Judge blocks Trump administration from terminating $14 billion in 'green bank' grants

A federal judge on Tuesday blocked the Trump administration from terminating USD 14 billion in grants awarded to three climate groups by the Biden administration, saying the government's “vague and unsubstantiated assertions of fraud are insufficient”.

The order by US district judge Tonya Chutkan prevents — for now — the Environmental Protection Agency (EPA) from ending the grant programme, which totalled USD 20 billion. The judge also blocked Citibank, which holds the money on behalf of EPA, from transferring it to the government or anyone else.

EPA administrator Lee Zeldin accused the grant recipients of mismanagement, fraud and self-dealing and froze the grants. But after reviewing arguments in the case, Chutkan said Zeldin's allegations fell short.

“At this juncture, EPA Defendants have not sufficiently explained why unilaterally terminating Plaintiffs' grant awards was a rational precursor to reviewing” the green bank programme, Chutkan wrote.

She was the third judge of the day to rule against the Trump administration. The trio of rulings came within hours of an extraordinary conflict, as President Donald Trump called for the impeachment of another judge who had temporarily blocked deportation flights. Trump's message drew a rare rebuke from Supreme Court Chief Justice John Roberts.

Climate United Fund and other groups had sued the EPA, Zeldin and Citibank, saying they had illegally denied the groups access to USD 14 billion awarded last year through the Greenhouse Gas Reduction Fund, commonly referred to as a “green bank". The programme was created by the 2022 Inflation Reduction Act to finance clean energy and climate-friendly projects.

Climate United and two other groups, the Coalition for Green Capital and Power Forward Communities, said the freeze not only prevented them from financing new projects, but might force them to lay off staff. They said the allegations they were mishandling funds were utterly meritless.

The nonprofits also wanted Judge Chutkan to order Citibank to unfreeze the account. She declined to do so. The order simply preserves the status quo while the case proceeds.

Climate United was awarded nearly USD 7 billion, the Coalition for Green Capital won USD 5 billion and Power Forward Communities was awarded USD 2 billion. Republicans unanimously voted against the law that created the grant program and have denounced it as an unaccountable "slush fund.'' After the funds were frozen, the EPA moved to terminate the grants.

Climate United CEO Beth Bafford said the judge's decision Tuesday was “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,” Bafford said.

The EPA did not immediately respond to a request for comment late Tuesday. Zeldin has characterised the grants as a “gold bar” scheme marred by 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 video posted online.

Climate United countered that the termination was unlawful, arguing the federal government had identified no evidence of waste, fraud or abuse.

Meanwhile, another federal judge blocked President Trump's executive order banning transgender people from military service on Tuesday. US District Judge Ana Reyes in Washington DC ruled that Trump's order to exclude transgender troops from military service likely violates their constitutional rights.

She delayed her order by three days to give the administration time to appeal.

The judge issued a preliminary injunction requested by attorneys for six transgender people who are active-duty service members and two others seeking to join the military.

On 27 January, Trump signed an executive order that claims the sexual identity of transgender service members "conflicts with a soldier's commitment to an honorable, truthful, and disciplined lifestyle, even in one's personal life” and is harmful to military readiness.

In response to the order, defense secretary Pete Hegseth issued a policy that presumptively disqualifies people with gender dysphoria from military service. Gender dysphoria is the distress that a person feels because their assigned gender and gender identity don't match. The medical condition has been linked to depression and suicidal thoughts.

Plaintiffs' attorneys contend Trump's order violates transgender people's rights to equal protection under the Fifth Amendment.

Government lawyers argue that military officials have broad discretion to decide how to assign and deploy service members without judicial interference.

Thousands of transgender people serve in the military, but they represent less than 1 per cent of the total number of active-duty service members.