The US government has made legal commitments as the Trump administration continues to withhold billions of dollars on climate and clean energy spending despite two federal judges ordering freed funds. There is growing concern that it can be skipped.
Usually, when the federal government spends money through grants or loan programs approved by Congress, it signs a binding agreement known as the obligation. Businesses, states, and other recipients often spend millions of dollars on purchasing equipment, hiring workers, and building facilities, federal government reimbursements. I fully expect to make a promise.
That expectation was overthrown by the new administration.
Following President Trump's order, federal agencies, including the Energy Agency, Environmental Protection Agency and the Agriculture Department, will be working to help broad mandatory grants related to the 2022 Inflation Reduction Act and the 2021 Bipartisan Infrastructure Act They suspended funds and wiped out the laws provided. Billions for climate and energy programs.
In just a few weeks, the results began to feel nationwide. Accounts have been frozen in school districts that planned to use the promised federal dollars to buy an electric school bus. Farmers and shopkeepers who spent hundreds of thousands of dollars in their own money replacing old refrigerated systems or installing solar panels have discovered that requests for refunds are delayed.
Two federal judges explicitly ordered the Trump administration to end the freeze and let the money flow again. On Monday, one of the judges Judge John J. McConnell Jr. of Rhode Island Federal Court, the White House said it withheld funds and ignored the order.
Jessica Tipman, dean of the Department of Government Procurement Law at George Washington University Law School, said the administration's actions put the integrity of the federal contract at stake.
“They took a long time, stable and reliable process and turned the government into an unreliable business partner,” Tilipman said. “Would you want to do business with individuals and organizations that don't pay your bills and in some cases stop communication completely without paying for work that is already being performed?”
A recent lawsuit has challenged the Trump administration's actions, claiming that the government freeze is damaging business.
On Monday, sustainable development company Chemonics International sued the federal government along with other plaintiffs for frozen work with the US International Development Agency. The company said in a court application that the agency owed a bill of approximately $103.6 million on unpaid invoices for work carried out last year. In a statement, Chemonics said it was forced to corner more than 600 U.S. staff and cut the time for 300 employees.
The White House did not respond to requests for comment.
Some agencies say the suspension is temporary and they are considering funds approved by the Biden administration to comply with the law, while others are going even further.
On Wednesday, EPA administrator Lee Zeldin said in a video posted to X that the $20 billion agency funding to help lower greenhouse gas emissions in low-income communities was the Biden administration It said it was a “rush job with surveillance reductions” under. Zeldin suggested trying to knock back the money that had already come out the door.
Zeldin appeared to be referring to the Greenhouse Gas Reduction Fund, a program established by Congress in 2022. Under the program, the Biden administration awarded eight organizations $20 billion and deposited the money into the Citibank account. Can be used. In the video, Zeldin said “we need to immediately fire a financial agent agreement with the bank.”
“In the name of environmental justice and climate equity, the days of irresponsibly rocking shovels that shook a massive amount of cash on the activist group on the far left,” Zeldin said.
Zealan Hoover, who directed the EPA to implement the Inflation Reduction Act program under the Biden administration, said the arrangement with Citi was thoroughly reviewed by agency inspectors at the time, and that the federal government uses private banks. Ta. First financial agent since the 1800s.
If either the EPA or Citi blocks access to funds, it could cause further lawsuits. Some program recipients have already entered into their own contracts to lend money to other organizations for clean energy and energy efficiency projects.
Hoover said the fact that the agency was rebelling against the courts on the freeze on spending threatened to curb mandatory funding is a “major area of concern.”
“It really raises questions about the full faith and credibility of the US government as a counterparty for financial agreements,” he said.
Aram Gavo, a law professor at George Washington University, said many of the questions being discussed in the courts were not clear.
“There are no recent immediate Supreme Court cases or series of circuits that make it very clear what the outcome of the case will be,” he says, and the administration's actions and the resulting cases “inject a strong degree of degree.” I did,” he added. Uncertainty about regulations on federal contracts.”
In the energy sector, authorities ordered an internal review of the potential multi-billion dollar worth of climate and infrastructure spending awarded by the Biden administration after the November 5th presidential election.
A memo dated February 7th states that once all energy sector actions during the “transition period” before Trump's inauguration are reviewed, financial transactions using funds from the Inflation Reduction Act or the Bipartisan Infrastructure Act are “It must be reviewed.” Approval by a senior political appointee.”
Christopher S. Johns, the agency's deputy chief financial officer, wrote in a memo that the review process complied with a recent district court order on federal funds. However, the document, first reported by E&E News, did not say what would happen if political appointees considered certain transactions and did not approve them.
It is not uncommon for the new administration to review existing programs, experts said. However, it is rare for an institution to stop the wide range of mandatory subsidies.
Republicans criticized these moves at the time. Vivek Ramaswamy called the Libyan Loan “a shot beyond the bow” to Tesla, a rival electric car manufacturer owned by Elon Musk. In December, three House Republicans sent a letter to the energy sector, urging them to stop the campaign to quickly distribute federal funds before the next administration takes office.
Experts said it would not be easy for the new administration to cancel the closed loan. Under the Biden administration, the energy sector loan office closed about $60.6 billion in loans and financial guarantees, while an additional $47 billion was a conditional commitment that required final approval.
Kennedy Nickerson, former policy advisor to the loan office and now vice president of energy at Capstone, a research firm, said that the Trump administration's attempt to cancel the final loan agreement was “legally challenging.” It takes time,” he said.
The former agency official said attempts to go after the final loan could block businesses from doing business with the federal government. Companies typically spend millions of dollars through a thorough review process by the loan program office.
“If we reach a conditional commitment with recipients of the loan program, it's government credibility,” David Turk, deputy energy secretary for the Biden administration, said in a statement. “It's American credibility to follow through and make sure they provide investment certainty.”
Trump's energy secretary, Chris Wright, said he wants to use hundreds of billions of dollars on the remaining loan authorities to advance the president's agenda of affordable, reliable electricity.
In an interview with Bloomberg Tuesday, Wright was asked if he could cancel a loan that has already been in effect. “We follow the law,” he replied.
At least one project has been exempt from the administration's freeze.
Montana's renewables secured a $1.677 billion loan guarantee from the Biden administration, converting vegetable oil and fat into diesel and jet fuel to expand its plant in Great Falls, Montana. Initially, the Trump administration blocked its initial $782 million payments while considering the loan.
But Sen. Steve Daines, a Montana Republican and President Trump's ally, said in a statement that he urged the White House to approve the payment. ”
Energy Department officials did not explain why Montana's renewable energy loans allowed them to move forward. Montana's renewable energy also declined to comment.
“The Department of Energy continues to review all funds across sectors, including grants and loans, in accordance with President Trump's executive orders and priorities.” “As part of this review process, all activities are consistent with the law. As the department has approved scheduled spending on loans for expansion of its biofuel facility in Great Falls, Montana.”
