The U.S. Court of Appeals for the District of Columbia Circuit on Wednesday issued a stay on a district court judge’s decision ordering the Environmental Protection Agency to unfreeze Greenhouse Gas Reduction Fund funding.
“The district court’s order is stayed insofar as it enables or requires Citibank to release, disburse, transfer, otherwise move, or allow access to funds,” wrote Circuit Judges Neomi Rao, Gregory Katsas and Nina Pillard. “It is further ORDERED that no party take any action, directly or indirectly, with regard to the disputed contracts, grants, awards or funds.”
The stay came after the U.S. District Court for the District of Columbia on Tuesday granted an injunction to the Climate United Fund, Coalition for Green Capital, and Power Forward Communities — nonprofit “green banks” which received $6.97 billion, $5 billion and $2 billion, respectively, from the Inflation Reduction Act’s GGRF.
Those funds, held at Citibank, have been frozen since Feb. 16. The nonprofits sued EPA and Citibank last month, alleging serious financial harm to both their institutions and their subgrantees should the freeze continue, and asked for an injunction to end it.
In a Wednesday memorandum opinion regarding her order to grant the injunction, Judge Tanya Chutkan wrote that EPA “acted arbitrarily and capriciously when it failed to explain its reasoning and acted contrary to its regulations in suspending and terminating Plaintiffs’ grants.”
“Though repeatedly pressed on the issue, EPA offers no rational explanation for why it suspended the grants and then immediately terminated the entire [National Community Investment Fund] and [Clean Communities Investment Accelerator] grant programs overnight,” Chutkan said.
She continued, “Nor has EPA offered any rational explanation for why it needed to cancel the grants to safeguard taxpayer resources, especially when it had begun examining the grant programs to add oversight mechanisms, or why it needed to cancel every single grant to review some aspects of the GGRF program with which it was concerned.”
Chutkan also ruled that the plaintiffs have a legitimate claim based on the constitutional separation of powers, saying, “EPA lacks the authority to effectively unilaterally dismantle a program that Congress established.”
The opinion was filed late Wednesday night, after the appellate court partially granted the stay. In the appellate court’s order, Rao said in a footnote that she “would administratively stay the district court's order in full, at least until the district court issues its opinion.”
“Injunctive relief is ‘an extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief’,” Rao said.
“The purpose of this order is to give the court sufficient opportunity to consider the district court’s forthcoming opinion in support of its order granting a preliminary injunction together with the emergency motion for stay pending appeal and any response thereto, and should not be construed in any way as a ruling on the merits of that motion,” the order said.
A spokesperson for the Climate United Fund said that even if the appellate court ultimately declines the stay after hearing arguments, funds won’t flow until the week after next.
