Federal judge orders immediate thaw of climate, infrastructure funds

A federal judge ruled Tuesday that EPA, the Interior and Energy Departments and other agencies unlawfully froze funds under Democrats' climate and infrastructure spending laws, ordering the agencies to immediately resume disbursing the money.

The ruling from Judge Mary McElroy of the U.S. District Court for the District of Rhode Island, who was named to the bench by President Donald Trump in 2019, comes on the eve of an expected decision from another judge in Washington on whether EPA lawfully terminated $20 billion in climate grants. That case and other litigation are part of a complex web of lawsuits over frozen funds and terminated grants playing out in multiple courts.

McElroy said she wanted to be "crystal clear" that the president is entitled to enact his agenda. However, "agencies do not have unlimited authority to further a President’s agenda, nor do they have unfettered power to hamstring in perpetuity two statutes passed by Congress during the previous administration."

The lawsuit was brought by six conservation and community groups that received grants under the Inflation Reduction Act that was enacted in 2022 and the bipartisan infrastructure law enacted in 2021.

The grant recipients demonstrated that the indefinite freeze of their funds was "neither reasonable nor reasonably explained," McElroy wrote, adding that the agencies did not show “that they considered the consequences of their broad, indefinite freezes: projects halted, staff laid off, goodwill tarnished.”

And McElroy rejected the administration's claim of "broad powers" to pause spending. Agencies have "narrower powers" to pause or terminate individual grants but not "cases of vast economic and political significance—like this one," she wrote, citing the Supreme Court's major questions doctrine, which looks skeptically at broad claims of executive power.

Among the groups that brought the suit were the Childhood Lead Action Project, which got $500,000 from EPA to combat childhood lead poisoning in Rhode Island; Codman Square Neighborhood Development Corp., which got $750,000 from the Department of Health and Human Services for energy efficiency upgrades to housing for the elderly; and the Woonasquatucket River Watershed Council, which got $1 million from the Forest Service for urban forestry work.

But McElroy applied her order to all IRA and IIJA grants nationwide, not just those of the groups that brought this lawsuit.

“It would be anathema to reasonable jurisprudence that only the named Nonprofits should be protected from the irreparable harms of the likely unlawful agency actions,” she wrote.

Notably, McElroy also dismissed the Trump administration's arguments that she lacks jurisdiction to issue this order because these are contract disputes that by law would have to be heard by another court. Similar arguments have been raised by EPA in litigation over its canceled climate grants.

But McElroy wrote that the nonprofits' rights don't stem from any contract with the government — they come from the laws passed by Congress. The groups are seeking to halt the government's funding freeze, not get "money damages" for past harm done, she said.

McElroy rejected the Trump administration's argument that the Supreme Court's recent decision to allow the termination of Education Department grants to go forward should bind her hands. A "single three-page per curiam order granting a stay" does not overrule a long line of precedent that gives her jurisdiction, McElroy wrote.

The judge added in a footnote she found it "funny" that the grant recipients and Trump administration changed positions on that case after the Supreme Court's order overruled a lower court, which she said only "highlights the challenges of pinning down the precedential effects of emergency decisions."

McElroy concluded by ordering the agencies to "take immediate steps to resume the processing, disbursement, and payment of already-awarded funding," and to report on their progress by 5 p.m. on Wednesday.

Spokespersons for the White House, EPA, Energy and Interior Departments did not immediately respond to request comment.