gas emissions. Citing concerns about conflicts of interest and lack of oversight, EPA terminated the grants in March 2025. The grantees sued, and the district court entered a preliminary injunction ordering EPA and Citibank to continue funding the grants.
We conclude the district court abused its discretion in issuing the injunction. The grantees are not likely to succeed on the merits because their claims are essentially contractual, and therefore jurisdiction lies exclusively in the Court of Federal Claims. And while the district court had jurisdiction over the grantees’ constitutional claim, that claim is meritless. Moreover, the equities strongly favor the government, which on behalf of the public must ensure the proper oversight and management of this multi-billion-dollar fund. Accordingly, we vacate the injunction…..
The sheer scale of the grant program and the method of allocating billions of dollars drew public attention and criticism. The record includes a widely publicized video in which an EPA employee was recorded describing how “until recently” his role was to make sure proper “processes are in place to … prevent fraud and to prevent abuse,” but after the election of President Donald Trump, EPA was “just trying to get the money out as fast as possible before they come in and … stop it all.” The employee compared the situation to “throwing gold bars off the Titanic.”
Law professor Jonathan Adler notes that Judge Rao’s opinion for the D.C. Circuit Court of Appeals “seems quite in line with the way the Supreme Court has been handling cases in which district courts have considered questions Congress has directed to the Court of Federal Claims or administrative entities. While a majority of the D.C. Circuit may disagree with this approach, I doubt a majority of the Supreme Court would. See, for instance, the Court’s handling of NIH v. APHA, another case involving grants (and upon which Judge Rao relies).”
But Judge Pillard dissented, at great length. Her dissent is twice as long as Judge Rao’s opinion for the appeals court. Here is the introduction to her 62-page dissent:
On the majority’s telling, Plaintiffs bring garden-variety contract claims against EPA’s reasonable decisions to terminate their grant awards. That version of events fails to contend with the government’s actual behavior and misapprehends Plaintiffs’ claims, leading the majority to the wrong conclusion at every step of its review of the district court’s preliminary injunction. . . .
In characterizing this case as merely a contract dispute subject to the Tucker Act’s jurisdictional bar, the majority baselessly strips the district court of authority to decide these important claims. The majority holds that a plaintiff cannot bring an arbitrary and capricious challenge to any government action that affects something of value that was originally obtained by contract. Maj. Op. 16-18. Doing so undercuts the Constitution’s and the APA’s checks on the Executive’s illegitimate seizure of Plaintiffs’ funds and subversion of Congress’s will. The government’s Tucker Act defense is especially pernicious here. Dismissal of this case presumably will enable the government to carry out its announced plan to immediately and irrevocably seize Plaintiffs’ funds. At best, in the unlikely event the government refrains from immediately draining Plaintiffs’ frozen accounts, the further delay involved in reinitiating litigation in the Court of Federal Claims will itself irreparably harm the infrastructure projects that cannot move forward and may fail without funding. In these circumstances, “[i]t is no overstatement to say that our constitutional system of separation of powers w[ill] be significantly altered” by “allow[ing] executive . . . agencies to disregard federal law in the manner asserted in this case.” Aiken Cnty., 725 F.3d at 267.
