A lawyer representing Inclusiv and other groups that received federal grants told appeals court judges Tuesday to keep in place a lower court ruling that would allow the groups to provide loans through credit unions and others for clean energy programs.
Adam Unikowsky, the lawyer for the plaintiffs, was questioned during three hours of oral arguments by a full panel of the U.S. Appeals Court of Washington, D.C. Among the 10 justices at Tuesday's hearing, four were appointed by President Obama, three by President Biden and three by President Trump.
A federal district court judge had ruled in favor of the plaintiffs in April, but two members of a three-judge panel had struck down the ruling in September.
Justice Neomi Rao, one of the two Trump-appointed judges supporting the government in the September ruling, told Unikowsky that since grant money belonged to the government, the government had a right to its return.
Rao cited case law from the 1850s establishing the government's ownership of grant money, but Unikowsky said that case did not involve money used to capitalize a lending fund.
Unikowsky said the law set up the program so that the money went to the groups in advance so that they could put it on their balance sheets to attract private capital for the loans credit unions, banks and other participants would be making for clean energy projects.
"The funds have already been not only obligated but also dispersed," Unikowsky said. "The money has all been spent."
Justice Cornelia Pillard, an Obama appointee who ruled in favor of the plaintiffs in September, supported Unikowsky, saying "the money has been spent for the purpose of the statute."
Since early 2025, the money has remained frozen in accounts at Citibank.
Unikowsky said the U.S. Environmental Protection Agency (EPA) can't ask for the money back because it was disbursed properly under the 2022 law. Congress' repeal of the law in July 2025 stopped more grants but does not give the EPA authority to claw back the old ones.
"EPA needs authority to do anything it does," he said.
And Unikowsky said the facts of ownership by the grantees makes this case different than other recent decisions involving the Department of Energy and the National Institutes of Health," where the plaintiffs were seeking promised money from the Treasury.
A critical element of the case is the government's argument that the issues should be contested in Federal Claims Court. Inclusiv and the other plaintiffs have argued the case belongs in U.S. District Court because they said the Trump administration violated the Constitution, the law and federal regulations.
The District Court agreed with the plaintiffs on that issue in April, but Justices Gregory Katsasa and Rao said it belonged in Federal Claims Court in their appeals panel ruling in September.
Unikowsky said that since the plaintiffs already have the money and are not asking for more, there's nothing a claims court can give them.
Inclusiv and other plaintiffs were granted the hearing before the full panel in December.
Inclusiv represented credit unions that are Community Development Financial Institutions (CDFIs). In 2024, the EPA granted Inclusiv $1.87 billion under Congress' Clean Communities Investment Accelerator (CCIA) Greenhouse Gas Reduction Fund (GGRF). Weeks after President Trump took office in January 2025, the EPA tried to terminate the grant without authority from Congress.
Inclusiv and others sued the EPA. U.S. District Judge Tanya Chutkan of the District of Columbia Federal Court in April issued a Preliminary Injunction rejecting the EPA's attempt to terminate the program.
The EPA appealed. A three-judge panel of the to the U.S. Circuit Appeals Court for Washington, D.C., heard the case in May and ruled 2-to-1 in September in favor of the EPA, vacating the District Court's Preliminary Injunction. The two Trump appointees agreed with the EPA that the District Court lacks jurisdiction, and that the issues must be heard instead by the Court of Federal Claims.
The Appeals Court in December granted Tuesday's emergency appeal hearing at the request of the plaintiffs.
Contact Jim DuPlessis at Jim.DuPlessis@arc-network.com.
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.