A federal judge has issued a temporary injunction blocking the Environmental Protection Agency (EPA) from canceling a $20 billion climate grant program, marking a significant development in the ongoing legal and policy debate surrounding federal climate investments.
The ruling, delivered by U.S. District Judge James Wesley Hendrix, prevents the EPA from revoking awards made through its Greenhouse Gas Reduction Fund—a key initiative under the Inflation Reduction Act aimed at accelerating clean energy projects and reducing greenhouse gas emissions in underserved communities. The decision comes in response to a lawsuit filed by a nonprofit organization, the American Coalition for Ethanol (ACE), which claims the EPA’s process lacked transparency and fairness.
In his opinion, Judge Hendrix acknowledged the “serious questions” raised about the EPA’s administrative process, particularly its decision to rescind funding after initial award notifications had been made. The temporary order preserves the status quo while the legal case proceeds, ensuring that selected grantees many of whom have already begun planning project implementation—are not immediately stripped of their funding.
The Greenhouse Gas Reduction Fund was established to mobilize financing for projects that reduce pollution and promote environmental justice, especially in low-income and historically disadvantaged communities. As such, the court’s decision carries implications not only for climate finance policy but also for community-based organizations, clean energy coalitions, and local governments working to advance equitable environmental solutions.
The EPA has yet to comment on the ruling, though it previously stated that the agency was acting within its legal authority to reassess and potentially withdraw funding commitments.
Legal analysts note that the outcome of this case could shape how federal agencies administer large-scale climate investments going forward particularly those tied to the Biden administration’s Justice40 initiative, which seeks to direct 40% of the benefits of federal climate and clean energy investments to disadvantaged communities.
As this case moves through the courts, stakeholders in the nonprofit, environmental, and public policy sectors are advised to monitor developments closely, especially those with existing or pending applications for federal climate-related funding.
At Levitate Legal & Consulting, we provide strategic guidance to nonprofits, local governments, and mission-driven organizations navigating complex policy landscapes. With deep expertise in climate resilience, environmental justice, and federal grant strategy, we support our clients in translating bold ideas into actionable programs—ensuring legal compliance, funding alignment, and community impact every step of the way.
