Author:  Alex Guillén       Published: 8/29/2025      Politico

A judge has ruled for the first time that EPA has the power to rescind the grants awarded by the Biden administration.

A federal judge on Friday tossed out a lawsuit brought by almost two dozen nonprofit groups and localities whose environmental justice grants were terminated by EPA.

The Supreme Court has made it clear that challenges to terminated grants must be heard by a special tribunal, the judge ruled. It’s the first time a court has ruled in EPA’s favor regarding grant terminations.

The ruling marks a blow for the hundreds of recipients of funding from EPA and other agencies who have seen huge swaths of grants canceled because the Trump administration disapproves of the spending, though they may be able to pursue damages in a different court.

Background: Democrats’ Inflation Reduction Act included a $2.8 billion chunk of money for environmental and climate justice block grants. The money was to be used by community groups to address environmental issues in historically disadvantaged communities. Like many other parts of the IRA, the grants were terminated en masse by Administrator Lee Zeldin earlier this year.

Congress has subsequently revoked unobligated funds under the IRA.

Details: The Southern Environmental Law Center, representing several groups, cities and counties that lost out on funding, argued that the grant terminations were unlawful and unconstitutional. But Judge Richard Leon of the U.S. District Court for the District of Columbia disagreed.

“Unfortunately for the plaintiffs, I have concluded that their claims warrant dismissal,” he wrote on Friday.

A law called the Tucker Act requires contract disputes with the federal government be heard by the U.S. Court of Federal Claims, Leon said, agreeing with EPA’s longstanding legal defense.

Leon, a George W. Bush appointee, pointed to two Supreme Court orders in other grant termination cases — one involving education grants that was issued in April and another regarding National Institutes of Health grants issued last week. In both cases, the high court indicated that grant terminations must be heard by the Court of Federal Claims.

Leon rejected the jilted environmental grant recipients’ “artfully” pleaded arguments that their circumstances are different than those in the Supreme Court cases.

“Put simply, I cannot order the Government to reinstate contracts and pay money due on them,” he wrote.

Reaction: Ben Grillot, a senior attorney at SELC, reiterated in a statement that EPA’s termination of the grants was unlawful. “We are currently reviewing the opinion and preparing to advise our clients on our next steps.”

EPA said it is reviewing the decision.

Context: Last week’s NIH ruling from the Supreme Court was broadly seen as doubling down on messaging to the lower courts that grant termination lawsuits belong in the Court of Federal Claims.

EPA could see additional court victories on this issue soon, including on the high-profile termination of $20 billion under the Greenhouse Gas Reduction Fund. EPA’s terminations were blocked by a district court judge earlier this year, and the matter has been pending on appeal for four months.

The grantees under that program wrote to the D.C. Circuit Court of Appeals earlier this week to argue that their situation is different from the NIH grants because the money “has long been in Plaintiffs’ accounts.” The funds were placed in accounts at Citibank as part of financial agent agreement, the first time EPA had structured grants in such a way.

EPA on Thursday fired back that there is no difference and the groups have a “misunderstanding that the funds in the Citibank accounts already belong to plaintiffs.”