Climate United Fund v. Citibank, N.A.

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 19, 2025 Decided September 2, 2025

No. 25-5122

CLIMATE UNITED FUND, ET AL.,

APPELLEES

v.

CITIBANK, N.A.,

APPELLANT

ENVIRONMENTAL PROTECTION AGENCY AND LEE M. ZELDIN,

IN HIS OFFICIAL CAPACITY AS ADMINISTRATOR, UNITED

STATES ENVIRONMENTAL PROTECTION AGENCY,

APPELLANTS

Consolidated with 25-5123

Appeals from the United States District Court

for the District of Columbia

(No. 1:25-cv-00698)

Yaakov M. Roth, Acting Assistant Attorney General, U.S.

Department of Justice, argued the cause for appellant

Environmental Protection Agency. With him on the briefs

2

were Gerard Sinzdak and Sophia Shams, Attorneys. Sharon

Swingle, Attorney, entered an appearance.

K. Winn Allen argued the cause and filed the briefs for

appellant Citibank, N.A.

Adam G. Unikowsky argued the cause for Private

plaintiffs-appellees. With him on the brief were Vincent Levy,

Kevin D. Benish, Daniel Fahrenthold, Beth C. Neitzel, Jack C.

Smith, Kevin Y. Chen, James M. Gross, Kathryn L. Wynbrandt,

David B. Robbins, Tanner J. Lockhead, Gabriel K. Gillett, Jay

C. Johnson, David J. Zimmer, Eric F. Citron, and Kathleen

Foley.

Teresa A. Reed Dippo argued the cause for State Bank

appellees. With her on the brief were Rob Bonta, Attorney

General, Office of the Attorney General for the State of

California, John D. Echeverria, Supervising Deputy Attorney

General, Diana L. Kim, Deputy Solicitor General, Theodore A.

McCombs and Meghan H. Strong, Deputy Attorneys General,

Keith Ellison, Attorney General, Office of the Attorney

General for the State of Minnesota, Peter N. Surdo, Special

Assistant Attorney General, Catherine Rios-Keating, Special

Assistant Attorney General, Kwame Raoul, Attorney General,

Office of the Attorney General for the State of Illinois, Jane

Elinor Notz, Solicitor General, Alex Hemmer, Deputy Solicitor

General, Aaron Frey, Attorney General, Office of the Attorney

General for the State of Maine, and Emma Akrawi, Assistant

Attorney General,

Samuel R. Bagenstos was on the brief for amicus curiae

Samuel R. Bagenstos in support of appellees.

William J. Cooper was on the brief for amici curiae Impact

Finance Experts in support of appellees.

3

Paul DeCamp was on the brief for amicus curiae Professor

Tobias Barrington Wolff in support of appellees.

Thomas Zimpleman, Nanding Chen, and Daniel F.

Jacobson were on the brief for amicus curiae Natural

Resources Defense Council in support of appellees.

Before: PILLARD, KATSAS and RAO, Circuit Judges.

Opinion for the Court filed by Circuit Judge RAO.

Dissenting opinion filed by Circuit Judge PILLARD.

RAO, Circuit Judge: The Environmental Protection

Agency awarded grants worth $16 billion to five nonprofits to

promote the reduction of greenhouse gas emissions. Citing

concerns about conflicts of interest and lack of oversight, EPA

terminated the grants in March 2025. The grantees sued, and

the district court entered a preliminary injunction ordering EPA

and Citibank to continue funding the grants.

We conclude the district court abused its discretion in

issuing the injunction. The grantees are not likely to succeed

on the merits because their claims are essentially contractual,

and therefore jurisdiction lies exclusively in the Court of

Federal Claims. And while the district court had jurisdiction

over the grantees’ constitutional claim, that claim is meritless.

Moreover, the equities strongly favor the government, which

on behalf of the public must ensure the proper oversight and

management of this multi-billion-dollar fund. Accordingly, we

vacate the injunction.

4

I.

This case involves EPA grants awarded under the

Greenhouse Gas Reduction Fund, for which Congress

appropriated $27 billion. Inflation Reduction Act of 2022, Pub.

L. No. 117-169, § 60103, 136 Stat. 1818, 2065–67 (formerly

codified at 42 U.S.C. § 7434 (2024)). In August 2024, EPA

awarded $20 billion to eight nonprofits pursuant to two of the

grant programs it created: the National Clean Investment Fund

and the Clean Communities Investment Accelerator. Five of

those grantees are plaintiffs in this case: Climate United Fund

($6.97 billion), Coalition for Green Capital ($5 billion), Power

Forward Communities, Inc. ($2 billion), Inclusiv, Inc. ($1.87

billion), and Justice Climate Fund, Inc. ($940 million).

Each grant was memorialized in an agreement between the

nonprofit and EPA. The grant agreements have an unusual

structure. Typically, grant funds are held by the U.S. Treasury

and disbursed incrementally as grantees use the funds for

program purposes. EPA structured these grants with a

middleman that would hold the funds as a “financial agent” of

the United States. According to EPA, this was the first time the

federal government used a financial agent, as opposed to

Treasury, to carry out this kind of grant program. Treasury

entered a Financial Agency Agreement (“FAA”) with Citibank.

As set forth in the grant agreements, the funds were to be

transferred from Treasury to Citibank in a “two-step

transaction” involving a “drawdown” by the grantee and a

subsequent “disbursement” to the appropriate Citibank

account. J.A. 566. The disbursement by the grantee is deemed

“an allowable cost” under “the EPA award.” Id.

Although the funds are held at Citibank, the grantees’ use

of the funds remains highly restricted. The money may be used

only “for the purposes and under the conditions of the [grant

5

agreement],” and “must be maintained” at Citibank until the

end of the grant’s period of performance. J.A. 568. The

grantees’ use of the funds is further restricted by Account

Control Agreements (“ACAs”) between EPA, Citibank, and

each of the grantees. The ACAs give the government a “right

to exclusive control” over the Citibank accounts. J.A. 72. If the

government exercises that right, Citibank must follow the

government’s transfer instructions “without further consent by

the [grantee].” Id. The ACAs expressly acknowledge that

Citibank “act[s] as a financial agent of the United States

pursuant to the authority of the U.S. Department of the

Treasury.” J.A. 71.

The sheer scale of the grant program and the method of

allocating billions of dollars drew public attention and

criticism. The record includes a widely publicized video in

which an EPA employee was recorded describing how “until

recently” his role was to make sure proper “processes are in

place to … prevent fraud and to prevent abuse,” but after the

election of President Donald Trump, EPA was “just trying to

get the money out as fast as possible before they come in

and … stop it all.” J.A. 705 n.1. The employee compared the

situation to “throwing gold bars off the Titanic.”

The month before President Trump’s inauguration, EPA

modified the grant agreements—with no apparent

consideration from the grantees—to make it more difficult for

the government to terminate the grants.1 The week before the

1

In December 2024, the government unilaterally modified the grant

agreements, including by (1) eliminating any reference to

termination for agency priorities; (2) requiring “credible

evidence … of a violation of Federal criminal law” before the

government could exercise its contractual right to terminate for

waste, fraud, or abuse; and (3) giving the grantees an expanded right

6

inauguration, EPA amended the ACAs to require Citibank to

“continue to disburse funds” to the grantees, even if the

government exercised its right of exclusive control, if the funds

are “associated with financial obligations ‘properly incurred’”

before the government exercised its right. J.A. 658.

After the change in administration, EPA reviewed the

grants and raised concerns about conflicts of interest during the

award process, the political connections of the chosen grantees,

lack of government oversight and control over tens of billions

of dollars, and last-minute amendments to the grant agreements

and ACAs.2 In February 2025, the FBI recommended to

Citibank that it “place an administrative freeze on the

account(s) associated with” the grantees’ ACAs. As the

government’s financial agent, Citibank complied and stopped

disbursing funds to the grantees. EPA also referred the matter

to the Office of Inspector General for investigation. Shortly

thereafter, EPA terminated the grant agreements.

The grantees sued, seeking to enjoin the terminations as

unconstitutional, unlawful, and arbitrary and capricious. They

sought a preliminary injunction barring EPA from terminating

the grants “except as permitted in accordance with the ACA,

the grant award, and applicable law,” and ordering Citibank to

to cure any nonperformance. There is no serious dispute that these

modifications increased the likelihood that a termination by the

incoming administration would constitute a breach of contract.

2

For example, the Acting Deputy Administrator averred in a letter

to the EPA Inspector General that “the former director of the

[Greenhouse Gas Reduction Fund], personally oversaw a $5 billion

grant to his previous employer, the Coalition for Green Capital –

without recusing himself.” J.A. 670.

7

resume disbursements “in accordance with the ACA.” J.A.

171–72.

The district court entered the injunction. It first held that it

had jurisdiction because the grantees’ claims were not

essentially contractual and therefore did not need to be brought

in the Court of Federal Claims. Climate United Fund v.

Citibank, N.A., 778 F. Supp. 3d 90, 107–11 (D.D.C. 2025). On

the merits, the court concluded the grantees were likely to

succeed on their constitutional, regulatory, and arbitrary and

capricious claims. The district court found the balance of harms

supported an injunction because the nonprofits exist “to fulfill

the objectives of a grant” and “sufficient protections [are] in

place” to prevent “reckless spending.” Id. at 117, 120. The

district court further concluded that an injunction “halt[ing] any

unlawful action” serves the public interest. Id. at 121. The court

enjoined Citibank as well, requiring it to disburse funds

according to the relevant agreements.

We administratively stayed the injunction and ordered the

parties to take no action “directly or indirectly” with respect to

the disputed funds, thereby prohibiting the grantees from

making further commitments in reliance on the disputed funds.

We then accelerated consideration of the merits of the appeal.

II.

While this litigation was pending, Congress enacted

legislation repealing the Greenhouse Gas Reduction Fund. See

Pub. L. No. 119-21, § 60002, 139 Stat. 72, 154 (2025)

(repealing 42 U.S.C. § 7434 and rescinding “unobligated

balances of amounts made available to carry out that section”).

Our partial administrative stay did not lift the portion of the

district court’s order enjoining the grant terminations, so the

funds at issue in this case remain at Citibank and remain

8

obligated. Congress’s repeal of the Greenhouse Gas Reduction

Fund therefore did not render this appeal moot.

We review the district court’s preliminary injunction for

abuse of discretion, its underlying legal conclusions de novo,

and its findings of fact for clear error. Huisha-Huisha v.

Mayorkas, 27 F.4th 718, 726 (D.C. Cir. 2022). We consider the

same Winter factors the district court applied, which require a

plaintiff seeking a preliminary injunction to establish that it “is

likely to succeed on the merits, that [it] is likely to suffer

irreparable harm in the absence of preliminary relief, that the

balance of equities tips in [its] favor, and that an injunction is

in the public interest.” Id. at 727 (quoting Winter v. NRDC, 555

U.S. 7, 20 (2008)).

III.

The district court erred in concluding the grantees are

likely to succeed on their regulatory, arbitrary and capricious,

and constitutional claims. See Aamer v. Obama, 742 F.3d 1023,

1038 (D.C. Cir. 2014) (describing likelihood of success on the

merits as the “most important factor” when considering a

preliminary injunction). The grantees’ regulatory and arbitrary

and capricious claims can be heard only in the Court of Federal

Claims, and their constitutional claim is meritless.

A.

The grantees first allege the termination of their grants

violated Office of Management and Budget (“OMB”)

regulations and was arbitrary and capricious under the

Administrative Procedure Act (“APA”). As a remedy, they

sought and received an injunction barring the termination of

their grants and restoring access to the funds held by Citibank.

We conclude the district court lacked jurisdiction over these

9

claims, which are essentially contractual and therefore must be

heard in the Court of Federal Claims.3

1.

The federal government enjoys sovereign immunity and

may be subject to suit only when it has explicitly waived that

immunity. United States v. Testan, 424 U.S. 392, 399 (1976).

Waivers of sovereign immunity must be strictly construed to

protect the prerogatives of the government and to ensure the

courts stay within the jurisdiction provided by Congress. See

Lane v. Pena, 518 U.S. 187, 192 (1996); Larson v. Domestic &

Foreign Com. Corp., 337 U.S. 682, 703–05 (1949). The

grantees brought their claims in district court, invoking the

APA’s waiver of sovereign immunity, which applies to claims

“seeking relief other than money damages.” 5 U.S.C. § 702.

But this waiver applies only if no “other statute that grants

consent to suit expressly or impliedly forbids the relief which

is sought.” Id. For contract claims against the government, the

Tucker Act establishes review in the Court of Federal Claims,

which may award only damages and cannot provide

3

Although the dissent considers this threshold jurisdictional question

a “diver[sion],” Dissenting Op. 47, our authority to assess the

lawfulness of EPA’s actions of course depends on having

jurisdiction. Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94

(1998). Concluding that jurisdiction over most of these claims lies

with the Court of Federal Claims, we do not reach their merits. The

dissent inverts this fundamental limitation on Article III courts by

recounting at great length the integrity and virtue of the previous

administration’s efforts to implement the Inflation Reduction Act

and the alleged misdeeds of the current administration in terminating

the grants. Our jurisdiction, however, rests on law, not on the severity

of the alleged wrongdoing claimed by the grantees and reported by

The Washington Post, The New York Times, and Politico. See

Dissenting Op. 11, 12, 14, 36.

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declaratory or injunctive relief except in narrow circumstances.

See 28 U.S.C. § 1491; Megapulse, Inc. v. Lewis, 672 F.2d 959,

963 n.13 (D.C. Cir. 1982); Walters v. Sec’y of Defense, 725

F.2d 107, 112 n.10 (D.C. Cir. 1983).

When it applies, Tucker Act jurisdiction is exclusive and

precludes jurisdiction in district court under the APA’s waiver

of sovereign immunity.4 See Transohio Sav. Bank v. Dir., Off.

of Thrift Supervision, 967 F.2d 598, 609 (D.C. Cir. 1992). The

Court of Federal Claims is the “single, uniquely qualified

forum for the resolution of contractual disputes.” Ingersoll-

Rand Co. v. United States, 780 F.2d 74, 78 (D.C. Cir. 1985).

Because Congress has limited the forum and the remedies for

contract claims against the government, a litigant whose claim

is essentially contractual cannot “avoid the jurisdictional (and

hence remedial) restrictions of the Tucker Act” by simply

asking for injunctive relief in district court. Megapulse, 672

F.2d at 967; Transohio, 967 F.2d at 613 (“[T]he APA does not

waive sovereign immunity for contract claims seeking specific

relief.”).

This jurisdictional inquiry cannot turn on a plaintiff’s

preferred characterization of its claim, lest we “upset the

carefully modulated waiver of sovereign immunity and grant

of remedies for breach of contract embodied in the Tucker

Act.” Int’l Eng’g Co., Div. of A-T-O v. Richardson, 512 F.2d

573, 580 (D.C. Cir. 1975); see also McKay v. United States,

4

The Tucker Act contains one exception to this rule, not relevant in

this suit involving billions of dollars. Damages claims not exceeding

$10,000 may be brought in district court, although the Tucker Act’s

remedial restrictions still apply. See 28 U.S.C. § 1346(a)(2); Int’l

Eng’g Co., Div. of A-T-O v. Richardson, 512 F.2d 573, 577 n.4 (D.C.

Cir. 1975); see also Contract Disputes Act of 1978, Pub. L. No. 95-

563, §§ 3(a), 10(a), 14(a), 92 Stat. 2383, 2383–84, 2388–89 (limiting

exception to non-procurement claims).

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516 F.3d 848, 851 (10th Cir. 2008) (“[I]n the contract context,

a distinct line of authority preserves the sovereign’s immunity

from being compelled to perform obligations it prefers to

breach and compensate financially, holding that what are ‘in

essence’ claims for breach of contract cannot circumvent the

Tucker Act and its prohibition on equitable relief by being

artfully pled as something else.”).

To determine whether jurisdiction was proper in the

district court, we must therefore assess whether the grantees’

claims are essentially contractual. Megapulse, 672 F.2d at 967–

68. The fact that the grantees’ “complaint nowhere mentions

breach of contract … cannot alone suffice to establish

jurisdiction in the District Court.” Ingersoll-Rand, 780 F.2d at

77. Instead, for each claim we consider (1) whether “the source

of the rights” asserted is contractual or is “based on truly

independent legal grounds” and (2) whether “the type of relief

sought” is a typical contract remedy. Megapulse, 672 F.2d at

968–71; see Transohio, 967 F.2d at 609.

2.

The grantees first allege EPA’s termination of their

agreements violated OMB regulations. By terminating for

“agency priorities,” EPA allegedly relied on a basis for

termination not set forth in the grant agreements, in violation

of 2 C.F.R. § 200.340(a)(4). Furthermore, EPA allegedly failed

to provide written notice of termination as required by 2 C.F.R.

§ 200.341(a). Despite the grantees’ characterization, their

claims are essentially contractual and therefore the district

court lacked jurisdiction to hear them.

First, the source of the grantees’ right to the relief they seek

is their agreements, which are contracts for Tucker Act

purposes. See Dep’t of Educ. v. California, 145 S. Ct. 966, 968

(2025) (per curiam); Columbus Reg’l Hosp. v. United States,

12

990 F.3d 1330, 1338–41 (Fed. Cir. 2021); see also Medina v.

Planned Parenthood S. Atl., 145 S. Ct. 2219, 2231 (2025)

(explaining that courts have historically described federal

grants as contracts). Each grantee’s right to the funds arises

“only upon creation and satisfaction of its contract with the

government; in no sense d[oes] it exist independently of that

contract.” Spectrum Leasing Corp. v. United States, 764 F.2d

891, 894 (D.C. Cir. 1985). While the grantees attempt to

ground their claims in OMB guidance, the substance of these

claims may be understood “as entirely contained within the

terms of the contract” or in principles of contract law.

Ingersoll-Rand, 780 F.2d at 78.

The claim that EPA violated 2 C.F.R. § 200.340(a)(4)

expressly refers to and incorporates the grant agreements. The

grantees interpret this OMB guidance as prohibiting the

government from terminating based on agency priorities unless

the grant agreements reserve the right to terminate on those

grounds. Even assuming this is what the guidance requires, the

grantees’ claim turns on the government’s rights under the

agreements—a question of contract interpretation that the

parties fiercely dispute. Because this claim perforce

incorporates the grant agreements, it is not based “solely” on

the regulation or on “truly independent legal grounds.”

Ingersoll-Rand, 780 F.2d at 78; Megapulse, 672 F.2d at 969–

70.

The claim that EPA failed to give proper notice of

termination in violation of 2 C.F.R. § 200.341(a) is not an

independent legal ground for a slightly different reason. This

allegation “could be phrased” as a claim that the government

stopped performing on the contract without sufficient warning.

Ingersoll-Rand, 780 F.2d at 78. Federal contract law addresses

13

when defective notice by the government is actionable,5 and

therefore the substance of the grantees’ claim can be analyzed

“solely on contract principles.” Ingersoll-Rand, 780 F.2d at 78.

As we have explained, the fact that the government’s

termination of a contract “also arguably violates certain other

regulations does not transform the action into one based solely

on those regulations.” Id. Indeed, “[i]f the mere allegation” of

violations of the regulations governing federal contracting and

grantmaking “were to bring claims of this type within the

jurisdiction of the district court, Congress’ intent to limit

contract remedies against the government to damages in the

[Court of Federal Claims] would be effectively circumvented.”

Id. (cleaned up). Because the substance of the grantees’ notice

claim sounds in federal contract law, the claim is essentially

contractual and can be heard only in the Court of Federal

Claims. The grantees cannot avoid the Tucker Act’s

jurisdictional channeling by disguising a breach of contract

claim as a claim that the government violated the regulations

governing grantmaking.

Furthermore, the guidance documents on which the

grantees rely likely do not create enforceable private rights

because they merely set out principles for agencies to follow

when making grants. See Guidance for Federal Financial

Assistance, 89 Fed. Reg. 30046, 30089–90 (Apr. 22, 2024).

These guidance provisions fall within subtitle A of Title 2,

which sets forth OMB’s “guidance to Federal agencies on

5

See, e.g., Decker & Co. v. West, 76 F.3d 1573, 1579 (Fed. Cir. 1996)

(“[H]arm should accompany a defect in an otherwise proper

termination notice in order for the contractor to seek relief based on

that defect.”); Philadelphia Regent Builders v. United States, 634

F.2d 569, 572–73 (Ct. Cl. 1980) (declining to treat government’s

termination as defective because government’s regulatory violations

were “harmless technical defects”).

14

government-wide policies for the award and administration of

Federal financial assistance.” 2 C.F.R. § 1.100(a). “Publication

of the OMB guidance in the [Code of Federal Regulations]

does not change its nature—it is guidance, not regulation.” Id.

§ 1.105(b). But in any event, as the dissent concedes,

Dissenting Op. 58, these regulatory claims are essentially

contractual, and we have no jurisdiction to consider them.

Second, the Court of Federal Claims has exclusive

jurisdiction because the remedy the grantees seek is contractual

in nature. The grantees requested an injunction barring EPA

from terminating the grants, “except as permitted in accordance

with the ACA, the grant award, and applicable law,” and

ordering Citibank to resume disbursements “in accordance

with the ACA.” The grantees maintain they own the funds and

seek an injunction barring unlawful interference, rather than an

order for specific performance. But the grantees’ “ownership”

of the funds goes only as far as the grant agreements and the

ACAs permit. And the funds are held by Citibank, which acts

as a fiduciary of the government. Despite their characterization,

in substance, the grantees are seeking specific performance of

their agreements with the government.6 As then-Judge Scalia

6

The dissent’s only legal argument that we have jurisdiction turns

on the claim that the grantees have “title” to the billions of dollars in

government funding. To demonstrate the grantees’ ownership,

however, the dissent relies on the grant agreements and the ACAs—

that is, on the disputed and ongoing contracts that govern the parties’

relationship. Dissenting Op. 48. The dissent’s argument merely

reinforces that this dispute is contractual and belongs in the Court of

Federal Claims. And even assuming the grantees had somehow

secured title, that would simply mean the grantees might have a

Takings Clause claim for damages, a claim they have not made and

which in any event would also have to be brought in the Court of

Federal Claims. See Knick v. Township of Scott, 139 S. Ct. 2162,

15

explained, “[t]he waiver of sovereign immunity in the [APA]

does not run to actions seeking declaratory relief or specific

performance in contract cases.”7 Sharp v. Weinberger, 798

F.2d 1521, 1523 (D.C. Cir. 1986). “[A] complaint involving a

request for specific performance must be resolved by the

[Court of Federal] Claims.” Ingersoll-Rand, 780 F.2d at 80.

In sum, the grantees cannot manufacture district court

jurisdiction through artful pleading. Because the grantees’

regulatory claims are essentially contractual, they must be

heard in the Court of Federal Claims.

3.

Nor can the grantees repackage their contract claims by

invoking the APA’s bar on arbitrary and capricious action. The

grantees’ arbitrary and capricious claims are also essentially

2170, 2173 (2019) (explaining the Tucker Act “provides the standard

procedure for bringing [takings] claims” against the federal

government and that “[e]quitable relief [is] not available” if

“monetary relief … under the Tucker Act” is).

7

The dissent’s reliance on Sharp is entirely misplaced. In Sharp,

there was no dispute that the plaintiff was a military officer, that he

had an interest in his employment, and that the deprivation of that

interest without due process could be litigated in district court under

Sampson v. Murray, 415 U.S. 61, 71 (1974). See Sharp, 798 F.2d at

1523. Here, by contrast, the rights and interests of the grantees are

disputed. The grantees assert they “performed” on their contracts

when Treasury deposited federal funds at Citibank, the government’s

financial agent. Even overlooking the oddity of this argument,

whether the grantees have performed depends entirely on the terms

of the disputed contracts—a question that must be adjudicated in the

Court of Federal Claims.

16

contractual, considering both the source of the legal right

asserted and the remedy sought.

The grantees assert the government acted arbitrarily

because it “offered no facts or individualized reasoning to

justify” the grant terminations. And the grantees insist they can

challenge the sufficiency of the government’s reasons for

terminating the grants separately from the issue of whether the

terminations were allowed under the agreements. But this court

has expressly and repeatedly rejected attempts to manufacture

district court jurisdiction by framing contract claims as

violations of the APA’s bar on arbitrary and capricious action.

See Ingersoll-Rand, 780 F.2d at 77–78; Richardson, 512 F.2d

at 580. Despite the grantees’ characterizations, the remedy they

seek is specific performance of their contracts, and they have

identified no right to that relief that is “truly independent” of

the grant agreements. Megapulse, 672 F.2d at 970.

As already discussed in reference to the grantees’

regulatory claims, the grantees seek to set aside their grant

terminations, which means they seek specific performance.

Ingersoll-Rand, 780 F.2d at 79–80. This is a “typical contract

remedy” that indicates a claim is “founded upon a contract for

purposes of the Tucker Act.” Spectrum Leasing, 764 F.2d at

894–95; see also Transohio, 967 F.2d at 613.

The APA’s substantive bar on arbitrary and capricious

action does not give the grantees an independent right to

specific performance of their grant agreements. To the extent

the grantees argue the government acted arbitrarily by failing

to follow the terms of the grant agreements, that argument can

be evaluated only by “reference to and incorporation of” the

agreements. Richardson, 512 F.2d at 578. The source of the

right asserted is therefore not “truly independent” of the

contracts. Megapulse, 672 F.2d at 970.

17

To the extent the grantees argue the terminations were

arbitrary regardless of whether they were permitted under the

agreements, that challenge turns, in substance, on principles of

federal contract law. That law prohibits the government from

“dishonor[ing], with impunity, its contractual obligations”

even when a contract allows the government to terminate for

convenience. Maxima Corp. v. United States, 847 F.2d 1549,

1553 (Fed. Cir. 1988) (cleaned up). The grantees’ argument

that the termination was arbitrary and capricious is simply a

claim that EPA breached the grant agreements by terminating

with “impunity.” That claim must be brought in the Court of

Federal Claims.

The grantees insist the APA gives them an independent

right to be free of arbitrary agency action, including contract

terminations. But we have long rejected the idea that the APA’s

general bar on arbitrary and capricious action subjects contract

terminations to a parallel review scheme in district court.8 See

Ingersoll-Rand, 780 F.2d at 77–78; Richardson, 512 F.2d at

580 (“[D]ecisions made by contracting officers pursuant to

contract clauses fall outside the contemplation of the [APA].”).

The APA’s bar on arbitrary and capricious action did not

“destroy the Court of [Federal] Claims by implication.”

Richardson, 512 F.2d at 580 (cleaned up).

8

The dissent’s analysis focuses on the grantees’ “theory of relief”

and concludes that because the grantees have “legitimate” APA

claims and request injunctive relief, the district court has jurisdiction.

Dissenting Op. 56–57. But Supreme Court and circuit precedent

require that we look beyond plaintiffs’ characterization of their

claims and determine whether the claims are “based on truly

independent legal grounds,” not simply whether plaintiffs have made

good faith legal arguments. See Megapulse, 672 F.2d at 969–70. On

this central question, the dissent has nothing to offer.

18

In sum, district courts have no jurisdiction to hear claims

that the federal government terminated a grant agreement

arbitrarily or with impunity. Claims of arbitrary grant

termination are essentially contractual and fall outside the

APA’s waiver of sovereign immunity.

This conclusion is reinforced by the Supreme Court’s

recent decision in a stay posture that a very similar arbitrary

and capricious challenge to federal grant terminations likely

could not be brought in district court. See Dep’t of Educ., 145

S. Ct. at 968. In that case, state plaintiffs sued in district court

and claimed the Department of Education’s decision to

terminate several grants was arbitrary and capricious under the

APA. The district court enjoined the terminations. The Court

stayed the injunction on the ground that the district court likely

lacked jurisdiction over the APA claims because “the Tucker

Act grants the Court of Federal Claims jurisdiction over suits

based on ‘any express or implied contract with the United

States.’” Id. (quoting 28 U.S.C. § 1491(a)(1)). The Supreme

Court has doubled down on this conclusion in another case

staying an injunction against discretionary grant terminations:

“The [APA]’s ‘limited waiver of [sovereign] immunity’ does

not provide the District Court with jurisdiction to adjudicate

claims ‘based on’” the plaintiffs’ grants “or to order relief

designed to enforce any ‘obligation to pay money’ pursuant to

those grants.” Nat’l Institutes of Health v. Am. Pub. Health

Ass’n, No. 25A103, 2025 WL 2415669, at *1 (Aug. 21, 2025)

(quoting Dep’t of Educ., 145 S. Ct. at 968).

The Court’s reasoning requires respect and strongly

supports our conclusion that the grantees’ arbitrary and

capricious challenge to the grant terminations is a disguised

contract claim that cannot be heard in district court. See Trump

v. Boyle, 145 S. Ct. 2653, 2654 (2025) (“Although our interim

orders are not conclusive as to the merits, they inform how a

19

court should exercise its equitable discretion in like cases.”);

Priests for Life v. HHS, 808 F.3d 1, 25 (D.C. Cir. 2015)

(Kavanaugh, J., dissenting from denial of rehearing en banc)

(explaining that Supreme Court stay orders are “extremely

strong signals”); see generally Trevor N. McFadden & Vetan

Kapoor, The Precedential Effects of The Supreme Court’s

Emergency Stays, 44 Harv. J. L. & Pub. Pol’y 827, 831 (2021)

(arguing some emergency orders are “authoritative with

respect to future cases considering the same legal questions”).

In the face of this overwhelming authority, the grantees

nonetheless maintain that jurisdiction over their arbitrary and

capricious claims is proper. But the two cases on which they

rely cannot support that conclusion.

The grantees point out that this court reviewed an agency’s

grant termination under the APA’s arbitrary and capricious

standard in Kansas City v. Department of Housing and Urban

Development, 923 F.2d 188, 193 (D.C. Cir. 1991). But the

court in that case made no mention of the Tucker Act, nor did

it engage with our decisions in Richardson and Ingersoll-Rand.

This drive-by jurisdictional holding does not bind us. Steel Co.

v. Citizens for a Better Env’t, 523 U.S. 83, 91 (1998). Just one

year later, we extensively considered the jurisdictional

framework and “decline[d] to overrule this Court’s very

specific holdings that the APA does not waive sovereign

immunity for contract claims seeking specific relief.”

Transohio, 967 F.2d at 613. As the Supreme Court’s stay order

in Department of Education confirms, Kansas City is an outlier

and does not support district court jurisdiction over the

grantees’ arbitrary and capricious claims.

Second, the grantees point to Maryland Department of

Human Resources v. Department of Health and Human

Services, which held that a state agency could maintain an

20

arbitrary and capricious claim in district court to challenge the

federal government’s withholding of grant funds. 763 F.2d

1441, 1451, 1453 (D.C. Cir. 1985). In that case, the federal

government was required by law to pay block grant funds to

Maryland according to a statutory formula. See 42 U.S.C.

§§ 1397a(a)–(b), 1397b(b) (1982). We explained that

Maryland’s claim was not contractual for purposes of the

Tucker Act because it “turn[ed] on the interpretation of statutes

and regulations rather than on the interpretation of an

agreement negotiated by the parties.” Maryland, 763 F.2d at

1449. There was no “contract within the meaning of the Tucker

Act”—only statutes and regulations that dictated how much

Maryland was entitled to receive, how the funds could be spent,

and under what circumstances the federal government could

withhold payment. Id.

By contrast, these grant agreements are “contracts” within

the meaning of the Tucker Act because they include the

traditional contract elements of offer, acceptance, and

consideration. See, e.g., Dep’t of Educ., 145 S. Ct. at 968;

Columbus Reg’l Hosp., 990 F.3d at 1338–41. The grantees do

not suggest that any of these elements is lacking. Moreover, the

Inflation Reduction Act did not specify who was to receive

money from the Greenhouse Gas Reduction Fund or in what

amount. Those determinations were to be made “on a

competitive basis” at the discretion of the EPA Administrator.

42 U.S.C. § 7434(a) (2024). The grantees obtained federal

funds only because they were awarded discretionary EPA

grants, the terms of which are governed by the grant

agreements. See Nat’l Institutes of Health, 2025 WL 2415669,

at *4 (Gorsuch, J., concurring in part and dissenting in part)

(explaining that Department of Education “controls” when a

district court seeks to remedy “the government’s denial of

previously awarded discretionary grants”). The dispute over

the termination of these agreements does not turn solely, or

21

really at all, on the statute, and the relief sought is continued

performance of the agreements.

In short, the grantees cannot circumvent the Court of

Federal Claims by arguing that EPA’s termination of the grants

was arbitrary and capricious in violation of the APA.

4.

Finally, the grantees cannot bring their regulatory or

arbitrary and capricious claims in district court by arguing that

the EPA Administrator acted ultra vires. The grantees invoke

the Larson-Dugan doctrine, which, like the Ex parte Young

exception to state sovereign immunity, holds that sovereign

immunity does not bar suits against federal officers whose

“powers are limited by statute” and whose actions go “beyond

those limitations” or are “constitutionally void.” Larson, 337

U.S. at 689, 701–02; see also Dugan v. Rank, 372 U.S. 609,

621–23 (1963). The grantees insist Administrator Zeldin

exceeded his lawful authority by terminating the agreements in

violation of the OMB guidance provisions and the APA’s bar

on arbitrary and capricious action. We disagree.

The Supreme Court in Larson recognized that the ultra

vires exception to sovereign immunity does not apply to

contract claims: “The Government, as representative of the

community as a whole, cannot be stopped in its tracks by any

plaintiff who presents a disputed question of property or

contract right.” 337 U.S. at 704. As already explained, the

grantees’ regulatory and arbitrary and capricious claims

essentially allege the government (1) violated the terms of the

grant agreements and (2) acted with impunity. If proven, these

claims establish breach of contract. They do not establish that

the government (or any official) acted in excess of statutory

limits or in contravention of the Constitution, as is required to

22

invoke the Larson-Dugan exception.9 See Larson, 337 U.S. at

695 (squarely rejecting the contention that “an officer given the

power to make decisions” only has sovereign immunity when

he “make[s] correct decisions”).

The grantees cannot bootstrap district court jurisdiction

through the ultra vires exception to sovereign immunity

because their regulatory and arbitrary and capricious claims are

essentially contractual.

B.

The grantees also maintain that EPA violated the

“Separation of Powers” by not enforcing the Inflation

Reduction Act, citing In re Aiken County, 725 F.3d 255 (D.C.

Cir. 2013). The grantees contend that Congress directed how

and when the Greenhouse Gas Reduction Fund appropriations

were to be spent and that EPA violated those directives by

canceling the grant agreements. Although the district court had

jurisdiction over this claim, it is unlikely to succeed on the

merits.

As an initial matter, this is not a constitutional claim at all,

but rather a claim that EPA violated the Inflation Reduction

Act. Claims that agency officials acted in excess of their

statutory authority do not ipso facto allege violations of the

“Separation of Powers.” See Dalton v. Specter, 511 U.S. 462,

9

This is consistent with the general principle that “[i]t is not illegal

for a party to breach a contract.” United States v. Blankenship, 382

F.3d 1110, 1133 (11th Cir. 2004). “The duty to keep a contract at

common law means a prediction that you must pay damages if you

do not keep it[]—and nothing else.” United States v. Winstar Corp.,

518 U.S. 839, 919–20 (1996) (Scalia, J., concurring) (quoting

Holmes, The Path of the Law (1897), in 3 The Collected Works of

Justice Holmes 391, 394 (S. Novick ed. 1995)).

23

474 (1994) (distinguishing between “claims that an official

exceeded his statutory authority, on the one hand, and claims

that he acted in violation of the Constitution, on the other”); cf.

5 U.S.C. § 706(2) (distinguishing judicial review of agency

action “contrary to constitutional right, power, privilege, or

immunity” and action “in excess of statutory jurisdiction,

authority, or limitations”). As we recently explained, when a

“supposed separation-of-powers violation turns entirely on

whether [executive] officials violated the governing

statutes, … Dalton requires us to analyze the claim as an ultra

vires one.” Nat’l Treasury Emps. Union v. Vought, No. 25-

5091, 2025 WL 2371608, at *19–20 (D.C. Cir. Aug. 15, 2025);

see also Glob. Health Council v. Trump, No. 25-5097, 2025

WL 2326021, at *6–9 (D.C. Cir. Aug. 13, 2025). The grantees

here allege violations of the statute, not the Constitution, and

we decline to adopt a principle that would convert every

statutory challenge to agency action into a constitutional claim.

We conclude EPA did not violate the Inflation Reduction

Act when it terminated these grants. The grantees have

identified no statutory provision that barred the cancellation of

the grants. In relevant part, the Inflation Reduction Act

“appropriated to the Administrator” $20 billion “to make

grants[] on a competitive basis” and provided that the funds are

“to remain available until September 30, 2024.” 42 U.S.C.

§ 7434(a) (2024). The grantees interpret these provisions as a

mandate that EPA spend the full $20 billion, a mandate that

EPA allegedly violated when it cancelled grants after the

September 2024 appropriation deadline. But even assuming the

statute required EPA to obligate all $20 billion by the

appropriation deadline, EPA did so. EPA later cancelled the

grants, but the Act does not limit the Administrator’s discretion

to withhold or terminate grants. And EPA repeatedly

represented that it planned to recommit the funds.

24

The grantees and the dissent insist EPA’s promise to

recommit the funds was hollow because the Inflation

Reduction Act appropriation had lapsed by the time EPA

terminated the grants, and therefore EPA had no ability to

recommit the funds. But the grantees cite no authority for the

proposition that when an agency cancels a grant after an

appropriation has lapsed, any recommitment of those funds

requires deobligation and a new appropriation by Congress.

Indeed, such a categorical rule would be inconsistent with the

longstanding position of the Government Accountability

Office—a legislative agency—that the Executive Branch may

issue replacement contracts even after an appropriation has

lapsed. See Funding of Replacement Contracts, 68 Comp. Gen.

158, 158 (Dec. 19, 1988); see also 31 U.S.C. § 1552(a)

(providing that appropriation account does not close until five

years after an appropriation expires).

In fact, the Executive often issues replacement contracts

after terminating for convenience, a practice the Comptroller

General has approved for decades.10 See U.S. General

Accounting Office, Principles of Federal Appropriations Law

3d ed., vol. 1, 5-28–5-33 (Jan. 2004) (discussing history of

replacement contracts and associated Comptroller General

opinions). Moreover, the rule the grantees assert would be

inconsistent with this court’s recognition that the government

gets “a second chance to obligate” even after an appropriation

has lapsed if a court sets aside the original, timely obligation.

Population Inst. v. McPherson, 797 F.2d 1062, 1071 (D.C. Cir.

1986). Considering the longstanding practice of the political

branches, as well as our precedent, we are not persuaded that

10

The Comptroller General opinion the dissent cites is inapposite

because it involves new obligations, not replacement grants. See

Dissenting Op. 41. Replacement grants do not require a new

obligation of funds.

25

the government lacks authority to recommit the funds after

termination.11

The district court’s determination that the grantees were

likely to succeed on their “constitutional” Inflation Reduction

Act claim rests on both factual and legal error. The court found

that “EPA seeks to dismantle these grant programs in their

entirety as a policy matter.” Climate United Fund, 778 F. Supp.

3d at 115. This factual determination was not supported by any

evidence in the record and rested only on the district court’s

assertion that EPA “suspended all eight grants.” Id. at 116. But

the suspension of the grants standing alone cannot demonstrate

EPA was shutting down the statutory programs without

congressional approval. Indeed, EPA repeatedly stated that it

planned to recommit the grant money with greater oversight

and accountability, contradicting the district court’s shutdown

finding. Absent any clear evidence to the contrary, EPA’s

representations were entitled to a presumption of regularity.

See Am. Fed’n of Gov’t Emps., AFL-CIO v. Reagan, 870 F.2d

723, 727 (D.C. Cir. 1989).

Rather than credit EPA’s statements or explain why the

presumption of regularity was overcome, the district court

simply declared EPA was shutting down the programs. The

court disregarded the government’s interest in prudent

management of the grant programs and the government’s

representations that it planned to properly supervise, rather

11

We need not consider for purposes of this appeal whether the

recent repeal of the Greenhouse Gas Reduction Fund, and the

recission of “unobligated balances,” affects EPA’s ability to

recommit the funds at issue here. If the repeal of the statute bars EPA

from recommitting the funds, it stands to reason that the repeal also

relieves EPA of any statutory obligation to do so.

26

than abandon, the grantmaking process.12 The district court’s

conclusory factual finding of program dismantlement was

clearly erroneous. See United States v. Microsoft Corp., 253

F.3d 34, 118 (D.C. Cir. 2001) (explaining that even on clear

error review the court is not required to “accept findings that

are utterly deficient”).

Because EPA issued the grants in accordance with the

Inflation Reduction Act, and there is no evidence the agency

sought to dismantle the programs without congressional

approval, In re Aiken County cannot support the grantees’

claims. In that case we issued a writ of mandamus because for

years the Nuclear Regulatory Commission flagrantly

disregarded statutory commands, failed to spend appropriated

funds, and plainly stated it had no intention of complying with

its statutory obligations. In re Aiken County, 725 F.3d at 257–

59. By contrast, EPA entered the grant agreements before the

appropriation expired in September 2024, in compliance with

any requirement in the Inflation Reduction Act to spend funds.

EPA subsequently terminated the agreements because of its

concerns about lack of oversight and potential conflicts of

interest during the award process.

EPA’s actions here are well within the Executive Branch’s

authority and responsibility to manage the expenditure of funds

and to ensure that money appropriated by Congress is properly

spent for its intended purposes. The grant terminations may be

12

The district court also ignored the government’s evidence of

mismanagement of the grant funds, such as the damning “gold bars”

video, which further supports EPA’s good faith in deciding to

terminate the grants and recommit the funds with proper supervision

and accountability. See J.A. 107 n.1. Moreover, the dissent focuses

primarily on EPA’s actions against these grantees, but the repeated

recounting of these actions tells us little about whether EPA will

recommit the funds through a more robust process.

27

challenged on the merits as a breach of contract, but nothing in

the Inflation Reduction Act prevented EPA from taking care

that the grant programs be faithfully executed.

The grantees’ false invocation of the separation of powers

cannot justify this preliminary injunction, which bars EPA

from carrying out basic executive functions to ensure the

prudent and effective management of substantial public

funds.13

IV.

The district court also abused its discretion in applying the

remaining Winter factors: irreparable harm to the plaintiff, the

balance of the equities, and the public interest. While some

grantees may be forced to shutter their operations during the

litigation, their harms do not outweigh the interests of the

government and the public in the proper stewardship of billions

of taxpayer dollars.

A.

The loss of grant funds during this litigation is not

irreparable because the harm is compensable through money

damages. The district court concluded the grantees would

suffer irreparable harm because their “purpose” and “business

operations … depend[] on their grant money.” Climate United

Fund, 778 F. Supp. 3d at 117. But it is well-established that

“economic loss does not, in and of itself, constitute irreparable

harm.” Mexichem Specialty Resins, Inc. v. EPA, 787 F.3d 544,

555 (D.C. Cir. 2015) (cleaned up). Pecuniary injuries can be

13

The grantees also argue EPA will violate the Appropriations

Clause if it reobligates the funds after terminating the grant

agreements. The district court did not base its preliminary injunction

on this argument, so we do not address it.

28

redressed through money damages if a plaintiff proves its case.

We have recognized only one exception, for pecuniary loss that

“threatens the very existence of the movant’s business.”

Wisconsin Gas Co. v. FERC, 758 F.2d 669, 674 (D.C. Cir.

1985). This exception generally applies when government

action threatens the existence of an independent private entity.

See, e.g., Alpine Sec. Corp. v. Fin. Indus. Regul. Auth., 121

F.4th 1314, 1329 (D.C. Cir. 2024) (finding irreparable harm

when a financial services firm would be forced to shutter if

regulatory action took effect during litigation).

The grantees do not fall within this exception. The

nonprofit entities that may need to suspend operations are

entities that were created solely for the purpose of applying for

and spending these federal grants. So while their “existence

relies on grant money” as the district court held, that is because

these entities were established to benefit from government

largesse. Creating such an entity cannot establish an

irrevocable claim to government funds or an entitlement to

injunctive relief preventing the Executive Branch from

supervising and managing those funds. In short, the existential

threat alleged by the grantees does not amount to irreparable

harm.

EPA terminated the grants because of concerns about the

integrity of the grantmaking process. While litigation is

pending, the grantees may have to scale down their operations

or return to the operational status they had before they received

federal funds. Although this causes some harm, the harm is

readily compensable through damages and therefore is not

irreparable.

B.

The balance of the equities and the public interest factors

similarly favor the government. The injunction harms the

29

government and the public interest by preventing the Executive

Branch from properly and prudently managing billions of

dollars in public funds. The grantees have an interest in

continued access to government funding. But the government

and the public have a stronger interest in protecting the public

fisc and eliminating the appearance of impropriety around

these grant programs.

Moreover, if the grant terminations are later determined to

be a breach of contract, the government may be required to pay

damages to the grantees, which would substantially, if not

entirely, redress the grantees’ interim injuries. By contrast, if

the government’s position is eventually vindicated, it will have

no apparent means to recover funds spent down while the

litigation has run its course. See Nat’l Institutes of Health, 2025

WL 2415669, at *1 (Order) (recognizing irreparable harm to

the government because the grant “funds cannot be recouped

and are thus irrevocably expended”) (cleaned up). The

government’s (and the public’s) harm from an erroneous

injunction is thus irreparable in a way that the grantees’ harm

from an erroneous contract termination is not.

Finally, Congress has explicitly channeled breach of

government contract claims to the Court of Federal Claims and

limited remedies to damages. See Megapulse, 672 F.2d at 967

(“The Court of [Federal] Claims may neither grant declaratory

nor injunctive relief.”) (cleaned up). The district court has no

jurisdiction over these claims, and even the Court of Federal

Claims lacks authority to issue injunctive relief. The public

interest favors limiting federal courts to the jurisdiction and

remedies provided by Congress. See Trump v. CASA, Inc., 145

S. Ct. 2540, 2562 (2025) (“When a court concludes that the

Executive Branch has acted unlawfully, the answer is not for

the court to exceed its power, too.”).

30

The same considerations support vacating the injunction

as to Citibank. The district court did not find that the grantees

were likely to succeed on any of their independent claims

against Citibank, which involve breach of contract, conversion,

and replevin. To the contrary, the court found that “Citibank

performed its obligations under the FAA in accordance with its

responsibilities as a financial agent of the United States.”

Climate United Fund, 778 F. Supp. 3d at 116. The injunction

against Citibank merely serves to stop Citibank from following

the government’s instructions, which the district court

considered unlawful. Because we conclude the injunction

against the government should be vacated, the derivative

injunction against Citibank must be vacated as well.

***

For the foregoing reasons, we vacate the district court’s

injunction and remand the case to the district court for further

proceedings consistent with this opinion.

So ordered.

PILLARD, Circuit Judge, dissenting: On the majority’s

telling, Plaintiffs bring garden-variety contract claims against

EPA’s reasonable decisions to terminate their grant awards.

That version of events fails to contend with the government’s

actual behavior and misapprehends Plaintiffs’ claims, leading

the majority to the wrong conclusion at every step of its review

of the district court’s preliminary injunction.

Three years ago, Congress passed the Inflation Reduction

Act. One of the law’s signature provisions directs the

Environmental Protection Agency to distribute $20 billion in

grants for investment in projects to develop clean energy

infrastructure and manufacturing capacity. Congress

structured the Greenhouse Gas Reduction Fund to provide jobs

while reducing greenhouse gas emissions and improving air

quality, especially in low-income and underinvested

communities. EPA distributed the grant money by the fall of

2024, as Congress required.

After the change in administration, in response to

President Trump’s directives to terminate the “Green New

Deal,” new leadership at EPA decided to take back the money

already awarded to Plaintiffs. Plaintiffs were holding and

spending the money exclusively as Congress intended. Yet

EPA—in conjunction with counterparts at the Department of

Justice, the FBI, and the U.S. Treasury—opened spurious

criminal and civil investigations into the Greenhouse Gas

Reduction Fund and pressured Citibank into “voluntarily”

freezing Plaintiffs’ accounts even though the government

lacked probable cause to impose such a freeze. EPA then

attempted to take back Plaintiffs’ money by “terminating” all

eight grants, comprising the entire $20 billion congressionally

mandated program, 24 hours before the government was due in

district court for a hearing on Plaintiffs’ application for a

temporary restraining order. Those unprecedented and

unfounded actions were part of EPA’s hunt for reasons to shut

down the congressionally mandated program and claw back the

2

funding that had already been disbursed to Plaintiffs and

committed to infrastructure projects. EPA’s termination letter

claims the agency conducted a “comprehensive review” but

fails to identify any contract breach or violation of law by

Plaintiffs.

So far, EPA has succeeded in depriving Plaintiffs of access

to their funding for six months. The freeze has already caused

Plaintiffs to default on promised loans and scuttled affordable

housing and energy projects implementing Congress’s vision.

EPA has done all that without presenting to any court any

credible evidence or coherent reason that could justify its

interference with Plaintiffs’ money and its sabotage of

Congress’s law.

Plaintiffs challenge EPA’s action to gut the Greenhouse

Gas Reduction Fund as contrary to the Constitution’s

separation of powers. Fundamental to our “constitutional

system of separation of powers” is the “settled, bedrock

principle[]” that neither the President nor his “subordinate

executive agencies” may “decline to follow a statutory mandate

or prohibition simply because of policy objections.” In re

Aiken Cnty., 725 F.3d 255, 259, 267 (D.C. Cir. 2013); U.S.

Const. art. I, §§ 1, 9, cl. 7; U.S. Const. art. II, § 3. Yet that is

just what EPA decided to do and has begun to effectuate here.

The record strongly supports the district court’s determination

that EPA has frozen and attempted to repossess billions of

dollars’ worth of lawfully spent money for no substantiated

reason other than disagreements with Congress’s policy

determination—grounds that are entirely inapposite and

inadequate, and that the government does not defend here. The

agency has no lawful basis—nor even a nonfrivolous assertion

of any basis—to interfere with funding that, pursuant to

Congress’s instructions, already belongs to Plaintiffs, who in

turn have committed it to energy infrastructure development

3

and advanced manufacturing projects according to Congress’s

plan.

That constitutional violation alone justifies the district

court’s injunction. The injunction is independently warranted

by the arbitrary and capricious character of EPA’s actions.

Plaintiffs challenge EPA’s taking of their funds under an

irrational process with only pretextual justifications. That is a

quintessential APA claim that belongs in the district court, and

on which Plaintiffs are likely to succeed.

Defendants insist that this is a government contract dispute

that we must dismiss because, under the Tucker Act, only the

Court of Federal Claims has authority to decide it. Our Tucker

Act precedents do not support that contention. They direct us

to analyze whether a claim is “at its essence” contractual and,

if it is, to cede jurisdiction to the Court of Claims for its expert

“knowledge of the government contracting process.”

Ingersoll-Rand Co. v. United States, 780 F.2d 74, 76, 78 (D.C.

Cir. 1985). That analysis, turning on the source of the right

Plaintiffs assert and the nature of the relief they seek—here,

constitutional and statutory claims to retain already-disbursed

funds to which they remain lawfully entitled—confirms the

jurisdiction of the district court. Megapulse, Inc. v. Lewis, 672

F.2d 959, 968-69 (D.C. Cir. 1982). The majority

acknowledges the district court’s jurisdiction over Plaintiffs’

constitutional claims. And nothing in the Tucker Act or

binding precedent interpreting it supports the majority’s view

that Plaintiffs’ APA claim is transformed into a contract claim

and ousted from the district court’s jurisdiction merely because

it seeks to prevent EPA’s capricious interference with funds

that Plaintiffs obtained through and must spend consistently

with a contract. Maj. Op. 16-18.

4

In characterizing this case as merely a contract dispute

subject to the Tucker Act’s jurisdictional bar, the majority

baselessly strips the district court of authority to decide these

important claims. The majority holds that a plaintiff cannot

bring an arbitrary and capricious challenge to any government

action that affects something of value that was originally

obtained by contract. Maj. Op. 16-18. Doing so undercuts the

Constitution’s and the APA’s checks on the Executive’s

illegitimate seizure of Plaintiffs’ funds and subversion of

Congress’s will. The government’s Tucker Act defense is

especially pernicious here. Dismissal of this case presumably

will enable the government to carry out its announced plan to

immediately and irrevocably seize Plaintiffs’ funds. At best, in

the unlikely event the government refrains from immediately

draining Plaintiffs’ frozen accounts, the further delay involved

in reinitiating litigation in the Court of Federal Claims will

itself irreparably harm the infrastructure projects that cannot

move forward and may fail without funding. In these

circumstances, “[i]t is no overstatement to say that our

constitutional system of separation of powers w[ill] be

significantly altered” by “allow[ing] executive . . . agencies to

disregard federal law in the manner asserted in this case.”

Aiken Cnty., 725 F.3d at 267.

BACKGROUND

A. The Greenhouse Gas Reduction Fund

In 2022, Congress passed the Inflation Reduction Act. The

Act establishes the $27 billion Greenhouse Gas Reduction

Fund and directs the Environmental Protection Agency (EPA)

to distribute that money for investment in projects to deploy

solar and electric energy technology throughout the country,

especially in low-income and disadvantaged communities.

Pub. L. No. 117-169, 136 Stat. 1818, 2065-67 (2022) (codified

5

at 42 U.S.C. § 7434). The program was intended to reduce

greenhouse gas emissions, improve air quality, and “improve

health outcomes, lower energy costs, and create high-quality

jobs for Americans—all while strengthening [the] country’s

economic competitiveness and ensuring energy security.”

Notice of Funding Opportunity (NOFO) 3 (J.A. 1735).

Achieving that vision would “require a tremendous

amount of financing and private capital for greenhouse gas-

and air pollution-reducing projects across the country.” Id.

Because the private sector has historically been hesitant to

invest in clean energy projects, Congress designed the

Greenhouse Gas Reduction Fund to finance clean energy

projects “in partnership with, and by leveraging investment

from, the private sector.” 42 U.S.C. § 7434(c)(3)(A).

Specifically, Congress directed EPA to spend $20 billion by

September 2024 to fund nonprofit financial institutions, which

in turn must use the funds either to recruit private investment

for clean energy programs or to assist community projects to

reduce air pollution. Id. § 7434(a)(2)-(3), (c)(3).

Pursuant to Congress’s directive, in July 2023, EPA

created two funding programs: the National Clean Investment

Fund (NCIF) program, to identify and deploy nonprofit lenders

to use public seed money to attract private investment for tens

of thousands of energy-efficient affordable housing,

transportation, and electricity projects throughout the country;

and the Clean Communities Investment Accelerator (CCIA)

program, to identify and deploy nonprofit organizations to use

public seed money to enable community lenders to invest in

clean energy projects in low-income and underinvested

communities.

EPA conducted a rigorous, competitive selection process,

which included review of applicants’ detailed program plans

6

and budgets, organizational capacity, and experience managing

third-party capital and financial risk. EPA selected eight

nonprofits—lenders and community organizations—capable

of carrying out those aims. The approved workplans and

budgets of the applicants EPA selected describe how those

organizations will use the federal funds they have since

received to expand access to—and recruit private investment

for—affordable construction and renovation of energy-

efficient businesses, schools, municipal buildings, healthcare

facilities, public housing, and transportation, particularly in

rural, Tribal, and low-income areas.

In compliance with the September 2024 deadline Congress

imposed, EPA obligated the grant funds for both programs by

the summer of 2024. To enable the grantees to recruit private

investment—as Congress required, 42 U.S.C.

§ 7434(c)(3)(A)—EPA deposited the grant funds in accounts

opened in the grantees’ names at Citibank. Unlike EPA’s

traditional disbursement system, that structure gave the

grantees title to the full amount of the award funds up front,

allowing those funds to serve as assets for the grantees to rely

on to raise private capital by reducing financial risk for private

investments. See Impact Finance Experts Amicus Br. 7-14.

The Plaintiff grantees’ legal title to their award funds is

spelled out in Account Control Agreements between EPA,

Citibank, and each grantee. Those agreements specify that

Citibank “maintains the Accounts for the [grantee]” and state

that the grantee is “the Bank’s customer with respect to the

Accounts and [] the entitlement holder with respect to all

financial assets credited . . . to the Accounts.” Account Control

Agreement § 1 (J.A. 1144). The Account Control Agreements

accordingly direct that Citibank “shall comply with all

instructions” it receives from the grantees. Id. § 2 (J.A. 1145).

The grantees’ title to the award funds is also reflected in

7

Citibank’s Financial Agency Agreement with Treasury, which

requires Citibank to act as the government’s “financial agent”

to achieve Congress’s goal by, among other things, establishing

“accounts in the names of the three NCIF and five CCIA grant

recipients” and maintaining a “customer relationship” with

each grantee. Financial Agency Agreement Ex. A § I.A.1

(J.A. 2145).

Under those agreements, EPA retained a security interest

in the grantees’ award funds that allows it to assert control over

the money in certain circumstances if—and only if—it issues a

Notice of Exclusive Control, which it undisputedly has not

done. Form of Notice of Exclusive Control (J.A. 1152); Oral

Arg. Tr. 28:6-22. EPA has only an unexercised security

interest; it does not own the funds in the grantees’ accounts.

See United States v. Whiting Pools, Inc., 462 U.S. 198, 209-10

(1983); Cent. Va. Cmty. Coll. v. Katz, 546 U.S. 356, 392 n.8

(2006) (Thomas, J., dissenting) (noting the distinction between

“the government possess[ing] merely a secured interest in the

property” and “own[ing] the funds”).

In addition to serving as the mechanism for conveying to

the grantees legal title to the award funds, the financial agent

structure affords EPA greater oversight of the grantees’ use of

the funds than it would have had under the default

disbursement system: While EPA’s traditional disbursement

system reports only the amounts withdrawn by the recipient

and the remaining award funds, the financial agent structure

allows EPA real-time “view access,” enabling it to see the

grantees’ and their subrecipients’ accounts to follow how much

they are spending, with all amounts broken down by budget

category, and to see income in the form of portfolio earnings

and loan repayments. Bafford Decl. ¶ 33 (J.A. 372).

8

Other oversight mechanisms provide further, detailed

confirmation of grantees’ lawful use of their funds. Grantees

provide extensive reporting to EPA on their spending. They

make quarterly, semi-annual, and annual written reports

regarding their transactions and progress against their EPA-

approved workplans, plus quarterly conflict-of-interest

reporting. They attend oversight, planning, and compliance

meetings with EPA at least weekly. They submit to EPA

withdrawal certifications attesting to the propriety of each draw

request to Citibank and to its necessity for their workplan. And

grantees are also subject to third-party financial audits and

audits for federal grant compliance. Id. ¶ 35 (J.A. 372-73).

The plaintiffs in this suit are five of the eight NCIF and

CCIA grantees, as well as several of their subgrantees. Since

mid-2024, they have been putting the grant money to work,

committing to loans for projects around the country that will,

for example:

• develop and renovate hundreds of energy-efficient

affordable housing units;

• fund low-cost loans to small business and homeowners

to finance heating and cooling systems and backup

battery storage;

• build a fleet of 500 American-made electric trucks to

be conveniently and affordably available for lease by

small businesses and independent contractors; and

• provide backup power sources to rural hospitals to

reduce the risks of harm to patients due to power

outages.

Those projects will help cut energy costs for consumers and

small businesses, create jobs, ameliorate the affordable-

9

housing crisis, and improve air quality in low-income and less

developed communities.

Plaintiffs’ projects provide benefits to people and

communities the value of which is many times greater than

their cost to the public fisc. Congress structured these

programs to enable each dollar of public funding spent to

attract multiple dollars of private funding. One Plaintiff, for

example, estimates that it will generate up to $4 of private

investment for every $1 of federal funds invested in projects.

Another Plaintiff’s workplan obligates it to mobilize $14 of

private investment for every $1 of federal funding awarded to

the Plaintiff. As of December 2024, it had already achieved a

private-public capital mobilization ratio of nearly 7:1. But

those projects—as well as many of the Plaintiffs’ ability even

to remain in business—cannot continue without Plaintiffs’

access to the funds EPA awarded them. Plaintiffs’

vulnerability to the freeze of their federal grant money is

particularly acute given that many of the Plaintiffs were formed

specifically to participate in the grant programs and as such do

not have other sources of funding.

B. EPA’s Actions

EPA’s campaign to seize the grant money already owned

by Plaintiffs began shortly after the new administration took

office, in response to its directives. On January 20, 2025,

President Trump issued Executive Order 14154. Exec. Order

14154, 90 Fed. Reg. 8353, 8357 (Jan. 29, 2025). Section 7 of

the Executive Order, entitled “Terminating the Green New

Deal,” directs “[a]ll agencies” to “immediately pause the

disbursement of funds appropriated through the Inflation

Reduction Act of 2022.” Id. Reacting to the E.O., EPA froze

“all disbursements for unliquidated obligations funded by . . .

the Inflation Reduction Act”—i.e., legally binding funding

10

commitments that had not yet been disbursed. Memorandum

from EPA Acting Chief Fin. Officer Gregg Treml Regarding

Inflation Reduction Act and Infrastructure Inv. & Jobs Act

Funding Action Pause (Jan. 27, 2025), https://perma.cc/5R6X-

LY4B; U.S. GOV’T ACCOUNTABILITY OFF., GAO-05-734SP, A

GLOSSARY OF TERMS USED IN THE FEDERAL BUDGET PROCESS

45, 70 (2005), https://perma.cc/AC5H-C7K6.

Despite that funding freeze—which was later enjoined by

several district courts, see Woonasquatucket River Watershed

Council v. U.S. Dep’t of Agric., 778 F. Supp. 3d 440, 479

(D.R.I. 2025); New York v. Trump, 769 F. Supp. 3d 119, 146-

47 (D.R.I. 2025); Nat’l Council of Nonprofits v. Off. of Mgmt.

& Budget, 775 F. Supp. 3d 100, 130-31 (D.D.C. 2025)—EPA

could not freeze the funds that Congress had appropriated for

the NCIF and CCIA programs because those funds had already

been given to Plaintiffs and were held in their Citibank

accounts. Nonetheless, EPA Administrator Lee Zeldin made

clear his intent to take back the funds disbursed through those

programs.

On February 12, Zeldin released a public statement video

in which he described the NCIF and CCIA grant programs as a

“scheme” by the “Biden EPA” to “park[]” 20 billion dollars at

an outside financial institution in order to “obligate all of the

money in a rush job with reduced oversight.” Lee Zeldin

(@EPALeeZeldin), X (Feb. 12, 2025, 7:52 PM),

https://perma.cc/PU5X-PUBP. Zeldin asserted that the bank

“must immediately return” the money in Plaintiffs’ Citibank

accounts so that EPA could “reassume responsibility” over the

funds. Id. He also vowed to refer the grant programs for

investigation by EPA’s Office of the Inspector General and the

Justice Department to redress “[t]he days of irresponsibly

shoveling boatloads of cash to far-left activist groups in the

name of environmental justice and climate equity.” Id. The

11

next day, EPA issued a press release repeating those statements

and reiterating that “Administrator Zeldin is calling for

termination of the financial agent agreement, and for the

immediate return of the entire fund balance to the United States

Treasury to ensure EPA oversight.” Press Release, EPA,

Administrator Zeldin Announces that Billions of Dollars

Worth of “Gold Bars” Have Been Located at Outside Financial

Institution (Feb. 13, 2025), https://perma.cc/48VN-PLYE.

Five days later, the Department of Justice took up Zeldin’s

cause, seeking to use its criminal prosecutorial powers to cut

off Plaintiffs’ access to their funds despite the lack of probable

cause to do so. The Justice Department first asked the Chief of

the Criminal Division of the Washington, D.C., U.S.

Attorney’s Office, Denise Cheung, to open a criminal

investigation into whether the NCIF and CCIA grants had been

“unlawfully” awarded, so that the government could prevent

the “contract awardees [from] continu[ing] to draw down” their

funds from their Citibank accounts. Read the Resignation

Letter by Denise Cheung, A Veteran D.C. Federal Prosecutor,

WASH. POST (Feb. 18, 2025), https://perma.cc/8NMY-DRWE.

When Cheung informed the Justice Department that probable

cause to open a grand jury investigation did not exist, the

Justice Department asked her to instead issue a letter requesting

that Citibank freeze Plaintiffs’ funds.

While Cheung worked in coordination with the FBI to

draft the freeze request letter to Citibank, she informed the

Justice Department that the government lacked probable cause

to believe that Plaintiffs’ accounts were subject to government

seizure. Id. The FBI, too, expressed “concern about the current

lack of evidence of any apparent crime and the need to send out

any such freeze letter.” Id. Despite that advice, the FBI sent

the freeze letter to Citibank that night, “recommend[ing]” that

Citibank freeze each of the NCIF and CCIA grantees’ and

12

subgrantees’ accounts for 30 days. FBI Freeze Ltr. (J.A. 99-

103).

Shortly after the letter went out, then-U.S. Attorney for the

District of Columbia, Ed Martin, directed Cheung to

immediately send a second letter to Citibank ordering—rather

than merely recommending—that it freeze the accounts

pursuant to a criminal investigation by the Justice Department.

When Cheung explained that the evidence was insufficient to

support such a letter, she was asked to resign for refusing to

send the letter. She resigned the next day.

Undeterred, Martin personally submitted a seizure warrant

application to a D.C. magistrate judge. Spencer S. Hsu,

Maxine Joselow & Nicolás Rivero, FBI Takes Up EPA Probe

amid Pushback from Judge, Prosecutors, WASH. POST (Feb.

27, 2025), https://perma.cc/E2JR-G4GF. The judge rejected

the seizure warrant application as unsupported by probable

cause. Id. Around the same time, the Deputy Attorney General

asked at least one other U.S. Attorney’s office to open a grand

jury investigation into the NCIF and CCIA grant programs and

seek a court-ordered bank freeze, but, like Cheung, those other

prosecutors refused the requests as unsupported. Id. As the

government eventually told the district court, the “effort to . . .

put a criminal freeze on the money” was “obviously”

unsuccessful “because that didn’t happen.” Mar. 12 TRO Hr’g

Tr. 26:5-9 (J.A. 199).

Despite having received multiple, independent

assessments that there was no probable cause to believe that

“any apparent crime” had been committed in connection with

Plaintiffs’ funds, EPA continued without basis to press for

investigations of Plaintiffs, and then pointed to the very

existence of those investigations as if they supported its efforts

to indefinitely prevent Plaintiffs from accessing their funds.

13

EPA’s Acting Deputy Administrator Chad McIntosh referred

the “GGRF program” to the EPA Office of Inspector General

for a “full investigation” into what he termed a “pattern of

reckless financial management, blatant conflicts of interest,

astonishing sums of tax dollars awarded to unqualified

recipients, and severe deficiencies in regulatory oversight

under the prior administration.” Mar. 2 Ltr. to EPA OIG 2 (J.A.

107). Fifteen minutes after sending the referral letter, in an act

of arrant bootstrapping, McIntosh forwarded the letter to

Citibank with a baseless cover email characterizing the GGRF

program as being “riddled with self-dealing, conflicts of

interest, extraordinarily unqualified recipients, improperly

reduced government oversight, and much more.” Mar. 2 EPA

Ltr. to Citibank (J.A. 105).

Meanwhile, Citibank continued to block disbursements of

Plaintiffs’ funds. But—given the government’s lack of success

in convincing any prosecutor or court that probable cause

existed to support a criminal freeze—that was only a

“voluntar[y] pause[]” pursuant to the FBI’s “recommendation”

from two weeks earlier. Mar. 2 EPA Ltr. to EPA OIG (J.A.

106). To ensure that Citibank continued the freeze, EPA asked

Treasury to instruct Citibank “not to disburse funds from any

of the GGRF accounts prior to the end of the day Sunday,

March 9, 2025.” Mar. 4 Treasury Ltr. to Citibank (J.A. 111);

see also Opp’n to Mot. for TRO 7, Climate United Fund v.

Citibank, No. 25-cv-698, Dkt. No. 16 (D.D.C. Mar. 12, 2025)

(hereinafter Opp’n to Mot. for TRO).

That same day—March 4—Zeldin posted from his official

EPA X account: “The money is now FROZEN and DOJ/FBI is

investigating.” Lee Zeldin (@EPALeeZeldin), X (Mar. 4,

2025, 6:02 PM), https://perma.cc/3KRB-FS77. EPA also sent

detailed requests to Plaintiffs for information and documents it

claimed to need to inform its “Compliance and Oversight

14

Review” of the Greenhouse Gas Reduction Fund. Mar. 4 EPA

Ltr. to Climate United (J.A. 674-77). Plaintiffs’ responses

were due by March 28 at noon. Mar. 4 EPA Ltr. to Climate

United (J.A. 675).

By March 9, as Treasury’s funding freeze directive was set

to expire, Justice Department officials worked with EPA and

Treasury to craft emails to Citibank that would achieve the

government’s “short-term objective [] to prevent disbursement

of the grant funds” by “making reference to the ongoing

criminal investigation and EPA’s civil investigation” into the

Greenhouse Gas Reduction Fund. Mar. 9 Emails,

https://perma.cc/84PV-RUQA (reported in Alex Guillén,

Quest to Retake $20B in Climate Money Puts Trump Agencies

at ‘Significant’ Risk, Attorney Warned, POLITICO (Apr. 23,

2025), https://perma.cc/BY4Q-J39A). The Justice Department

officials admitted that those investigations had not

“uncover[ed] . . . criminal conduct or other improprieties” that

could justify the government’s interference with Plaintiffs’

money but advised that, before the government would have to

defend the freeze in court, it would “make . . . arguments about

how those claims sound in contract and should be pursued in

another forum.” Id.

The Justice Department recognized that, “[a]t some point,

we will need to raise defenses, but the criminal and civil

investigations may fill that out over the intervening period.” Id.

That is, in the Justice Department’s candid estimation, the

government had not turned up any wrongdoing that could

justify its action to “prevent disbursement of the grant funds.”

Id. Rather, it pursued criminal and civil investigations in the

hopes of uncovering “criminal conduct or other improprieties”

that could justify freezing Plaintiffs’ accounts.

15

In response to the Justice Department’s instructions, EPA

sent a letter to Citibank the next day instructing it to “pause the

processing of payment instructions for the GGRF accounts

until further notice.” Mar. 10 EPA Ltr. to Citibank (J.A. 65).

EPA stated that it was “working to review and develop

additional account controls to address concerns regarding

potential fraud and/or conflicts of interest related to the

[GGRF], including based on incoming responses to oversight

questions EPA issued to grant recipients on March 4, 2025,”

and asserted that “[t]he GGRF is also the subject of an ongoing

criminal investigation by the U.S. Department of Justice and an

investigation by the EPA Office of Inspector General (OIG).”

Id. EPA advised Citibank that, until “additional account

controls are developed and implemented . . . and given the

ongoing investigations into the GGRF, it is critical that the

Bank not resume processing payment instructions for the

GGRF accounts.” Id. EPA stated further that “[t]his interim

account control will be rescinded as soon as reasonably

practicable once EPA completes its review and implements

additional account controls through additional instructions as

necessary.” Id.

Meanwhile, Plaintiffs had already been unable to access

the money in their bank accounts for over two weeks—a period

that has now stretched to more than six months. And because

the terms of the grant awards generally prohibited Plaintiffs

from withdrawing funds unless they would be spent in the

following fourteen business days, Plaintiffs were starting to run

out of money to make payroll, pay the rent on their offices, and

pay third-party contractors for essential auditing, legal, and IT

security services. On top of that, without access to their

funding, they would soon be unable to meet their commitments

under loans for projects they had already agreed to finance.

Some of those loan payments could be requested by borrowers

at any time; if borrowers requested a loan draw-down while

16

Plaintiffs could not access their funds, Plaintiffs would be

forced to default on those loans, imperiling the projects.

Plaintiffs remained unable to access the money in their

accounts. They repeatedly requested an explanation from EPA

or Citibank as to why their funds were inaccessible. They

received no substantive reply. Climate United, for example,

sent three emails, left a voicemail, and mailed a hard-copy

letter to Citibank between February 19 and March 3 before

finally receiving a response stating only that Citibank had

“received [Climate United’s] correspondence” and was

“awaiting further guidance” from EPA. Bafford Decl. ¶¶ 42-

51 (J.A. 376-78). When Climate United contacted EPA on

February 20, the agency at first offered Climate United a

meeting the following week, only to reschedule the meeting

three times before cancelling it and becoming entirely non-

responsive to Climate United’s efforts to get in touch.

At the same time that EPA was refusing to respond to

Plaintiffs’ requests for information, Zeldin made multiple

public statements in which he claimed to have “seen [] a lot of

self-dealing, a lot of conflicts of interest,” described the

Greenhouse Gas Reduction Fund as a “clear-cut case of waste

and abuse” and a “criminal” scheme, and vowed that EPA was

“not going to rest” until it had “recover[ed]” the grant awards. 1

After three weeks of being kept in the dark without access

to their funds, Plaintiffs “had no choice but to sue.” Mar. 12

TRO Hr’g Tr. 14:8 (J.A. 187). Climate United sued first. It

named Citibank, EPA, and Zeldin in its March 8 complaint and

1

Sunday Morning Futures (@SundayMorningFutures), X (Feb. 23,

2025, 11:21 AM), https://perma.cc/6H9Y-L7H8; Rapid Response

47 (@RapidResponse47), X (Feb. 25, 2025, 10:16 AM),

https://perma.cc/V37L-84WC.

17

informed them that it intended to move for a temporary

restraining order on March 10.

Despite that advance notice, when the district court

preliminarily scheduled a hearing for March 11, the

government emailed Climate United’s counsel asking for “the

courtesy of agreeing to ask the Court to push back these

deadlines by 24 hours.” Bafford Decl. ¶ 55 (J.A. 379-80).

When Climate United agreed to EPA’s request “as a

professional courtesy,” EPA used the 24-hour delay to send

each of the grantees identical letters stating that their grants

were terminated, effective immediately. Climate United Fund

v. Citibank, 775 F. Supp. 3d 335, 343 (D.D.C. 2025); J.A. 390-

91 (termination letter). The government then argued that the

case should be dismissed as moot because the relief Plaintiffs

sought—an injunction preventing EPA from terminating the

awards—was no longer available, as EPA had already

purported to terminate the awards.

Rejecting EPA’s attempt to moot the case, the district

court granted a temporary restraining order. It found that EPA

had failed to provide any logical explanation for terminating

Plaintiffs’ grant awards. Climate United, 775 F. Supp. 3d at

346-48. Instead, in declarations and two live hearings before

the district court, EPA cited allegations of criminal activity and

fraud that the court held were unsupported by any credible

evidence. Id. at 347-48; see also id. at 346 (“EPA Defendants

proffered no evidence to support their basis for the termination

. . . .”). Rather than proffer any credible evidence, EPA merely

pointed to the ongoing investigations by EPA’s Office of the

Inspector General, the Department of Justice, and the FBI—

each of which EPA had instigated based on the same

unsubstantiated allegations for which it could not provide any

credible evidence to the district court. Id. at 348 n.4; see also

Opp’n to Mot. for TRO 21.

18

By the time Plaintiffs moved for a preliminary injunction

a week later, EPA was still unable to provide anything more

than “unsubstantiated reasons” for freezing their money and

revoking their awards. Climate United Fund v. Citibank, 778

F. Supp. 3d 90, 114 (D.D.C. 2025); see also Apr. 2 PI Hr’g Tr.

47:8-14 (J.A. 876) (“[Court to EPA:] I’ve asked you

repeatedly, and you’ve been very candid with me, in saying that

you don’t know what the evidence is of waste, fraud and abuse

and violation of the law and corruption and all of that. And I

still don’t. I mean, here we are weeks in, and as far as I—

you’re still unable to proffer me any information with regard to

any kind of investigation, malfeasance.”).

In fact, once it had to answer in court, EPA abandoned its

previous arguments that the terminations were necessary due

to “substantial concerns regarding program integrity” and

“programmatic fraud, waste, and abuse.” Opp’n to Mot. for

TRO 21. Instead, EPA maintained that its “bases for

termination were the grants’ structure and terms” and that its

termination decision “reflected no more than a decision based

on reasons of policy,” not anything to do with Plaintiffs’

“noncompliance” or “conduct.” Opp’n to PI 34-35, 38 (J.A.

503-04, 507) (internal quotation marks omitted); see also

Climate United, 778 F. Supp. 3d at 115 (“Now, in a shift in

position, [EPA Defendants] contend that the termination was

based on the agency’s changed priorities.”).

The district court preliminarily found that EPA froze and

terminated Plaintiffs’ grant awards in violation of the APA as,

despite being “repeatedly pressed on the issue,” EPA “offer[ed]

no rational explanation for why it suspended the grants and

then immediately terminated the entire NCIF and CCIA grant

programs overnight.” Climate United, 778 F. Supp. 3d at 114.

And the court held that EPA violated the constitutional

separation of powers by seeking to “effectively unilaterally

19

dismantle a program that Congress established.” Id. at 116.

Specifically, it found that “suspend[ing] all eight grants

comprising the entire NCIF and CCIA programs,” coupled

with “the agency’s public statements . . . regarding the future

of the program,” showed that EPA “seeks to dismantle these

grant programs in their entirety as a policy matter”

notwithstanding the agency’s hollow representations in court

that it intended to re-obligate the funds following the

terminations. Id at 115-16.

By the time the district court granted the preliminary

injunction in mid-April, Plaintiffs’ inability to access their

funding threatened to permanently unravel projects that

depended on funding commitments they had incurred before

EPA’s actions to undo the GGRF. A project to renovate 192

affordable housing units in Virginia could lose its $4 million in

committed Department of Housing and Urban Development

(HUD) funding if a subgrantee cannot fulfill its funding

obligations by September. Donovan Decl. ¶ 19 (J.A. 437-38).

Projects to construct a community health center in New Jersey

and to renovate a historic hotel into 63 rental apartments in

rural Iowa were slated to lose their state tax credits and collapse

if they did not receive a subgrantee’s planned funding by July.

Moon Decl. ¶¶ 19, 25-26 (J.A. 465-67). And construction of

302 affordable housing units in Texas and 236 units in

Maryland will not move forward, and will eventually collapse,

without a subgrantee’s committed funding. Donovan Decl.

¶ 17 (J.A. 436-37).

Those harms have only continued to mount as the funding

freeze has persisted, and for some projects, it is likely already

too late. Due to one subgrantee’s inability to access its grant

funds, a 106-unit affordable housing renovation lost its state

tax credits in May, increasing the project’s cost and placing the

project in jeopardy. Mayopoulos Decl. ¶¶ 5-6, Climate United,

20

No. 25-cv-698, Dkt. No. 112-1 (D.D.C. May 12, 2025)

(hereinafter Mayopoulos Supp. Decl.). Another project to

construct a 160-home subsidized rental apartment community

in Detroit most likely lost its critical HUD housing assistance

commitment because of a subgrantee’s inability to provide a

promised $4 million bridge loan in June. Id. at ¶¶ 7-8; Brown

Decl. ¶ 18 (J.A. 437). And a $34 million project to build 90

rental homes in Texas was projected to fall through due to a

subgrantee’s inability to provide its $3.6 million of committed

funding by the end of June. Moon Decl. ¶¶ 20-21 (J.A. 465).

In addition to undermining existing projects, EPA’s

actions will soon put many of the Plaintiffs themselves out of

business, preventing accomplishment of the projects Congress

intended them to fund. Without access to their funding,

Plaintiffs are unable to make payroll, pay their bills, or keep

current on their rent. Climate United, 778 F. Supp. 3d at 117-

20. Due to EPA’s interference with Plaintiffs’ ability to make

payroll, many employees have started looking for other jobs,

left voluntarily, or been laid off. For instance, one Plaintiff has

laid off or lost approximately 50% of its staff, and one of its

subgrantees was “forced to act financially as though the GGRF

award does not exist” by laying off 36 of its employees.

Mayopoulos Supp. Decl. ¶¶ 2-3. And because Plaintiffs cannot

pay their bills, third-party contractors have started to withdraw

essential services, including critical accounting, financial

management, and award compliance services. Simply put,

without access to their funds, Plaintiffs cannot keep their doors

open, much less honor their loan commitments.

More harmful still, faced with EPA’s threats to claw back

Plaintiffs’ funds, existing partners have begun to shun

Plaintiffs’ funding offers, pulling out of near-final deals and

stopping working on Plaintiffs’ projects. After eight weeks of

negotiations, an Alaska-based community finance institution

21

had agreed to a $10 million loan from one of the Plaintiffs; all

that was left to officially close the deal was the board’s

approval. Following EPA’s actions, the board refused to

approve the loan. That same plaintiff had completed

negotiations with a local green bank in the Midwest to help

finance a different project, with only board approval

outstanding. The board met the day after Zeldin’s February 12

comments on X and voted against the loan because of Zeldin’s

public threats and vow to end the NCIF program. A

philanthropic entity interested in investing $250 million in a

partnership with one of the Plaintiffs broke off discussions

following EPA’s actions. Co-investment and collaboration is

critical to Plaintiffs’ ability to carry out Congress’s directive to

efficiently finance projects to benefit the public by lowering

“greenhouse gas emissions and other forms of air pollution in

partnership with, and by leveraging investment from, the

private sector.” 42 U.S.C. § 7434(c)(3)(A).

DISCUSSION

An accurate understanding of the program Congress

enacted, together with the complete lack of evidence to support

EPA’s false assertions of improper use or deficient oversight

of federal expenditures, confirms that the district court’s

decision to preliminarily enjoin EPA’s unlawful actions is

unassailable. Based on nothing more than the President’s

announced vendetta against the “Green New Deal,” EPA

determined to cut off access to money that was already

disbursed to Plaintiffs and that they were using—pursuant to

Congress’s explicit directions as implemented by EPA—to

expand access to solar- and electric-powered housing, cars,

buildings, and power generation. The Constitution does not

allow the President or his subordinate executive agencies to

unilaterally decide to take back money that Congress has

appropriated and the agency already lawfully spent merely

22

because the Executive Branch disagrees with Congress’s

policy choices. Neither do the laws governing federal agencies

allow them to initiate specious criminal investigations in hopes

of digging up pretextual justifications to cover up that

unconstitutional action, let alone rely on the very existence of

those investigations to interfere with Plaintiffs’ lawful use of

their money.

EPA’s violations of law are so clear that the agency hardly

contests them. And the imminent, irreversible harm to

Plaintiffs is incontrovertible. These circumstances cry out for

preliminary injunctive relief, as the district court rightly

recognized. The majority’s contrary conclusion accepts the

government’s gambit to strip district courts of jurisdiction over

the government’s blatant violations of basic principles of

constitutional and administrative law.

Plaintiffs received the funds at issue here via federal grant

awards. Absent EPA’s unjustified interference, the money in

Plaintiffs’ accounts is theirs to spend in conformity with the

terms of the funding agreement. The government has expressly

and repeatedly disclaimed any allegation that Plaintiffs have

violated those terms. Neither has EPA attempted to regain

control of the money by asserting its security interest in

Plaintiffs’ funds.

EPA has instead frozen and purported to terminate the

grant awards based on shifting, post-hoc, and unsupported

allegations. Plaintiffs thus challenge EPA’s actions as arbitrary

and capricious, and based on pretextual justifications. In no

way is that claim “in essence” a contract claim over which the

district court lacks jurisdiction. The reality that Plaintiffs

obtained the funds by government contract does not mean that

claims they raise against the government’s interference with

their lawful use of those funds sound in contract. Our binding

23

precedent makes clear that just because Plaintiffs “would have

no claims to assert” if they had never received the funds

through a grant does not mean that they assert a “contract

right.” Crowley Gov’t Servs., Inc. v. Gen. Servs. Admin., 38

F.4th 1099, 1110 (D.C. Cir. 2022).

The court’s holding to the contrary is unsupportable. The

court falls short today in its Article III duty to independently

say what the law is and thereby hold the Executive Branch to

account. Such “[a]bdication of responsibility is not part of the

constitutional design.” Clinton v. City of New York, 524 U.S.

417, 452 (1998) (Kennedy, J., concurring).

A. Likelihood of Success

1. APA

EPA’s conduct is arbitrary and capricious. Agencies may

not offer “contrived reasons” for their decisions, Dep’t of Com.

v. New York, 588 U.S. 752, 785 (2019), nor can they make any

decision that “runs counter to the evidence before the agency,

or is so implausible that it could not be ascribed to a difference

in view or the product of agency expertise,” Motor Vehicle

Mfrs. Ass'n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463

U.S. 29, 43 (1983). It is beyond dispute that an agency’s own

patently unfounded criminal investigations against private

companies cannot be invoked to justify the factually baseless

and legally unauthorized taking of the companies’ funds. By

all indications, that is exactly what EPA did here.

Following the President’s instructions to cut off funding to

clean energy projects, EPA vowed to “reassume responsibility”

of the NCIF and CCIA grant funds. To that end, without

probable cause to suspect any criminal wrongdoing related to

the grant programs, EPA—in coordination with the Justice

Department and the FBI—first pressured Citibank into

24

voluntarily freezing Plaintiffs’ accounts by referring to

“possible criminal violations,” including “[c]onspiracy to

defraud the United States” and “wire fraud.” FBI Freeze Ltr.

(J.A. 99-101). Not satisfied that Citibank’s voluntary freeze

would hold, the agencies attempted to open a criminal

investigation into the grants and impose a freeze of Plaintiffs’

funds based on suspected criminal conduct. When those efforts

came to nothing, EPA instructed the agency’s Office of

Inspector General to open a civil investigation, immediately

sent the referral—including its unfounded allegations of “self-

dealing, conflicts of interest, [and] extraordinarily unqualified

recipients,” J.A. 105—to Citibank, and instructed Citibank to

keep the accounts frozen until EPA was able to establish

sufficient account controls.

When that account freeze expired, the agencies again

referenced “potential fraud” and ongoing criminal and civil

investigations to Citibank as support for an indefinite

continuation of its account freeze, ostensibly to enable EPA to

evaluate Plaintiffs’ responses to its oversight questions. Mar.

10 EPA Ltr. to Citibank (J.A. 65). But the very next day—

weeks before those responses were due, and mere hours before

a hearing on Climate United’s TRO motion—EPA used the 24-

hour delay, which it had requested as a “professional courtesy,”

to abruptly announce its putative termination of all the NCIF

and CCIA awards. EPA then argued that the court should

dismiss Climate United’s suit as moot on the ground that EPA

had terminated its grant.

When EPA could not point the court to any evidence

supporting its allegations of fraud, Climate United, 775 F.

Supp. 3d at 346-47, it changed its tune. EPA argued to the

district court and then to us that it terminated the grants not

because any “particular plaintiff has engaged in a particular act

that constitutes fraud,” but only because of “EPA’s lack of

25

oversight tools to ensure that the money wasn’t abused.” Oral

Arg. Tr. 103:9-15; see also Apr. 2 PI Hr’g Tr. 39:4-15 (J.A.

868). EPA insisted that its oversight concern did not in any

way depend on Plaintiffs’ “noncompliance” or “conduct”—

despite the termination letters’ references to “fraud, waste, and

abuse” as a basis for the termination. PI Opp. 34-35, 38 (J.A.

503-04, 507); Termination Ltr. (J.A. 390).

Each of those actions is consistent with EPA’s unlawful

pursuit of a “short-term objective [] to prevent disbursement of

the grant funds” that had nothing to do with any valid concerns

about fraud or oversight, and everything to do with the

agency’s desire to carry out President Trump’s directive to

block implementation of Congress’s environmental policy.

Mar. 9 Emails, https://perma.cc/84PV-RUQA. That is

demonstrated most clearly by EPA’s pursuit of criminal and

civil investigations that it hoped would “uncover . . . criminal

conduct or other improprieties” to substantiate its asserted

justifications for freezing Plaintiffs’ funds. Id. It pursued those

baseless (and fruitless) investigations against the advice of at

least two experienced federal prosecutors the EPA consulted

and the ruling of a magistrate judge that there was no probable

cause to believe any improper conduct had occurred.

Equally revealing is EPA’s double-speak: EPA claimed

publicly and in communications to the parties that its actions

were justified because the program is a “criminal” scheme and

a “clear-cut case of waste and abuse” that is “riddled with self-

dealing, conflicts of interest, extraordinarily unqualified

recipients . . . and much more,” even as EPA insisted to the

district court, which rebuked it for utterly failing to substantiate

those allegations, and to our court, that it was not “accusing”

and has never “accuse[d] the plaintiffs of waste, fraud and

abuse.” Apr. 2 PI Hr’g 39:12-13 (J.A. 868); Oral Arg. Tr.

27:15-18. Such shifting and contradictory representations

26

further show that the oversight concerns EPA emphasizes as its

sole basis for terminating the awards are post-hoc and

pretextual. Oral Arg. Tr. 27:15-21.

The timing of the termination letters similarly undermines

EPA’s purported oversight concerns. Only the day before

terminating the grants, EPA instructed Citibank to extend the

“voluntary” funding freeze while it waited for Plaintiffs’

responses to its oversight questions—answers it claimed to

need in order to evaluate “concerns regarding potential fraud

and/or conflicts of interest.” Mar. 10 EPA Ltr. to Citibank (J.A.

65). Later that day, Climate United moved for a TRO to

prevent EPA from terminating the awards, among other

requested relief. Instead of waiting for Plaintiffs’ responses to

its oversight questions—which EPA had given Plaintiffs

another several weeks to submit—EPA abruptly terminated the

grants the next day, less than 24 hours before the district court’s

scheduled TRO hearing.

That sequence of events—terminate first, gather data

later—is emblematic of EPA’s approach throughout the events

underlying this litigation. It is fundamentally at odds with the

APA’s requirement of reasoned decision making. An agency

must, at a minimum, “examine the relevant data and articulate

a satisfactory explanation for its action including a rational

connection between the facts found and the choice made.”

State Farm, 463 U.S. at 43 (internal quotation marks omitted).

By EPA’s own admission, it decided to terminate the awards

before gathering the relevant oversight data, just as it decided

to freeze Plaintiffs’ money and launch criminal investigations

without any reason to believe that Plaintiffs were engaged in

“criminal conduct or other improprieties.” Mar. 9 Emails. At

every turn, EPA’s actions demonstrate that its purported

reasons for terminating the grant—its “substantial concerns

regarding program integrity, the award progress, [and]

27

programmatic fraud, waste, and abuse,” Gov. Br. 33—are

entirely pretextual. Deciding the outcome before investigating

the facts, unleashing the government’s prosecutorial power on

private citizens with no basis to think fraud or crime occurred

and, having uncovered no evidence, giving contrived and

contradictory reasons for predetermined and unsupported

agency action is quintessentially arbitrary and capricious. See

Dep’t of Com., 588 U.S.at 782-85.

EPA argues that it had legitimate concerns about its ability

to ensure that the grant funds were being spent lawfully,

making its decision to suddenly terminate the awards

reasonable. Gov. Br. 33-34. But the oversight issues it cites

are contradicted by the record. EPA’s explanation not only

“runs counter to the evidence before the agency” and “is so

implausible that it could not be ascribed to a difference in view

or the product of agency expertise,” State Farm, 463 U.S. at

43, but is patently pretextual.

EPA points to the use of Citibank as a financial agent, the

distribution of grant funding to subgrantee organizations, and

modification of the agreement between the presidential

election and inauguration as raising “serious concerns” about

EPA’s ability to oversee Plaintiffs’ use of the funds. Gov. Br.

9-11. From EPA’s telling, unqualified grantees were awarded

enormous sums of federal grant funding with virtually no

oversight. That narrative finds no support in the record.

Start with EPA’s allegation that Plaintiffs are

“extraordinarily unqualified recipients” who “had no prior

track record.” Mar. 2 EPA Ltr. to Citibank (J.A. 105); Gov. Br.

6. That is a grave mischaracterization. Recipients were

coalitions of some of the country’s most reputable nonprofits

with decades of relevant experience. They formed coalitions,

structured as newly formed subsidiaries, to accommodate the

28

demands of the role that Congress envisioned for the grantees.

That organizational design enables the subsidiary to adopt

policies and structures most conducive to leveraging private

capital—one of Congress’s key goals for the program—while

benefitting from the experience and infrastructure of the parent

organizations. Bafford Decl. ¶ 8 (J.A. 363). Climate United,

for instance, is a coalition of three nonprofits with thirty to fifty

years of experience each who have collectively managed nearly

$30 billion of private and institutional capital to increase

environmental sustainability. Id. ¶ 7 (J.A. 363). Power

Forward Communities is a coalition of five nonprofits—

including household names like United Way and Habitat for

Humanity—with more than a century of combined experience

financing, managing, and implementing affordable housing

projects. Its coalition partners’ past projects total more than

$100 billion and have successfully added approximately 1.5

million affordable homes and apartments across the United

States for Americans in need. Mayopoulos Decl. ¶ 3 (J.A.

452).

Those coalitions are led by people of proven experience

and integrity. Power Forward Communities itself is led by a

former President and CEO of Fannie Mae who was also

General Counsel of Bank of America; one of its subgrantees is

led by a former director of the U.S. Office of Management and

Budget and HUD Secretary; and another of its subgrantees is

led by a former Senior Vice President at Wells Fargo who also

served as Vice President at the Federal Reserve Bank of San

Francisco. Such impressive leadership and proven track

records make the coalitions eminently suited to fulfill

Congress’s objectives. It is disingenuous of EPA to insinuate

that the coalition structure implies Plaintiffs’ lack of

qualifications when it is “common practice for established

organizations to set up subsidiaries for specific projects and

programs”; coalition applicants were specifically invited to

29

apply for the grants by EPA; and the coalition partners and their

leaders are extraordinarily qualified to administer the grant

awards. Bafford Decl. ¶ 8 (J.A. 363); NOFO at 6 (J.A. 1738).

Nothing in the record materially disputes any of that.

Nor do EPA’s purported concerns about conflicts of

interest hold water. Start with the example selected by the

majority. Maj. Op. 6 & n.2. The majority highlights that, in

urging its Office of Inspector General to open an investigation

into the grant program, EPA’s Acting Deputy Administrator

alleged that “Jahi Wise, the former director of the GGRF,

personally oversaw a $5 billion grant to his previous employer,

the Coalition for Green Capital [(CGC)]—without recusing

himself.” Mar. 2 Ltr. to EPA OIG (J.A. 107). But the record

squarely contradicts that allegation. Consistent with “EPA

Order 5700.5A1, EPA’s Policy for Competition of Assistance

Agreements, and the rigorous ethics and conflict-of-interest

review carried out by EPA during the review and selection

process for GGRF funding . . . Mr. Wise was recused from

reviewing, evaluating, selecting, or approving funding on any

grant competition for GGRF funding for which CGC submitted

an application.” Hopson Decl. ¶ 22 (J.A. 421). That is, in

addition to recusing himself from CGC’s application for

funding, “Mr. Wise did not even review applications from

CGC’s competitors for GGRF funds.” Id. Even EPA

recognizes that its speculation about conflicts of interest does

not support its termination decision. Indeed, after failing to

present the district court with any evidence of fraud, conflicts

of interest, or anything even approaching “waste, fraud, and

abuse,” EPA pivoted to argue that its decision to terminate the

grants was solely “based on reasons of policy” and did not have

anything to do with Plaintiffs’ “noncompliance” or “conduct.”

PI Opp. 34-35, 38 (J.A. 503-04, 507) (internal quotation marks

omitted).

30

EPA’s characterization of the grants’ funding structure as

an “unusual and apparently improper” “scheme [to] remove[]

$20 billion from governmental oversight in the days, weeks,

and months before a new administration took office” is

similarly unfounded. Mar. 2 Ltr. to EPA OIG (J.A. 107). As

explained above, Plaintiffs received their awards as lump-sum

payments which they held in accounts at Citibank, subject to a

security interest held by EPA. That financial structure was

specifically chosen to enable Plaintiffs to carry out Congress’s

directive to act “in partnership with, and by leveraging

investment from, the private sector.” 42 U.S.C. § 7434(c)(3).

If the grant funds are to help attract private financing for clean

energy projects, either by recruiting private co-investors or

offering credit enhancements that make projects less risky for

private investors, the funds need to be Plaintiffs’ own assets

and reflected on their balance sheets as such. See Impact

Finance Experts Amicus Br. 3, 9-14; Bafford Decl. ¶¶ 29, 32

(J.A. 370-72). Under EPA’s standard grant disbursement

system, in contrast, a recipient’s balance sheet reflects only the

portions of the award that have already been expended, rather

than the full award amount. Adherence to the agency’s default

payment system would have impeded Plaintiffs’ ability to

recruit private capital. To effectuate Congress’s direction, EPA

instead deposited the full award amount in Citibank accounts

opened in Plaintiffs’ and their subgrantees’ names. That way,

their balance sheets reflected Plaintiffs’ ownership of the full

amount of the award, even as they drew down funds from the

account only as needed and in compliance with their

obligations to fund projects and cover administrative costs.

That funding mechanism was contemplated by EPA as

early as July 2023—long before any potential change in

administration. See NOFO 55-56 (J.A. 1787-88)

(contemplating departures from standard EPA practice,

including a “one-time or periodic balance-sheet

31

capitalization(s)”). And there is nothing improper about it.

Rather, “federal financial agents” like Citibank are “routinely

appointed” and are specifically authorized by statute.

Transactive Corp. v. United States, 91 F.3d 232, 236 (D.C. Cir.

1996); 12 U.S.C. § 265. Most relevant to EPA’s litigating

position, the financial agent structure affords EPA more

oversight than the agency’s standard payment system.

Citibank’s interface displays these grantees’ and subgrantees’

expenditures broken down by budget category and provides

EPA with full, real-time view access into each of the grantees’

and subgrantees’ accounts. Those oversight features are absent

from EPA’s standard disbursement system, which reports only

the amount of money drawn down by the recipient. EPA’s

determination that the “prior administration’s designation of a

financial agent . . . untenably reduced EPA’s oversight” has it

backwards. Gov. Br. 10.

In the same vein, EPA asserts that, because some

subgrantees may distribute award funds to other entities, EPA

lacks the “visibility to see how [the subgrantees are] making

those decisions or how that money is being used.” Oral Arg.

Tr. 34:2-4; see also Gov. Br. 10. That concern inexplicably

disregards the many ways in which EPA can oversee the

subgrantees’ activities. EPA approved detailed budgets and

workplans that specify how the subgrantees will use the grant

money. Just like the grantees, every subgrantee must certify,

under threat of “prosecution under 18 U.S.C. 1001 and other

applicable criminal, civil and administrative sanctions,” that

each requested withdrawal of funds from its Citibank account

is “necessary to execute against the workplan for the Subaward

Agreement supported with EPA funding.” Subgrantee

Account Control Agreement, Ex. B (J.A. 1189). And

subgrantees’ progress against that workplan is tracked and

reported in quarterly, semi-annual, and annual reports to EPA.

For instance, Rewiring Community Investment Fund—a

32

Power Forward Communities subgrantee—describes how its

inability to access its funding will prevent it from fulfilling its

obligations under its EPA-approved workplan, which include

“establish[ing] a loan loss reserve to encourage lenders to

provide loans with significantly discounted interest rates” to

households for energy-efficient, clean heating and cooling

systems. Matusiak Decl. ¶ 19 (J.A. 447). Moreover, many of

the subgrantees are financial institutions that are themselves

subject to extensive regulation and oversight by the Federal

Reserve, Office of the Comptroller of the Currency, Federal

Deposit Insurance Corporation, and state regulators. JCF Ltr.

at 3 (May 21, 2025).

To the extent EPA takes issue with the fact that grantees

may provide “subgrants to others, who then pass it through to

others,” that is the structure that Congress, not the prior

administration, chose to adopt. See 42 U.S.C. § 7434(b)(2)

(“The eligible recipient shall provide funding” to “entities that

provide financial assistance to qualified projects at the State,

local, territorial, or Tribal level or in the District of Columbia,

including community- and low-income-focused lenders and

capital providers.”).

Tellingly, when one of the Plaintiffs responded to EPA’s

asserted concerns about its ability to oversee subgrantees by

proposing restructuring the $770 million of its grant funding

that was slated for distribution to subgrantee community

lenders, EPA ignored it. JCF Ltr. at 2-3. Under the proposal,

the vast majority of the Plaintiff’s money would remain

unspent in a segregated trust or escrow account that EPA could

monitor. Instead of being distributed to the community lenders

to lend directly, the funds would be used to secure the loans

made by those community lenders to small businesses and

communities looking to finance clean energy projects. In that

way, the grant funds could have advanced the programs’ goals

33

while largely staying put in an account monitored by EPA.

EPA did not respond to the letter, despite repeated follow-up

from the Plaintiff. Id. at 1. That lack of engagement further

suggests that EPA’s purported oversight concerns are not the

real reason it terminated Plaintiffs’ grant awards.

At bottom, each of EPA’s specific examples of oversight

concerns is refuted by the record. And its broad-brush

argument is simply untenable in light of the detailed oversight

mechanisms available to EPA. EPA’s assertions that it had

such grave oversight concerns that it had to cancel the grant

awards overnight run aground on a conceded lack of any

indication that Plaintiffs were out of compliance with the award

terms, let alone that they were engaging in any conflicts of

interest, fraud, or criminal activity. In addition to the real-time

visibility Citibank provides EPA into Plaintiffs’ and their

subgrantees’ accounts, EPA receives quarterly, semi-annual,

and annual reports detailing Plaintiffs’ transactions, activities,

progress against their workplans, and expenditures by budget

category, as well as mandatory quarterly conflict-of-interest

reporting by Plaintiffs and their subgrantees. Bafford Decl.

¶ 35(a) (J.A. 373). Before it purported to halt the program and

itself disengaged from constructive communication, EPA had

also held meetings with Plaintiffs “at least weekly, and, at

times, two to three times per week,” to discuss their “program

plans, reporting, oversight, and compliance with the EPA

Terms and Conditions.” Id. ¶ 35(b) (J.A. 373); Arabshahi

Decl. ¶ 34 (J.A. 1981). On top of those controls, Plaintiffs are

subject to third-party audits and to “transaction testing” by

EPA, in which EPA conducts a “systematic examination and

verification of every dollar spent by [the grantee] to ensure they

comply with the grant’s terms, conditions, and applicable

regulations.” Bafford Decl. ¶ 35(g), (h) (J.A. 373).

34

EPA and the majority make much of the fact that the grant

awards were amended in December 2024 and January 2025,

claiming that these “last-minute” modifications in the waning

days of the Biden administration were implemented to “make

it more difficult for the government to terminate the

agreements.” Maj. Op. 5; see Gov. Br. 10, 34. EPA

specifically contends that the original terms of the awards

allowed it to terminate them “based on [a] change in policy

priorities,” per the version of EPA’s General Terms and

Conditions in place before October 2024—a contention the

majority credits. Oral Arg. Tr. 102:17-25; see Maj. Op. 5 n. 1.

That is incorrect.

The original grant agreements, signed in August 2024—

months before the election—already incorporated the

termination provision from EPA’s now-operative General

Terms and Conditions. Those General Terms and Conditions

allow terminations of federal awards based on a change in

policy priorities only when that basis for termination is “clearly

and unambiguously” set forth in the award agreement itself. 2

C.F.R. § 200.340(a)(4), (b) (emphasis added). (Neither the

EPA nor the majority contends that the award agreement itself,

apart from the referenced regulation, allows the awards to be

terminated based on a change in policy priorities.) The

December 2024 amendment to the grant award thus did not

alter the permissible bases for termination, which had never

allowed termination for changed policy priorities.

Plaintiffs’ original award agreements specifically stated

that, “[n]otwithstanding the General Term and Condition

‘Termination,’ [otherwise in effect before October 1, 2024,]

EPA maintains the right to terminate the Assistance Agreement

only as specified in . . . the version of 2 CFR 200.340

applicable to EPA grants as of July 1, 2024, pursuant to 89 Fed.

Reg. 55262 (July 3, 2024).” J.A. 552 (emphasis added). The

35

version of the regulation the awards incorporated from the

outset was the one providing “that an agency may terminate a

Federal award if it no longer effectuates the program goals or

agency priorities (e.g. unilateral termination) but only when

such language is clearly and unambiguously included in the

terms and conditions of the award,” 89 Fed. Reg. 55,262,

55,263 (July 3, 2024) (emphasis added).

EPA adopted that constraint pursuant to OMB’s invitation

to agencies to opt into the revised rule before its default

October 1, 2024, effective date. As of July 2024, EPA

announced in the Federal Register that it had “decided to apply

the revised version of 2 CFR 200.340 to EPA financial

assistance agreements awarded or amended to add funds on or

after July 1, 2024.” 89 Fed. Reg. at 55263. The December

amendment thus imposed no new limit on EPA’s “control over

[the] grant funding.” Gov. Br. 10.

The timing of the amendment also is entirely innocuous.

EPA had explained shortly after the awards were announced in

April 2024 that it would share draft award terms that month,

and that it “expected the terms to change based on awardee

feedback, to ensure they were clear and would be viable for

awardee workplans.” Bafford Decl. ¶ 19 (J.A. 367). EPA

accordingly planned to communicate a “final” set of award

terms in late June, followed by an iterative process during the

fall and winter of 2024 in which EPA would receive grantees’

suggested modifications based on their experience

implementing the programs. Id. ¶¶ 17-20 (J.A. 366-68).

Despite EPA’s and the majority’s insinuations to the contrary,

nothing about the timing or content of those amendments

supports Defendants’ assertion that they were intended to

reduce the agency’s oversight or control in the next

administration.

36

Neither does the “gold bars” video, which Zeldin

repeatedly referenced in public comments smearing Plaintiffs,

provide any plausible basis for sincere oversight concerns on

the part of EPA’s new leadership. In the November 2024

Project Veritas video, an EPA staffer is shown saying to a peer

on a Tinder date (who was surreptitiously filming him) that

EPA was “trying to get the money out as fast as possible”

before Trump’s inauguration. Lisa Friedman, An Offhand

Remark About Gold Bars, Secretly Recorded, Upended His

Life, N.Y. TIMES (July 1, 2025), https://perma.cc/FHM4-94R9.

Whatever the staffer may have meant, those comments cannot

have been referring to awards under the Greenhouse Gas

Reduction Fund because those had been fully obligated as of

August 2024 (in accordance with Congress’s September 2024

deadline). “EPA Awards $27B in Greenhouse Gas Reduction

Fund Grants to Accelerate Clean Energy Solutions, Combat the

Climate Crisis, and Save Families Money,” EPA (Aug. 16,

2024), https://perma.cc/Z7ER-RV7A. Anyone with a basic

familiarity with the GGRF program would understand that a

video of a staffer’s bluster at a bar in November is irrelevant to

the grants at issue here.

In sum, the record makes clear that EPA’s abrupt

termination of the grant awards on the eve of the TRO hearing

cannot rationally be explained by reference to the agency

leadership’s professed oversight concerns. That alone shows

that the agency violated the APA, as EPA’s explanation for its

decision to terminate the awards “runs counter to the evidence

before” it. State Farm, 463 U.S. at 43. Far more troubling,

EPA’s dogged pursuit of criminal investigations unsupported

by probable cause and its unsubstantiated public accusations of

criminal activity strongly suggest that the agency’s professed

oversight concerns are pretextual. EPA’s refusals to discuss its

declared concerns with Plaintiffs themselves, engage with their

responses, or even wait to consider how they would answer its

37

oversight questions give the lie to its widely trumpeted

concerns. Contrived, baseless justifications for the grant

terminations do not satisfy the “reasoned explanation

requirement of administrative law,” which “is meant to ensure

that agencies offer genuine justifications for important

decisions, reasons that can be scrutinized by courts and the

interested public.” Dep’t of Com., 588 U.S. at 785. The

Supreme Court has made clear that “[a]ccepting contrived

reasons would defeat the purpose of the enterprise.” Id. “If

judicial review is to be more than an empty ritual, it must

demand something better” by way of reasoned explanation than

the false statements EPA broadcast to build a sensationalist

public narrative in its favor. Id.

2. Separation of Powers

It is equally clear that EPA’s actions violate the

Constitution. Our constitutional system of separation of

powers rests on the idea that national “policy is for Congress

and the President to establish as they see fit in enacting statutes,

and for the President and subordinate executive agencies . . . to

implement within statutory boundaries.” Aiken Cnty., 725 F.3d

at 257. “Money is the instrument of policy,” Clinton, 524 U.S.

at 451 (Kennedy, J., concurring), and it is Congress—not the

executive branch acting unilaterally—that has “exclusive

power over the federal purse,” Rochester Pure Waters Dist. v.

E.P.A., 960 F.2d 180, 185 (D.C. Cir. 1992). Only Congress

may authorize “money [to] be paid out of the Treasury.”

Cincinnati Soap Co. v. United States, 301 U.S. 308, 321

(1937). And when it does so, the executive “may not ignore”

those funding directives “merely because of policy

disagreement with Congress.” Aiken Cnty., 725 F.3d at 260.

To hold otherwise would allow “the executive [to] possess

an unbounded power over the public purse of the nation,” 2

38

JOSEPH STORY, COMMENTARIES ON THE CONSTITUTION OF THE

UNITED STATES § 1348, at 215 (Thomas Cooley ed., 4th ed.

1873)—the very concentration of power the Appropriations

Clause was intended to prevent. See Cincinnati Soap Co., 301

U.S. at 321. It is thus incontrovertible that, “[a]bsent

congressional authorization, the Administration may not

redistribute or withhold properly appropriated funds in order to

effectuate its own policy goals.” City & Cnty. of San Francisco

v. Trump, 897 F.3d 1225, 1235 (9th Cir. 2018). As then-Judge

Kavanaugh explained, it is a “settled, bedrock principle[] of

constitutional law” that neither the President nor his

“subordinate executive agencies” may “decline to follow a

statutory mandate or prohibition simply because of policy

objections.” Aiken Cnty., 725 F.3d at 259. Insofar as the

majority defends a prerogative of EPA to cancel the grants for

policy reasons, the majority’s assertion that “the [Inflation

Reduction] Act does not limit the Administrator’s discretion to

withhold or terminate grants,” Maj. Op. 23, squarely conflicts

with Aiken.

Congress in the Inflation Reduction Act appropriated

federal funds for the Greenhouse Gas Reduction Fund and

instructed EPA “to make grants” by September 30, 2024, to

“nonprofit organization[s] that [are] designed to provide

capital, leverage private capital, and provide other forms of

financial assistance for the rapid deployment of low- and zero-

emission products, technologies, and services.” 42 U.S.C.

§ 7434(a) (providing funds “to remain available until

September 30, 2024” and instructing EPA to make the

described grants), (c)(1)(A) (specifying that “eligible

recipients” must be able to leverage private capital). The

statute specifies that grantees, working in partnership with the

private sector and with local communities, must provide

funding and other assistance to housing and infrastructure

projects designed to reduce greenhouse gas emissions. Id.

39

§ 7434(b). EPA is constitutionally obligated to administer

those grants; it cannot unilaterally decide to get rid of the grant

programs based on the Administration’s policy preference to

“[t]erminat[e] the Green New Deal.” 90 Fed. Reg. at 8357.

The district court found that EPA sought to do just that. It

found that “EPA seeks to dismantle these grant programs in

their entirety as a policy matter,” as shown by EPA’s public

expressions of determination to shut down the grant program,

and as confirmed by its action to terminate “all eight grants

comprising the entire NCIF and CCIA programs.” Climate

United, 778 F. Supp. 3d at 116. The district court’s factfinding

is amply supported by the record, and the majority’s conclusion

that it was clearly erroneous cannot be squared with EPA’s

remarkable conduct in this case. Maj. Op. 25-26.

As already discussed, EPA’s actions at every turn reveal

its determination to permanently defund the Greenhouse Gas

Reduction Fund programs for no more reason than that

President Trump announced that goal. See 90 Fed. Reg. at

8357 (directing agencies to “Terminat[e] the Green New Deal”

by preventing the “disbursement of funds appropriated through

the Inflation Reduction Act”). Without any further planning,

consideration, or explanation, EPA acted to prevent Plaintiffs

from accessing their funds. Current agency leadership has

demonized the recipients as if the President’s policy

preferences alone license them to slander as fraudulent or

criminal any grantee whose activities do not align with those

preferences. No matter that all evidence confirms that

Plaintiffs were spending their money precisely as Congress

intended and authorized.

Indeed, EPA’s hasty decisions to freeze and terminate the

grant awards with no evidence of noncompliance and no

communication with Plaintiffs cannot be explained as anything

40

other than a decision to do what the President said he wanted

only because he said so. The decision to terminate the grants

just hours before the district court had a scheduled occasion to

rule on whether to restore or preserve Plaintiffs’ access to their

award funds is hard to explain as anything but a bald effort to

rewrite the statute and undo what was done in compliance with

it. Those are not legitimate means to advance the new

President’s policy agenda. Why terminate grant awards that

had been made and were being carried out as Congress

intended unless EPA’s real disagreement was with Congress’s

legislated policy choice to fund “green energy” projects?

The majority chides the district court for discounting

EPA’s representations that it intended to reconstitute the grant

programs with increased oversight. Maj. Op. 25-26. At oral

argument, EPA disavowed any “frontal assault on the

appropriation or Congress’s objective,” insisting that the

agency “intends, as consistent with principles of appropriations

law, to continue to make these funds available in a permissible

way and in a way that comports with the oversight principles

that it thinks are important here.” Oral Arg. Tr. at 25. But, as

discussed below, since the appropriation’s deadline to obligate

the funds has passed, EPA retains at most a narrow authority to

make “replacement” grants and cannot obligate the funds

anew.

In any event, the district court had ample basis not to credit

EPA’s representations that it will spend the funds as Congress

intended. The court observed EPA’s track record throughout

this case of making slanderous and insupportable public

statements and disavowing them in court in favor of self-

serving contradictory representations. The court knew that

EPA instigated unsupported criminal and civil investigations to

hunt for justifications to claw back Plaintiffs’ money and

observed that the agency remained unable to provide any

41

evidence to support its very public assertions of

mismanagement and insufficient oversight. Presented with

EPA’s actions and its patent inability to justify them on any

other basis, the district court was on unassailably solid

evidentiary footing in finding that EPA’s actions had nothing

to do with its professed oversight concerns. EPA simply

sought to “dismantle these grant programs in their entirety as a

policy matter.” Climate United, 778 F. Supp. 3d at 115.

EPA’s “repeated[] represent[ations] that it planned to re-

commit the funds,” Maj. Op. 23, ring entirely hollow in light

of its patent inability to do so. See Bagenstos Amicus Br. 3-11.

It is an “elementary principle” of federal appropriations law

that “a federal agency’s budget authority lapses on the last day

of the period for which funds were obligated.” W. Va. Ass’n of

Cmty. Health Ctrs, Inc. v. Heckler, 734 F.2d 1570, 1576 (D.C.

Cir. 1984). Here, Congress specified that the appropriation for

the Greenhouse Gas Reduction Fund would “remain available

until September 30, 2024.” 42 U.S.C. § 7434(a)(1), (2), (3).

The appropriation thus expired on that date, after which EPA

could no longer use the funding to incur new obligations. See

Off. of Nat. Res. Revenue-Coop. Agreements, B-321297, 2011

WL 3343023, at *3 (Comp. Gen., Aug. 2, 2011).

Federal appropriations law thus bars EPA from

terminating the awards and then re-obligating the funds to

reconstitute the Greenhouse Gas Reduction Fund programs.

“If an agency deobligates funds after the expiration of the

period of availability, the funds are not available for new

obligations.” Continued Availability of Expired Appropriation

for Additional Project Phases, B-286929, 2001 WL 717355, at

*3 (Comp. Gen., Apr. 25, 2001). In other words, once EPA

terminates the grant awards, it will no longer have the authority

to make new grant awards to fulfill its statutory obligations.

The majority suggests that Congress’s repeal last month of the

42

Greenhouse Gas Reduction Fund could affect EPA’s asserted

authority to recommit the funds and thereby relieve it of any

obligation to do so. Maj. Op. 25 n. 11. It does neither. The

statute rescinds only “unobligated” funds: Obligated funds,

like those at issue here, are unaffected. One Big Beautiful Bill

Act (OBBBA), Pub. L. No. 119-21, § 60002, 139 Stat. 72, 155

(2025). See generally July 7, 2025, Neitzel Ltr. to Clerk of

Court Cislak (noting that Senator Capito described the

proposition that OBBBA might “claw back money” as

“ridiculous”) (quoting Josh Siegel, Q&A: Sen. Shelley Moore

Capito, incoming EPW chair, (Nov. 20, 2024),

https://perma.cc/T4KC-8MQ9). It is the federal appropriations

rule, not the repeal legislation, that prevents EPA from

recommitting the funds.

EPA’s assertions that it will nonetheless fulfill Congress’s

plan by labeling its re-obligations as “replacement grants,”

Reply Br. 17, are empty promises. The majority, too, cites

replacement-grant authority as evidence of EPA’s intent to

continue the program with new grantees rather than terminate

it. Maj. Op. 24 & n.10. To qualify as a replacement grant, the

re-obligation would have to be “substantially identical in scope

and purpose to the original grant.” The Honorable Lawton

Chiles U.S. Senate, B-164031, 1976 WL 10353, at *4 (Comp.

Gen. June 25, 1976). Those requirements cannot be met by

new grants that materially alter the financial structure, number

of grantees, or other oversight controls—meaning that EPA

would have to retain the very features it claims prompted the

agency to interfere with Plaintiffs’ grants. See NRDC Amicus

Br. 9-13.

The majority reasons that, because “there is no evidence

the agency sought to dismantle the programs without

congressional approval, In re Aiken County cannot support the

grantees’ claims.” Maj. Op. 26. The majority’s factual premise

43

is unsupported, and the validity of Plaintiffs’ separation of

powers claim follows from Aiken County. We held in Aiken

County that executive agencies violate the constitutional

separation of powers when they refuse to spend money

appropriated by Congress because they disagree with

Congress’s policy choice. 725 F.3d at 260. There, as here,

Congress appropriated funds for a particular effort (there,

assessing applications to store nuclear waste; here, making

competitive grants) and set a statutory deadline for the agency

to act. Id. at 257-58. When the agency refused to adhere to the

statute due to “policy disagreement[s] with Congress,” we held

that refusal violated the Constitution, posing a threat to

undermine “our constitutional system of separation of powers”

that supported judicial intervention. Id. at 260, 267.

EPA’s attempts to dismantle the statutorily mandated

NCIF and CCIA programs due to the current agency

leadership’s policy disagreements with Congress run afoul of

the Constitution in the same way. In rejecting Plaintiffs’

separation of powers claim, the majority says that it is

“declin[ing] to adopt a principle that would convert every

statutory challenge to agency action into a constitutional

claim.” Maj. Op. 23. That may well be advisable, but it does

not describe the rule of Aiken County that properly applies here.

The majority cannot choose to “decline” to apply our binding

precedent. Wherever the line between constitutional and

statutory claims lies, Aiken County squarely holds that EPA’s

actions violated the Constitution.

B. Irreparable Injury and Balance of Equities

Baseless allegations of fraudulent or criminal activity,

coupled with EPA’s unfounded interference with Plaintiffs’

grant funds, threaten enormous harm to Plaintiffs and, more

importantly, to the communities, businesses, and individuals

44

across the United States who stand to benefit from the uses of

the money that Congress prescribed. Without access to their

grant awards, Plaintiffs are already out of money to make

payments for rent, third-party contractors, and insurance

policies critical to continue operating, and many of the

Plaintiffs will permanently shutter in the coming months.

Plaintiffs have already been forced to defer compensation for,

lay off, withdraw offers from, and lose employees with

specialized expertise that “cannot be replaced easily, if at all.”

Supp. Bafford Decl. ¶ 7 (J.A. 954).

Absent funding from Plaintiffs, major projects already

underway will fold—projects intended to create demand for

and boost the global competitiveness of U.S. advanced electric

manufacturing capability, provide critically necessary

affordable housing and infrastructure, lower energy costs,

improve air quality, and reduce climate risks across the United

States. If the agency succeeds in taking back the funding

provided under the Act, many of those projects will not be able

to raise capital from other sources and will irrevocably fail.

That is particularly likely because Congress directed grantees

to invest in “qualified projects that would otherwise lack access

to financing.” 42 U.S.C. § 7434(b)(1). As just a single

example, one subgrantee community lender has set up projects

to install clean-energy microgrids at churches, community

centers, and nursing homes in rural Georgia, Mississippi, and

Alabama to provide sustained power during outages of existing

power sources. Without the subgrantee’s promised funds,

those projects are at risk of being left undone. The projects

were intended to provide vulnerable populations with “energy

independent safe havens for residents and community

members” during increasingly common extreme weather

events; instead, when blackouts inevitably happen, “[o]xygen

machines that would be powered by solar panels during a

blackout will turn off” and “[e]ssential medications that require

45

refrigeration will warm and spoil.” Parker Decl. ¶¶ 35-37 (J.A.

950).

EPA’s unlawful actions are not just an enormous loss to

Plaintiffs and the American people. They defy Congress’s

objectives for authorizing and funding the Greenhouse Gas

Reduction Fund: to provide financial assistance to pollution-

reducing projects “in partnership with, and by leveraging

investment from, the private sector.” 42 U.S.C. § 7434

(c)(3)(A). By directing Citibank to freeze Plaintiffs’ money,

the government is making it impossible for Plaintiffs to serve

as reliable funding partners, ruining their prospects for securing

future partnerships, favorable loan terms, qualified staff, and

federal grant funding. As one Plaintiff explained:

To be an effective financing counterparty, CGC (or

any organization) must have certainty of funding

sources, be able to move efficiently and reliably in

negotiations, and be viewed as credible by involved

parties. CGC is made ineffective if potential partners

cannot rely on when CGC’s capital will become

available. No credible counterparty will take this

funding risk, or be willing to be associated financially

with CGC.

Kauffman Decl. ¶ 13 (J.A. 429). That reputational harm is

devastating to Plaintiffs. Because “part of [Plaintiffs’] purpose

is to bridge market failures and attract private co-investment to

projects that might otherwise be deemed too risky, confidence

in [Plaintiffs’] commitments as . . . investor[s] is vital to

achieving buy-in from private sector investors. . . . The longer

the freeze on [Plaintiffs’] funds continues, the more difficult it

will be for [them] to originate deals and secure co-investors.”

Id. ¶¶ 18, 23 (J.A. 430-31). Worse, the agency’s action

contrary to Congress’ enactment sets off a cycle of skepticism.

46

When Plaintiffs’ hard-won partnerships with private investors

and community lenders initially hesitant to fund clean-energy

projects evaporate, those partners will be all the more reluctant

to invest in similar ventures in the future. Plaintiffs “have had

to work hard to build relationships and to earn a reputation as

[] trustworthy, reliable lending institution[s],” and the “knock-

on effects” of the damage EPA has caused to their reputations

“will delay adoption and therefore achievement of GGRF’s

mission.” Parker Decl. ¶¶ 25-26 (J.A. 947).

These harms are the very definition of irreparable injury.

Once a lender’s reputation as a stable source of promised

funding is compromised, it is difficult, if not impossible, to

repair. Indeed, investors and loan applicants have already

pulled out of near-final agreements due to the uncertainty over

whether Plaintiffs will be able to access their funds. Projects

underway that miss key deadlines due to Plaintiffs’ inability to

make good on their loan commitments will be shut down

permanently.

More broadly, the distrust bred by EPA’s actions will

make it exceedingly difficult to revive the coordination and

cooperation between nonprofit organizations, private investors,

private businesses, and community lenders critical to carrying

out Congress’s objective of building important projects at low

public cost by spending government grant money to leverage

private investment. What is more, without a court-ordered

injunction, the government’s actions portend that EPA will

drain the money from Plaintiffs’ accounts with no apparent

avenue for Plaintiffs to reclaim it. Once EPA successfully

terminates the awards and moves the funds back to Treasury—

as it intends to do as soon as the district court’s injunction is

lifted, see Oral Arg. Tr. 4:14-16—it is unlikely that a court

would be able to order their return to Plaintiffs or take any other

action to fulfill the agency’s congressional mandate. See City

47

of Houston, Tex. v. Dep’t of Hous. & Urb. Dev., 24 F.3d 1421,

1426 (D.C. Cir. 1994) (explaining that “a court cannot reach”

funds that have reverted to Treasury “in order to award relief”

when the appropriation authorizing their expenditure has

expired); 42 U.S.C. § 7434(a) (appropriations for GGRF grant

programs expired on September 30, 2024); see also generally

Bagenstos Amicus Br. (explaining that EPA cannot re-obligate

the grant funds, nor can a court order it to do so, because the

appropriation authorizing those funds expired in September

2024). Under such circumstances, any eventual judicial

declaration that the terminations were unlawful would be a

hollow victory.

On the other side of the ledger, the government claims that

allowing Plaintiffs to access their funding will cause

“substantial and irreparable harm to the public fisc.” Gov. Br.

41. But as the government itself submits, its “bases for

termination were the grants’ structure and terms” which

“reflected no more than a decision based on reasons of policy,”

not anything to do with Plaintiffs’ “noncompliance” or

“conduct.” PI Opp. 34-35, 38 (J.A. 503-04, 507) (internal

quotation marks omitted). The government insists that it is

“not accusing anybody of fraud.” Oral Arg. Tr. 27:16. That is,

the government no longer disputes that Plaintiffs are using the

award funds as initially instructed by EPA, and as mandated by

Congress. It is hard to see how the public is harmed by

Plaintiffs’ use of money allotted by Congress to carry out its

duly enacted policies.

C. Tucker Act

The government attempts to divert this court’s attention

from its brazenly unlawful actions by arguing that the district

court lacked jurisdiction over Plaintiffs’ APA claims. But the

district court at a minimum had jurisdiction over Plaintiffs’

48

meritorious separation of powers claim. That alone provides

jurisdiction for the preliminary injunction.

In any event, the majority’s conclusion that the Tucker Act

bars Plaintiffs’ arbitrary and capricious claim under the APA is

wrong. Plaintiffs are not seeking reinstatement of their grant

awards or any other form of specific performance of contracts.

Nor are they seeking payment of funds from the Treasury.

Their suit challenges the government’s decision to illegally

seize their property—money in bank accounts opened in their

names, in which the government has only a security interest

(which it has not exercised). The grant awards define that

money as “gross income earned by” Plaintiffs, meaning that

title to the money passed to Plaintiffs when the award funds

were deposited in their Citibank accounts. Grant Award at 53

(J.A. 1134) (quoting 2 C.F.R. § 200.1).

Plaintiffs’ title to the funds in their accounts is cemented

by the Account Control Agreements between Citibank, EPA,

and each grantee, which specify that Citibank “maintains the

Accounts for [Plaintiffs],” and that Plaintiffs are “the

entitlement holder[s] with respect to all financial assets

credited from time to time to the Accounts.” J.A. 1144.

Citibank’s status as a “fiduciary of the government,” Maj. Op.

14—in which capacity it promises to maintain accounts for

Plaintiffs, allow them to “access and use funds” in their

accounts, and provide view access to EPA, Financial Agency

Agreement Ex. A §§ I.A.1, I.D.1 (J.A. 2145, 2149)—changes

nothing about Plaintiffs’ title to the money in their accounts.

That Citibank has a contractual obligation to the government to

serve as a custodian of Plaintiffs’ funds does not mean that the

government owns the funds.

Indeed, Plaintiffs’ title to the award funds, which allows

the award to serve as a liquid asset instead of an inherently

49

risky “expected income stream,” is critical to Congress’s

decision to equip grantees to attract private investment and is

one of the reasons EPA selected the financial agent structure.

Impact Finance Experts Amicus Br. 3, 7-14. Plaintiffs thus

seek an equitable remedy “for the recovery of specific property

or monies,” which stands in contradistinction to money

damages, Bowen v. Massachusetts, 487 U.S. 879, 893 (1988)

(internal quotation marks omitted) (emphasis added), the

“prototypical contract remedy,” Crowley, 38 F.4th at 1107.

The nature of the relief that Plaintiffs seek—recovery of

property that is lawfully theirs—suffices to resolve the Tucker

Act question against the government. Land v. Dollar, 330 U.S.

731 (1947), reflects that longstanding principle. There, the

plaintiff sought an injunction preventing the U.S. Maritime

Commission from selling shares of stock that the plaintiff

alleged it owned under a contract with the Commission. Id. at

734. The Court held that the district court had jurisdiction over

the case even though the plaintiff’s alleged right to the disputed

property originated in a contract and depended on interpreting

the contract in its favor. The Court nonetheless recognized that

the plaintiff’s “claim rests on [its] right under general law to

recover possession of specific property wrongfully

withheld”—a claim sounding in tort, not contract. Id. at 735-

36. That was so even though the government possessed and

had “record title” to the property. Id. at 737. As the Court

explained:

[P]ublic officials may become tort-feasors by

exceeding the limits of their authority. And where

they unlawfully seize or hold a citizen’s realty or

chattels, recoverable by appropriate action at law or

in equity, he is not relegated to the Court of Claims

to recover a money judgment. The dominant interest

of the sovereign is then on the side of the victim who

50

may bring his possessory action to reclaim that which

is wrongfully withheld.

Id. at 738.

We acknowledged in Megapulse, Inc. v. Lewis the line

drawn in Land v. Dollar between claims to property acquired

by contract—which may proceed in district court—and claims

to enforce rights to contractual proceeds, which must proceed

in the Court of Claims under the Tucker Act: “The Supreme

Court many years ago recognized a private party’s cause of

action outside the Tucker Act to challenge the statutory

authority of federal officials to claim ownership rights in

property allegedly transferred during the course of a contract.”

672 F.2d at 968-69. That principle confirms the district court’s

jurisdiction here. Moreover, these cases underscore that a

claim to recover property need not be framed as an

unconstitutional taking to proceed in district court.

Plaintiffs claim that EPA has unlawfully interfered with

their previously disbursed funds in violation of, inter alia, the

APA. Appellee Br. at 15. Plaintiffs assert that EPA has

“unlawfully seize[d]” their property, and they seek an

injunction to “reclaim that which is wrongfully withheld.”

Dollar, 330 U.S. at 738. This case is even clearer in that regard

than Land v. Dollar itself, because the government has neither

title to nor possession of the disputed funds. Plaintiffs’ action

is one to recover their property. It does not seek any money

from the Treasury. It is not a contract action so is not

“relegated to the Court of Claims.” Id. As in Megapulse,

Plaintiff’s “position is ultimately based, not on breach of

contract, but on an alleged governmental infringement of

property rights and violation of [a statute].” 672 F.2d at 969.

The Supreme Court itself recently recognized that

distinction in Department of State v. AIDS Vaccine Advocacy

51

Coalition, where it declined to stay a district court order

requiring the government to issue payments owed to plaintiffs

for foreign aid work they had already completed. 145 S. Ct.

753 (2025). The government argued there, as here, that the

plaintiffs essentially sought to enforce a government contract

so must proceed, if at all, in the Court of Claims. See id. at 756

(Alito, J., joined by Thomas, Gorsuch, and Kavanaugh, JJ.,

dissenting from the denial of the application to vacate the

district court’s order). The Court was unpersuaded that the

government thus was likely to establish a sovereign immunity

bar against the district court’s jurisdiction. Id. at 753. Like the

grantees here, the plaintiffs in AIDS Vaccine Advocacy

Coalition brought APA and constitutional challenges to

defendants’ interference with their existing entitlement to grant

funding. Their claims depended not on breach of their

contracts, but on the unlawfulness of the government’s

actions. The district court’s jurisdiction over Plaintiffs’ APA

and constitutional claims here is even clearer than it was in

AIDS Vaccine Advocacy Coalition, because here, unlike there,

payment was already made.

Those same facts—that Plaintiffs seek an injunction

preventing the government from interfering with money the

government has already properly disbursed to them—renders

inapplicable the Supreme Court’s emergency stay orders in

National Institutes of Health v. American Public Health Ass’n,

No. 25-A-103, 2025 WL 2415669 (Aug. 21, 2025), and

Department of Education v. California, 145 S. Ct. 966 (2025).

I respect the reasoning of those orders where they apply, but no

part of the district court’s injunction in this case “order[s] the

payment of money” from the Treasury or requires the

government to “pay out past-due grant obligations” or to

“continue paying obligations as they accrue.” Dep’t of Ed., 145

S. Ct. at 968. And, unlike plaintiffs in National Institutes of

Health, Plaintiffs here need not seek to enforce the

52

government’s “obligation to pay money,” 2025 WL 2415669,

at *1, because these Plaintiffs’ money was already paid before

Defendants interfered with it.

Rather, what Plaintiffs seek here is to unfreeze their funds

and to enjoin EPA from unlawfully interfering with them based

on the President’s announced policy disagreement with

Congress’s objectives. In doing so, Plaintiffs challenge EPA’s

decision to replace Congress’s legislated policy choice with

one aligning with the President’s directions. See Executive

Order 14154 (ordering agencies to “Terminat[e] the Green

New Deal” by stopping the “disbursement of funds”); J.A. 507

(Defendants opposition to motion for preliminary injunction

describing contract terminations as “reflect[ing] no more than

a decision based on reasons of policy”) (internal quotation

marks omitted); Climate United, 778 F. Supp. 3d at 115-16

(finding that EPA “seeks to dismantle these grant programs in

their entirety as a policy matter”). To the extent National

Institutes of Health applies here, it supports the district court’s

jurisdiction over the policy-based interference with Plaintiffs’

funds. See National Institutes of Health, 2025 WL 2415669, at

*2 (Barrett, J., concurring) (asserting that a district court likely

has jurisdiction over challenges to an agency’s policies).

Binding precedent of this court anchors the district court’s

jurisdiction. Our “longstanding test for determining whether a

claim falls within the exclusive jurisdiction of the Claims Court

pursuant to the Tucker Act” confirms that the Tucker Act does

not displace the district court’s jurisdiction over Plaintiffs’

arbitrary and capricious claim. Crowley, 38 F.4th at 1106. We

explained in Megapulse that, in order to preserve the Court of

Claims’ exclusive jurisdiction over “actions based on

government contracts,” a plaintiff whose “claims against the

United States are essentially contractual” cannot be allowed to

“avoid the jurisdictional (and hence remedial) restrictions of

53

the Tucker Act by casting its pleadings in terms that would

enable a district court to exercise jurisdiction under a separate

statute.” 672 F.2d at 967. Whether a “particular action” is “‘at

its essence’ a contract action depends both on [1] the source of

the rights upon which the plaintiff bases its claims, and upon

[2] the type of relief sought (or appropriate).” Id. at 968. That

is a flexible, context-specific inquiry that directs us to

“determine if the claim so clearly presents a disguised contract

action that jurisdiction over the matter is properly limited to the

Court of Claims.” Id.

Starting with the first prong, to determine whether the

“source of the rights” of a claim is contractual, we consider

whether the plaintiff’s arguments turn on the terms of the

contract. In Perry Capital LLC v. Mnuchin, for instance, we

concluded that the plaintiff’s claims were not “a disguised

contract action” because the plaintiff did not “seek to enforce

any duty imposed upon [the government] by the [relevant

contract],” nor did it “contend [the government] breached the

terms” of the contract or “invoke” the contract in any other

meaningful way. 864 F.3d 591, 619 (D.C. Cir. 2017) (internal

quotation marks omitted). Similarly, in Megapulse, we were

“convinced” that the plaintiff’s claims were not “disguised”

contract claims by the fact that the plaintiff did not “claim a

breach of contract” and based its “request for relief” on non-

contractual documents. 672 F.2d at 969.

Plaintiffs’ APA challenge to Defendants’ arbitrary and

capricious action is clearly not a “disguised contract action.”

Their claim is not premised on EPA’s violation of the grant

agreements’ termination provisions, nor on its failure to

perform any duty “imposed” on EPA by the grant award.

Rather, Plaintiffs assert that they are entitled to relief because

EPA froze and seeks to seize their funds based on pretextual,

internally inconsistent, and unfounded reasons. See, e.g.,

54

Plaintiffs’ Mot. for Preliminary Injunction (PI Mot.) 29 (J.A.

327) (arguing that “the record leading up to the termination”—

for example, the fact that EPA purported to terminate the grants

several days after professing a “lack of critical information”

about “concerns regarding potential fraud” that would be

informed by an ongoing compliance review—“highlights the

pretextual nature of EPA’s stated invocation of waste, fraud,

and abuse”). According to Plaintiffs, and as supported by the

record, EPA acted entirely outside the bounds of acceptable

agency action by first deciding to seize the money Plaintiffs

had been awarded and then casting about for after-the-fact

justifications—including pressuring Citibank into freezing

Plaintiffs’ funds without any basis, notice, or explanation, and

directing DOJ and FBI to open criminal investigations into

Plaintiffs’ grant performance without probable cause, or any

grounds whatsoever. See PI Mot. 1-4 (J.A. 299-302).

That is precisely the type of arbitrary and capricious action

the APA is designed to address. As the Supreme Court

explained in Department of Commerce v. New York, agency

action is arbitrary and capricious when the agency’s “stated

rationale was pretextual,” because “contrived reasons . . .

defeat the purpose of” the “reasoned explanation requirement

of administrative law.” 588 U.S. at 773-74, 785. The non-

contractual “essence” of Plaintiffs’ APA claim has been clear

since Plaintiffs filed their complaint and sought a preliminary

injunction. They have from the outset sought to show that

EPA’s vague, unsupported, and irrational justifications are

merely “pretextual cover to shut down a program approved by

Congress that the new Administration does not like.” PI Mot.

29 (J.A. 327). That was clear to the district court from the very

first hearing. See Mar. 12 TRO Hr’g Tr. 9:17-18 (J.A. 182)

(district court observing that the terminations have “a ready,

fire, aim” feel). Plaintiffs seek relief based on a quintessential

claim of arbitrar

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