On remand from the Fourth Circuit Court of Appeals, the federal district court for the District of South Carolina ruled that U.S. Environmental Protection Agency (EPA) guidance closing the Inflation Reduction Act’s (IRA’s) Environmental and Climate Justice (ECJ) Block Grant Program in February 2025 was illegal. The court concluded that it had jurisdiction to hear the challenge to the guidance and rejected the defendants’ contention that the One Big Beautiful Bill Act’s rescission of the program mooted the action. The district court found that the EPA guidance was a “final and discrete” agency action subject to Administrative Procedure Act review, that the plaintiff grant recipients had Article III standing to challenge the guidance, and that “there is no doubt” that the internal guidance terminating the ECJ Program in contravention of IRA Section 7438 was arbitrary and capricious and unlawful. The court denied the plaintiffs’ requests for a permanent injunction requiring EPA to implement the ECJ Program and for an “equitable extension” of IRA Section 7438’s September 30, 2026 deadline, finding the relief “impractical” but noting that the plaintiffs were “of course free to pursue their claims for alleged unlawful termination” in the Court of Federal Claims. The court declined to consider the plaintiffs’ nonstatutory ultra vires claims.

Community groups' and cities' lawsuit alleging that the Trump administration had unlawfully and arbitrarily frozen federal grant funds, including for programs and projects to reduce greenhouse gas emissions.

Sustainability Institute v. Trump

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South Carolina Federal Court Said EPA Guidance Closing Environmental and Climate Justice Block Grant Program Was Unlawful

Filed

United States of America

South Carolina

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South Carolina Federal Court Said EPA Guidance Closing Environmental and Climate Justice Block Grant Program Was Unlawful

Policy instrument

Impacted group

Greenhouse gas

Economic sector

Finance