A federal judge has dealt a significant blow to the Environmental Protection Agency (EPA), ruling that the agency's termination of contracts with three nonprofits was "arbitrary and capricious." The judge's decision comes after the EPA asked Citibank to freeze the accounts of the nonprofits, citing concerns about waste, fraud, and conflicts of interest.

The three nonprofits, recipients of grants from the Greenhouse Gas Reduction Fund, a part of the Inflation Reduction Act signed into law in 2022, had their accounts frozen by Citibank at the EPA's request. However, the judge found that the EPA's claims were "vague and unsubstantiated," and that the agency failed to provide specific information about the alleged investigations or factual support for its decision.

The judge, Tanya Chutkan of the U.S. District Court for the District of Columbia, wrote that the EPA's termination letters "vaguely reference 'multiple ongoing investigations' into 'programmatic waste, fraud, and abuse and conflicts of interest' but offer no specific information about such investigations, factual support for the decision, or an individualized explanation for each [of the nonprofits]." The judge deemed this insufficient and ruled in favor of the nonprofits.

One of the plaintiffs, Climate United, had already committed $392 million to projects that qualify for money from the Greenhouse Gas Reduction Fund, including $31.8 million for solar projects in rural Arkansas and $63 million for solar power plants to be developed in Oregon and Idaho in conjunction with tribal communities. Another plaintiff, Power Forward, had committed $539 million, but the freeze on its accounts left it "unable to pay outstanding invoices from contractors."

The judge's ruling is significant, as it highlights the EPA's failure to follow proper procedures in terminating the contracts. Normally, when the EPA or any other government agency moves to terminate a contract, it sends written notice and gives the awardee an opportunity to object. In this case, the nonprofits didn't hear from the EPA or Citibank before their accounts were frozen, and the EPA ignored their inquiries.

The EPA's actions were deemed "arbitrary and capricious" by the judge, who found that the agency didn't take the legally required steps necessary to terminate the grants. The judge also noted that the EPA proffered no evidence to support its basis for the termination or that it followed the proper procedures.

In issuing the temporary restraining order, the judge found that the nonprofits "have shown a substantial likelihood of success" in winning the case. The order requires the EPA and Citibank to give the nonprofits access to the funds in their accounts, allowing them to continue their projects and pay their contractors.

The implications of this ruling are far-reaching, as it sets a precedent for government agencies to follow proper procedures when terminating contracts. It also highlights the importance of transparency and accountability in government actions, and serves as a reminder that even government agencies must operate within the bounds of the law.

As the case continues, it will be interesting to see how the EPA responds to the judge's ruling and whether the agency will take steps to rectify its mistakes. For now, the nonprofits can breathe a sigh of relief, knowing that they will have access to the funds they need to continue their important work.