Climate United Fund v. Citibank, N.A.

The organizations filed a petition for rehearing en banc. They argued that the panel’s decision was at odds with D.C. Circuit and Supreme Court precedent and that the panel’s evaluation of the equities “brushed aside the financially devastating consequences” for some of the organizations, ignored precedent on reputational harm, and was “tainted” or “skewed” by its erroneous legal rulings.

In a 2-1 decision, the D.C. Circuit Court of Appeals ruled that a federal district court abused its discretion when it granted nonprofit organizations’ motion for a preliminary injunction requiring the U.S. Environmental Protection Agency (EPA) and a bank that served as the U.S.’s financial agent to continue funding grants awarded to the organizations during the Biden administration under the Greenhouse Gas Reduction Fund (GGRF) established by the Inflation Reduction Act (IRA). The D.C. Circuit’s opinion—authored by Judge Rao and joined by Judge Katsas—held that pursuant to the Tucker Act the Court of Federal Claims had exclusive jurisdiction over the nonprofit organizations’ “essentially contractual” claims that the grant terminations violated regulations governing federal grantmaking and were arbitrary and capricious under the Administrative Procedure Act. The D.C. Circuit further held that the ultra vires exception to sovereign immunity for claims that federal officials exceeded their lawful authority did not apply to the organizations’ “essentially contractual” claims. Although the D.C. Circuit concluded that the district court had jurisdiction over the organization’s constitutional claim that EPA violated separation of powers by not enforcing the IRA, the D.C. Circuit found that the claim was meritless. As an initial matter, the court said the claim was “not a constitutional claim at all”; the court further found that EPA had issued the grants in accordance with any requirement in the IRA to spend funds and that EPA’s subsequent actions terminating the grant awards were “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 D.C. Circuit also found that the organizations’ loss of grant funds during the litigation was not irreparable because any harm would be compensable through money damages and any need to suspend operations would affect only entities “created solely for the purpose of applying for and spending” the GGRF grants. The D.C. Circuit also found that 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.” Judge Pillard dissented, writing that the majority’s characterization of the nonprofit organizations’ lawsuit as involving “garden-variety contract claims against EPA’s reasonable decisions to terminate their grant awards … fails to contend with the government’s actual behavior and misapprehends” the organizations’ claims. The dissenting opinion would have found that the separation of powers violation warranted the district court’s injunction and that the injunction was “independently warranted by the arbitrary and capricious character of EPA’s actions.” The dissenting opinion also rejected the majority’s conclusion that Tucker Act precedents supported exclusive jurisdiction in the Court of Federal Claims.

On July 3, 2025, the U.S. Department of Justice (DOJ) filed a letter in the D.C. Circuit arguing that the One Big Beautiful Bill Act’s repeal of the Inflation Reduction Act (IRA) provision establishing the Greenhouse Gas Reduction Fund (GGRF) and rescinding “unobligated balances” of funding made available under that provision provided additional support for DOJ’s position that the D.C. Circuit should reverse the preliminary injunction barring EPA from terminating GGRF grants. On July 7, the plaintiffs-appellees filed a response, arguing that the OBBBA did not affect their claims that EPA’s actions violated the Constitution, the IRA, federal regulations, and the Administrative Procedure Act, given that “all their funds were and are obligated.”

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On April 28, 2025, the D.C. Circuit ordered that consideration of the stay motion be consolidated with consideration of the merits of the federal government’s and Citibank’s appeals of the preliminary injunction. The court set an expedited schedule for consideration of the appeals. Briefing is to be completed on May 15, and the D.C. Circuit will hear oral argument on May 19.

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