More than 100 credit unions are still waiting for about $651 million in grant funds they were supposed to receive in February for programs to help their members cut energy costs through conservation or solar power improvements.
But within weeks of taking power, Trump appointees at the Environmental Protection Agency froze the funds, leading to a lawsuit in which the U.S. District Court of Washington, D.C., ruled in favor of Inclusiv and other plaintiffs four months ago.
While the plaintiffs can win under the law, they are still losing by the clock.
The funds are still frozen while the plaintiffs await an appeals court to render a decision. Even if an opinion came this week in favor of Inclusiv and the other plaintiffs, the government is likely to appeal to the U.S. Supreme Court, and the funds would likely remain frozen while the Supreme Court mulls the issue. The soonest the issue is likely to be resolved would be next spring.
U.S. District Judge Tanya S. Chutkan’s mid-April decision in favor of the grant recipients laid out the events that led to lawsuit, and her reasons for deciding for the plaintiffs.
Congress appropriated $27 billion for the solar grants as part of the Inflation Reduction Act it passed in 2022. In the summer of 2023 EPA launched three grant programs: The National Clean Investment Fund (“NCIF”), the Clean Communities Investment Accelerator (“CCIA”) and Solar for All.
Inclusiv, which represents credit unions that are Community Development Financial Institutions, was among the groups that applied for grants when the process opened in October 2023. Inclusiv was awarded its $1.87 billion under the CCIA program.
The program was set up to put the funds in accounts at Citibank, where the money belonged to the recipients but was viewable by the EPA. In mid-February 2025, Citibank stopped disbursing any funds after receiving a letter from the FBI “recommending” that Citibank freeze assets related to the grants.
“Overnight, billions of dollars appropriated by Congress were frozen. As a result, nationwide projects were halted, workplans were disrupted, and millions of dollars in approved transactions with committed partners could not be disbursed,” Chutkan wrote.
Inclusiv and the other groups followed up with emails, letters, and voicemails to Citibank, with no response. And EPA officials did not respond to the groups’ inquiries, leaving them “with no information as to why they could not access their funds.”
The lawsuit was triggered after the U.S. Treasury Department told Citibank on March 4 not to disburse any of the grant funds, saying it had been informed of EPA’s “concerns regarding potential fraud and/or conflicts of interest related to the Greenhouse Gas Reduction Fund.”
Other grant recipients filed suit March 8 and requested a temporary restraining order (Inclusiv filed March 31, and its suit was later joined with other plaintiffs). Chutkan told the parties she wanted to hold a hearing March 11. The government asked for a day’s delay “as a professional courtesy.” The plaintiffs had no objection and Chutkan agreed.
The day before the hearing, EPA sent the plaintiffs identical letters, informing them that EPA was terminating their grants “effective immediately.”
EPA said the terminations were “based on substantial concerns regarding program integrity, the award process, programmatic fraud, waste, and abuse, and misalignment with the Agency’s priorities, which collectively undermine the fundamental goals and statutory objectives of the award.”
The federal government has rules for terminating grants for waste, fraud and abuse. The rules define the infractions, demand the government take certain corrective actions and provide avenues for recipients to object.
Chutkan said EPA took no steps under those grounds, and made no allegations of waste, fraud or abuse during its hearing. As a result, those issues were swept off the table.
This left the government with two main remaining issues. One was its assertion that the government could terminate the grants if the government’s policy priorities changed, even if there were no violations of the contract. The other was that the issues in contention were a mere contract dispute that should be heard by a Federal Claims Court.
Chutkan ruled the plaintiffs had standing in U.S. District Court “These claims are not ‘in essence’ contract claims,” she wrote, saying "federal district courts have jurisdiction over all civil actions arising under the Constitution, laws, or treaties of the United States.”
“These claims are not ‘in essence’ contract claims,” she wrote. “The court does not look solely to any contract, nor could it when it must address clear regulatory and statutory questions. Plaintiffs were awarded this grant under a statute authorized by Congress.”
EPA appealed to the U.S. Court of Appeals in Washington, D.C., and a three-judge panel heard oral arguments May 19.
EPA was represented in the hearing by Yaakov M. Roth, who was appointed early this year as Principal Deputy Assistant Attorney General at the Civil Division of the U.S. Department of Justice.
“To be clear, we're not accusing the grantees of breaching the contact,” Roth said. “But we do maintain that EPA has the authority to terminate the contract under the terms and conditions.”
“Those terms and conditions included the right to terminate based on a change in policy priorities,” he said.
The hearing was wrapping up after two hours of argument when Appellate Judge Gregory G. Katsas, a 2017 Trump appointee to the court, asked Roth if his argument made enough sense not to be considered frivolous.
“You're now putting a lot of weight on the possibly that ‘it no longer effectuates agency priorities' clause is a valid ground of breach,” Katsas said. “Maybe I missed it, but it's not actually in the grant agreement.”
Roth provided a citation and the hearing ended.
Meanwhile, Inclusiv still has the $1.87 billion grant award on its books as asset, but is blocked from touching it. Same goes for the other plaintiffs.
Several of the plaintiff groups have had to make significant layoffs, including some at Inclusiv.
Inclusiv had pre-qualified 250 credit unions to be part of the program, and had announced its initial $651 million in grants to the 108 credit unions who were ready to start before the funds were frozen.
Meanwhile Inclusiv President Cathie Mahon said “almost all” the credit unions are still committed to the loan programs — if and when the grants flow.
The grants have impact far beyond the initial amount. Often they are used to fund the expected losses associated with any loans, allowing the credit unions to make far more loans than the grant amount. The idea is for the grants to seed a loan fund that can revolve for years.
Mahon said many of the loans were targeted to lower-income borrowers.
“We're missing the boat on getting that relief to low income households to be able to tighten up their homes, make them more efficient, and be able to control their own ability to generate energy,” she said.
Contact Jim DuPlessis at JDuPlessis@cutimes.com.
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