Legislative Update: Appeals Court Issues Partial Stay on Trump Administration Freeze of Biden Climate Grants

While the US Congress is on Easter and Passover Recess until Monday, April 28, regulatory and legal issues continue.

 

Appeals Court Issues Partial Stay on Trump Administration Freeze of Biden Climate Grants

On April 17, the Court of Appeals issued a partial stay on U.S. District Court Judge Tanya Chutkan’s injunction halting the Environmental Protection Agency’s (EPA) attempt to rescind billions of dollars in climate grants awarded under the Biden administration. The appeals court ruled that the partial stay was to give the court “sufficient opportunity” to examine it, saying that Chutkan’s reasoning for the injunction did not meet the standard required for such an injunction.

On April 15, Judge Tanya Chutkan issued an injunction halting the Environmental Protection Agency’s (EPA) attempt to rescind billions of dollars in climate grants awarded under the Biden administration. Chutkan ruled that the EPA could not revoke or block access to these funds, which were distributed through the Greenhouse Gas Reduction Fund, a $20 billion program established by the Inflation Reduction Act (IRA).

The EPA had frozen the grants in February and formally terminated them in March, citing concerns about program integrity, alleged misconduct, and inconsistencies with the agency’s evolving priorities. However, the court found the EPA presented no concrete evidence of fraud, waste, or abuse to justify the termination. Judge Chutkan, who had previously issued a temporary restraining order in March, reaffirmed that the agency’s actions lacked an adequate legal basis and violated due process for the grantees.

Federal Judge Orders Agencies to Unfreeze Nationwide Climate and Infrastructure Grants Under IRA and IIJA  

In another legal case, a federal judge on April 15 ordered the immediate resumption of climate and infrastructure grant disbursements that had been halted by the Trump administration, hindering the executive branch’s efforts to stop funding authorized by laws passed under the Biden administration. Judge Mary McElroy of the U.S. District Court for the District of Rhode Island ruled that agencies such as the EPA, the Department of Energy, and the Interior Department acted unlawfully when they indefinitely paused grants issued through congressional authority under the Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act (IIJA). Her ruling emphasized that while the president may pursue his policy agenda, federal agencies are not empowered to obstruct the implementation of duly enacted statutes unilaterally.

Judge McElroy determined that the grant freezes were inadequately justified and inflicted demonstrable harm on communities by halting critical projects and triggering layoffs. Citing the Supreme Court’s “major questions” doctrine, she underscored that agencies may not invoke sweeping authority to suspend programs of “vast economic and political significance” without clear congressional authorization.

McElroy extended her ruling beyond the plaintiffs, applying it to all IRA and IIJA grants nationwide to prevent broader harms from unlawful administrative action. She also rejected the administration’s jurisdictional argument, affirming that the nonprofits’ rights originate from statutory entitlements rather than contractual claims. In addressing the administration’s comparison to a recent Supreme Court stay involving Education Department grants, she dismissed the notion that an emergency ruling could override longstanding precedent.

The ruling directs the relevant agencies to immediately restart the distribution of funds and provide a status report by the following day. It represents a precedent-setting assertion of judicial oversight over executive decisions to delay or suspend congressionally mandated funding, with broader implications for ongoing litigation over federal climate and infrastructure investments. The Trump Administration is expected to appeal this decision.

EPA Officials Signal Significant Restructuring and Deregulatory Priorities Planned 

Acting EPA Deputy Administrator Chad McIntosh announced that significant agency restructuring is underway, although full details remain forthcoming. Speaking at the American Chemistry Council’s (ACC) annual GlobalChem conference, McIntosh urged patience, stating that reorganization efforts would unfold over the coming weeks and months as the agency continues assembling its leadership team. His comments came shortly after a federal deadline for agencies to submit revised restructuring plans, part of a broader Trump administration initiative aimed at layoffs and realignment of federal resources.

Shari Barash, Director of the EPA’s New Chemicals Division, outlined efforts to streamline the agency’s review process for new chemical submissions, with a focus on reducing the significant backlog of applications that exceed the 90-day review timeline mandated by the Toxic Substances Control Act (TSCA). She indicated that such improvements could help the division retain existing staff and potentially integrate scientists from EPA’s Office of Research and Development (ORD), but clarified that no formal staffing decisions or reallocations have yet been communicated to her division.

Barash explained that to accelerate new chemical reviews, the EPA is grouping similar or straightforward applications to streamline evaluations, particularly through low-volume exemptions that permit expedited reviews under certain restrictions. She also announced that the agency is considering reinstating a training initiative modeled after the former Sustainable Futures program. This program helped manufacturers, researchers, and the public understand the EPA’s chemical review process by providing access to modeling tools and regulatory assumptions. Industry stakeholders have praised the program for enabling early identification of potential regulatory issues before chemicals are developed. Barash indicated that further procedural updates will be communicated via public announcements and an EPA listserv in the coming months.

Chemical Industry Urges Bipartisan Reforms to TSCA for Regulatory Clarity

At the ACC GlobalChem conference, congressional staff and industry representatives emphasized the need for increased clarity and predictability in the EPA’s implementation of the Toxic Substances Control Act (TSCA), particularly in the new chemicals review program. With a statutory deadline approaching that requires Congress to decide on the EPA’s authority to collect fees from chemical manufacturers, lawmakers can make targeted changes to TSCA as early as next year.

Industry leaders support focusing on specific TSCA reforms, rather than a complete overhaul, arguing that the law’s current structure delays innovation and punishes new chemical technologies.  Congressional staff advised that minimizing proposed changes to the 2016 law would improve prospects for bipartisan support. Overall, speakers advocated for policy adjustments that would align EPA practices with global regulatory standards while supporting American innovation and competitiveness.

Jake Kennedy, a senior Majority staffer on the Senate Environment and Public Works (EPW) Committee, and Chris Sarley, a senior Majority advisor on the House Energy and Commerce Committee, outlined proposed legislative updates to improve the EPA’s chemical review process and reduce regulatory uncertainty.  They encouraged more significant stakeholder outreach to the EPA and Congress to advocate for practical reforms.  Sarley noted that most current committee members were not in Congress during the 2016 TSCA amendments and will need guidance on how EPA’s regulatory approach affects U.S. competitiveness.

Kennedy stressed that inconsistent implementation of chemical policies across administrations has left companies struggling to navigate shifting regulatory landscapes. He underscored the importance of the EPA clearly outlining what data manufacturers must submit for new chemical evaluations, emphasizing that certainty, not necessarily speed, will be critical for U.S. companies operating under the new chemicals program under TSCA.

Kennedy also drew comparisons to the European Union’s REACH regulation, which, while detailed and time-intensive, is valued for its predictability.  Suggestions included reviving the Sustainable Futures Program to help manufacturers assess chemicals in advance, and implementing a “no order SNUR” policy that would apply consistent restrictions to all manufacturers of a given substance.

ACC President Chris Jahn echoed Kennedy’s points, noting that some companies have shifted production to the European Union, which offers more predictability than the U.S. system.

Republicans Start Drafting Budget Reconciliation Bill

House and Senate Republicans passed their “budget blueprints” for reconciliation last week, and will now begin drafting the details of what will be in their “big, beautiful bill” that will be the vehicle of much of President Trump’s top policy priorities, including extending his 2017 tax cuts, border security, and expanding fossil fuel energy while rolling back many of Biden’s IRA and IIJA climate and clean energy tax credits.

With razor-thin majorities, the process of negotiating a single, must-pass package will be complicated.  Growing fissures are emerging between the House and Senate, threatening to slow the GOP’s momentum in advancing the legislation. House and Senate GOP leaders are eager to pass the bill quickly, so there is less time for division and delay to bog down the measure. House Speaker Mike Johnson (R-LA), Majority Leader John Thune (D-SD), Senate Budget Chair Lindsey Graham (R-SC), and House Budget Chair Jodey Arrington (R-TX) are calling for the reconciliation bill to be sent to President Trump by Memorial Day (May 29).

While House Republicans want the Senate to adopt their budget framework to initiate the reconciliation process, Senate GOP leaders have criticized the House’s proposal as inadequate and signaled plans to craft their approach, particularly regarding the scale and location of spending cuts. A point of contention is the House’s call for $880 billion in savings from the Energy and Commerce Committee, which would likely require cuts to Medicaid. This has drawn bipartisan concern, with several Senate Republicans, including Sens. Josh Hawley (R-MO) and Thom Tillis (R-NC), opposing any changes that would reduce benefits or impose cost burdens on states.  House leaders, meanwhile, are defending the budget as a realistic effort to manage growth in federal healthcare spending without cutting benefits.

Senate Republicans also want to include a debt limit increase in the final package, a shift from previous resistance, signaling modest progress in negotiations. However, internal GOP divisions persist, including over whether to use accounting strategies that make tax cut extensions appear deficit-neutral.

A group of four US Senate Republicans—Sens. Lisa Murkowski (R-AK), John Curtis (R-UT), Thom Tillis (R-NC), and Jerry Moran (R-KS)—cautioned against a complete repeal of energy tax credits enacted under the 2022 IRA, warning that doing so could disrupt energy markets and undermine U.S. leadership in the global energy sector. In a letter to Senate Majority Leader John Thune (R-SD), they emphasized the importance of preserving credits that spur domestic manufacturing, reduce utility costs—especially in rural areas—and provide certainty for businesses that have already invested under the current tax framework. Their opposition carries weight, as four votes could be enough to block a budget reconciliation package if they withhold support. Their message aligns with concerns raised by 21 House Republicans earlier this year and adds complexity to Republican efforts to pass a reconciliation bill focused on eliminating tax cuts for clean energy programs that are often times benefitting red states.

Trump Signs Order to Block State climate Laws Targeting Fossil Fuel Industry  

President Donald Trump issued an executive order aimed at invalidating state-level climate policies that restrict the use of fossil fuels or impose penalties on energy companies for their role in climate change. The order directs the U.S. Attorney General to identify and take action against state laws that promote environmental, social, and governance (ESG) initiatives, climate regulations, and environmental justice goals. This directive marks another step in the administration’s broader agenda to boost domestic energy production and dismantle regulations that, in its view, threaten American energy dominance and economic security.

The order specifically targets policies in states such as New York, Vermont, and California, including carbon pricing laws, cap-and-trade programs, and climate-related litigation against fossil fuel companies. The American Petroleum Institute praised the order, applauding the federal government for challenging what it called unconstitutional and punitive actions by states against oil and gas producers.

Executive Order Boosts Port Infrastructure and Shipbuilding 

President Donald Trump signed an executive order on April 14, 2025, launching a wide-ranging initiative to strengthen the U.S. maritime industry and reduce reliance on foreign, particularly Chinese, shipbuilding. The order mandates the development of a “Maritime Action Plan” that will focus on upgrading port infrastructure, expanding shipbuilding capacity, and increasing workforce training for mariners. Federal agencies are directed to submit a comprehensive plan within 210 days, following legislative and financial assessments.

Shipping industry groups have expressed concerns about the feasibility and potential economic disruption of the proposed measures, citing the lack of sufficient domestic shipbuilding capacity. Additionally, maritime service fees of up to $1.5 million could negatively impact U.S. port operations and international trade flows.

Senate Republicans Introduce Bill to Eliminate Judicial Review Under NEPA

Senators Bill Cassidy (R-LA), Jim Risch (R-ID), and Mike Crapo (R-ID), introduced the Revising and Enhancing Project Authorizations Impacted by Review (REPAIR) Act, a bill that would sharply curbing judicial review of infrastructure and energy projects under the National Environmental Policy Act (NEPA) and the Administrative Procedure Act (APA). The bill would limit legal challenges to environmental statutes specific to each project and impose a 120-day statute of limitations for such lawsuits. The bill also raises the legal threshold for plaintiffs to establish standing, requiring proof of direct and tangible harm, and prohibits courts from vacating or enjoining a project unless it poses an imminent and substantial threat to human health or the environment, with no other legal remedy available.

Unlike previous bipartisan proposals that included broader reforms to expedite permitting, the Cassidy bill narrowly targets judicial review, seeking to prevent what its sponsors describe as “frivolous lawsuits” brought by environmental activists to delay or block approved projects. The legislation would also establish a 120-day mediation process overseen by the Federal Permitting Improvement Steering Council if a project is enjoined, remanded, or vacated by the courts.

Supporters of the REPAIR Act—including the U.S. Chamber of Commerce, the American Petroleum Institute, and other industry-aligned organizations—argue that the legislation would streamline the permitting process, enhance energy infrastructure development, and support President Trump’s domestic energy agenda.

EPW Advances EPA Nominations

The Senate Environment and Public Works Committee advanced three nominations, including one for EPA general counsel.  The committee, by a party-line vote of 10-9, approved the nominations of Sean Donahue to lead the agency’s legal team and Brian Nesvik to be the director of the U.S. Fish and Wildlife Service. Jessica Kramer, nominated to lead the EPA’s water office, received bipartisan support in a 15-4 vote.

Chemical Industry Seeks Mass Exemptions from EPA Toxic Air Rules 

Industry groups representing hundreds of chemical and petrochemical manufacturers are requesting broad exemptions from EPA rules that limit emissions of hazardous air pollutants such as mercury, arsenic, and benzene. The American Chemistry Council and the American Fuel & Petrochemical Manufacturers submitted a joint letter to the EPA arguing that the current regulations are based on flawed risk assessments and impose unmanageable costs and timelines. The Vinyl Institute has submitted a letter to the EPA supporting applications from PVC resin facilities which requested the exemptions. The request aligns with a Trump administration policy that invites companies to apply for two-year presidential exemptions under the Clean Air Act, utilizing a new EPA-managed portal designed to streamline exemption requests.

The requested exemptions would apply to nine EPA rules issued under the Biden administration, including stringent limits on mercury and ethylene oxide emissions. Industry groups claim the Biden-era rule on stationary source air pollution could cost more than $50 billion—far exceeding the EPA’s original estimate of $1.8 billion.

The White House has not yet decided whether to grant the exemptions, but confirmed that President Donald Trump supports measures to reduce regulatory burdens on U.S. industries in the name of energy independence and national security. The chemical industry expressed appreciation for the administration’s willingness to reconsider what it views as unworkable regulatory standards and committed to collaborating with the EPA to develop alternative, science-based policies.