EPA should not have been blocked from terminating ‘green bank’ funds, court says

WASHINGTON (AP) — The Trump administration was handed a win by a federal appeals court on Tuesday in its effort to freeze billions of dollars and terminate contracts for nonprofits to run a “green bank” aimed at financing climate-friendly projects.

The head of the Environmental Protection Agency had blasted the Biden-era program as a waste of taxpayer money, tried to claw back its funding and accused the nonprofits of mismanagement.

A lower court said the EPA couldn’t support Administrator Lee Zeldin’s accusations and that the agency was wrong to try and end contracts with the nonprofits without substantiating allegations against them. On Tuesday, a divided federal appeals court ruled 2-1 in the agency’s favor, saying the EPA should not have been blocked from terminating the grants and that the arguments by the climate groups have no place in federal district court.

Instead, the case should be heard in a federal claims court that hears contract disputes, the appeals court ruled in a decision written by U.S. Appeals Court Judge Neomi Rao, who was appointed by President Donald Trump in his first term. The decision was a major loss for the groups who said they can only seek monetary damages in district court. The groups in this case were seeking an order allowing them immediate access to their funds, which total about $16 billion.

“In sum, district courts have no jurisdiction to hear claims that the federal government terminated a grant agreement arbitrarily or with impunity. Claims of arbitrary grant termination are essentially contractual,” Rao wrote in a decision supported by Judge Gregory Katsas, also a Trump appointee.

The appeals court ruling said the nonprofits’ arguments belong in federal claims court because they dealt chiefly with the underlying contracts the groups held with the federal government, not matters of law or the Constitution.

Climate United Fund and other groups sued the EPA, Zeldin and Citibank, which held the grant money on behalf of the agency, saying they had illegally denied the groups access to funds awarded last year. They wanted access to those funds again, saying the freeze had paralyzed their work and jeopardized their basic operations.

In order to provide the parties with an opportunity to appeal, the decision won’t go into effect immediately.

Climate United CEO Beth Bafford said in a statement, “This is not the end of our road.”

“While we are disappointed by the panel’s decision, we stand firm on the merits of our case: EPA unlawfully froze and terminated funds that were legally obligated and disbursed,” Bafford said.

Judge Cornelia Pillard, who was appointed by former President Barack Obama, said in her dissent that the groups provided evidence that the EPA disagreed with the program’s goals and tried to end it, while throwing around allegations against the groups that it couldn’t substantiate.

The EPA has damaged the green bank program “without presenting to any court any credible evidence or coherent reason that could justify its interference with plaintiffs’ money and its sabotage of Congress’s law,” Pillard wrote.

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Associated Press writer Matthew Daly contributed reporting.

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