The U.S. Court of Appeals for the First Circuit upheld a Rhode Island District Court ruling that the Trump Administration may not suspend funding for “Green New Deal” initiatives to the extent that Congress appropriated the funding under the Infrastructure Investment and Jobs Act of 2021 or the Inflation Reduction Act of 2022.

The IIJA authorized appropriations for transportation and infrastructure projects, including federal highways, highway safety programs, and transit programs. The IRA provided funding to increase energy security and reduce greenhouse gas emissions. Various federal agencies administer grant programs pursuant to the IRA and the IIJA.

The suit challenged the validity of a memo to all federal agency heads from the Acting Director of the Office of Management and Budget and the President’s Assistant for Economic Policy directing them to immediately pause disbursement of funds appropriated under the IRA or the IIJA to the extent that the programs conflict with the Administration’s policy of increasing energy production as set out in an Executive Order. The memo resulted in agencies freezing funds appropriated by Congress under the IRA and the IIJA.

Six non-profit organizations filed suit, claiming the memo and freeze on funding violated the Administrative Procedure Act. The district court granted a preliminary injunction for the plaintiffs, finding that they were likely to succeed on the merits. The district court ordered the agencies to "take immediate steps to resume the processing, disbursement, and payment" of such funds and "to release awarded funds previously withheld or rendered inaccessible.”

The court of appeals affirmed. It held that the district court did not err in determining that the plaintiffs are likely to succeed in showing that the challenged agency actions are arbitrary and capricious as they failed to consider the plaintiffs’ interests in relying on the appropriated funds, and are therefore invalid under the APA.