[00:00:00] Speaker 00:
case number 25-5122 Ed Al.

[00:00:03] Speaker 00:
Climate United Fund Ed Al versus Citibank NA, Environmental Protection Agency, and Liam Zeldin in his official capacity as Administrator, United States Environmental Protection Agency at balance.

[00:00:16] Speaker 00:
Mr. Roth for the EPA, Mr. Allen for Citibank NA, Mr. Unikowsky for the private grantees, and Ms.

[00:00:23] Speaker 00:
Kim for the State Bank.

[00:00:26] Speaker 11:
Good morning, Council.

[00:00:27] Speaker 11:
Mr. Roth, please proceed when you're ready.

[00:00:30] Speaker 05:
basic court and Roth on behalf of the government.

[00:00:33] Speaker 05:
Your honors, the district court here enjoined termination of plaintiff's grants.

[00:00:39] Speaker 05:
Question on appeal is whether that was proper.

[00:00:42] Speaker 05:
It was not.

[00:00:43] Speaker 05:
Plaintiff's APA claims were precluded by the Tucker Act and what plaintiffs call their separation of powers claims fail on the merits and couldn't justify this injunction anyway.

[00:00:54] Speaker 05:
Now, after NIH in California, plaintiffs don't really want to talk about the termination of their grants.

[00:01:00] Speaker 05:
Instead, they want to talk about who owns the funds in the Citibank accounts.

[00:01:05] Speaker 05:
That is jumping ahead.

[00:01:07] Speaker 05:
Due to challenge the termination of their grants, that was the final agency action they sought to set aside.

[00:01:13] Speaker 05:
The district court enjoined the termination and revived the contractual relationship between the EPA and the grantees.

[00:01:22] Speaker 05:
That's the only issue that is before the court right now.

[00:01:25] Speaker 05:
If plaintiffs want to argue that regardless of the termination of their grants,

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They get to keep the money in the Citibank accounts.

[00:01:34] Speaker 05:
I think that's an utterly implausible position, but it's not the issue that was decided below.

[00:01:39] Speaker 05:
And it's not the issue that is teed up for this court to resolve.

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The only question here is whether the district court erred by rejoining the terminations and reinstating the grants.

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As to that, we think the district court clearly did err.

[00:01:52] Speaker 05:
And I'd like to walk through each of the claims that plaintiffs have pressed to explain why each of them is either jurisdictionally flawed or legally flawed or factually flawed.

[00:02:03] Speaker 05:
First, the district court's principal basis for its injunction was its conclusion that the terminations were contrary to the terms and conditions of

[00:02:13] Speaker 05:
The grant awards include a termination clause, and the district court said EPA hadn't shown that the conditions for termination were satisfied.

[00:02:23] Speaker 05:
That is literally a breach of contract claim.

[00:02:26] Speaker 05:
It's an argument that the EPA took action that was inconsistent with the terms of the grant.

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And after NIH, I don't even think plaintiffs are contesting that that version of their claim is precluded by the federal.

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Mr. Court also relied on the regulations.

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The regulations say that EPA can only terminate consistent with the terms and conditions.

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This court addressed that issue in Ingersoll-Rand and said that too is precluded.

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And at the panel stage, even the dissent agreed that that claim was likely precluded by the court.

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The third claim and the third variation on the claim is arbitrary and capricious claim.

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In other words,

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Whether this was consistent with the grant terms or not, EPA didn't do a good enough job explaining why it had done what it did.

[00:03:16] Speaker 05:
That is the claim that was pressed in NIH in California, where the Supreme Court said that it was likely precluded by the Tucker Act, essentially because the APA does not expand the substantive rights or remedies

[00:03:32] Speaker 05:
that are available to a contracting party beyond what the terms and conditions of the contract provide.

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If federal contract law treats a termination as a breach, then the party can sue for that breach in the court of federal claims and recover damages.

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If not, if the federal contract law does not treat the termination as a breach of the contract,

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party cannot use the APA to get broader relief in district court.

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And this court has said that going back even before Megapulse to cases like Richardson almost 50 years ago, more than 50 years ago.

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The final claim that the plaintiff's press and the district court adopted was the idea that the terminations are inconsistent with the separation of powers or the inflation reduction act because they amounted to a dismantling of the statutory program

[00:04:23] Speaker 05:
based on a policy disagreement with Congress.

[00:04:27] Speaker 15:
Mr. Rock, didn't they also raise a claim that EPA violated the Inflation Reduction Act when it terminated the grants?

[00:04:38] Speaker 05:
Yeah, so what they call the separation of powers claim, we think of as a statutory claim that EPA acted contrary to the Inflation Reduction Act.

[00:04:46] Speaker 05:
So that's what I've gotten to that.

[00:04:47] Speaker 15:
And bracketing for now, Title VI, Section

[00:04:51] Speaker 15:
60,002 of the OBBA.

[00:04:55] Speaker 15:
I take it you don't dispute that the Inflation Reduction Act made a mandatory appropriation for the greenhouse gas reduction.

[00:05:04] Speaker 05:
Well, we haven't really argued that, but I don't think the text of the Inflation Reduction Act did make it mandatory.

[00:05:11] Speaker 05:
The text actually just made the money available for grants.

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There are certain appropriations that say shall, this one does not.

[00:05:17] Speaker 05:
Regardless, our point is EPA did make the grants consistent with the statute and nothing in the statute, let alone the constitution, prohibits terminating the grants later.

[00:05:27] Speaker 15:
You've never argued that they could have decided not to make the grants.

[00:05:30] Speaker 15:
I can't believe you conceded in writing that these are mandatory.

[00:05:34] Speaker 05:
I don't recall conceding it, but we have impressed it because again, EPA didn't do it.

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So we think that that's kind of that ship is sailed.

[00:05:42] Speaker 05:
EPA made the grants consistent with the statute.

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And the question is, can they terminate the grants for the reasons that they did?

[00:05:49] Speaker 15:
Did you have, I don't think you've given authority.

[00:05:52] Speaker 15:
I think the default rule is that an appropriation is mandatory.

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And I don't think you've pointed to anything that would

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create an exception to that for this appropriate?

[00:06:05] Speaker 05:
Well, again, we haven't really argued the point.

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So I think that came up in the Global Health Council USAID case where the issue was an alleged impoundment.

[00:06:15] Speaker 05:
And so that really got into the question of, all right, what language is mandatory?

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What language is not?

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Again, here, EPA made the grants at the time they were supposed to make the grants consistent with the statute.

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And so the question that was presented here in this case is,

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Is there a violation of the statute or, as plaintiffs put it, the separation of powers by later terminating those grants?

[00:06:38] Speaker 05:
And we have sort of two main responses to that.

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The first is, even if one thinks that would violate something, the remedy is not reinstating these grants to these plaintiffs on these terms.

[00:06:51] Speaker 05:
At most, the remedy for that type of claim, as in global health counsel,

[00:06:57] Speaker 05:
would have been something like, you got to restore the program, consistent with the discretion that you have under the statute.

[00:07:05] Speaker 05:
It would not support the injunction the district court entered, which is again, reinstating grants as they existed previously.

[00:07:12] Speaker 08:
Mr. Roth, after the Raquel Act, the act that repealed section 134 and any unobligated funds, could the government

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issue new grants?

[00:07:25] Speaker 08:
Like does the government, does EPA have any statutory authority to reissue the grants?

[00:07:32] Speaker 08:
And since the preliminary injunction is forward looking, I mean, how does the repeal act affect this discussion?

[00:07:40] Speaker 05:
Yeah, so I do think it affects it going forward.

[00:07:43] Speaker 05:
So the point I was making was at the time of the injunction,

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district court aired by granting relief broader than would have been necessary for the separation of power, so-called separation of powers violation.

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Again, I'll address on the merits as well, but just for that reason alone, it was wrong.

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I think at this point, EPA could not restore the program because the statute has been repealed.

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So I think a going forward injunction would be inequitable for that reason.

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But at the time,

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that was an option that was on the table.

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And actually EPA made clear when it terminated the grants, we intend to re-obligate the money.

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And I know there's a dispute about under appropriations law, what exactly could they have done with the money?

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How close would the replacement grants have to have been to the original grants to satisfy appropriations law?

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But everyone agrees, I think, that there was some way it could be done.

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Maybe narrow, but there was a way to re-obligate the money and restore the program.

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and that was what EPA said it was going to do.

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And so to the extent the district court didn't believe that that was what EPA was going to do, the appropriate remedy would have been to order it to do it.

[00:08:53] Speaker 15:
I don't take you to have made a clearly erroneous claim on appeal.

[00:08:59] Speaker 15:
You don't mention clearly erroneous except in narrating, I think in quoting something in the panel opinion, and I take that to be

[00:09:10] Speaker 15:
a forfeiture of the point, and the district court made a finding that the government had no intention to re-obligate the funds.

[00:09:22] Speaker 05:
I think what we said about that was that there was no support in the record for that proposition, which to me is clearly erroneous.

[00:09:30] Speaker 05:
There's no support in the record.

[00:09:31] Speaker 15:
And did not develop any argument, because there is support in the record that the district court narrated.

[00:09:36] Speaker 05:
Your Honor, respectfully, I don't think there is.

[00:09:39] Speaker 05:
The story is entirely consistent.

[00:09:43] Speaker 05:
It started with the gold bars video came out in December of 2024.

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After that, the EPA administrator made clear even before he was confirmed at his confirmation hearing that this was a priority for him to figure out what had happened with these so-called gold bars and to address it and to restore accountability to the program.

[00:10:04] Speaker 05:
EPA came in in January

[00:10:06] Speaker 05:
began to investigate what had happened discovered the amendments to the contracts and the transactions that had occurred between the time of the election and the inauguration announced that they were terminating the grants.

[00:10:19] Speaker 05:
for that reason, and that they were intended to re-obligate them in a way that was consistent with proper oversight over the money.

[00:10:28] Speaker 05:
So I think everything in the record is entirely consistent with the account we have given, which is that these terminations were based on the EPA's very serious concerns with how the grants had been structured.

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It was not any type of rejection of what Congress had at that point ordered.

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And EPA was committed to following through on the program, consistent with the congressional directive, but not using these instruments.

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These instruments they viewed as fundamentally flawed because they deprived the EPA of the ability to do proper oversight of the money.

[00:11:08] Speaker 13:
Yet when you.

[00:11:12] Speaker 03:
I'm confused.

[00:11:15] Speaker 03:
The repeal

[00:11:17] Speaker 03:
of the Inflation Reduction Act provision at issue happened before the panel issued its opinion.

[00:11:27] Speaker 03:
And the government filed a 28-J letter as that repeal was about to happen.

[00:11:37] Speaker 03:
But it did not file any subsequent 28-J letter or take position before the panel

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that the repeal of the Inflation Reduction Act somehow changed the legal posture of this case or prevented the government from re-obligating the funds.

[00:12:01] Speaker 03:
Am I misstating the record?

[00:12:03] Speaker 05:
Your Honor, I don't remember exactly what we said in the 28-J letter.

[00:12:06] Speaker 05:
I know we advised the court of the statutory development, and the court didn't ask for supplemental briefing on the impact of statutory development.

[00:12:15] Speaker 05:
The court did address it in the opinion.

[00:12:17] Speaker 05:
The court said it was not moot, because if the grants had been improperly terminated, that predated the time of the repeal, and therefore those funds wouldn't be rescinded.

[00:12:30] Speaker 05:
That's what the panel said.

[00:12:31] Speaker 03:
And I don't recall you saying in your opening brief that at this point, the funds cannot be re-obligated.

[00:12:42] Speaker 03:
In fact, you said you teed up the issue by saying in your statement of issues, I think it's at page four, that the issues presented are whether the injunction can be justified on the theory that EPA's decision

[00:13:01] Speaker 03:
To terminate the grant agreements and re-obligate the funds violates the Constitution or constitutes ultra various action.

[00:13:10] Speaker 03:
And I don't see anywhere in your brief where you say, well, we can no longer re-obligate the funds.

[00:13:17] Speaker 03:
I didn't see that until your reply brief at page 24 and have mentioned in past.

[00:13:26] Speaker 05:
So your honor, we're focused on the injunction at the time it was issued by the district court.

[00:13:31] Speaker 05:
And at the time it was issued by the district court, the injunction was flawed because the APA claims in our view were precluded and because the separation of powers claims fail on the merits and we say wouldn't have justified this injunction anyway.

[00:13:46] Speaker 05:
The question I got was, okay, well, if this court were to vacate the injunction and send it back,

[00:13:54] Speaker 05:
Could the plaintiffs, this is how I understood the question, could the plaintiffs ask for a different injunction, one that would say EPA needs to re-obligate the money?

[00:14:02] Speaker 05:
And I think at that point, they would not be able to do that because of the intervening developments in the statute.

[00:14:08] Speaker 05:
But at the time the district court entered the injunction, the error was different.

[00:14:13] Speaker 11:
So is your view then that if we assume the district court got everything exactly right,

[00:14:21] Speaker 11:
and we were otherwise going to affirm the district court, then the repeal comes along.

[00:14:26] Speaker 11:
And is your view that the repeal just completely changed the universe?

[00:14:29] Speaker 11:
And therefore, even if you were otherwise inclined to affirm what the district court did, that's no longer tenable in light of the repeal.

[00:14:34] Speaker 11:
And the only conceivable result as a consequence of repeal is there has to be a vacated because there can't be a likelihood of success on the merits in light of the repeal.

[00:14:44] Speaker 11:
Is that your view?

[00:14:45] Speaker 05:
I don't think so.

[00:14:46] Speaker 05:
You don't you don't think I'm not sure that's what we're saying.

[00:14:48] Speaker 05:
I think again, it's because there's different claims.

[00:14:50] Speaker 05:
So to the extent they're saying, you know, to the extent their role they were relying on an injunction relied on, you know, violation of the terms of the contract or the regs or the APA.

[00:15:00] Speaker 05:
Right.

[00:15:01] Speaker 05:
And the remedy for that, assume the court says yes, the proper remedy for that was to reinstate the grants as they stood at the time that they were terminated prior to the repeal.

[00:15:13] Speaker 05:
then I guess the court could affirm that.

[00:15:15] Speaker 05:
Now, could EPA on remands terminate them anew based on the statutory developments?

[00:15:20] Speaker 05:
Maybe, and that would create a new controversy.

[00:15:23] Speaker 05:
But I think the repeal really goes to the separation of powers claim only.

[00:15:28] Speaker 11:
Okay, so that claim then is your view as to that claim that, yeah, put aside the other ones for now, but as to the separation of powers claim, is your view that

[00:15:38] Speaker 11:
the repeal changes the universe.

[00:15:40] Speaker 11:
So in light of the repeal, there can't be a likelihood of success on the merits.

[00:15:43] Speaker 05:
I think it changes it in the sense that the only remedy that would be appropriate for a separation of powers violation, again, if that's the claim we're looking at, the proper remedy for that would no longer be equitable in light of the repeal of the statute.

[00:16:01] Speaker 05:
because the proper remedy would be, you got to restore the program.

[00:16:04] Speaker 05:
You know, you can't dismantle, this is the argument, you can't dismantle a congressionally created program.

[00:16:08] Speaker 05:
All right, so the remedy for that is restore it, but EPA can't restore it because the statute is broken.

[00:16:13] Speaker 05:
So I think that part of the case- But it only goes to the remedy.

[00:16:15] Speaker 11:
It doesn't go to whether there's a violation to begin with, the repeal.

[00:16:18] Speaker 05:
I don't think it goes to whether there was a violation at the time, because that predates the repeal.

[00:16:23] Speaker 08:
Mr. Roth, doesn't the repeal in part go to the merits because the plaintiffs claim

[00:16:30] Speaker 08:
its so-called separation of powers claim is that that claim is not related to the contract terminations.

[00:16:38] Speaker 08:
It's contract terminations plus the alleged intention of the government not to keep funding the program.

[00:16:46] Speaker 08:
So the separation of powers argument turns very much on what the statute requires.

[00:16:52] Speaker 08:
Does it require the government to fund this greenhouse gas program?

[00:16:58] Speaker 08:
So the repeal

[00:17:00] Speaker 08:
seems to essentially affect that merits part of their argument.

[00:17:06] Speaker 08:
I mean, it goes to the remedy, of course, but preliminary injunctions are forward looking.

[00:17:12] Speaker 08:
This isn't retroactive relief for a violation in the past.

[00:17:15] Speaker 08:
So likelihood of success has to turn in part on what the law requires today.

[00:17:22] Speaker 05:
So your honor, look, it's a very peculiar claim to me at the outset because the claim was EPA says it's committed to the statute.

[00:17:30] Speaker 05:
It hasn't said, as in Aitken County, right, where the agency said, we're not doing this, we're not doing what Congress said.

[00:17:37] Speaker 05:
Everything EPA said was consistent with the statute, yet we think that really, EPA wasn't committed to the statute.

[00:17:44] Speaker 05:
And then on top of that, now Congress has repealed the statute.

[00:17:46] Speaker 05:
So it was a very strange claim to begin with.

[00:17:48] Speaker 05:
I think it's become an even more sort of twisted claim because this court would be in the position of, I guess, vindicating Congress's goals and intentions by reinstating a program that Congress has repealed.

[00:18:02] Speaker 08:
Well, their argument turns on the fact that EPA was shutting down the program.

[00:18:06] Speaker 08:
And in the interim, Congress has shut down the program.

[00:18:10] Speaker 08:
Like definitively, it's repealed Section 134.

[00:18:13] Speaker 05:
So I don't disagree, Your Honor.

[00:18:18] Speaker 11:
I just think it was also wrong to begin with, because it's a different thing saying you don't disagree and you actually join issue.

[00:18:24] Speaker 11:
I mean, is the government taking the position that in light of the repeal, the merits, the merits are done as to the separation of powers claim, not that it goes to what the relief would be.

[00:18:35] Speaker 11:
But is the government taking the position that

[00:18:38] Speaker 11:
Because I didn't see that in their briefing.

[00:18:40] Speaker 05:
I think we played that into the remedy side of the analysis.

[00:18:44] Speaker 05:
I mean, I think they bleed together.

[00:18:46] Speaker 05:
So I think there are different ways of looking at it.

[00:18:49] Speaker 05:
But we certainly said that in light of the repeal, this remedy or any remedy wouldn't really make sense.

[00:18:58] Speaker 05:
If the goal of this claim is to vindicate what Congress wanted, Congress has now told us they don't want this program.

[00:19:07] Speaker 03:
Help me understand something.

[00:19:09] Speaker 03:
Let's suppose the executive hadn't taken any actions at all, that the money had been obligated sitting in the city bank accounts.

[00:19:24] Speaker 03:
And then what happens is Congress repeals the inflation reduction.

[00:19:32] Speaker 03:
What would happen to the money in the city bank accounts at that point?

[00:19:37] Speaker 05:
So I don't think anything would have happened automatically, but EPA might might well at that point have terminated the grants, based on the statutory.

[00:19:49] Speaker 09:
Council, I'm sorry.

[00:19:50] Speaker 09:
I thought the repeal was of unobligated funds, but the funds at issue here already were obligated.

[00:19:55] Speaker 05:
Right.

[00:19:56] Speaker 05:
So there were two parts.

[00:19:57] Speaker 05:
There was a repeal of the statute and there was a rescission of the unobligated funds.

[00:20:02] Speaker 05:
And so that's why I was answering Judge Wilkins.

[00:20:05] Speaker 05:
The statute would not have automatically done anything to obligated funds.

[00:20:10] Speaker 05:
They would have remained obligated absent agency action.

[00:20:13] Speaker 05:
But it's possible that under those circumstances, EPA would have said, we're terminating the program, we're terminating the grants because Congress has repealed the statute.

[00:20:23] Speaker 05:
And at that point, we would be in a similar position to what we're in now, which is the grants have been terminated, or at least our position is they've been terminated.

[00:20:29] Speaker 05:
And to the extent there's any remaining dispute, it goes to what happens to the money post termination.

[00:20:36] Speaker 05:
which is a dispute we're willing to have with the other side as part of the closeout process and disputes over that can be resolved in the court of federal claims as they always are in disputes over closeout.

[00:20:48] Speaker 15:
Let me just ask one more question that relates to the point you just made.

[00:20:52] Speaker 15:
So the statute does nothing to the obligated funds, the funds at issue in this case.

[00:21:00] Speaker 15:
Let's imagine that EPA hadn't taken the action it took in this case

[00:21:05] Speaker 15:
and then it decides in light of that decision by Congress only to rescind the unobligated funds, EPA says we're gonna leave the obligated funds in place.

[00:21:23] Speaker 15:
What would govern those funds?

[00:21:25] Speaker 15:
Presumably they would be governed by the terms of the agreements when they were made, right?

[00:21:31] Speaker 05:
The contract would still be there.

[00:21:33] Speaker 05:
It would be a little bit strange because the contract talks about how we're going to implement the statutory goals.

[00:21:39] Speaker 05:
Statutory goals are no longer there.

[00:21:40] Speaker 05:
So it's a bit awkward.

[00:21:42] Speaker 15:
Statutory goals were there.

[00:21:43] Speaker 15:
Were there, yes.

[00:21:44] Speaker 15:
And the legislation, as Judge Rao has pointed out, is prospective.

[00:21:48] Speaker 15:
So as we typically look at statutes under Landgraf and Varelas and other cases, we would assume that that contract that was made would be governed by

[00:22:02] Speaker 15:
the statute when it was made and as expressed and implemented through the terms of the contract, no?

[00:22:10] Speaker 05:
That may be right.

[00:22:12] Speaker 15:
Is there anything you can identify that's wrong about that?

[00:22:15] Speaker 15:
I assume EPA would have a strong interest in saying exactly because they wouldn't want orphaned money.

[00:22:23] Speaker 05:
It's hypothetical so I can't, it's hard for me to know.

[00:22:26] Speaker 05:
There is an analogy.

[00:22:28] Speaker 05:
I'm happy to answer it as a hypothetical.

[00:22:30] Speaker 05:
There was a third part of the greenhouse gas reduction fund, the solar program.

[00:22:36] Speaker 05:
And as we pointed out at the time of these terminations EPA did not terminate any of the grants in the solar program precisely because those grants did not suffer from the defects that led to let EPA to terminate these other grants.

[00:22:51] Speaker 13:
Let's talk about those defects though because I'm a little concerned about what you're providing as adequate rationale.

[00:22:59] Speaker 13:
First, you start out with no real reason for freezing the funds for weeks.

[00:23:04] Speaker 13:
These parties don't even know what was going on.

[00:23:07] Speaker 13:
Then you move on to fraud, waste, and abuse without any true proof of any fraud, waste, or abuse.

[00:23:15] Speaker 13:
Then you move on to lack of oversight.

[00:23:18] Speaker 13:
So how are we to take that you actually had an adequate reason at the time of you de-obligating these funds?

[00:23:26] Speaker 05:
A couple of points on that, Your Honor.

[00:23:28] Speaker 05:
First of all,

[00:23:29] Speaker 05:
The fraud, waste and abuse language in the termination clause of the contract, whether we can prove that or not as a contracts dispute for the Court of Federal Claims and in contract disputes, it's not governed by the time of the action.

[00:23:44] Speaker 05:
We can get discovery and we can resolve it after discovery.

[00:23:48] Speaker 05:
It's not an APA posture.

[00:23:49] Speaker 05:
And so we don't we're not limited to the administrative record.

[00:23:52] Speaker 05:
Putting that aside, the point from the beginning was that the inability to do proper oversight of the funds creates an opportunity for waste and abuse that EPA cannot properly police.

[00:24:04] Speaker 05:
For example, several days before the inauguration, one of the grantees transferred close to $3 billion out of the Citibank accounts to a series of private equity funds.

[00:24:16] Speaker 05:
We have no idea what that money is doing right now.

[00:24:18] Speaker 05:
We have no ability to track it, to monitor it, to oversee it,

[00:24:22] Speaker 05:
That is the type of problem that arises from this contractual structure.

[00:24:27] Speaker 05:
And that's why EPA was concerned and terminated the grants.

[00:24:31] Speaker 05:
Now, whether a particular grantee will ultimately be found liable criminally or civilly for fraud or abuse is, we're not there yet.

[00:24:41] Speaker 14:
I thought you had long since withdrawn any assertion.

[00:24:45] Speaker 14:
You had any factual basis to believe that a single one of these grantees

[00:24:51] Speaker 14:
had engaged in fraud, waste, or abuse.

[00:24:53] Speaker 14:
Is that correct?

[00:24:55] Speaker 05:
We have been clear that the terminations- Is that correct, yes?

[00:24:58] Speaker 05:
That's right.

[00:24:59] Speaker 05:
The terminations were- Is that correct?

[00:25:01] Speaker 05:
The terminations were not based on assertions.

[00:25:04] Speaker 14:
Exactly, so this had nothing to do with why these were terminated.

[00:25:07] Speaker 05:
Correct.

[00:25:08] Speaker 05:
I'm not sure it has nothing to do with it.

[00:25:09] Speaker 14:
I mean, you want just everybody to go find something wrong after the fact, but it seems too late in the day, excuse me, it seems too late in the day after you charged criminality and then

[00:25:21] Speaker 14:
dropped that, you couldn't even get anyone to credit that.

[00:25:25] Speaker 14:
And then there were charges of fraud, waste and abuse.

[00:25:27] Speaker 14:
And then those have all been dropped.

[00:25:28] Speaker 14:
And then it's simply, excuse me, but it's simply as a basis for termination.

[00:25:33] Speaker 12:
Correct.

[00:25:34] Speaker 14:
Correct.

[00:25:35] Speaker 12:
Yes.

[00:25:35] Speaker 14:
I want to be clear.

[00:25:37] Speaker 14:
Admitting that something wasn't the basis for termination doesn't mean that if later in the world you discover something, but as of now.

[00:25:45] Speaker 05:
We are not resting on

[00:25:47] Speaker 05:
allegations as to particular grantees as a reason for terminating.

[00:25:51] Speaker 05:
We're resting on the structural oversight issues.

[00:25:53] Speaker 05:
There are investigations ongoing, so I don't want to suggest that there's no evidence of anything.

[00:25:58] Speaker 05:
It just wasn't what we relied on for terminating these grants.

[00:26:01] Speaker 15:
I'm puzzled in two ways.

[00:26:03] Speaker 15:
One, if the grant structure is the only concern, not the grantees, at least not any

[00:26:12] Speaker 15:
conduct that has been discovered at the time of the terminations might terminate.

[00:26:17] Speaker 15:
I mean, there's ample authority and opportunity and I think willingness by these grantees to collaborate with EPA to add safeguards.

[00:26:27] Speaker 15:
I mean, there's a real mismatch between the stated ground insofar as it's a concern that there aren't enough guardrails and the action

[00:26:39] Speaker 15:
that EPA took here.

[00:26:43] Speaker 05:
Your honor, I don't think it's a mismatch at all.

[00:26:44] Speaker 05:
I think the EPA concluded that the way these were structured was fundamentally inappropriate and unacceptable, and it required doing them over.

[00:26:54] Speaker 15:
And the part of it that's, I mean, one thing that I struggle with a little bit is it seems like the aspect that EPA is stating that it is concerned

[00:27:07] Speaker 15:
about is the capitalization.

[00:27:10] Speaker 15:
That Congress created something that's supposed to create these financial institutions to leverage private investment.

[00:27:18] Speaker 15:
And in order to do that, these non-depository financial institutions dedicated to developing energy infrastructure need to be capitalized.

[00:27:28] Speaker 15:
That's why, consistent with congressional intent, the money was dispersed early and in a lump sum.

[00:27:37] Speaker 15:
And it sounds like what EPA is saying is no, no, we think this should be a pay as you go contract because then we have control, we hold the reins.

[00:27:50] Speaker 15:
Is that, that's wrong.

[00:27:50] Speaker 15:
I can see you shaking your head.

[00:27:52] Speaker 05:
The problem is not capitalization as such.

[00:27:55] Speaker 05:
The problem is how it was implemented.

[00:27:57] Speaker 05:
So you could have capitalization where the grantee says, we want to do this project.

[00:28:04] Speaker 05:
It's going to be this much money.

[00:28:06] Speaker 05:
We need it in advance so that we can make it work.

[00:28:08] Speaker 15:
Well, what about you're creating a non-profit finance institution to do that, consistent with the notion that private actors sometimes do things better.

[00:28:22] Speaker 15:
So are you saying the problem is that the financial institution is not within the government?

[00:28:31] Speaker 05:
No, the problem is that once that gets off the ground, so EPA deposited the money in this account, and its ability after that point to exercise any kind of oversight or control of the funds is extremely limited, which is not necessarily true for any capitalization.

[00:28:49] Speaker 05:
You could have a capitalization where EPA needs to sign off on particular projects,

[00:28:53] Speaker 05:
You could have a capitalization where EPA needs to have a contractual relationship with subgrantees so that it has an ability to audit and monitor the subgrantees.

[00:29:01] Speaker 05:
There are many things that can be done consistent with capitalization that would allow EPA to see where the money is going, make sure it's being spent appropriately.

[00:29:09] Speaker 15:
And those things cannot be done with these current grantees as EPA thought about that?

[00:29:15] Speaker 05:
Maybe it could, but not under these instruments.

[00:29:17] Speaker 05:
And so the point was these instruments don't work.

[00:29:21] Speaker 15:
We need to start over these instruments precludes I didn't see anything about that in your brief or let alone in the account termination in the notices of termination.

[00:29:31] Speaker 05:
It's all about the rights that are given or in this case not given under the agreements that were that were created and implemented.

[00:29:40] Speaker 05:
So for example, EPA has the power under

[00:29:46] Speaker 05:
the grant agreements to or has the obligation under the grant agreements to sign off if a grantee seeks to withdraw more than 10% of the budget amount in a particular transaction.

[00:29:59] Speaker 05:
That is a huge amount.

[00:30:01] Speaker 05:
Why couldn't it be 1% or for any transaction, right?

[00:30:05] Speaker 05:
You could have terms that better preserve EPA's ability to say, well, I need more information about that project before I'm signing off on that.

[00:30:13] Speaker 05:
under this agreement, under this arrangement, EPA cannot do that.

[00:30:16] Speaker 05:
And that is what EPA determined is a problem, because it meant the money was in the Citibank accounts, and there's very, very limited ability to ensure that it gets used for its proper purposes.

[00:30:27] Speaker 15:
It's your position that those assurances could not be provided with the ongoing contracts.

[00:30:33] Speaker 05:
Well, I suppose we could have gone to them and said, we have no leverage, but would you like to agree to additional constraints?

[00:30:40] Speaker 05:
And maybe they would have said yes, and maybe they would have said no, but I don't think it was unreasonable under those circumstances to say, we're cutting this off right now, and then we can start over on fixing it.

[00:30:50] Speaker 05:
I mean, think of any business owner, new business owner comes into a business, CEO starts, looks through the contracts and finds a vendor agreement that he says, wow, this vendor agreement is completely one-sided,

[00:31:01] Speaker 05:
It gives us no rights to ensure that this relationship is appropriate.

[00:31:09] Speaker 05:
We're canceling it.

[00:31:10] Speaker 05:
And I think I can cancel it.

[00:31:12] Speaker 05:
But if it turns out to be a breach, I'll pay damages.

[00:31:15] Speaker 05:
But I can't live under this agreement.

[00:31:17] Speaker 05:
We'll figure out a new vendor agreement.

[00:31:19] Speaker 05:
It's not an unreasonable way to approach the situation.

[00:31:21] Speaker 14:
I think most businesses would go to the person and ask to renegotiate.

[00:31:27] Speaker 14:
I assume these contracts, they all look identical.

[00:31:29] Speaker 14:
I assume they were drafted by the government.

[00:31:32] Speaker 05:
I don't know, Your Honor, it predates the administration.

[00:31:36] Speaker 14:
They're all identical.

[00:31:37] Speaker 05:
They're all our grantees.

[00:31:39] Speaker 14:
Are you aware, you've been in the administration now for a while, that the administration allows grantees to write their own contracts?

[00:31:48] Speaker 05:
I think there are a lot of questions about how these contracts were put together.

[00:31:50] Speaker 14:
I'm asking about the fact that I think we can probably take additional notice.

[00:31:53] Speaker 14:
The government wrote these contracts.

[00:31:56] Speaker 14:
And the business owner that writes a contract and executes the contract

[00:32:01] Speaker 14:
And the other person is performing under it, is performing fully satisfactorily, no basis to believe that there's been any non-compliance, any questions about performance.

[00:32:15] Speaker 14:
Comes in and goes, oops, wish I hadn't written the contract that way.

[00:32:21] Speaker 14:
I'm freezing up the money I already gave you in your bank account.

[00:32:26] Speaker 14:
You think that's a rational way for a business to proceed?

[00:32:30] Speaker 05:
I think it absolutely was a rational way to proceed here because there was a change in leadership between those times.

[00:32:36] Speaker 14:
I'm asking if a business, I don't care who the leader, yeah I'll give you a change in leadership in a business.

[00:32:40] Speaker 05:
And the new leadership said this contract.

[00:32:41] Speaker 14:
What's your best case authority or statute regulation that that is a proper way of proceeding when assumed for answering this question the government drafted the contract.

[00:32:59] Speaker 05:
Your Honor, the terms, the general EPA terms and conditions that were in effect at the time of this contract gave EPA the right to terminate the contract based on its policies.

[00:33:07] Speaker 15:
There's much debate about that.

[00:33:08] Speaker 05:
They did not.

[00:33:09] Speaker 05:
We read it differently, Your Honor.

[00:33:10] Speaker 15:
They did not.

[00:33:11] Speaker 15:
The EPA had accepted the invitation to have the incoming standard terms, which said the only way you can terminate based on policy priorities is if that is included

[00:33:24] Speaker 15:
in the text of the contract itself.

[00:33:26] Speaker 15:
And everyone knows that that was not included.

[00:33:29] Speaker 15:
So there was an opt in rather than an opt out.

[00:33:32] Speaker 15:
And I just don't see how you can continue to so assert given that you're aware that EPA as a general matter had opted to take the new regulations as of July.

[00:33:45] Speaker 05:
Can I make two points in response, Your Honor?

[00:33:48] Speaker 05:
Number one, JA 518 is the provision of the contract

[00:33:53] Speaker 05:
that says the general terms and conditions are incorporated.

[00:33:56] Speaker 05:
Later in the contract, they say for termination, we're limiting ourselves to this, but it does not restrict that initial provision that says it's the general terms and conditions are incorporated and nothing herein is intended to change or modify this.

[00:34:12] Speaker 15:
And after time the contract was entered, the general terms and conditions did not allow that

[00:34:17] Speaker 05:
That that that respectfully determination for policy priorities.

[00:34:20] Speaker 05:
I don't think that's correct.

[00:34:21] Speaker 05:
As of July, July 30th, it didn't take effect till October.

[00:34:24] Speaker 15:
No, it took effect.

[00:34:25] Speaker 15:
It took effect generally throughout the government in October.

[00:34:28] Speaker 15:
But OMB said anybody who wants to take this on earlier have at it.

[00:34:34] Speaker 15:
And there's a there's a publication that federal judges are saying EPA raised his hand and said, we want to sign on to that.

[00:34:40] Speaker 15:
as of July, and you just haven't grappled with that in any way.

[00:34:45] Speaker 05:
My understanding is that the signing on was generally going to take effect in October.

[00:34:49] Speaker 15:
Generally for other agencies, but EPA said we're doing it at July 3rd.

[00:34:53] Speaker 05:
So let me make my second point, Your Honor, which is to the extent the court disagrees with our reading of the termination clause, the consequence is it's a breach of contract.

[00:35:02] Speaker 05:
And you can breach a contract and pay damages.

[00:35:04] Speaker 05:
And we're prepared to litigate that issue in the court of federal claims.

[00:35:08] Speaker 05:
We'll explain why we think the termination is appropriate.

[00:35:10] Speaker 05:
If we lose, we will pay damages.

[00:35:12] Speaker 15:
You were saying you didn't have any leverage and then you had an exchange with Judge Mallette and where she was questioning the basis for the freeze.

[00:35:19] Speaker 15:
But it just underscored for me why terminate where you could have frozen the funds and then turned to the grantees and said, look, we don't feel comfortable with this rolling out.

[00:35:33] Speaker 15:
Let's work out something.

[00:35:34] Speaker 15:
different, tried, not tried, considered?

[00:35:39] Speaker 05:
Your honor, I don't know why that would be any functionally any different.

[00:35:43] Speaker 15:
So the termination is- I have some questions about sort of the scope of relief.

[00:35:52] Speaker 15:
What effect do these notices of termination have?

[00:35:55] Speaker 15:
For example, if the court were to order that the funds and plaintiffs account at Citibank be unfrozen,

[00:36:06] Speaker 15:
but it didn't enjoin the notice of contract termination.

[00:36:08] Speaker 15:
What would happen next?

[00:36:12] Speaker 05:
Just make sure I understand the question, Your Honor.

[00:36:13] Speaker 05:
This court vacates the injunction that enjoins the terminations.

[00:36:19] Speaker 05:
Then the question becomes, what happens to the money, right?

[00:36:23] Speaker 05:
That is, I think, governed by the closeout procedures under the grant agreements.

[00:36:29] Speaker 05:
And as part of those closeout procedures, maybe plaintiffs will assert, we get to keep all of it.

[00:36:34] Speaker 05:
I mean, I think that,

[00:36:36] Speaker 05:
I'm not sure how they will be able to make that assertion after challenging determinations, because the whole premise of challenging determinations was, if you terminate, we're not going to get the money anymore.

[00:36:47] Speaker 05:
And for now, they've changed their tune because they recognize the difficulties.

[00:36:52] Speaker 14:
Also in the plain text of the closeout agreement.

[00:36:55] Speaker 14:
Plain text of the closeout agreement that if they check the required boxes, they retain the funds.

[00:37:01] Speaker 14:
for continued use consistent with the program.

[00:37:03] Speaker 14:
So they can make that argument?

[00:37:04] Speaker 14:
But that's the plain text of, I mean, it says it, they're in terms, and so.

[00:37:10] Speaker 05:
And the plain text of the termination clause is that we have to re-obligate the money if we terminate.

[00:37:14] Speaker 05:
So they can try to reconcile those two things as part of a closeout, and we can litigate it.

[00:37:19] Speaker 14:
Well, you re-obligate any money that's left.

[00:37:21] Speaker 14:
But if the contract says they end up keeping it, then there won't be anything left for you to re-obligate.

[00:37:26] Speaker 14:
It's a perfectly reconcilable reading of it.

[00:37:28] Speaker 05:
OK, so we can have that dispute.

[00:37:30] Speaker 05:
as part of the closeout process.

[00:37:31] Speaker 14:
But I mean, you were sort of dismissing how crazy it would be to think they get the money.

[00:37:34] Speaker 14:
I'm just pointing out that it's right there in the closeout.

[00:37:36] Speaker 05:
Again, you all wrote the contract.

[00:37:39] Speaker 05:
I think if they really thought that was correct, they would have been thrilled when we terminated the contract, because they would have kept keeping $20 billion with no strings attached to it.

[00:37:45] Speaker 05:
Instead, they sued the termination of the contract.

[00:37:47] Speaker 14:
Well, no, there are still strings under the closeout agreement.

[00:37:49] Speaker 14:
It has to be used for the statutory purposes.

[00:37:52] Speaker 14:
And I think they've explained themselves before that this was a program.

[00:37:55] Speaker 14:
They wanted to go forward.

[00:37:57] Speaker 14:
working with it in the program and working with EPA to the extent EPA wanted to work with them.

[00:38:03] Speaker 14:
Right.

[00:38:03] Speaker 05:
So EPA doesn't want to work with them anymore.

[00:38:05] Speaker 05:
That's why terminated the grants.

[00:38:07] Speaker 05:
And again, if there's a dispute over closeout, we can have that dispute after the terminations are effectuated.

[00:38:15] Speaker 05:
But it's not the question.

[00:38:16] Speaker 14:
Let me get to, at least for me, I guess.

[00:38:23] Speaker 14:
They assert title to these funds and their accounts.

[00:38:27] Speaker 14:
and the government disputes that status.

[00:38:32] Speaker 14:
But I haven't, I'm very confused on this record as to what the status of the money in their accounts is.

[00:38:39] Speaker 14:
Is it still until it's put in their accounts and then the idea under the statute is they then put it out for other investments.

[00:38:48] Speaker 14:
So is the government's position that it remains the government's money until it's put out

[00:38:56] Speaker 14:
Right money.

[00:38:58] Speaker 05:
Yeah, the best I can do your honor is, is, I think the money is held by Citibank in the names of the grantees.

[00:39:05] Speaker 05:
And it is subject to being used by the grantees consistent with the terms of the contract.

[00:39:10] Speaker 05:
And it is also subject to being

[00:39:15] Speaker 05:
the notice of exclusive control and other rights that EPA has to block or take back the money.

[00:39:21] Speaker 05:
So it's a pile of money that is in the bank account.

[00:39:24] Speaker 14:
Whose money is it when it's in the bank account?

[00:39:27] Speaker 05:
It's showing on city banks.

[00:39:29] Speaker 05:
Both parties have certain rights under the contract in the funds.

[00:39:33] Speaker 05:
So I don't know how to answer that.

[00:39:35] Speaker 03:
If you say it's held in the name of someone, doesn't that mean that it belongs to that someone?

[00:39:43] Speaker 05:
Well, I don't think it's quite that simple because there are restrictions on it.

[00:39:47] Speaker 05:
And so they can't just withdraw it and spend it on anything they want.

[00:39:52] Speaker 05:
And EPA is entitled to assert control of the funds under certain circumstances.

[00:39:57] Speaker 05:
So again, I think it's the contracts spell out the competing rights and obligations of the parties with respect to the money.

[00:40:04] Speaker 11:
Is it fair to say, I mean, you can have a thing that's sort of clear and unencumbered title, and then you can have encumbered title.

[00:40:10] Speaker 11:
I mean, it sounds to me like what you're saying is,

[00:40:12] Speaker 11:
They may have title, but it's not clear and unencumbered title because there are certain entitlements that DPA has with respect to the same race.

[00:40:19] Speaker 05:
So it's, I think it's certainly true that they don't have clear and unencumbered title.

[00:40:23] Speaker 05:
I don't really know exactly how to answer the title question or why it matters.

[00:40:29] Speaker 05:
I think the key question or key threshold question is, do we have a live contract?

[00:40:34] Speaker 05:
In which case the money is in that account and everyone agrees it's subject to these

[00:40:38] Speaker 05:
rights and obligations, or do we have a terminated contract, in which case we have to go through close out and figure out what happens next?

[00:40:45] Speaker 05:
And our position here is we're in the second bucket.

[00:40:48] Speaker 08:
You have to go ahead.

[00:40:50] Speaker 08:
I mean, the government cites Judge Posner's opinion in Ingrid Joliet will, which suggests that in this sort of circumstance, where money is held either by a grantee or third party, it remains the property of the United States until it is spent for the grant purposes.

[00:41:08] Speaker 08:
And the same reasoning is true under cases under 18 USC 641, which involves conversion of government money.

[00:41:16] Speaker 08:
You can be criminally liable for converting money that is held by a third party.

[00:41:22] Speaker 08:
So why do those, I mean, the government has cited those cases.

[00:41:26] Speaker 08:
So, and this circuit has favorably cited in Rejuliet Will and other contexts.

[00:41:31] Speaker 05:
I think what I'm trying to say is the question of exactly how to characterize the status of the money while the grant is operative is tricky in certain ways, but it also doesn't matter for what we're doing now.

[00:41:46] Speaker 05:
Because what we're doing now is terminating the grant.

[00:41:48] Speaker 14:
For some of us, it might matter, or at least potentially be relevant.

[00:41:52] Speaker 14:
And we said, as Judge Wilkins pointed out, this is money in their accounts.

[00:41:56] Speaker 14:
They are called the pledger under the agreement, and they

[00:42:02] Speaker 14:
grant the government a security interest.

[00:42:05] Speaker 14:
The government doesn't come in with it.

[00:42:06] Speaker 14:
They agree to grant the government a security interest, which government would need if it was already had a possessory interest.

[00:42:14] Speaker 14:
So what the government has been granted by these grantees, give me using the word twice, is a security interest, which suggests they have enough legal interest to be able to do that.

[00:42:26] Speaker 14:
They pay taxes.

[00:42:29] Speaker 14:
on the earnings on this account, which would be odd if it wasn't their income.

[00:42:37] Speaker 14:
The closeout agreement allows them if they go through the process and comply with all of its terms to keep these funds, which would be extraordinary if it wasn't theirs on a couple of reasons.

[00:42:53] Speaker 14:
One, it would just blame be extraordinary, but two,

[00:42:59] Speaker 14:
The executive branch has no legal authority by regulation or contract to give federal funds to private parties.

[00:43:07] Speaker 14:
Only Congress can authorize that.

[00:43:10] Speaker 14:
So Congress, on the assumption the government was asking appropriately, only Congress could have authorized allowing them to keep it.

[00:43:19] Speaker 14:
And that's certainly consistent with the vision under the IRA of how these things are to proceed.

[00:43:24] Speaker 14:
And so the reason, I'm sorry, the reason I'm putting all this in there

[00:43:27] Speaker 14:
We seem not so interested, but is if they've got some sort of substantial legal interest, probably a property interest in these funds, this starts to look exactly like Crowley, which involved this exact type of bank account in a third party in the name of the contractor.

[00:43:53] Speaker 14:
And then government agents coming in

[00:43:55] Speaker 14:
there they didn't freeze the whole thing, they just pulled out chunks of money.

[00:43:59] Speaker 14:
We had this exact same financial setup involving bank accounts and the third party in Crowley.

[00:44:07] Speaker 14:
And we treated the request for declaratory and injunctive relief prospectively against, there it wasn't a freezing, it was scooping out $37 million as something that could go forward, did not need to go through to the court of federal claims.

[00:44:26] Speaker 14:
Didn't we, in Crowley?

[00:44:28] Speaker 05:
Crowley held that it was not a contract, yeah.

[00:44:30] Speaker 14:
It was this exact same setup, a bank account just like this.

[00:44:33] Speaker 05:
Your Honor, my recollection of Crowley was that the court said it was really a tort claim, and it was being exercised by a non-party to the contract.

[00:44:43] Speaker 14:
It's still the executive branch.

[00:44:45] Speaker 14:
It's one big executive branch, right?

[00:44:47] Speaker 05:
Well, for certain purposes.

[00:44:49] Speaker 14:
Your Honor, the difference is- I'm sorry, not for present purposes?

[00:44:53] Speaker 14:
I just didn't hear what you said, I'm sorry.

[00:44:55] Speaker 05:
No, I said yes, for certain purposes, that's true.

[00:44:58] Speaker 14:
But not for this purpose.

[00:45:00] Speaker 05:
The EPA is the party to one of these contracts.

[00:45:02] Speaker 05:
Treasury is the party to others.

[00:45:05] Speaker 05:
I don't think if they sued the Department of Interior, it would be the same fact.

[00:45:10] Speaker 05:
It would be the same scenario.

[00:45:11] Speaker 05:
The scenario here is the EPA.

[00:45:13] Speaker 14:
Probably the Defense Department had said, hey, GSA,

[00:45:18] Speaker 14:
Like these contracts that we wrote, can you like audit that there they actually were actually doing audits and start scooping some of this money out for us that would have been a different answer.

[00:45:28] Speaker 05:
So, Your Honor, I think the key point and the key difference is that was not a termination of the contract and Crowley and it wasn't challenged to termination of the contract.

[00:45:36] Speaker 14:
It was definitely argued by the government that it was arguments about violating the contract.

[00:45:43] Speaker 14:
and contract, and the government's position was as it was here that there should be a contract claim in the court of federal claims.

[00:45:50] Speaker 05:
Correct?

[00:45:50] Speaker 05:
Correct?

[00:45:52] Speaker 05:
I don't remember, Your Honor.

[00:45:53] Speaker 05:
Of course you do.

[00:45:54] Speaker 14:
That's why the case was decided the way it was.

[00:45:57] Speaker 14:
You've read it, come on.

[00:45:58] Speaker 05:
I have read it.

[00:45:59] Speaker 05:
My recollection is what the court said.

[00:46:01] Speaker 14:
Yes, I just asked you what the government said in that position.

[00:46:04] Speaker 05:
The government lost that case.

[00:46:07] Speaker 05:
Here, there's a termination of a contract, which this court has said since Ingersoll Rand

[00:46:13] Speaker 05:
trying to undo the termination of the contract, that's a contract issue.

[00:46:17] Speaker 14:
Just asking Crowley, you had the same exact thing, which you did not have on Ingersoll.

[00:46:23] Speaker 14:
Exact same scenario, funds are already deposited in an account in the name of their contractor rather than a grantee.

[00:46:29] Speaker 14:
And the government is then taking money out, say freezing small portions of it would be the equivalent of what's going on here.

[00:46:38] Speaker 14:
And we set a request for prospective injunctive relief against that.

[00:46:43] Speaker 05:
And go forward and your honor, that's not what this injunction is.

[00:46:47] Speaker 05:
This injunction doesn't do that.

[00:46:48] Speaker 05:
It says you cannot terminate the contract.

[00:46:50] Speaker 14:
It also says it also required you to undo the freeze on the funds.

[00:46:55] Speaker 14:
I mean, there's two things happening here.

[00:46:57] Speaker 05:
The freeze, the suspension, which was Treasury telling Citibank not to disperse the funds, lasted for a week and it's been done for a year.

[00:47:06] Speaker 14:
termination that came in.

[00:47:08] Speaker 14:
I'm sorry, what's done for a year?

[00:47:10] Speaker 05:
They're still frozen at... No, Your Honor, they're frozen because of this court's injunction.

[00:47:15] Speaker 14:
Right, I'm sorry.

[00:47:16] Speaker 14:
I'm sorry, yes, to be clear.

[00:47:18] Speaker 14:
Sorry, I wasn't clear at all.

[00:47:20] Speaker 14:
Had the district court's injunction not come in place, the government had gone beyond freezing for a week and said keep them frozen until we tell otherwise.

[00:47:28] Speaker 05:
No, the termination

[00:47:30] Speaker 05:
The freeze, the request that... Suspension, whatever you want to call it.

[00:47:34] Speaker 05:
Yeah, the request that Citibank not disperse was while EPA was figuring out what to do.

[00:47:39] Speaker 05:
EPA then determined to terminate the contract.

[00:47:42] Speaker 05:
That replaced any prior directive or action.

[00:47:46] Speaker 14:
So you no longer believe you have a legal right to have a suspension or freezing of these funds?

[00:47:51] Speaker 05:
I think it's moved.

[00:47:52] Speaker 05:
I think that part is moved.

[00:47:54] Speaker 05:
To the extent there was a pre termination directive like that's not what this case is about anymore because that has not been in place for a year.

[00:48:02] Speaker 05:
And that's not what we're relying on.

[00:48:04] Speaker 05:
And that's not what we're objecting to.

[00:48:05] Speaker 05:
We're objecting to the injunction against the termination.

[00:48:08] Speaker 05:
The termination didn't freeze anything.

[00:48:10] Speaker 05:
The termination said the contract is over.

[00:48:13] Speaker 05:
Let's proceed with closeout.

[00:48:15] Speaker 05:
give us your report okay so and then what happens during close out they can go ahead and going forward and spend this money now under your view they can try that if that's what they want to do and i'm you know maybe we'll have to sue them maybe they'll have to sue us again there's lots of different ways this could play out after the termination takes effect but we're not there yet and i do think it's really important that we take this one step at a time i have a just a

[00:48:35] Speaker 15:
Small question going back to the exchange you had with Chief Judge Trinnavastan and Greg Millett about the Juliet Posner decision and whether Citibank is sort of in the position of a dispersing officer.

[00:48:49] Speaker 15:
And as I read those cases, Citibank is not a dispersing officer because the dispersing officer is a government officer.

[00:48:58] Speaker 15:
And this has already been sent out to a private party.

[00:49:02] Speaker 15:
And I understand that you, you know,

[00:49:07] Speaker 15:
the agency agreement, you characterize, and Citibank is for certain purposes, an agent of government, but you don't have any authority for treating a non, treating a private party as a dispersing officer for purposes, just at that point.

[00:49:22] Speaker 15:
Your Honor, this is a very unusual structure, and so I don't have- No, and my other question is, for your Tucker Act argument,

[00:49:31] Speaker 15:
Does the government need to have a contractually non-frivolous round for terminating the contract to make the plaintiff's relief sounding contract?

[00:49:44] Speaker 05:
No.

[00:49:45] Speaker 15:
It doesn't need to have a non-frivolous round.

[00:49:47] Speaker 15:
It can have a completely frivolous round.

[00:49:49] Speaker 05:
Because we can breach.

[00:49:51] Speaker 05:
We can terminate for no reason, and it would be a breach.

[00:49:55] Speaker 15:
You do take the position.

[00:49:56] Speaker 15:
I saw you adopted that from the panel opinion.

[00:50:00] Speaker 15:
The government may, at its option, engage in what you refer to as efficient breach.

[00:50:09] Speaker 05:
Like any other party can breach a contract and pay damages.

[00:50:12] Speaker 05:
Now there are some doctrines in the Court of Federal Claims and the Federal Circuit has adopted that limit

[00:50:18] Speaker 05:
that by essentially saying it's sort of akin to, you know, good faith and fair dealing type arguments.

[00:50:24] Speaker 05:
The panel opinion cited the, you know, you can't reach with impunity doctrine, but those are doctrines that treat certain terminations as breaches, even though they may be consistent with the literal terms.

[00:50:35] Speaker 15:
So let me ask you if, if putting aside the facts of this case, if there is a mandatory appropriation that says this money shall be spent, you know,

[00:50:46] Speaker 15:
during the coming year by X state for such and such a purpose.

[00:50:53] Speaker 15:
And the government spends it for that purpose and gives it to, you know, whatever functioning entities is doing the actual work.

[00:51:05] Speaker 15:
And then there's a change in administration and the new government says, you know, we have different policies.

[00:51:13] Speaker 15:
We're just going to,

[00:51:14] Speaker 15:
engage in efficient breach of that contract.

[00:51:18] Speaker 15:
And we're gonna have to pay some damages on that and it'll just be done.

[00:51:23] Speaker 15:
Lawful?

[00:51:25] Speaker 05:
I think from a contract and APA standpoint.

[00:51:27] Speaker 05:
From a statutory, I'm talking about from a statutory.

[00:51:29] Speaker 05:
So from a statutory, somebody could sue and say, you're not complying with the statute.

[00:51:35] Speaker 15:
Contrary to law.

[00:51:37] Speaker 05:
Like an impound, it would be an essentially an impoundment type claim.

[00:51:39] Speaker 05:
It would be an impoundment claim.

[00:51:40] Speaker 15:
And with that claim,

[00:51:43] Speaker 15:
That's the whole thing.

[00:51:44] Speaker 15:
Would that claim have to go to the Court of Claims under the Tucker?

[00:51:49] Speaker 05:
I don't think so.

[00:51:50] Speaker 05:
I think that claim would go to district court.

[00:51:52] Speaker 05:
But the remedy for that claim would not be reinstate the contracts you terminated to those particular grantees.

[00:51:58] Speaker 05:
They would have to go to the Court of Claims if they want relief.

[00:52:01] Speaker 05:
What would the relief be?

[00:52:02] Speaker 04:
It would be you have to spend the money.

[00:52:05] Speaker 04:
Why wouldn't the remedy be you can't effectuate this termination notice because this termination notice was contrary to the statute?

[00:52:12] Speaker 05:
Because it's not the specific termination that is allegedly violating the statute.

[00:52:16] Speaker 05:
It's the not spending the money.

[00:52:17] Speaker 05:
The agency does have it.

[00:52:20] Speaker 04:
You could think of these each and each termination is final agency action.

[00:52:24] Speaker 04:
If it violates the statute, the ordinary remedy is to set it aside.

[00:52:28] Speaker 04:
maybe the next day the government could do a termination that doesn't violate the statute.

[00:52:33] Speaker 04:
Or isn't it?

[00:52:34] Speaker 05:
And I don't want to lose sight of the fact that we don't think that the terminations here were contrary to the statute.

[00:52:40] Speaker 05:
Totally understood.

[00:52:40] Speaker 05:
By putting that aside, if not one particular termination that is a violation of the statute, on the hypothetical it would be the decision to terminate and not to use the money for the statutory purpose.

[00:52:54] Speaker 05:
Right.

[00:52:54] Speaker 15:
And that's where it seems like you're

[00:52:57] Speaker 15:
argument that the OBBA would not allow you to spend the money actually strengthens the plaintiff's position in this case that there is a violation of the appropriation because this is a 2022 appropriation.

[00:53:15] Speaker 15:
The Congress wants this program.

[00:53:17] Speaker 15:
The money is dispersed.

[00:53:19] Speaker 15:
The act reflecting the view of Congress, we're not going to take back money that's already been obligated, but we're going to take whatever

[00:53:27] Speaker 15:
hasn't, and you're saying we persist in wanting to take this money back, but we won't have any way then to spend it.

[00:53:40] Speaker 15:
Why is that not?

[00:53:41] Speaker 05:
I don't see how a subsequent legislative action could render what we did unconstitutional.

[00:53:47] Speaker 15:
I'm not saying unconstitutional.

[00:53:49] Speaker 15:
I'm saying contrary to the act.

[00:53:51] Speaker 15:
And I think it's very closely parallel to the constitutional argument.

[00:53:55] Speaker 15:
But just to simplify, let's say contrary

[00:53:58] Speaker 15:
to the act.

[00:53:59] Speaker 15:
And it isn't rendered unconstitutional, but I don't think it's rescued either by the OBBA, which doesn't address these funds.

[00:54:06] Speaker 15:
So put that aside and say, you do intend to re-obligate.

[00:54:13] Speaker 15:
If the district court is right, and you haven't challenged as arbitrary and clearly erroneous, it's binding that you didn't intend to.

[00:54:22] Speaker 15:
Plus,

[00:54:24] Speaker 15:
If it turns out that you have no legal authority under the replacement grant to give to anybody else, statutory violation, it seems to me you'd have to concede in that situation.

[00:54:38] Speaker 15:
Of course there's a statutory violation.

[00:54:40] Speaker 05:
No, I don't, Your Honor, because there's two relevant time periods.

[00:54:43] Speaker 05:
There's time period A, when the contracts are terminated and the intent is to re-obligate.

[00:54:48] Speaker 05:
That's perfectly consistent.

[00:54:49] Speaker 15:
The district court found no intent to re-obligate.

[00:54:52] Speaker 05:
And we 100% have argued very forcefully in our brief, but there was no basis in the record for that finding.

[00:54:58] Speaker 05:
We use the term no basis because it is that clear in the record that nothing EPA ever said suggested that they were not intended to comply with the statutory obligation.

[00:55:09] Speaker 09:
Council, if I could then point you to a few parts of this record.

[00:55:13] Speaker 09:
The president issued an executive order purporting to terminate the Green New Deal by directing all agencies to immediately pause the disbursement of funds appropriated through the Inflation Reduction Act.

[00:55:26] Speaker 09:
Then on February 12th, the EPA administrates

[00:55:28] Speaker 09:
EPA Administrator Zeldin publicly announced that, quote, the financial agent agreement with the bank needs to be instantly terminated and that the city bank must immediately return the funding and that EPA is not going to rest until it recovered the grant funds.

[00:55:42] Speaker 09:
Then on February 23rd, when describing the grant program, Zeldin stated that the entire scheme, in my opinion, is criminal.

[00:55:49] Speaker 09:
And then on March 4th, Zeldin announced the money is now frozen.

[00:55:53] Speaker 09:
What I mean clearly erroneous is a very high standard the district court found that the EPA seeks to dismantle these grant programs in their entirety as a policy matter.

[00:56:03] Speaker 09:
This evidence supports that, and even if you think it could be read differently or you would credit different evidence, other than this, it doesn't meet the clearly erroneous standard.

[00:56:12] Speaker 05:
Your honor it's clearly erroneous because everything that is zelda and the EPA said.

[00:56:17] Speaker 05:
was entirely consistent with the narrative that I've given here, which is that the concern was with the way these grants were structured and implemented, not with the congressional program.

[00:56:27] Speaker 05:
But there's a problem with the whole program.

[00:56:29] Speaker 09:
It's criminal.

[00:56:30] Speaker 05:
There's not a problem with the whole program.

[00:56:31] Speaker 09:
There's a problem.

[00:56:31] Speaker 09:
Well, regardless of whether it was or not, the district court could reasonably

[00:56:38] Speaker 09:
not credit the government's allegation or statement that it was going to re obligate the funds and instead credit the evidence in the record that they sought to terminate and dismantle the programs.

[00:56:49] Speaker 09:
And it's not clearly erroneous, even if you disagree with it.

[00:56:52] Speaker 05:
I think it's absolutely clearly erroneous.

[00:56:54] Speaker 05:
It is all of the evidence in the record.

[00:56:55] Speaker 09:
I know you think that, but I'm saying that there's evidence here.

[00:56:58] Speaker 09:
There isn't evidence.

[00:56:59] Speaker 09:
And for you to prove that it was clearly erroneous, you would have to show that there was no evidence to support it.

[00:57:04] Speaker 09:
And I've just read to you evidence that does.

[00:57:06] Speaker 05:
None of that evidence suggests that EPA wasn't going to re-obligate the money consistently.

[00:57:10] Speaker 09:
Why doesn't it, if he's going to terminate the program, you're not going to re-obligate the money?

[00:57:16] Speaker 05:
He was going to terminate the grants and terminate the financial agency agreement because the problem was the grant.

[00:57:19] Speaker 09:
He was terminating the Green New Deal.

[00:57:21] Speaker 09:
That's the entire program.

[00:57:22] Speaker 09:
It's not just the specific grants.

[00:57:24] Speaker 09:
Your Honor, that's the EO.

[00:57:25] Speaker 09:
We don't have to quibble about whether it's true or not.

[00:57:27] Speaker 09:
I'm just saying that there's enough evidence here for the district court to discredit the government's statements that it was going to obligate and instead credit the statements it was going to terminate the whole program.

[00:57:40] Speaker 05:
I respectfully disagree with that interpretation of the record.

[00:57:43] Speaker 05:
And I would just note that the EO that your honor is mentioning post-dates the statements from the EPA, then the nominated administrator, he hadn't yet been confirmed, but he had said long before that, that because of the gold bar video, his top priority was finding out what had happened and restoring that money to government control.

[00:58:05] Speaker 09:
Councilor, you can point to evidence that you think favors your position.

[00:58:08] Speaker 09:
All I'm saying is that the,

[00:58:10] Speaker 09:
standard of review is clearly erroneous, and there's evidence here to support what the district court found.

[00:58:14] Speaker 05:
So then let me say that if that is correct, the remedy for that would have been, I don't believe you have 60 days to re-obligate the money.

[00:58:22] Speaker 05:
That's not what the district court did.

[00:58:24] Speaker 09:
All right, Mr. Roth, but if I can just, I'm sorry Judge Roth, if I can just finish then.

[00:58:28] Speaker 09:
It seems to me then you have conceded that if in fact the EPA intended to dismantle these programs, that would be

[00:58:39] Speaker 09:
at least a statutory violation, if not a separation of powers one.

[00:58:43] Speaker 09:
You agree with that, right?

[00:58:45] Speaker 09:
They can't just dismantle these programs that Congress has.

[00:58:48] Speaker 05:
We've certainly not challenging the point that the agency has to follow what Congress says.

[00:58:52] Speaker 05:
Okay, so you agree with that.

[00:58:53] Speaker 05:
Congress, EPA did follow what Congress said.

[00:58:55] Speaker 09:
Okay, I understand.

[00:58:56] Speaker 09:
So I guess I just wanna underscore that this is a factual dispute because the district court found that EPA sought to dismantle that, which you agree would have been erroneous.

[00:59:05] Speaker 09:
And so that part of,

[00:59:08] Speaker 09:
this case, the statutory separation of powers thing boils down to this factual question, correct?

[00:59:14] Speaker 05:
I'm not sure it's really a factual question.

[00:59:16] Speaker 09:
I mean, it's a question about... Well, it's a factual question whether or not you intended to re-obligate and therefore didn't violate the statute according to you.

[00:59:22] Speaker 05:
If you want to call that a factual issue, then that's the... How is that not a factual issue?

[00:59:26] Speaker 05:
Well, I mean, I think we're looking at what is the

[00:59:31] Speaker 05:
What is the presumption that the government gets?

[00:59:34] Speaker 09:
Which is still a factual issue.

[00:59:35] Speaker 09:
It's a factual issue, whether or not you intended to re-obligate or whether or not you intended to dismantle the whole program.

[00:59:40] Speaker 05:
That's factual.

[00:59:41] Speaker 05:
Maybe ultimately it is.

[00:59:42] Speaker 05:
There's a presumption of regularity that attaches.

[00:59:45] Speaker 05:
That's fine.

[00:59:45] Speaker 09:
But in no world is that not a factual question, is it?

[00:59:49] Speaker 10:
If it is a highly factual issue unique to this case, why are we on bunk?

[00:59:57] Speaker 05:
Good question, Your Honor.

[00:59:59] Speaker 08:
I also have a question about the factual.

[01:00:06] Speaker 08:
If we do credit the district court's findings of dismantling, that only goes to the so-called separation of powers statutory argument, because plaintiffs have made no argument that the so-called dismantling

[01:00:25] Speaker 08:
fits under the APA.

[01:00:27] Speaker 08:
They never made such a claim in district court.

[01:00:28] Speaker 08:
They never made such a claim before the panel.

[01:00:31] Speaker 08:
Is that correct?

[01:00:32] Speaker 07:
That is so not correct.

[01:00:35] Speaker 08:
Can I finish?

[01:00:37] Speaker 08:
Right.

[01:00:37] Speaker 08:
So they argued that it was arbitrary to terminate the contracts.

[01:00:42] Speaker 08:
They only argued, they did not argue the dismantling claim under the APA.

[01:00:48] Speaker 08:
The district court did not address the dismantling claim under the APA.

[01:00:54] Speaker 08:
So even if that dismantling finding is credited, it only goes to the so-called separation of powers statutory argument.

[01:01:04] Speaker 08:
And then that argument has now changed because Congress has in fact dismantled this program.

[01:01:12] Speaker 08:
Am I matching up the claims correctly with the facts?

[01:01:17] Speaker 08:
I mean, the facts, there are different claims that were brought by plaintiffs under the APA.

[01:01:22] Speaker 08:
and under the so-called separation of powers statutory claim.

[01:01:25] Speaker 05:
Yes, Your Honor, I think you are correctly aligning them.

[01:01:27] Speaker 05:
The claims that the district court ruled on were three.

[01:01:30] Speaker 05:
One, the terminations violated the terms of the grants, it's a contract claim.

[01:01:37] Speaker 05:
Two, terminations violated the regulations because

[01:01:42] Speaker 05:
It was inconsistent with the terms contract claim under your solvent.

[01:01:45] Speaker 05:
And third, EPA intended to dismantle the program and you can't do that, whether that's statutory or constitutional claim on which our point is, okay, well then the remedy would be finding doesn't actually matter for the EPA claim because they never brought a dismantling as

[01:02:07] Speaker 08:
contrary to law under the APA claim, either in the district court or before the panel.

[01:02:13] Speaker 08:
They are now trying to re-characterize it in their briefs here.

[01:02:16] Speaker 11:
Can I just ask you on that score?

[01:02:21] Speaker 11:
So on page 20 of your reply brief,

[01:02:24] Speaker 11:
There's a paragraph, the thing is to start, the remedy for a constitutional claim, parentheses, or an APA claim, parentheses, the challenges of an alleged dismantling of a statutory program.

[01:02:34] Speaker 11:
So that at least hypothesizes there is an APA claim that deals with dismantling.

[01:02:39] Speaker 05:
They've started to raise it in their briefs.

[01:02:42] Speaker 05:
I think at least one of the briefs in this court and on bank proceedings has made the argument.

[01:02:46] Speaker 05:
But it wasn't the argument below.

[01:02:47] Speaker 05:
It was at the panel stage.

[01:02:49] Speaker 05:
I understood Judge Rowley.

[01:02:50] Speaker 11:
I see.

[01:02:51] Speaker 11:
So when you hypothesize or an APA claim,

[01:02:54] Speaker 11:
You're not what you say.

[01:02:57] Speaker 05:
Yeah.

[01:02:59] Speaker 05:
I mean, ordinarily the remedy for an APA claim for failure to explain would be

[01:03:03] Speaker 05:
you know, give a better explanation.

[01:03:04] Speaker 05:
It also wouldn't be reinstate the grant.

[01:03:06] Speaker 05:
I mean, there's a fundamental mismatch here is the order that the discord entered, which is reinstate the grants.

[01:03:13] Speaker 05:
That is the classic contractual remedy of specific performance, which is what this court said 40 years ago in Ingersoll Rand.

[01:03:19] Speaker 05:
It's what the fourth circuit said last month in sustainability Institute.

[01:03:22] Speaker 05:
If you're trying to reinstate a contractual relationship, you're in the wrong place.

[01:03:28] Speaker 11:
Can I ask you just to flesh out one thought on the effect of the repeal?

[01:03:33] Speaker 11:
So you started to get into the solar funds because those hadn't been terminated, at least as of the time of the repeal.

[01:03:41] Speaker 11:
I mean, another way to ask this is the same question I think is where you're going is you've made a lot of statements today about the ability of the agency to oversee the administration of the program, that there were some deficiencies in that regard.

[01:03:54] Speaker 11:
So after the repeal and the rescission of the

[01:03:58] Speaker 12:
unobligated balances.

[01:04:01] Speaker 11:
What happens is, is there still the ability on the part of the agency and the government's perspective to engage in those kinds of activities vis-a-vis, for example, the solar fronts or vis-a-vis a situation in which there wasn't a termination because I didn't understand you to be arguing

[01:04:15] Speaker 11:
that the government lacks that ability in the aftermath of the repeal slash decision.

[01:04:19] Speaker 11:
And it didn't sound to me like your argument today takes that position.

[01:04:22] Speaker 05:
So what I can tell you is that on the solar funds, they were not terminated at the time of these terminations, precisely because the problem was not with the statute, it was with the implementation of the NCIF and CCIA sub programs.

[01:04:36] Speaker 05:
After the repeal, the EPA did terminate the solar

[01:04:40] Speaker 05:
program, the solar grants, and said that's because of the statutory development and because our money to administer and oversee the program was rescinded.

[01:04:49] Speaker 05:
And so, you know, we're going to terminate it as a mat, not necessarily that the statute requires us to terminate, but we are going to terminate in light of the statutory development.

[01:04:58] Speaker 11:
But that that's how they handle the solar program.

[01:05:01] Speaker 11:
So this would the same thing have happened if there hadn't been a termination already.

[01:05:04] Speaker 11:
And with the non-solar part of the case, the non-solar part of the statute, i.e.

[01:05:09] Speaker 11:
what we have before us today, what is that?

[01:05:13] Speaker 05:
I mean, it's counterfactual.

[01:05:15] Speaker 05:
I don't know.

[01:05:15] Speaker 05:
It's possible.

[01:05:17] Speaker 05:
It's possible that they would have terminated for that alternative ground after the repeal.

[01:05:22] Speaker 05:
But we never got there because they repealed for different reasons.

[01:05:25] Speaker 05:
They terminated for different reasons six months before.

[01:05:29] Speaker 05:
And at that point,

[01:05:31] Speaker 05:
which it wasn't that it was going to be repealed.

[01:05:32] Speaker 05:
The anticipation was we're going to have to re obligate this money in short order.

[01:05:36] Speaker 05:
And EPA was preparing to do that when the district court cut that process off.

[01:05:42] Speaker 04:
Council.

[01:05:44] Speaker 04:
We just have two legal questions, which I hope will be remain legal questions.

[01:05:47] Speaker 04:
So the first is we've had a lot of discussion of the statutory claim.

[01:05:51] Speaker 04:
Obviously there's one question about intent to re obligate.

[01:05:55] Speaker 04:
Do you agree that you also need to show at least some possibility that you could have re obligated?

[01:06:00] Speaker 04:
So if, for instance, I know you would dispute this.

[01:06:03] Speaker 04:
If there was a categorical prohibition on a replacement grant in this situation, would you agree that the statute's been violated because sort of intent aside, objectively, there's been an impoundment?

[01:06:16] Speaker 04:
I'm just trying to figure out if you think we need to answer that question.

[01:06:19] Speaker 04:
So the availability of a replacement.

[01:06:21] Speaker 05:
Yeah.

[01:06:21] Speaker 05:
So the hypothetical is I'll say there was no way

[01:06:25] Speaker 05:
To re obligate was impossible.

[01:06:27] Speaker 05:
I still don't think that would be a statutory violation because the purpose of the termination wouldn't be to what Congress wanted.

[01:06:34] Speaker 05:
It would be because these instruments were unacceptable.

[01:06:39] Speaker 05:
So I still think they wouldn't be able to get to the point of saying it's a conflict of the statute.

[01:06:44] Speaker 04:
Even if the result is, say, you know, $10 billion of the appropriated money.

[01:06:48] Speaker 05:
And the best way to best way to think of that is imagine that one of these programs only had three grantees.

[01:06:52] Speaker 05:
Okay, let's assume that the three grantees were all convicted of wire fraud and we terminated them.

[01:06:57] Speaker 05:
Would that violate the statute?

[01:06:58] Speaker 05:
I don't think so, because the purpose of the termination was, well, these grantees are criminals.

[01:07:04] Speaker 05:
And so for the same, in sort of parallel fashion, if the termination had not been based on, you know, we're, we don't care what Congress wanted, we're not interested in doing this anymore, then it's not a violation of the statute or the separation.

[01:07:19] Speaker 04:
Okay.

[01:07:20] Speaker 04:
Thank you.

[01:07:20] Speaker 04:
The second is different.

[01:07:22] Speaker 04:
It's about Tucker Act.

[01:07:23] Speaker 04:
So it's certainly true that most things we think of that are claims that a termination of a contract is arbitrary and capricious should go to the Claims Court.

[01:07:33] Speaker 04:
But that's because if you have a situation like in Richardson, where that really does turn on debating the terms of the contract.

[01:07:42] Speaker 04:
What if you have a claim that is just the government has stated some reasons for terminating my contract, but they're entirely protectual.

[01:07:51] Speaker 04:
Resolving that claim, it seems, wouldn't require looking at the contract at all.

[01:07:56] Speaker 04:
And we're supposed to be asking whether the claim is bounded on contract.

[01:08:00] Speaker 04:
Why wouldn't a claim that a termination is pretextual be proper in district court?

[01:08:06] Speaker 05:
Because, Your Honor, if the termination was pretextual, and if the pretextual reason meant the termination was inconsistent with the contract, we'd have a breach claim.

[01:08:17] Speaker 05:
So your breach claim would be you haven't terminated, you've terminated in violation of the contract.

[01:08:22] Speaker 05:
Government says, oh no, what are you talking about?

[01:08:24] Speaker 05:
We have a great reason in the contract, you know, misconduct.

[01:08:27] Speaker 05:
And you say, well, that's pretext.

[01:08:29] Speaker 05:
There's no misconduct.

[01:08:30] Speaker 05:
That's the debate we would have in the claims court over whether it was a breach or not.

[01:08:34] Speaker 04:
But isn't there sort of a value recognized by the fact that we have the APA in having the government state its true reason.

[01:08:41] Speaker 04:
So you would set aside this termination, require it to,

[01:08:44] Speaker 04:
It's not a very good remedy, because all it gets you is the government has to issue a better termination.

[01:08:50] Speaker 04:
But why shouldn't that be allowed?

[01:08:52] Speaker 05:
Here's a hypothetical that I think of that helps me understand this.

[01:08:55] Speaker 05:
Imagine you had a contract that said, either party can terminate this contract by sending an email to the other side that says, contract is hereby terminated.

[01:09:04] Speaker 05:
Government sends the email, contract is hereby terminated.

[01:09:07] Speaker 05:
Party goes to district court and says, spoiler plate, nothing about reliance interests, nothing about the reasoning,

[01:09:14] Speaker 05:
APA violation.

[01:09:16] Speaker 05:
Nobody would think that's a proper APA claim.

[01:09:18] Speaker 05:
If it's permitted by the terms of the contract, it's not going to be an APA violation.

[01:09:22] Speaker 05:
The world of federal contract law existed before the APA, and it determines what the government can or cannot do with respect to breaching or terminating a contract.

[01:09:31] Speaker 05:
And the APA does not speak to that.

[01:09:33] Speaker 05:
That's what I understand the point of the preclusion.

[01:09:38] Speaker 06:
Could I just take it back to the

[01:09:43] Speaker 06:
Inflation Reduction Act Dismantling Claim.

[01:09:48] Speaker 06:
Following up on Judge Rao's questions, let's assume that all relevant claims and theories of review are preserved.

[01:09:58] Speaker 06:
I still wonder why, whether the IRA Dismantling Claim is judicially reviewable.

[01:10:09] Speaker 06:
And I'm thinking about

[01:10:11] Speaker 06:
some things we've said in the CFPB case this afternoon.

[01:10:17] Speaker 06:
You have a bunch of individual termination decisions which by themselves are wholly lawful and you put all of them together and consider some of the pungent statements from the president and the administrator

[01:10:38] Speaker 06:
And you infer from that a district court here said dismantling decision, one could say the decision to shut down this program.

[01:10:49] Speaker 06:
That seems to me not final agency action reviewable under the APA for reasons explained in the NTEU panel decision and then not judicially

[01:11:07] Speaker 06:
reviewable through ultra virus review because any one of these plaintiffs has an adequate remedy in the court of federal claims.

[01:11:16] Speaker 06:
So you don't have, you don't have the APA as a mechanism for review and you don't have the Hail Mary of ultra virus as a mechanism for review.

[01:11:28] Speaker 06:
So end of claim.

[01:11:32] Speaker 05:
I'm not gonna disagree with you on any of that.

[01:11:34] Speaker 05:
I just, I would like to win this case regardless of what happens this afternoon.

[01:11:37] Speaker 05:
And I think the point that I was hoping to make was to the extent that that was a reviewable claim.

[01:11:43] Speaker 06:
I mean, you either go that route or you're fighting the dismantlement finding as clearly erroneous on the facts.

[01:11:51] Speaker 05:
Or we're saying it doesn't matter because it doesn't justify this injunction.

[01:11:56] Speaker 05:
If the problem with it, because you got to match up the agency action and the remedy.

[01:12:00] Speaker 05:
So if the final agency action is termination of Climate United's grant,

[01:12:04] Speaker 05:
then the remedy would be reinstating Climate United's grant.

[01:12:07] Speaker 05:
And that runs into the Tucker Act problem.

[01:12:09] Speaker 05:
If the supposed agency action is shutting down the program.

[01:12:12] Speaker 06:
Yes, you have that remedial argument on mismatch and you have this whole question about what's the impact of the repealer.

[01:12:20] Speaker 06:
But before you get to those remedy questions on the back end, it seems to me you either have this no judicial review theory

[01:12:31] Speaker 06:
Or you're fighting the dismantlement finding is clear.

[01:12:35] Speaker 05:
And I would think you'd rather have the former or at least you'd rather have both.

[01:12:41] Speaker 05:
They're both available.

[01:12:42] Speaker 05:
You know, again, I recognizing

[01:12:46] Speaker 05:
the different views on what the evidence shows.

[01:12:49] Speaker 05:
You know, I looked at this record and I read, watched the video of the administrator and I said, there's absolutely nothing here.

[01:12:55] Speaker 05:
I mean, everything he is saying is consistent with what we've said from the beginning, which is that the problem was the money was put into this account with no oversight ability so that it can be moved around and used and nobody will have any idea what's going on with it.

[01:13:07] Speaker 05:
And that is unacceptable to the EPA.

[01:13:09] Speaker 05:
And so EPA is going to do something about it.

[01:13:11] Speaker 05:
There was not a word about how the Congress was off base or this is a bad policy or

[01:13:15] Speaker 05:
you know, green banks are a waste of time.

[01:13:17] Speaker 05:
Nobody said anything like that because that was not the problem.

[01:13:19] Speaker 15:
Except the President of the United States and Administrator Zeldin.

[01:13:25] Speaker 05:
The Administrator did not say that.

[01:13:26] Speaker 05:
The President issued an executive order that was after the Administrator had already committed to this.

[01:13:33] Speaker 05:
at his confirmation hearings that predated the executive order.

[01:13:36] Speaker 05:
This had nothing to do with that executive order.

[01:13:38] Speaker 05:
It was completely independent of the executive order.

[01:13:41] Speaker 05:
And it all goes back to the gold bars video from two months beforehand.

[01:13:44] Speaker 15:
Tellden described the program as a clear cut case of waste and abuse in a criminal scheme.

[01:13:51] Speaker 15:
That is not saying these contracts were not done correctly.

[01:13:57] Speaker 15:
We're going to redo them.

[01:13:59] Speaker 05:
It is that's exactly what it was saying that the way it was structured was his view criminal and and wait, then it was wasteful because it means that the money cannot be tracked to help be monitored and we cannot ensure that it's being spent.

[01:14:14] Speaker 14:
Regardless, you just have not in this case made the argument that there's an absence of a final action.

[01:14:22] Speaker 14:
The way we've been thinking.

[01:14:24] Speaker 14:
You haven't argued it in your brief at all, so it's forfeited.

[01:14:27] Speaker 14:
The briefs say what they say.

[01:14:28] Speaker 14:
I just want to make sure, because we've read a lot of briefs.

[01:14:33] Speaker 14:
So if I missed it, please tell me.

[01:14:35] Speaker 14:
Did you make the lack of a final, however you want to call it, lack of final agency action, discreetness requirement for AP claims?

[01:14:42] Speaker 14:
Have you made that in your opening brief in this case to this court?

[01:14:46] Speaker 14:
On that court.

[01:14:47] Speaker 14:
I don't think so, your honor.

[01:14:50] Speaker 14:
Was if you haven't, it would be that argument would be forfeit.

[01:14:54] Speaker 05:
I think what we said was- That argument would be forfeited if you had not made it in your argument.

[01:14:57] Speaker 05:
That's a legal question for the court to decide.

[01:14:59] Speaker 14:
Our president or our president, your argument would be forfeited if you have not made it.

[01:15:03] Speaker 05:
Maybe that's right.

[01:15:04] Speaker 05:
What we said was the agency action that they sued over in the district court was the termination of their individual grants and that there is no way to justify that in the judgmental law.

[01:15:15] Speaker 14:
I'm not critiquing at all the judgments that were made here about which claims to press and understand what you've done.

[01:15:24] Speaker 14:
for the panel.

[01:15:26] Speaker 14:
So, and it may well work here, but I'm just trying to clarify and make sure I didn't misunderstand your brief.

[01:15:33] Speaker 14:
And I take it from you that you have not pressed that argument.

[01:15:38] Speaker 14:
Can I ask just one more procedural question that this does relate to the repeal issue.

[01:15:43] Speaker 14:
And you may have already said this and it just hasn't registered with me.

[01:15:47] Speaker 14:
So if the injunction is lifted, as in your view, it should be,

[01:15:55] Speaker 14:
To me, again, what happens in your view, the funds and the Citibank account.

[01:16:03] Speaker 05:
Well, they can't spend them right now, because with the grant being terminated.

[01:16:07] Speaker 05:
They can't certify that disbursement would be necessary to.

[01:16:14] Speaker 05:
you know, to comply with their work plan because there's no more grants.

[01:16:18] Speaker 05:
So I don't think they can spend the money on projects if there's no live grants.

[01:16:23] Speaker 05:
I think they are supposed to provide EPA with a closeout report.

[01:16:27] Speaker 05:
And then there will be some back and forth over who owes what to whom.

[01:16:31] Speaker 05:
And then that's how that would work.

[01:16:32] Speaker 14:
Would the government have the authority in its view when the injunction lifts to direct Citibank, return the money to the Treasury?

[01:16:44] Speaker 05:
I don't know that we can direct Citibank to do that.

[01:16:46] Speaker 05:
I think we could terminate the financial agency agreement.

[01:16:50] Speaker 05:
Treasury terminate the financial agency agreement.

[01:16:53] Speaker 05:
And then Citibank would have to figure out how to, what to do.

[01:16:57] Speaker 15:
What happens?

[01:16:58] Speaker 05:
I'm really just trying to understand.

[01:16:59] Speaker 05:
I mean, I always say, I don't know what is going to happen because we never got there.

[01:17:02] Speaker 05:
And this could go, I think in 10 or 20 different directions, depending on exactly who does what at what time.

[01:17:08] Speaker 05:
So I really don't know the answer.

[01:17:09] Speaker 14:
There are a possibility or a risk.

[01:17:11] Speaker 14:
that it would, I mean, this is- There's a possibility that the- We'll just go to the treasury?

[01:17:15] Speaker 05:
Sure, there's a possibility that the treasury terminates the city bank accounts, terminates the financial agency agreement and city bank says fine, we're sending the money back to treasury and then plaintiffs will sue- I mean, is there something that's supposed to happen?

[01:17:28] Speaker 14:
And I know that agreement is sealed, so I don't want to, we can't talk about it, we can't talk about it, but is there something either in the financial agency agreement or principal codes of law that you're aware of as to what happens

[01:17:40] Speaker 05:
money like this when the financial agency agreement says that if the in the event of a de obligation like a termination that this city bank has to follow the directions of

[01:17:56] Speaker 05:
treasury consistent with the account control agreement.

[01:17:59] Speaker 05:
So cross-reference is another agreement.

[01:18:01] Speaker 05:
That, by the way, is at 2148 at the JA.

[01:18:06] Speaker 05:
But I really can't predict exactly how it's going to play out after remand.

[01:18:11] Speaker 05:
All I can say is we never got to any of that because of the injunction, and the injunction is erroneous.

[01:18:16] Speaker 14:
So the government, if you can't, you can't make a representation that it would not

[01:18:25] Speaker 14:
to make his own decision, but the government would not move those funds, do anything with them until at least resolution of the closeout process.

[01:18:40] Speaker 05:
I don't think I'm authorized to make the representation.

[01:18:43] Speaker 05:
I don't know what, if a decision has been made.

[01:18:45] Speaker 05:
I do know that the decision was to proceed with closeout and we've always been ready to proceed with closeout.

[01:18:51] Speaker 05:
Um, and the money is there.

[01:18:53] Speaker 05:
I think the money is there regardless of exactly where it's housed.

[01:18:56] Speaker 05:
I mean, they can't spend it in the city bank accounts.

[01:18:59] Speaker 05:
Uh, if the grant is terminated, but it's there, whether it's there as an agent of treasury or in a treasury account, uh, in treasury's hands, it's there for closeout purposes.

[01:19:08] Speaker 05:
And we are committed to, uh, undertaking closeout process expeditiously.

[01:19:13] Speaker 14:
And if they're sorry, if it gets moved to, I'm really, this is uncharted territory for me, at least if it gets moved to treasury,

[01:19:21] Speaker 14:
and they go through the closeout process.

[01:19:23] Speaker 14:
And it turns out under the closeout process, they actually get to keep the money that was left in their funds for use consistent with the purposes under which it was originally given.

[01:19:34] Speaker 14:
Treasury would then have to, is this a judgment fund?

[01:19:42] Speaker 14:
I'm not sure what this is.

[01:19:43] Speaker 14:
Could it have to then give them back the money?

[01:19:44] Speaker 05:
Your honor, that's how it generally works in grant terminations.

[01:19:48] Speaker 05:
So usually the money isn't that,

[01:19:50] Speaker 05:
in Citibank.

[01:19:51] Speaker 05:
Usually the money is in a government account and there's closeout and as part of a closeout process they do a reconciliation and let's say we figure out we owe them a million dollars.

[01:19:59] Speaker 05:
The money comes out of that account and goes to plaintiffs from that account.

[01:20:03] Speaker 05:
It sits there until it doesn't get technically de-obligated until closeout is done so it's there and available for closeout.

[01:20:11] Speaker 14:
It's still obligated until the closeout process is complete.

[01:20:14] Speaker 03:
That's how the regs are supposed to work.

[01:20:17] Speaker 03:
Can I just make sure I understand the government's view of how the cause of action, the statutory cause of action and remedies are supposed to work?

[01:20:29] Speaker 03:
Suppose, hypothetical, not saying this is what happened here.

[01:20:34] Speaker 03:
Let's suppose that in February of last year, president, EPA administrator, all of the relevant

[01:20:47] Speaker 03:
parties said you're terminating this program and falling back on the money and we are not going to re-obligate those funds.

[01:21:04] Speaker 03:
Would you agree that that would violate the inflation reduction?

[01:21:12] Speaker 05:
So for purposes of this case, we haven't argued otherwise because we didn't think we had to.

[01:21:17] Speaker 05:
I think the only potential point I would make is that the inflation reduction act actually didn't require the money to be spent in the first place.

[01:21:26] Speaker 05:
So if your hypothetical is imagine an appropriation that is a mandatory appropriation, right?

[01:21:32] Speaker 05:
The government agency shall spend a billion dollars on X and the government says, we're not doing it too bad.

[01:21:40] Speaker 05:
Yeah, I think there could be a cause of action.

[01:21:43] Speaker 03:
So I understand you to be saying that the remedy for a proper injunction, if such a cause of action were valid, would be in order to re-obligate the funds as opposed to setting aside the termination.

[01:22:11] Speaker 03:
What is your, I guess, best authority for that proposition?

[01:22:18] Speaker 05:
I think it's just the point that the remedy is supposed to match the wrong.

[01:22:23] Speaker 05:
So if the wrong is you're not doing what Congress said, the remedy should be you have to do what Congress said.

[01:22:30] Speaker 05:
And that is what happened in the global health council case.

[01:22:35] Speaker 05:
At least the allegations were there's this money that's been appropriated for foreign aid.

[01:22:41] Speaker 05:
State Department or USAID is not spending it.

[01:22:45] Speaker 05:
So the remedy wasn't, you know, it has to go to the plaintiffs.

[01:22:49] Speaker 05:
The remedy even the district court before this court's opinion was government has to obligate it by the deadline.

[01:22:55] Speaker 05:
And that's appropriate as an equitable matter because to the extent that the statute affords some discretion to the agency and how to implement the program.

[01:23:03] Speaker 05:
And here the discretion was very large.

[01:23:05] Speaker 05:
I mean, the statute is short, doesn't have a whole lot of detail.

[01:23:09] Speaker 05:
These sub programs, NCIS, CCA, was all developed by the agency.

[01:23:14] Speaker 05:
The process for picking the grantees was developed by the agency.

[01:23:19] Speaker 05:
Obviously, the contracts were developed through agency discretion.

[01:23:23] Speaker 05:
So there's no basis to take that discretion away if the problem is you're not doing what the statute wants.

[01:23:30] Speaker 12:
Make sure there's no additional questions at this time.

[01:23:33] Speaker 12:
Thank you, Council.

[01:23:34] Speaker 12:
Thank you.

[01:23:34] Speaker 12:
Give us some time for rebuttal.

[01:23:44] Speaker 02:
Mr. Allen.

[01:23:46] Speaker 02:
May it please the court, Wynn Allen on behalf of Citibank.

[01:23:49] Speaker 02:
Citibank has a limited role with respect to this grant program.

[01:23:53] Speaker 02:
We operate as a financial agent of the United States in which capacity we perform commercial banking and financial services to support the grant awards.

[01:24:02] Speaker 02:
There's obviously a dispute between plaintiffs and the government as to what should happen to the grant funds.

[01:24:09] Speaker 02:
Citibank does not take any position with respect to that dispute.

[01:24:12] Speaker 02:
Whatever the court ultimately decides, Citibank will comply.

[01:24:16] Speaker 02:
Our only interest is in following court orders and complying with our contracts with the government and the plaintiffs.

[01:24:23] Speaker 02:
I wanted to make two modest points in my time today.

[01:24:26] Speaker 02:
First of all, if the court does determine

[01:24:29] Speaker 02:
that plaintiffs are not entitled to an injunction against the government, then they are also not entitled to an injunction against Citibank.

[01:24:36] Speaker 02:
There's no scenario in which plaintiffs can obtain relief against Citibank alone.

[01:24:42] Speaker 02:
Secondly, we do believe Citibank has complied with its contractual obligations to both the government and to plaintiffs.

[01:24:47] Speaker 02:
There was a period of time when Citibank was subject to conflicting instructions from the plaintiffs and the government.

[01:24:54] Speaker 02:
And in that scenario, Citibank did its best to balance the contractual requirements imposed on us by the financial agency agreement with Treasury with the contractual requirements in the account control agreements with plaintiffs and EPA.

[01:25:07] Speaker 02:
Citibank believes it adhered to both contracts and we don't believe there's any merit to the breach of contract claims that plaintiffs brought against us.

[01:25:15] Speaker 14:
Well, if the injunction lifts.

[01:25:21] Speaker 14:
And contracts, assuming Junction lifts, so contracts are not reinstated, freezes off.

[01:25:28] Speaker 14:
There was no ready off.

[01:25:32] Speaker 14:
Don't hear boo from either party.

[01:25:34] Speaker 14:
What does Citibank do with the funds?

[01:25:36] Speaker 02:
In that instance, the grants have still been terminated, Your Honor.

[01:25:40] Speaker 02:
Yes, yeah.

[01:25:42] Speaker 02:
So in the event of a grant termination, what the FAA tells Citibank is that we must take direction from the relevant secured party in accordance with the account controlled agreements.

[01:25:52] Speaker 02:
So for the primary grantees funds, we're required to take direction from the EPA.

[01:25:56] Speaker 14:
But if they don't say anything to you, that was my hypothetical, because they've said maybe that you would just send it back on your own.

[01:26:04] Speaker 02:
If we're not, if Citibank is not directed to do anything with the money, the money will stay in the current accounts it's in right now.

[01:26:15] Speaker 15:
I thought you just said that Citibank's obligation would be to take direction from the secured party under the scenario that Judge Millett

[01:26:27] Speaker 15:
That's correct.

[01:26:28] Speaker 15:
But the account control agreement requires Citibank to, quote, comply with all instructions, notifications, and entitlement orders that the bank receives from the account holder.

[01:26:41] Speaker 15:
That would be plaintiffs directing the disposition of funds and financial assets in the account and may only refuse if the secured party

[01:26:51] Speaker 15:
that would be EPA exercises its right to issue a notice of exclusive control.

[01:26:56] Speaker 15:
So if they have done that, and the injunction is lifted and the agreements are in effect, and EPA says, don't, don't, what's your, and the plaintiffs ask for money from their accounts.

[01:27:15] Speaker 02:
It is frankly unclear to us to be candid, Your Honor, in the event of a grant termination

[01:27:21] Speaker 02:
whether EPA has to exercise a notice of exclusive control in order to give us directions as it's entitled to do under Exhibit A, B3 of the FAA, or whether they can give us those directions without issuing a notice of exclusive control.

[01:27:39] Speaker 02:
Again, as we read the FAA, we're required to take their direction as to what to do with the funds.

[01:27:45] Speaker 02:
It's not obvious to me that requires them to implement a notice of exclusive control.

[01:27:51] Speaker 15:
is clear, the city bank may refuse only if the secured party under the ACA has a secured party right to issue the control.

[01:28:00] Speaker 02:
That is what the ACA says, Your Honor, but again, we are subject to both contracts, so we have to contrue that consistently with the FAA.

[01:28:08] Speaker 02:
And the FAA certainly does say that we're obligated to take direction from the relevant secured party.

[01:28:14] Speaker 02:
So I think we'd have to have a discussion with the EPA and say,

[01:28:17] Speaker 02:
Are you going to issue a notice of exclusive control or not?

[01:28:20] Speaker 02:
And if you're not, why do you think that we can still take your direction?

[01:28:24] Speaker 02:
We haven't had that conversation.

[01:28:27] Speaker 06:
Is there any reason to think if the termination is upheld, why wouldn't that notice follow as night falls day?

[01:28:35] Speaker 12:
I expect it would, but I haven't had conversations with the government about it.

[01:28:41] Speaker 12:
I don't have additional questions.

[01:28:44] Speaker 12:
Thank you, Council.

[01:28:51] Speaker 12:
from Rappley's Council now, Mr. Unikowsky.

[01:28:54] Speaker 10:
Thank you, Your Honours.

[01:28:55] Speaker 10:
May it please the court.

[01:28:57] Speaker 10:
I'd like to begin today's argument with the issue of the grantee's title, why the grantees have title to these funds and why that is dispositive as to the jurisdiction.

[01:29:06] Speaker 10:
So EPA frames the grantees title as a kind of technicality or maybe a kind of artifice to avoid the Tucker Act.

[01:29:12] Speaker 10:
That's not the case.

[01:29:13] Speaker 10:
The grantees have title because that's necessary for the program to work as intended.

[01:29:18] Speaker 10:
In the greenhouse gas reduction fund statute itself, both in the definition of an eligible recipient and in the definition of a qualified project, Congress provided that the grantees had to work with private capital in order to effectuate the program's purposes.

[01:29:33] Speaker 10:
And EPA recognized as early as the notice of funding opportunity in 2023 that these green banks could not really be green banks unless they are adequately capitalized

[01:29:44] Speaker 10:
unless they can put these funds on their balance sheets so they could potentially attract private capital as Congress intended.

[01:29:51] Speaker 10:
So that's why from day one, this program was designed to ensure that the grantees would in fact have title to these funds.

[01:29:58] Speaker 10:
And contrary to EPA statements, I think that these documents are invariably unambiguous that the grantees have title to the funds.

[01:30:06] Speaker 10:
It's true that EPA has a security interest and it can exercise that security interest

[01:30:10] Speaker 10:
in certain circumstances, just like a bank can exercise a security interest on a homeowner.

[01:30:15] Speaker 10:
But nonetheless, title is in the hands of the grantees, precisely so they can put that money on their balance sheets and really call themselves legitimate green banks.

[01:30:23] Speaker 08:
And so, yes.

[01:30:25] Speaker 08:
The plaintiffs here did not say anything about the Seventh Circuit cases that were cited by the government with respect to how grant funds held by a third party are treated.

[01:30:39] Speaker 08:
And I'm wondering if you have any response to how Inri Joliet will, and the other cases that were cited, which have also been cited favorably in the DC Circuit apply for understanding.

[01:30:50] Speaker 08:
You have kind of an, there's sort of an abstract argument about title, but then there are all of these cases suggesting that until grant money is spent for its intended purposes, the government retains the ultimate reversionary interest in that money.

[01:31:04] Speaker 08:
And here the money has not yet been spent for the statutory purposes.

[01:31:08] Speaker 10:
Judge Poser's opinion in that case doesn't suggest that every single case where there's a grant, the title states or the government, there's specific language in that opinion saying that it turns on the specific terms of the grant agreement at issue.

[01:31:20] Speaker 10:
And so the terms in this grant agreement are quite different than, as far as I know, the terms in the grant agreement at issue in that opinion.

[01:31:26] Speaker 08:
Well, then that just puts you into court of federal claims.

[01:31:31] Speaker 08:
If the claim about title is a contract dispute, then that is a dispute to be resolved elsewhere.

[01:31:37] Speaker 10:
I respectfully disagree with that, Your Honor.

[01:31:38] Speaker 10:
If we have title, then we're allowed to proceed in district court and the court always has jurisdiction to determine its own jurisdiction.

[01:31:44] Speaker 08:
But the question of title you've just said is a contract question.

[01:31:49] Speaker 08:
It turns on the agreements you just said.

[01:31:52] Speaker 10:
That's not the case, Your Honor.

[01:31:53] Speaker 10:
The court is able to decide whether we have title for purposes of deciding whether we proceed in the court of federal claim.

[01:31:58] Speaker 10:
That's what the court essentially said in land versus dollar, which is very similar to this case.

[01:32:03] Speaker 08:
What about the cases under 18 USC 641, which say that you can have criminal liability for grant money held by a third party that is not yet spent for grant purposes if you convert that money

[01:32:18] Speaker 08:
There's, I mean, that is well established across the circuits.

[01:32:21] Speaker 08:
This circuit has upheld convictions on that basis.

[01:32:24] Speaker 08:
What is your best case for the fact that grant money before it is spent is somehow the property of the grantee?

[01:32:33] Speaker 08:
What is your best case for that?

[01:32:35] Speaker 08:
In contrast to the seventh circuit cases and this long line of criminal cases under 641.

[01:32:41] Speaker 10:
All I can tell you is the language is quite unambiguous.

[01:32:45] Speaker 10:
I don't think there's any dispute what a concept of a secured party means under a property law.

[01:32:49] Speaker 15:
I'm a little confused by your answer, partly because the money has been spent for the purpose of the statute, which is to capitalize a nonprofit financial institution that's then going to leverage private investment and provide a catalyst for development of

[01:33:09] Speaker 15:
clean energy infrastructure?

[01:33:10] Speaker 15:
Is it not in the sense of

[01:33:14] Speaker 15:
disbursing obligated funds have been spent for the purpose of which it was intended?

[01:33:20] Speaker 10:
I agree with that, Your Honor.

[01:33:20] Speaker 10:
The funds have already been not only obligated, but also disbursed.

[01:33:24] Speaker 10:
The agreement calls these funds capitalization by non-exchange capital contribution.

[01:33:28] Speaker 10:
So the banks have been capitalized.

[01:33:30] Speaker 10:
The money has all been spent.

[01:33:32] Speaker 08:
The grant money is treated differently under our case law as to who has the reversion or the interest.

[01:33:38] Speaker 08:
Can you point to any, I mean, there are so many cases that say money in this circumstance remains the property of

[01:33:44] Speaker 08:
the government.

[01:33:47] Speaker 08:
So if your situation is obvious, can you point to a case involving grant funds where the title goes to the grantees before it is spent?

[01:33:56] Speaker 10:
I don't think I have a case because I don't think that there's been a situation like this where there's been green banks which have been capitalized and the money already has been spent.

[01:34:03] Speaker 10:
I don't mean to talk past your honor, but I think all of the money has been spent.

[01:34:07] Speaker 10:
It has all been dispersed.

[01:34:08] Speaker 10:
These banks have been capitalized.

[01:34:10] Speaker 06:
It's sitting in a bank account, right?

[01:34:15] Speaker 06:
Yes.

[01:34:16] Speaker 06:
And in at least one respect, this is a tougher case for the grantee than Joliet.

[01:34:25] Speaker 06:
In Joliet, the funds were in the bank account of the grantee.

[01:34:30] Speaker 06:
Yes, Your Honor.

[01:34:31] Speaker 06:
Which says it's still property of the government taking into account the substantive restrictions on the grant.

[01:34:42] Speaker 06:
Here, same restrictions except it's one step removed from the grantee.

[01:34:48] Speaker 06:
It's not in their bank account.

[01:34:50] Speaker 06:
Your Honour, even setting aside the grant agreement.

[01:34:52] Speaker 06:
It's sort of like an escrow-like arrangement with Citibank.

[01:34:56] Speaker 10:
That's not the case, Your Honour.

[01:34:57] Speaker 10:
From day one, from the notice of funding opportunity, EPA made clear that the funds would be dispersed at the outset so the banks could be capitalized so we could lawfully

[01:35:05] Speaker 10:
put all of these funds on our balance sheet so we can attract private investment in accordance with Congress's intent.

[01:35:10] Speaker 10:
There was just nothing like that in the bankruptcy case at issue in the Joliet case.

[01:35:14] Speaker 10:
And even wholly setting aside the grant agreement, the ACA itself explicitly says that the pledge or that's the grantees is the customer, it's the entitlement holder with respect to the financial assets.

[01:35:26] Speaker 10:
And then the agreement says it's intended to quote, perfect the security interest of the secured party.

[01:35:31] Speaker 10:
That's a commercial relationship between us and Citibank and EPA

[01:35:35] Speaker 10:
And I just don't think it's possible to read this language and hold anything other than title in the property is with you will grant the security interest to EPA.

[01:35:44] Speaker 14:
I'm not sure how you can grant a security interest in something that's not yours.

[01:35:48] Speaker 10:
That's exactly right.

[01:35:49] Speaker 10:
So, I mean, I understand there may have been other cases and other grant agreements that don't involve the capitalization of green banks that have to put money on their balance sheets in order to attract private investment.

[01:35:59] Speaker 10:
But I would repeat that the Joliet case, yes.

[01:36:00] Speaker 08:
The case law in a variety of contexts, and this is kind of a strange fact situation.

[01:36:05] Speaker 08:
I understand it's somewhat sui generis with these grants.

[01:36:09] Speaker 08:
But the reasoning of those cases is that where the government maintains supervision and control over the grant money before the grant money is spent, it effectively remains the property of the government.

[01:36:20] Speaker 08:
And it remains so even for the purposes of criminal liability for conversion of those funds.

[01:36:25] Speaker 08:
And here under the accounts, EPA

[01:36:28] Speaker 08:
maintains a great deal of supervision and oversight over these funds.

[01:36:32] Speaker 08:
You know, the grantees can't spend the money without EPA approval, disbursements have to be approved.

[01:36:37] Speaker 08:
There's, you know, there's, I mean, there are a whole list of ways in the agreements in which EPA maintains supervision and control over the funds.

[01:36:46] Speaker 10:
Your Honor, I don't think you'll find a single case anywhere that says that someone could be a secured party and nonetheless maintain title.

[01:36:51] Speaker 10:
That's just not what it means to have a security interest in something and all of these- I don't think you can find it.

[01:36:56] Speaker 08:
You have said that there are no cases adjusting that

[01:36:59] Speaker 08:
grant money is treated in that same way because grant money is a unique type of disbursement, it remains the property of the government.

[01:37:08] Speaker 08:
And you've not pointed to anything that gets out of that basic principle that was established in the Supreme Court case, I think from the 1850s.

[01:37:18] Speaker 10:
The Supreme Court case in the 1850s doesn't involve the actual capitalization, which the EPA explicitly says that it's handing over all the money to capitalize these organizations.

[01:37:29] Speaker 08:
It's handing over the money, but the money hasn't yet been spent for grant purposes, and the EPA maintains a great deal of supervision and control.

[01:37:37] Speaker 08:
In that circumstance, even if nominally the grantees have some kind of title, it's not title that matters in this

[01:37:47] Speaker 10:
I think it is titled that matters in that context because I think it sharply distinguishes this case from cases such as DOE and NIH where the plaintiffs really were trying to get money out of the Treasury.

[01:37:58] Speaker 10:
I think that's a helpful way of thinking about the Tucker Act inclusion issue.

[01:38:01] Speaker 10:
So as I read the DOE and the NIH cases, the plaintiffs were trying to get money directly from the US Treasury.

[01:38:09] Speaker 10:
That's what they were trying to do.

[01:38:10] Speaker 10:
And the Supreme Court, as I interpret those decisions, were saying that the Tucker Act provides a way for you to do that.

[01:38:15] Speaker 10:
If you want money from the Treasury, go to the Court of Federal Claims and you can get your money from the Treasury pursuant to the grant.

[01:38:21] Speaker 10:
And so the Supreme Court was saying you can't go to federal district court to get money from the Treasury, which is what you want, which you can already get from the Court of Federal Claims.

[01:38:29] Speaker 10:
In this case,

[01:38:30] Speaker 10:
We're not asking for any money from the treasury.

[01:38:32] Speaker 10:
There is no money from the treasury.

[01:38:33] Speaker 10:
That's even that issue.

[01:38:34] Speaker 10:
The relief we're asking for, which is preventing the interference with these funds that are in the accounts with our names, with EPA holding a security interest, is completely unavailable from the court of federal claims.

[01:38:45] Speaker 10:
That's why I think that the grantee's legal relationship to these funds is as positive in this case.

[01:38:50] Speaker 10:
Just thinking functionally in terms of the remedies that the court of federal claims is even capable of giving, it can't even possibly vindicate our claims to these funds in this case.

[01:38:58] Speaker 15:
I would love it if you would address the statutory claim, which was discussed a little bit in questions to Mr. Ra.

[01:39:08] Speaker 15:
The panel held that EPA did not violate the Inflation Reduction Act when it terminated the grants.

[01:39:15] Speaker 15:
And I think the crux of that statutory holding is the panel's rejection of the district court's fact-finding that when EPA acted to terminate these grants, it had no intention of obligating them,

[01:39:28] Speaker 15:
Now I know that that was, it seems like that was addressed more, I know I thought about it more at the panel stage as whether it was a violation of Appropriations Clause, whether it was the executive infringing on Congress's statutory, Congress's constitutional power to direct appropriations.

[01:39:51] Speaker 15:
But there's really a simpler version, isn't there?

[01:39:53] Speaker 15:
And it's not the APA arbitrary and propitious, but the APA,

[01:39:57] Speaker 15:
contrary to law, i.e.

[01:39:59] Speaker 15:
contrary to the statute.

[01:40:01] Speaker 15:
And so why isn't that the simplest way to resolve this case if the court were inclined to resolve it in your favor?

[01:40:13] Speaker 10:
Sure, Your Honor, we'd have no objection to the court resolving that case this way.

[01:40:16] Speaker 10:
We think there's both a statutory and a constitutional violation, but I'm happy to focus on the statutory violation.

[01:40:22] Speaker 10:
And I agree, if the court concludes there was a violation of the statute,

[01:40:25] Speaker 10:
and that there was jurisdiction that would be contrary to law.

[01:40:28] Speaker 15:
And to conclude that, we'd have to think that the appropriation was mandatory in the sense that the executive had to spend it.

[01:40:38] Speaker 10:
I think so, but that's not been disputed at any time by NPA in this case.

[01:40:41] Speaker 10:
And there's cases like Train which reach that conclusion.

[01:40:45] Speaker 15:
And they say, well, there was nothing saying it had to go to these recipients, sure enough, but it went to them.

[01:40:52] Speaker 13:
That's true.

[01:40:53] Speaker 15:
And if it went to them and EPA is trying to get the money back after the appropriation lapsed, and it has identified no authority to re-obligate, and indeed it now disavows, I think wrongly, authority to re-obligate, and it had as a district court found no intention to re-obligate, why aren't those just the ingredients of a straightforward violation

[01:41:22] Speaker 15:
of the IRA.

[01:41:23] Speaker 15:
Why do we need to get into Tucker?

[01:41:25] Speaker 15:
Why do we need to get into Dalton?

[01:41:28] Speaker 10:
I think that would be a very straightforward way of resolving the case.

[01:41:30] Speaker 10:
And I just add one more point onto the table, which is I agree with the way Judge Garcia formulated the remedy, which is if there's unlawful agency action, then the natural thing for the district court to do is set aside that unlawful agency action.

[01:41:42] Speaker 10:
Certainly in the district court, the government didn't suggest any other injunction other than setting aside the action.

[01:41:47] Speaker 10:
So I think that the district court did an ordinary thing when we do in this situation.

[01:41:50] Speaker 10:
which is identify a violation of law and set aside the action that resulted in that violation.

[01:41:56] Speaker 10:
What the action is, the terminations?

[01:41:58] Speaker 10:
I understand it to be the dismantlement of the entire program, which was effectuated through the terminations and also the unlawful infringement on the property interest held by the grantees, which was again effectuated by those terminations.

[01:42:11] Speaker 10:
I think that's the right way to think about what the government did here.

[01:42:13] Speaker 10:
There weren't like targeted, isolated terminations.

[01:42:16] Speaker 10:
It was really the dismantlement of the entire program.

[01:42:18] Speaker 08:
Mr. Unikowski, can you point to where in the complaint there was an argument that the dismantlement was contrary to law under the APA, because I don't see that anywhere in the complaint.

[01:42:29] Speaker 08:
And I don't see that anywhere in the injunction that the district court actually issued in terms of the APA relief, which is all based solely on grant terminations.

[01:42:38] Speaker 08:
This is a nice way, it's an interesting repackaging now, but I don't see where any of that was argued below.

[01:42:44] Speaker 10:
Your Honor, I respectfully disagree.

[01:42:46] Speaker 10:
I think this has been our claim the whole way.

[01:42:47] Speaker 10:
So JA 327 is our preliminary injunction motion.

[01:42:50] Speaker 10:
And in our section, in our portion of the brief, talking about the arbitrary and capricious argument, we say, indeed, it is clear that the vague references to lowercase fraud, waste, and abuse in the notices are pretextual cover to shut down a program approved by Congress that the new administration does not like.

[01:43:07] Speaker 10:
And likewise, in the section about the Tucker Act, one of our core arguments is that this wasn't really an individual termination case that ultimately the EPA had shut down the entire program.

[01:43:19] Speaker 08:
But the section arguments are made under your constitutional separation of powers claims, not under the APA.

[01:43:26] Speaker 10:
No, Your Honor, what I just read to you was in the portion of our brief addressing the APA claims.

[01:43:30] Speaker 10:
And I also understand the district court's order to have understood our argument correctly and resolve this issue.

[01:43:35] Speaker 10:
So you'll see on page JA 993, the district court says, though repeatedly pressed on the issue, EPA offers no rational explanation for why it suspended the grants and then immediately terminated the entire NCIF and CCIA grant programs overnight.

[01:43:54] Speaker 08:
Well, but that is linking, that is suggesting that the termination of the grants are coterminous with dismantling.

[01:44:02] Speaker 08:
And your argument is that there is a separate contrary to law claim for the dismantling.

[01:44:09] Speaker 08:
This is a little bit of a different case than say the NIH stay case before the Supreme Court, where at least Justice Barrett explained that the guidance was distinct from the grant terminations.

[01:44:22] Speaker 08:
here any dismantling is solely about the grants.

[01:44:26] Speaker 08:
Is there any program beyond the grants here?

[01:44:29] Speaker 08:
I mean section 134 is just about grants.

[01:44:32] Speaker 08:
There's no additional program other than the grant terminations.

[01:44:37] Speaker 10:
I word it a little bit differently.

[01:44:38] Speaker 10:
What I understand EPA to have done is terminated the program by simultaneously shutting down all the grants on the identical grant.

[01:44:46] Speaker 10:
So I

[01:44:46] Speaker 10:
I think that you can't really view EPA as having done eight separate things here.

[01:44:50] Speaker 10:
EPA really did one thing, which is dismantle the program.

[01:44:52] Speaker 10:
And it effectuated that dismantlement by sending these word for word identical letters to all of the grantees at the same time.

[01:44:59] Speaker 10:
And so in terms of thinking about whether there's been a violation of the statute, I think there was.

[01:45:04] Speaker 10:
And I think you can see this in kind of two very related ways.

[01:45:09] Speaker 10:
So one, as the court knows, every agency must point to statutory authority for everything that they do.

[01:45:15] Speaker 10:
An agency can never act, has no power to act unless there's something in a statute that allows them to do it.

[01:45:21] Speaker 10:
And so if you agree as the district court concluded that EPA was dismantling this entire program, it needs to find some statutory authorization to do that.

[01:45:29] Speaker 10:
And there's certainly nothing in the greenhouse gas reduction fund that says that they can.

[01:45:34] Speaker 10:
The GGRF says that the agency has to make grants.

[01:45:36] Speaker 10:
We do think that's mandatory by September of 2024.

[01:45:40] Speaker 10:
And then it has some requirements for the grantees.

[01:45:42] Speaker 10:
There's no affirmative statutory authority to undo and redo the program after the date.

[01:45:47] Speaker 10:
And if you accept the district court's factual finding, and I don't see the government as having argued that that's clearly erroneous, the practical effect of the dismantlement is going to be to wipe out a program that Congress declared to be mandatory.

[01:46:00] Speaker 10:
I do want to say one other thing about that.

[01:46:02] Speaker 03:
I'd like to just press you to make sure I understand what you just said.

[01:46:09] Speaker 03:
It's your contention that if a statute says that funds have to be spent by ex-dates

[01:46:17] Speaker 03:
then the executive cannot terminate the program after sent date because that would violate the statute.

[01:46:30] Speaker 03:
What's your authority for that proposition?

[01:46:34] Speaker 10:
Well, let me say it in two ways.

[01:46:37] Speaker 10:
One is that the agency has to have authority to do everything that it does.

[01:46:41] Speaker 10:
And there's no authority, positive authority, to dismantle the program after it's already been fully disbursed.

[01:46:47] Speaker 10:
So that's one point.

[01:46:49] Speaker 10:
The EPA has never pointed to any authority to redo the program.

[01:46:52] Speaker 10:
And second, I think that this statute contemplates that once the grants are made, they won't be just immediately unmade, thus putting the agency into the position it would have been if it had never made them at all.

[01:47:04] Speaker 10:
The EPA's position seems to be that if on September 30, 2024,

[01:47:09] Speaker 10:
All the grants were made.

[01:47:10] Speaker 10:
And then the next day, the program was just completely dismantled that EPA would have complied with the statute simply because the grants were made, even though they were unmade the next day.

[01:47:19] Speaker 10:
And that can't possibly be right.

[01:47:21] Speaker 10:
This statute presupposes that the program will not be shut down, that once it is put into existence, it just won't be eliminated.

[01:47:27] Speaker 10:
And so I do think there's a statutory violation where EPA wipes out the program, putting the parties in exactly the situation they would have been in if it had violated the statute by never having made the grants at all.

[01:47:37] Speaker 10:
So I think that's the simplest way.

[01:47:39] Speaker 10:
That's the way I understand this.

[01:47:41] Speaker 03:
But I talked at the posture in the district board, and before the merits panel was that the statutory violation was not just terminating, but also without re-obligate.

[01:47:58] Speaker 03:
That is correct, John.

[01:47:59] Speaker 03:
That the real core of the violation was, well, you're just trying to not spend this money

[01:48:08] Speaker 03:
And so maybe you can terminate, but if you terminate, you've got to re-obligate.

[01:48:15] Speaker 03:
And we don't believe that there's any intention of re-obligating, so that's the violation.

[01:48:20] Speaker 03:
I thought that that was the argument that was made below.

[01:48:24] Speaker 10:
That's right.

[01:48:25] Speaker 10:
And the district court made a factual finding that this dismantling was going ahead and that the representations in court about re-obligation were inconsistent with the record.

[01:48:34] Speaker 03:
But I guess I'm trying to forgive

[01:48:39] Speaker 03:
I think about these things like a trial judge.

[01:48:45] Speaker 03:
And I try to think of what is the cause of action and what would be the elements of the cause of action.

[01:48:53] Speaker 03:
The elements of the statutory cause of action.

[01:48:57] Speaker 03:
Is no intent to re-obligate the funds an element of the statutory cause of action?

[01:49:04] Speaker 10:
Yes or no?

[01:49:05] Speaker 10:
I don't think it is.

[01:49:06] Speaker 10:
There is a factual finding, but I don't think it is.

[01:49:08] Speaker 10:
If I can explain that and answer everyone.

[01:49:10] Speaker 10:
So EPA said that it asserted it was going to re-obligate the funds.

[01:49:16] Speaker 10:
But EPA also said that it had these dramatic programmatic concerns and it wanted to re-obligate the funds in this completely different way.

[01:49:23] Speaker 10:
It never specified how it would do it, but it made clear that it was going to re-obligate the funds according to a program that was radically different from the original program.

[01:49:31] Speaker 10:
If it did that, that too would violate the statute because any limited authority to obligate funds after an appropriations deadline

[01:49:39] Speaker 10:
has to be pursuant to substantially identical grants.

[01:49:43] Speaker 10:
So really, EPA had two options.

[01:49:45] Speaker 10:
There's two options on the table.

[01:49:46] Speaker 10:
One is that as the district court found, which was not clearly erroneous, they weren't going to do it at all.

[01:49:51] Speaker 10:
Or number two, even accepting everything EPA said, they were going to re-obligate in a manner that would also have violated the statute.

[01:49:58] Speaker 11:
So either way- Which statute?

[01:50:00] Speaker 11:
When you say they would have to re-obligate in a manner that's substantially identical,

[01:50:05] Speaker 11:
is substantially identical coming from the IRA slash GGRF or is that coming from somewhere?

[01:50:10] Speaker 10:
No, that's a general principle of the appropriations law that the Comptroller General has applied.

[01:50:14] Speaker 10:
And the statute creates a deadline of September 30th, 2024.

[01:50:19] Speaker 10:
There is some authority from the GIO that if you're going to give a substantially identical grant, it's like a continuation of the original grant and sort of like nuke protunque.

[01:50:28] Speaker 10:
The date of the grant will be deemed to have been before the deadline.

[01:50:31] Speaker 10:
And that's how, in very unusual cases, the GAO has authorized the re-obligation after a statutory deadline.

[01:50:37] Speaker 11:
But other than that situation- So it's the statutory deadline that's doing the work then?

[01:50:41] Speaker 10:
I'm just trying to figure out- Yes, the statutory deadline's doing the work.

[01:50:42] Speaker 10:
Because if EPA completely redid the program after the deadline, that would violate the requirement.

[01:50:47] Speaker 10:
that the funds be obligated by the deadline.

[01:50:49] Speaker 10:
So, I mean, I think the easiest way to resolve this case is just to say that the district court made a factual finding that the funds weren't going to be re-obligated and EPA has not argued that that's clearly erroneous and the court can just end the analysis there.

[01:51:02] Speaker 10:
But if the court were to decide to credit all the representations that the funds would be re-obligated according to some completely different scheme, that would just be- I'm trying to understand what work the finding

[01:51:14] Speaker 03:
that the EPA had no intention of re-obligating funds.

[01:51:19] Speaker 03:
What work does that finding do?

[01:51:21] Speaker 03:
You just told me that it's not an element.

[01:51:24] Speaker 03:
Your cause of action sort of cares.

[01:51:28] Speaker 03:
Why has so much ink been spilled on that in the briefing before the panel, briefing before the district court, briefing before us,

[01:51:42] Speaker 03:
briefing in the panel and dissents.

[01:51:46] Speaker 03:
You're telling me that that finding doesn't matter for your claim.

[01:51:52] Speaker 10:
Is that right or wrong?

[01:51:54] Speaker 10:
I think it matters because

[01:51:57] Speaker 10:
it establishes that EPA necessarily was going to violate the statute.

[01:52:01] Speaker 10:
You see, we're willing to accept for the sake of argument.

[01:52:04] Speaker 03:
But your argument is that the statute was violated the moment that they terminated after the statutory deadline.

[01:52:13] Speaker 15:
So isn't it, let me see if I can, you can repeat it.

[01:52:17] Speaker 15:
I'd like for him to answer my question.

[01:52:19] Speaker 15:
I'm just gonna, okay.

[01:52:20] Speaker 03:
I'd like for him to answer my question, as I asked.

[01:52:24] Speaker 10:
Let me answer the question.

[01:52:25] Speaker 10:
So we're willing to accept for the sake of argument that if EPA complied with the requirement to give substantially identical grants, which it clearly wasn't going to do because it says it wasn't going to do that, but if EPA had complied and issued substantially identical grants, then under these GAO cases, that might not have been a statutory obligation.

[01:52:45] Speaker 10:
But we know it wasn't going to do that because there's a factual finding that it wasn't going to do that because it was going to terminate it altogether.

[01:52:51] Speaker 10:
And then even accepting everything that EPA said, it was going to give completely different grants.

[01:52:56] Speaker 10:
So that's the only slight modification to your question about terminating after the deadline.

[01:53:00] Speaker 10:
Does GAO authorities say that there's this very unusual exception for substantially identifiable grants, but we know that EPA wasn't going to do that.

[01:53:08] Speaker 10:
I'm sorry, Josh.

[01:53:11] Speaker 15:
I guess I had been thinking about, and your answer was not surprisingly more nuanced, but I had been thinking about them as almost built-in suspenders, that either EPA has just determined it's not going to spend the money, and the district court has so found, and or

[01:53:34] Speaker 15:
It can't anyway it says we're going to re obligate the money and then it kind of looks around and it says yeah yeah there's a replacement grant and and says that's what we're going to do.

[01:53:43] Speaker 15:
And you're right that replacement grant is very, very narrow authority and they haven't pointed to.

[01:53:50] Speaker 15:
any other authority.

[01:53:53] Speaker 15:
So again, it's sort of, that's the suspenders on the district court's finding that they never meant to anyway.

[01:53:59] Speaker 15:
So it's like they never meant to, they didn't have any authority to, so that backs up what the district court found.

[01:54:08] Speaker 10:
I think that's probably a better way of putting it than I did.

[01:54:10] Speaker 10:
I mean, when EPA terminated the program, it just terminated it completely.

[01:54:14] Speaker 10:
And then this notion of re-obligation sort of came up after the fact.

[01:54:17] Speaker 10:
to try to retroactively justify EPA's actions.

[01:54:20] Speaker 15:
I thought they referred in the termination letters to re-obligation.

[01:54:23] Speaker 15:
And that is actually not really available.

[01:54:27] Speaker 15:
It's not really a re-obligation.

[01:54:28] Speaker 15:
It's a replacement grant.

[01:54:29] Speaker 15:
So it's considered the original obligation, as you said.

[01:54:33] Speaker 15:
So yeah, it's sort of both.

[01:54:35] Speaker 15:
I think that was post hoc.

[01:54:36] Speaker 15:
But they did in the letter.

[01:54:38] Speaker 10:
Right.

[01:54:39] Speaker 10:
Well, there's certainly no indication contemporaneously that EPA was going to comply with the statutory requirements of the IRA by giving a continuation grant.

[01:54:46] Speaker 10:
That was never asserted.

[01:54:47] Speaker 10:
I'm not sure it's ever been asserted at any point in this case that EPA was going to comply with that statutory obligation.

[01:54:52] Speaker 13:
But the statutory deadline is essentially a statutory mandate.

[01:54:56] Speaker 13:
Yes.

[01:54:57] Speaker 13:
And so you wouldn't be able to re-obligate after that time period.

[01:55:00] Speaker 10:
Correct.

[01:55:01] Speaker 10:
I mean, setting aside this very narrow exception for continuations, they would have had no authority to do that.

[01:55:06] Speaker 10:
So EPA's purported plan

[01:55:07] Speaker 10:
setting up an entirely new grant program after the deadline is plainly contrary to law which sets a deadline for September of 24.

[01:55:14] Speaker 10:
That's why I think that the easiest way to view this issue is to say that EPA needs statutory authority to do everything that it does, and it doesn't have the statutory authority to undo and redo the program after the statutory deadline.

[01:55:30] Speaker 08:
interested in how this, I understand your theory of the statutory violation.

[01:55:37] Speaker 08:
How does that theory persist after the repeal act?

[01:55:40] Speaker 08:
Because for the constitutional claim to work, it rests not on the terminations, but it rests on this idea that the government won't re-obligate the grants.

[01:55:52] Speaker 08:
So even just accepting the district court's finding that they're not going to re-obligate the grants,

[01:55:58] Speaker 08:
that whole circumstance has arguably changed now that Congress has said this program is over.

[01:56:05] Speaker 08:
We've shut down the program, not just with respect to the money, but respect to the budget authority and the statutory authority for re-obligating the grants.

[01:56:13] Speaker 08:
And I didn't see anything in plaintiff's briefs accounting for how that change in circumstance can allow this court to uphold the preliminary injunction.

[01:56:24] Speaker 08:
which is based on this idea that they were dismantling a program that was required by law.

[01:56:30] Speaker 08:
Even if they were intending to whatever, dismantle the program, that program no longer exists.

[01:56:36] Speaker 08:
So I don't see, so what is the best argument that your so-called separation of powers or statutory claim persists after the repeal?

[01:56:45] Speaker 10:
So Your Honor, I think the right way to look at this is to ask two questions.

[01:56:49] Speaker 10:
First is when EPA did the thing that it did, was it lawful?

[01:56:54] Speaker 10:
And then second, did the passage of the one big beautiful bill act change that.

[01:56:59] Speaker 10:
So, I'm sorry.

[01:57:01] Speaker 10:
We, as we've argued at length in our briefs, when EPA did what it did and when the district court issued this injunction.

[01:57:09] Speaker 10:
EPA had violated an act of Congress.

[01:57:12] Speaker 10:
EPA had acted without any authority.

[01:57:13] Speaker 10:
It had shut down a program that Congress had authorized.

[01:57:16] Speaker 10:
We have argued that that's a separation of powers and a statutory violation.

[01:57:19] Speaker 10:
So the question is whether the passage, the subsequent passage of the OB-BBA should alter the legal analysis with respect to EPA's prior action.

[01:57:28] Speaker 08:
Well, so I take your point with respect to the grant terminations, right?

[01:57:32] Speaker 08:
So grant terminations you've argued were unlawful.

[01:57:35] Speaker 08:
for a variety of reasons, that is backward looking action as to whether those grants should be restored.

[01:57:43] Speaker 08:
But as to the separation of powers argument with respect to upholding a preliminary injunction, which is forward looking, this court has to take the law as it is.

[01:57:53] Speaker 08:
And the law as it is under what Congress passed in this repeal act is that there's no longer any authority for this program.

[01:58:01] Speaker 08:
So if EPA could not reissue these grants,

[01:58:06] Speaker 08:
How could we uphold an injunction requiring them to issue new grants?

[01:58:12] Speaker 08:
Because there's no longer, as you said, an EPA can only act if there's statutory authority.

[01:58:17] Speaker 08:
That statutory authority has been repealed.

[01:58:20] Speaker 10:
So I don't agree with that for two reasons.

[01:58:23] Speaker 10:
So first of all, I just point to the text of the Act that I think was written to close any such arguments.

[01:58:28] Speaker 10:
It recites that the unobligated balances of amounts made available to carry out the section are rescinded.

[01:58:35] Speaker 10:
So it's specifically contemplating that the obligated balances are not rescinded.

[01:58:40] Speaker 10:
And it knew that at the time that the statute was passed, those funds were still obligated because there was an injunction against the termination.

[01:58:48] Speaker 08:
But you're just reading the unobligated funds part.

[01:58:50] Speaker 08:
The repeal act also says that section 134, which is

[01:58:54] Speaker 08:
you know, the section that was created by the Inflation Reduction Act for these programs is repealed.

[01:58:59] Speaker 10:
But it was a prospective repeal, Your Honor.

[01:59:01] Speaker 10:
The prospective repeal of a statute doesn't retroactively render an illegal action legal.

[01:59:05] Speaker 10:
Like if there's a criminal statute, and then someone commits a crime, and then the criminal statute is repealed, then unless the statute specifically says it, it doesn't mean that the person's crime is excused.

[01:59:15] Speaker 10:
It just means going forward.

[01:59:16] Speaker 08:
Well, but there are two different illegal acts.

[01:59:18] Speaker 08:
One alleged illegal act is the grant terminations.

[01:59:22] Speaker 08:
Another one is dismantling the program.

[01:59:25] Speaker 08:
that act can no longer be illegal after the repeal act.

[01:59:30] Speaker 10:
It was illegal in the moment it happened.

[01:59:33] Speaker 09:
Are the grant agreements still in effect after the repeal for the already obligated funds?

[01:59:39] Speaker 10:
Yes, absolutely, they are.

[01:59:40] Speaker 09:
So is the answer to Judge Rao's question that it would proceed under the still existing grant agreements?

[01:59:48] Speaker 10:
It would.

[01:59:48] Speaker 10:
That would be the effect.

[01:59:49] Speaker 10:
I mean, you're not asserting a breach of contract or breach of grant agreement.

[01:59:52] Speaker 08:
But then you're right back to the court of federal claims.

[01:59:54] Speaker 08:
If the claims are based on the grant agreements,

[01:59:58] Speaker 08:
and there's no longer the possibility of a dismantling claim because Congress has by law dismantled the program, then where does the constitutional claim come from?

[02:00:13] Speaker 08:
That justifies a preliminary injunction, which is a forward-looking restriction on what the government can do.

[02:00:22] Speaker 10:
It's a forward looking restriction because the government's prior illegal action doesn't become legal by virtue of the statute because the statute doesn't purport to alter the legal status.

[02:00:31] Speaker 10:
It could.

[02:00:32] Speaker 11:
So I mean, a statute could do that.

[02:00:34] Speaker 11:
And the question is whether this one did and I guess

[02:00:37] Speaker 11:
as an adjunct to which I draw is asking you.

[02:00:39] Speaker 11:
So the statute says section 134 of the Clean Air Act is repealed.

[02:00:42] Speaker 11:
And then it goes on to deal with the unobligated funds.

[02:00:46] Speaker 11:
What is your interpretation of the is repealed part?

[02:00:48] Speaker 11:
What did that do?

[02:00:49] Speaker 11:
What work did that do, if any, independently of what followed?

[02:00:54] Speaker 10:
So I don't really think it did much work at all, but to the extent that it did any work, it's possible that it had the effect of eliminating certain statutory requirements on grantees.

[02:01:03] Speaker 10:
So there's a part of the statute that sets forth certain obligations.

[02:01:06] Speaker 10:
That's A.

[02:01:07] Speaker 10:
to issue grants by September of 24.

[02:01:09] Speaker 10:
And then there's various requirements about the use of funds B for eligible recipients that go forward.

[02:01:15] Speaker 10:
So I suppose you might say that the repeal got rid of B on a forward looking basis, certain requirements or grantees on the use of funds.

[02:01:22] Speaker 10:
Of course, the contracts themselves already have a set of requirements.

[02:01:25] Speaker 15:
So that actually didn't have much of a- Why would it even under your theory that the

[02:01:32] Speaker 15:
Grants are governed by the statute that was on the books when they were awarded.

[02:01:38] Speaker 10:
So I think that's the best interpretation.

[02:01:40] Speaker 10:
I mean, if you want to give the repeal some meaning, that might be how you give it.

[02:01:45] Speaker 10:
But I do think that the best way to look at this is that the repeal is sort of belt and suspenders.

[02:01:49] Speaker 15:
I don't know if you had two answers.

[02:01:51] Speaker 15:
In answer to Judge Rao's question, and we kind of took you off track, as is our want, I apologize.

[02:01:59] Speaker 15:
But she had said, you know, you have to take the lives it is, overlooking, there's no longer an authority to this.

[02:02:05] Speaker 15:
How can there be a statutory violation of the IRA and or constitutional claim?

[02:02:11] Speaker 15:
And you said you have two reasons, one obligated balances, only the obligated balances are rescinded.

[02:02:15] Speaker 15:
And I don't think we let you get to your second.

[02:02:17] Speaker 10:
Okay.

[02:02:17] Speaker 10:
I guess my second was that you should read the two parts of the statutes together.

[02:02:20] Speaker 10:
So there's the repeal, number one.

[02:02:24] Speaker 10:
And then there's the unobligated balances of the amounts made available to carry out that section, number two, are rescinded.

[02:02:29] Speaker 10:
And I just think the sensible way to look at this is to say that the repeal is connected to the rescission of the unobligated balances.

[02:02:37] Speaker 10:
And so, I'm sorry.

[02:02:39] Speaker 10:
Go ahead.

[02:02:39] Speaker 10:
So, you know, the statute was taking a snapshot in time, so looking on the day the statute was passed and saying, okay, if there are funds which have not been obligated, which there were, there were some administrative costs that weren't obligated,

[02:02:51] Speaker 10:
those funds are rescinded.

[02:02:52] Speaker 10:
And I guess with respect to those funds, the statute doesn't have any forward-looking effect.

[02:02:57] Speaker 10:
But it didn't purport to rescind the obligated funds, even if those funds were deobligated afterwards, as a question from the bench in the first step, those would become orphan funds unless the statute still applied to them going forwards.

[02:03:11] Speaker 15:
It's interesting to me that Congress did only what it did.

[02:03:15] Speaker 15:
I had the impression that

[02:03:19] Speaker 15:
that Congress felt like it couldn't.

[02:03:22] Speaker 15:
It would be really extraordinary for it to rescind funds that had already been spent.

[02:03:32] Speaker 15:
Is that something that you know anything about or can help us think about?

[02:03:38] Speaker 10:
I mean, it would have been extraordinary.

[02:03:39] Speaker 10:
It would have exposed Congress to litigation.

[02:03:42] Speaker 10:
There would have been takings claims, other types of claims.

[02:03:44] Speaker 10:
And if Congress had enacted that statute, it would have been very legally vulnerable.

[02:03:48] Speaker 10:
And so I assume that whoever was advising, whoever drafted the statute said, you know, don't do that, make this as very narrow targeted appeal and don't purport to interfere with these already obligated funds.

[02:03:58] Speaker 10:
And so Congress didn't, it was very careful to avoid that outcome, which is why we're here making the same arguments as we would have made before the repeal.

[02:04:05] Speaker 10:
Because I think the best reading of the statute is that Congress just didn't want to touch the legal issues that would come into play if it purported to issue some kind of retroactive appeal.

[02:04:17] Speaker 14:
I'm taking the same actions I did here, but it did them the day after Refuel Act.

[02:04:23] Speaker 14:
It issues a notice of termination across the board to everybody.

[02:04:27] Speaker 14:
It says, and you keep throwing some statements about we're getting rid of this program.

[02:04:32] Speaker 14:
Congress got rid of it and we're happy to get rid of it.

[02:04:38] Speaker 14:
What's supposed to happen going forward?

[02:04:44] Speaker 14:
The money's in the accounts.

[02:04:48] Speaker 14:
But provisions, I mean, does the supervision by EPA end?

[02:04:56] Speaker 14:
Does the EPA have to keep supervising and authorizing, I guess, the girls more than, I think, 10% of the award?

[02:05:06] Speaker 14:
Does the court force the EPA to continue that supervisory role?

[02:05:11] Speaker 14:
I'm trying to pause it in a real world way.

[02:05:18] Speaker 14:
what, how we're supposed to navigate this forward looking release going forward, post repeal.

[02:05:25] Speaker 10:
Well, I think there is no way, which is part of the reason the court shouldn't construe the statute if it had that effect on the separation of powers claim, right?

[02:05:32] Speaker 14:
Because... I'm sorry, there is no way or is there?

[02:05:34] Speaker 10:
No, I... I'm sorry, I just didn't hear what you said.

[02:05:37] Speaker 10:
I don't think that the relief that Judge Rao postulates some kind of relief that treats the separation of powers analysis as having changed would really make sense in this case.

[02:05:46] Speaker 14:
So to answer your question directly... I'm sorry, my hypothetical was it never happened beforehand, it only happened after the repeal.

[02:05:52] Speaker 10:
I see.

[02:05:53] Speaker 14:
And you would still say it's a separation of powers problem?

[02:05:55] Speaker 10:
Well, if it happened, I would still, yeah, I would probably still say that because the statute still says the unobligated balances of amounts made available are rescinded.

[02:06:03] Speaker 10:
So I would say that there's probably a violation of that provision because those amounts weren't rescinded by the statute.

[02:06:07] Speaker 10:
In terms of maybe the separation of powers argument would be harder because you have to analyze the action on the date that it occurred.

[02:06:13] Speaker 10:
And so on the day that this action occurred, the statute was still in place.

[02:06:16] Speaker 10:
So, you know, I probably would still make the separation of powers argument, because I think the best construction of the statute is that the repeal applied only to the unobligated funds.

[02:06:25] Speaker 14:
But a district court issue injunction saying we've done all these notices of termination that says is here, you cannot effectuate those notices of termination.

[02:06:34] Speaker 10:
I think our argument would be harder, but we'd probably still make the same statutory and constitutional claims because we wouldn't interpret this repeal as affecting the backward-looking grants, in your honor's hypothetical.

[02:06:47] Speaker 11:
So I think it has to be the same.

[02:06:48] Speaker 11:
I think your argument would stay the same, regardless of when the terminations occur.

[02:06:52] Speaker 11:
But if the unobligated balances are gone, and those unobligated balances were meant to deal with the agency's funds for administering the act,

[02:07:04] Speaker 11:
which, as I understand it, that's what's really at issue.

[02:07:06] Speaker 11:
That's the 19 million that's in the estimate.

[02:07:12] Speaker 11:
Then there's nothing left with which to administer the act.

[02:07:16] Speaker 10:
I disagree with that, Your Honor.

[02:07:17] Speaker 10:
EPA gets $3 billion of general appropriations to monitor all the statutory programs.

[02:07:22] Speaker 10:
I think it has abundant statutory authority to use that general appropriation.

[02:07:26] Speaker 10:
to engage in it, whatever monitoring if things is appropriate.

[02:07:28] Speaker 14:
So, you know, I don't think that EPA's hands are tied with respect to- Just to clarify, I mean, the assumption here is that the repeal of the unobligated funds was administrative.

[02:07:41] Speaker 14:
Funds of Congress had said expressly, we hear by, if you want to take back whatever the right word is for the unobligated funds,

[02:07:53] Speaker 14:
that would have been spent on administration of this program.

[02:07:56] Speaker 14:
I just don't know enough about this sort of law.

[02:08:01] Speaker 14:
It would be okay for EPA to say, that's okay.

[02:08:03] Speaker 14:
We've got other funds over here that we can use to administer, even though Congress said we're taking back money for you to administer this program.

[02:08:11] Speaker 10:
I think EPA could do that.

[02:08:12] Speaker 10:
Yes.

[02:08:13] Speaker 10:
I think that EPA has a general appropriation, which it can use for oversight of all of its grant programs and all of its functions.

[02:08:19] Speaker 10:
And I think that EPA is allowed to use that general authority and allocate it however it wants to.

[02:08:23] Speaker 11:
Would they have to?

[02:08:24] Speaker 11:
So you think EPA could tap into other funds?

[02:08:28] Speaker 11:
Do you think that EPA would have to with respect to contracts that are grants that are terminated after the repeal?

[02:08:35] Speaker 11:
Or do you think it's discretionary?

[02:08:36] Speaker 10:
I think it's ultimately discretionary.

[02:08:38] Speaker 10:
I mean, we're not asking for an injunction forcing EPA to continue monitoring us.

[02:08:42] Speaker 10:
We're not asking for specific performance of any monitoring requirement.

[02:08:45] Speaker 10:
You can even call that a requirement in these agreements.

[02:08:51] Speaker 10:
But I think that EPA has abundant authority to exercise whatever oversight function it wishes.

[02:08:57] Speaker 10:
there may be a world in which EPA just systematically refuses to do things under the agreement, which might result in a breach of contract or potentially a separation of powers problem.

[02:09:06] Speaker 10:
But I think it's important to recognize that we're not really asking EPA to do anything at this point, other than not interfere with our property interests in the contract, right?

[02:09:16] Speaker 10:
And not dismantle the entire program.

[02:09:18] Speaker 10:
We're not asking for any specific performance of any particular contractual obligation in these grants.

[02:09:23] Speaker 10:
We're just saying to EPA,

[02:09:24] Speaker 10:
You know, don't dismantle the entire program and don't interfere with our proprietary interest.

[02:09:29] Speaker 14:
What's the difference between that and going through the closeout process, which could leave this money in your account just the same, it'd be your money.

[02:09:41] Speaker 14:
So go through the closeout process.

[02:09:42] Speaker 14:
I assume you intend to satisfy all of its requirements and it will be your money.

[02:09:49] Speaker 10:
Your Honor, we think that probably would happen.

[02:09:51] Speaker 10:
We don't think it makes sense to do that.

[02:09:53] Speaker 10:
EPA has this argument.

[02:09:55] Speaker 14:
So you could go through the closeout program.

[02:09:59] Speaker 14:
And I assume your view would be you would be able to comply with all of its requirements such that the money would remain yours.

[02:10:06] Speaker 14:
And money in the accounts would remain yours.

[02:10:10] Speaker 14:
And then it would be clear at that point, the lease of supervision.

[02:10:14] Speaker 14:
I think the obligation to still comply with the statutory purposes would go forward.

[02:10:22] Speaker 14:
Why isn't that sufficient, if not even better for you?

[02:10:28] Speaker 10:
If that is the outcome, obviously we will accept it.

[02:10:30] Speaker 10:
That is the outcome.

[02:10:31] Speaker 14:
I'm not asking whether you'll accept the rule.

[02:10:32] Speaker 14:
I'm asking you to understand why, given there's been this repeal, why that isn't what should happen next.

[02:10:43] Speaker 14:
And maybe the funds stay frozen so neither party can do anything with it until the closeout process is done.

[02:10:51] Speaker 10:
I just don't think it's logical as the matter of the sound administration of the courts to untether the termination and then the infringement on the property interests that may or may not happen, depending on EPA's decisions pursuant to that termination.

[02:11:04] Speaker 10:
Like whatever Congress meant in 702, I don't think it intended for like one challenge to the termination to be parked in the court of federal claims and the other to be in federal district court.

[02:11:13] Speaker 10:
We just don't think that's the way to run the judicial railroad.

[02:11:16] Speaker 10:
And so that's why we've argued that all these things- Right, it's just sometimes that is what happens.

[02:11:21] Speaker 14:
with Tucker Act claims, contract claims go there, and district claims stay in district court.

[02:11:26] Speaker 14:
So there's nothing contrary to that, but I'm really just trying to get to this injunction, which was written at a time, fair to the district court, obviously, but it was a different world.

[02:11:38] Speaker 14:
But now, I think we agree that they don't have to engage as a matter of statutory law post-repeal in

[02:11:51] Speaker 14:
effectuated the agreement.

[02:11:54] Speaker 14:
And if they say the next step in our view is, we're going to issue a new notice of termination, the injunction only applies to one with a certain date on it, based on the repeal, and let's do the closeout process.

[02:12:11] Speaker 14:
Either everyone agrees, we won't touch the money, it'll stay frozen there until we finish that process.

[02:12:18] Speaker 14:
What

[02:12:20] Speaker 14:
What's the problem with that scenario?

[02:12:21] Speaker 14:
I'm just having trouble understanding what the problem is.

[02:12:24] Speaker 14:
If I'm reading the closeout process accurately, which could be a problem for you to point out, you end up with the money at the end.

[02:12:32] Speaker 10:
So we definitely think your honor has read the closeout provisions accurately.

[02:12:36] Speaker 10:
We haven't argued for that.

[02:12:37] Speaker 10:
We argued for an injunction against a statutory violation because I think that a client is committed to following the statute and the statutory program.

[02:12:45] Speaker 10:
And we're not looking for- What does it mean

[02:12:50] Speaker 14:
have an injunction not to get rid of the statutory program.

[02:12:53] Speaker 14:
So that, are you reading this injunction as then obligating, I don't see this in the words of it, obligating the EPA going forward to continue working with you all under this program.

[02:13:07] Speaker 14:
I don't know, having meetings, obviously signing off on 10% or dispersals that reduce

[02:13:19] Speaker 14:
by 10% or more than 10%, whatever that rule is.

[02:13:21] Speaker 14:
There's rules on the side of dispersals they have to stop on.

[02:13:24] Speaker 10:
That- We've never asked for any of that, Your Honor.

[02:13:27] Speaker 14:
I mean, we're not asking- Right, so that's not in the injunction here, so- No, because we've never asked for that.

[02:13:31] Speaker 10:
This is not about, we're not asking for EPA to do anything.

[02:13:34] Speaker 10:
None of the grantees have asked for these additional dispersal authorities- So if you don't want them to do anything, you want the closeout outcome.

[02:13:43] Speaker 10:
I don't think we do, Your Honor.

[02:13:44] Speaker 14:
If that's- Okay, this is what I'm missing is the delta between what you

[02:13:48] Speaker 14:
want and what the closeout agreement would get you.

[02:13:51] Speaker 14:
What is that, Delta?

[02:13:53] Speaker 10:
I mean, EPA has said in its brief that if there's a closeout, it will take the position that it will sweep all the money back.

[02:14:00] Speaker 10:
And it has characterized the contrary position as implausible, even though I think that Your Honor is correct that the plain text of these agreements would require that outcome.

[02:14:07] Speaker 10:
Okay, but certainly.

[02:14:07] Speaker 14:
I know, but that could be, if the funds stay frozen, then that could be, you'd go through it.

[02:14:12] Speaker 14:
And then, then that would be a head on contract dispute.

[02:14:18] Speaker 14:
that, again, money could stay frozen until that's resolved.

[02:14:22] Speaker 14:
Is it not?

[02:14:24] Speaker 10:
All I can say is that the injunction that the district court entered, I think it was lawfully entered.

[02:14:27] Speaker 10:
And that's the injunction we're asking for on appeal for the court to affirm.

[02:14:31] Speaker 14:
But otherwise, there's no practical delta for you between what the closeout process would get you and assuming the money can't be swept away.

[02:14:40] Speaker 14:
A little position is you could get it back in your contract claim anyhow.

[02:14:47] Speaker 10:
Well, if the closeout occurs, then there's no more grant agreement.

[02:14:51] Speaker 10:
I mean, it's true, we'd still have to use the money for certain purposes, but it wouldn't be an identical outcome.

[02:14:56] Speaker 14:
But identicalism, lack of identicalism is irreparable harm.

[02:15:03] Speaker 10:
Right, Your Honor, but look, I mean, EPA will certainly take the position.

[02:15:06] Speaker 14:
There must be a reason you're resisting.

[02:15:08] Speaker 10:
Look, Your Honor, at the end of the day, the court decides that the correct way to do this is for

[02:15:14] Speaker 10:
like half the case, like the challenge to the termination to go to the court of federal claims, but the district court still has the authority to issue an injunction ensuring that the funds stay with the grantees.

[02:15:23] Speaker 10:
You know, obviously that would be an outcome that we would accept.

[02:15:26] Speaker 10:
I mean, that would be legally correct.

[02:15:27] Speaker 10:
I think if the case, if the, if, as the government suggests, you have to divide up the case in that way, but you know, we've never asked for that because we think that all of the whole challenge should be heard as one unified whole.

[02:15:40] Speaker 10:
And the district court had the authority to issue the injunction that it did.

[02:15:42] Speaker 10:
And that's why we're asking the court to affirm the injunction.

[02:15:45] Speaker 15:
Why is it not in indicium that this is a contract claim that belongs in the Court of Federal Claims that part of the relief that the district court granted was to reinstate the contract?

[02:16:02] Speaker 10:
So I think it's not an addition of a contract claim because I view that as the relief to ensure that the statutory and constitutional violations didn't occur.

[02:16:10] Speaker 10:
So I think the way to think about it is first what's the statutory or constitutional violation and then what's the remedy for that.

[02:16:17] Speaker 10:
So, for example, we argue that there's a violation of the IRA.

[02:16:20] Speaker 10:
or we argue that the agency acted arbitrary and capriciously, that's a statutory violation, not a contractual violation, and that opens the door for the court to issue a form of relief that will ensure that that violation is remedied.

[02:16:32] Speaker 10:
And in this case, the court concluded that the way to effectuate that was to issue this prohibitory injunction against the dismantling of the whole program for what we argue is an arbitrary and capricious reason.

[02:16:43] Speaker 10:
But there's no authority that suggests that the mere fact that the court issues such a remedy is just a sufficient basis to

[02:16:49] Speaker 10:
eliminate jurisdiction, right?

[02:16:50] Speaker 10:
I mean, I think that the NIH case is a lot narrower than that.

[02:16:53] Speaker 10:
The NIH case does say that- Jeff Rowe had asked you- Then prong two- Oh, sorry.

[02:16:59] Speaker 10:
Then prong two of Megapulse is doing no work.

[02:17:01] Speaker 10:
No, I don't think so, Ewan.

[02:17:03] Speaker 10:
So there's two prongs of Megapulse.

[02:17:04] Speaker 10:
One is the relief requested.

[02:17:06] Speaker 06:
You're saying you can go to district court no matter how quintessentially contractual

[02:17:14] Speaker 06:
the remedy is, literally reinstating the contract and that doesn't trigger Megapulse.

[02:17:21] Speaker 10:
So I think that the second prong of Megapulse in terms of the relief that's requested is directed to figuring out whether the relief you're asking for is relief that the court of federal claims can give, which is to say money from the government.

[02:17:32] Speaker 10:
I actually think that the Supreme Court's articulation of that in the NIH case is quite helpful.

[02:17:36] Speaker 10:
The court says, I'm just reading from the Supreme Court's order in the NIH case, the Administrative Procedure Act's limited waiver of sovereign immunity

[02:17:44] Speaker 10:
does not provide the district court with jurisdiction to adjudicate claims based on the grants, that's one, or to order relief designed to enforce any obligation to pay money pursuant to those grants, that's two.

[02:17:56] Speaker 10:
So we're definitely not asking for enforcement of any obligation to pay money pursuant to the grants.

[02:18:01] Speaker 06:
The Court of Federal Claims can't give specific performance on a contract.

[02:18:07] Speaker 06:
That's true, so I think that's- Specific performance on a contract is heartland prone to megapulse

[02:18:13] Speaker 06:
pointing you in the direction of that court.

[02:18:17] Speaker 10:
I agree with the court that we could not have come to district court in this case and said, your honor, there's been an API violation because there's been a violation of the contract.

[02:18:26] Speaker 10:
In other words, we couldn't have said that a contract is a type of law, it's private law, and therefore, because the agency has acted contrary to that private law, it's acted contrary to law under the APA,

[02:18:37] Speaker 10:
and therefore the correct remedy is to order specific performance of contractual obligations.

[02:18:41] Speaker 10:
That, I agree, is a claim that's based on a contract when the legal right that's being asserted is the right to have the contract followed.

[02:18:48] Speaker 10:
But that's definitely not our claim.

[02:18:49] Speaker 10:
We've never said that.

[02:18:50] Speaker 10:
We've always argued a constitutional claim, a statutory claim, and a regulatory claim, and therefore it's not based on a contract within the meaning of megapoll.

[02:18:58] Speaker 10:
So I do agree that specific performance is improper

[02:19:02] Speaker 10:
when the claim is founded on the contract in the sense that the source of law that was violated.

[02:19:06] Speaker 06:
I take your point on prong one.

[02:19:08] Speaker 06:
You're invoking public law sources, APA and IRA, and maybe the Constitution.

[02:19:19] Speaker 06:
But in order to produce a remedy that to me seems like totally heartland court of federal claims on prong two.

[02:19:29] Speaker 10:
I don't think it is.

[02:19:30] Speaker 10:
So let me just say two things about that.

[02:19:32] Speaker 10:
So first of all, I think Heartland Court of Federal Claims is a money judgment because that's the remedy that the Court of Federal Claims is empowered to get.

[02:19:38] Speaker 06:
Yeah, fair enough.

[02:19:38] Speaker 06:
But so is specific performance is pretty close to the Heartland.

[02:19:42] Speaker 10:
No, I mean, I think that when we think about prong two, the way I think about that is that the court should figure out whether the relief that's being sought is relief that would be available in the Court of Federal Claims.

[02:19:51] Speaker 10:
And if so, that may displace the district court's authority.

[02:19:54] Speaker 10:
But here, the relief we're asking for is clearly not available in the Court of Federal Claims.

[02:19:57] Speaker 10:
And so it doesn't displace

[02:19:59] Speaker 10:
district court's authority.

[02:20:00] Speaker 10:
I also take issue with the idea that this is specific performance of the grant.

[02:20:03] Speaker 10:
I think there's a difference between blocking the government from taking an action that has the effect of dismantling the program and interfering with their property interests and specific performance of a specific contractual obligation.

[02:20:15] Speaker 10:
Again, like this is a prohibitive injunction that doesn't force EPA to really do anything.

[02:20:20] Speaker 10:
It's interesting in the reply briefing, the EPA says, well, the reason this is specific performance

[02:20:24] Speaker 10:
There's some scenario in which EPA would have to approve some action that is inconsistent with the EPA approved work plan.

[02:20:32] Speaker 10:
Yeah, but none of the grantees have asked for that.

[02:20:34] Speaker 10:
And the district court's order doesn't order EPA to do that.

[02:20:36] Speaker 10:
So I don't think that this is really reasonably characterized as specific performance of a particular term.

[02:20:41] Speaker 10:
I think it's a prohibitory injunction designed to enforce compliance with the statute and the APA.

[02:20:47] Speaker 04:
Can I ask a question about this?

[02:20:48] Speaker 04:
So the result of what I'm going to say is that, as Judge Katz was suggesting, the first prong of megapoles really drives the train.

[02:20:56] Speaker 04:
It seems to me, although Ingersoll ran said something else.

[02:21:00] Speaker 04:
We've also said this trans Ohio sharp written by Judge Scalia tells us a district court may accept jurisdiction over a statutory or constitutional claim for adjunctive relief, even where the relief sought is an order forcing the government to obey the terms of the contract that is specific performance.

[02:21:16] Speaker 04:
Our cases have always, I mean, has something from this court or the Supreme Court overturned our fairly simple approach that if your claim is truly based on a statute, you can get relief that looks like specific performance of a contract?

[02:21:31] Speaker 10:
I think that prong, too, as elaborated in DOE NIH, is ultimately about money from the US Treasury.

[02:21:36] Speaker 10:
There is this, I mean, I do understand the Supreme Court to have said in DOE that if the plaintiff is asserting an arbitrary and capricious

[02:21:43] Speaker 10:
breach of a contract that provides for money from the U.S.

[02:21:46] Speaker 10:
Treasury and the remedy that the plaintiff seeks is money paid directly from the Treasury pursuant to a grant, then perhaps that claim goes to the Court of Federal Claims because that's the court that has been.

[02:21:56] Speaker 04:
And then I just have another clarifying question about what has been enjoined and what we are reviewing because I think it would sure be a problem.

[02:22:03] Speaker 04:
This repeal would be a big problem for you if the government was enjoined on an ongoing basis from terminating the grants.

[02:22:09] Speaker 04:
My understanding is that that is not the injunction and it never has been.

[02:22:13] Speaker 04:
and they could have terminated your contract for better reasons on March 12.

[02:22:17] Speaker 04:
They could have terminated it the day after the repeal, and you would have raised other challenges.

[02:22:22] Speaker 04:
But all that's in front of us is a order saying not to effectuate the March 11 termination notices.

[02:22:29] Speaker 10:
And I think that's correct, Your Honor.

[02:22:32] Speaker 10:
I think all the district court did was the classic APA remedy of setting aside a discrete unlawful agency action.

[02:22:37] Speaker 10:
So if

[02:22:38] Speaker 10:
The EPA wants to do something else going forward.

[02:22:40] Speaker 10:
I'm sure we'll have more litigation about that.

[02:22:42] Speaker 10:
But I don't think that the EPA's action is anything other than invalidate unlawful agency action.

[02:22:47] Speaker 10:
Of course, if the EPA tries to get around the injunction or does something else, we might have an additional litigation.

[02:22:52] Speaker 10:
But we have to consider whether it was lawful in light of current law.

[02:22:57] Speaker 10:
Well, the court always considers current law, but current law may include like looking backwards and finding that the current law is not retroactive.

[02:23:03] Speaker 10:
So I think the way, so again, in a criminal case, suppose the statute's repealed, a criminal law is repealed and someone's indicted before the statute.

[02:23:10] Speaker 10:
Okay, so the court always looks at current law, but current law includes the effect of the repealer.

[02:23:14] Speaker 10:
And if it didn't repeal going backwards, the person can still be criminally charged.

[02:23:18] Speaker 10:
So it's kind of the same thing here.

[02:23:19] Speaker 10:
Like obviously the court always has to look at the US code in front of it.

[02:23:22] Speaker 10:
But if the statute is not retroactive and it clearly isn't, it just says repeal.

[02:23:26] Speaker 10:
It has nothing about retroactivity.

[02:23:27] Speaker 10:
then the unlawfulness of the EPA's action wouldn't be rendered lawful by virtue of a forward-looking repealer statute.

[02:23:37] Speaker 03:
Let's suppose here the government back in February or March said, terminating all these grants, we're going to issue replacement grants, and they lay out precisely when and how that is going to occur.

[02:23:57] Speaker 03:
and you file a lawsuit challenging that as violating the Inflation Reduction Act.

[02:24:07] Speaker 03:
Does that violate Inflation Reduction Act?

[02:24:11] Speaker 10:
If there fell within this very narrow exception for replacement grants that were simply a continuation of the original grants, then I'd say probably it wouldn't.

[02:24:19] Speaker 10:
But that's not what happened.

[02:24:21] Speaker 10:
That's not what the district went down.

[02:24:22] Speaker 03:
I understand that's not what happened.

[02:24:24] Speaker 03:
But it gets back to my question, which is, how do you prove a violation of the statute without also there being a finding then that there is not a replacement or re-obligation or no intention to have a replacement or re-obligation?

[02:24:49] Speaker 03:
You just told me that if there is an intent and a plan to re-obligate the funds, there's no violation of the statute.

[02:24:57] Speaker 03:
But I thought you told me a few minutes ago that you didn't need that element for there to be a violation of the statute.

[02:25:03] Speaker 10:
So I'm confused.

[02:25:04] Speaker 10:
Let me try to make my answer more precise.

[02:25:07] Speaker 10:
I think there's a distinction between a replacement and a more general re-obligation.

[02:25:12] Speaker 10:
So a replacement grant is really essentially the same thing as the original grant.

[02:25:15] Speaker 10:
It's a continuation.

[02:25:17] Speaker 10:
That's why the GIO has said,

[02:25:18] Speaker 10:
that those grants can occur after the deadline because they're really the same grant as the original.

[02:25:23] Speaker 10:
So it's good to have an example of this.

[02:25:25] Speaker 10:
So an example is if a professor has a grant and then the grant goes to his university and the professor switches to a new university, then the agency can sort of issue, reissue the grant to the new university as long as it's the same grant.

[02:25:38] Speaker 10:
Because the idea is that's really just a continuation of the original grant.

[02:25:42] Speaker 10:
It's not a new obligation.

[02:25:43] Speaker 10:
So that type of replacement grants, you know, there is authority from the GAO suggesting that that could happen after a deadline.

[02:25:49] Speaker 10:
But that's an extremely narrow exception.

[02:25:52] Speaker 10:
And anything else other than that would be illegal.

[02:25:55] Speaker 03:
So what is the effect of the repeal today?

[02:26:00] Speaker 03:
Do you agree with your friend on the other side that not even such a replacement grant could be issued today because of the repeal?

[02:26:12] Speaker 10:
Okay, so I don't agree, but even if I'm wrong about what I'm about to say, I think in some ways it make argument stronger so I'll tell you how I read this and then I'll explain how it would work under the contrary reading.

[02:26:23] Speaker 10:
So, the way I read the repealer.

[02:26:26] Speaker 10:
is that the repeal of the statute has to be read in conjunction with the rescission of the unobligated balances.

[02:26:33] Speaker 10:
So the statute is repealed as to the unobligated balances, but the obligated balances stay obligated.

[02:26:39] Speaker 10:
And so the logical way to view that is that the statute continues to apply to those obligated balances.

[02:26:44] Speaker 10:
And the unobligated balances are only those that were unobligated on the date the statute was enacted, which is this 19 million.

[02:26:50] Speaker 10:
And so with respect to the rest of the funds, the repealer doesn't apply.

[02:26:54] Speaker 10:
I think that's the sensible way to read the statute.

[02:26:56] Speaker 10:
In which case, the repeal wouldn't wouldn't matter.

[02:26:59] Speaker 10:
But let's say I'm completely wrong about that.

[02:27:01] Speaker 10:
And let's say EPA is correct.

[02:27:03] Speaker 10:
that if there was a termination that it was just, its hands were tied, it couldn't re-obligate the funds at all.

[02:27:10] Speaker 10:
I think that maybe Judge Pillard suggested in the first half of the argument that almost strengthened the statutory argument, because it would mean that the EPA couldn't give replacement grants either, which means there's absolutely nothing that EPA could do to remedy the violation of the statute that occurred before or BBBA.

[02:27:26] Speaker 15:
I'm a little bit confused, I think, in the same way that Judge Wilkins is in the sense that you said

[02:27:33] Speaker 15:
It's not an element that you have to show that the money either wasn't intended to be or could not be re-spent because I think that it does close the loop.

[02:27:47] Speaker 15:
I mean, if you're taking that sort of, you know, Aiken County, the reason that was the executive purporting to be able to dispense with a congressional act or unilaterally repeal the law or whatever was because

[02:28:03] Speaker 15:
it was refusing, it was not spending and saying we are not gonna spend.

[02:28:10] Speaker 15:
And so here it's taking back or wanting to take back the money and not spend it that makes this defeat the Inflation Reduction Act, the GDRF, not just taking back the money except

[02:28:28] Speaker 15:
So, so there is, I mean to close the loop and make it actually defeating the program, you have to have something in that belt or suspenders part of it.

[02:28:38] Speaker 10:
So I think that that's the sensible way to view this case, that there's this factual finding that the program was being dismantled and the court need not look further as to what might have happened.

[02:28:47] Speaker 15:
So you can do both though, but I'm just responding to the very technical question that Wilkins had, which is, isn't that a material component of the claim of the impoundment, effectively impoundment?

[02:29:00] Speaker 10:
Yes, as to the theory of impoundment, obviously if there's no impoundment, then the separation of powers

[02:29:06] Speaker 10:
claim premise on the empowerment, that would go away.

[02:29:08] Speaker 10:
I agree with that.

[02:29:09] Speaker 10:
But suppose there was a fact, just hypothetically, there's a factual finding from the district court that EPA was going to re-obligate these funds in some completely different ways, some completely different set of grantees.

[02:29:18] Speaker 15:
I understand that goes outside those placement grants, the continuation grants.

[02:29:23] Speaker 15:
All I'm doing is trying to establish that there are different ways to close that loop, but one of them at least, and it could be more than one,

[02:29:32] Speaker 15:
is required for the statutory and the constitutional claim that you're raising.

[02:29:36] Speaker 10:
That's all I'm trying to say.

[02:29:38] Speaker 10:
I mean, that's correct.

[02:29:39] Speaker 10:
I'm just trying to say that one of those things is necessary to close the loop.

[02:29:43] Speaker 09:
So Judge Rao had asked you where in your complaint you tie your APA claim and cause of action to the termination of the Inflation Reduction Act.

[02:29:55] Speaker 09:
And I just want to ask you if this

[02:29:58] Speaker 09:
part of your complaint does that, this is on JA 1209 paragraph 10 of your PI motion and complaint, where you say, EPA's actions are unconstitutional and violate the Administrative Procedure Act, period.

[02:30:13] Speaker 09:
Instead of executing the law as Congress passed it, EPA and its officials have impeded the flow of capital to green banks that Congress intended.

[02:30:21] Speaker 09:
And then you say, defendant's actions violate the separation of powers,

[02:30:25] Speaker 09:
You say it violates the clauses of the constitution and it violates the executive's duty to execute Congress's laws faithfully.

[02:30:31] Speaker 09:
And then you say EPA also acted ultra virus contrary to statutory and regulatory law and arbitrarily and capriciously by pursuing unsupported claims of waste, fraud and abuse and unlawfully terminating the award outside the regular procedures in order to carry out an executive policy of terminating the Inflation Reduction Act.

[02:30:54] Speaker 09:
Does that paragraph make the claim that there's a violation of the APA based on the statutory violation.

[02:31:02] Speaker 10:
I agree.

[02:31:03] Speaker 10:
It makes the claim.

[02:31:03] Speaker 10:
And if I can just add one other thing to that, which is that throughout the case, our theory on the Tucker Act has been that this is or one of our theories has been that this is a dismantlement of the whole program.

[02:31:13] Speaker 10:
So I don't think it makes sense to say that our APA claim isn't challenging the dismantlement when at all times in this case- No, I understand that, but Judge Rauwant- Yes, the answer's yesterday.

[02:31:22] Speaker 10:
I think the paragraph that you read, I don't have the complaint memorized, I admit, but the paragraph you read does make that allegation.

[02:31:33] Speaker 14:
Your friend on the other side flagged with what the government views as sort of a potential conflict between the termination provision, which requires deobligation,

[02:31:44] Speaker 14:
and the closeout provisions.

[02:31:46] Speaker 14:
Do you have a way of reconciling those?

[02:31:50] Speaker 10:
I don't really understand the conflict.

[02:31:51] Speaker 10:
I mean, there is a provision saying that other grantees will get the funds.

[02:31:56] Speaker 10:
If the funds are re-obligated, it's going to go to other grantees.

[02:31:59] Speaker 10:
But here, EPA is terminating the entire program at the same time.

[02:32:01] Speaker 10:
And so, again, we don't want to go to closeout.

[02:32:06] Speaker 10:
We've said that we've argued for affirmance of the injunction.

[02:32:09] Speaker 10:
But if, in fact, that's where the court goes,

[02:32:12] Speaker 10:
then yes, I don't think EPA has a very strong argument that it can sweep the money back.

[02:32:16] Speaker 10:
I mean, that's just the plain text.

[02:32:17] Speaker 14:
I'm just asking as, sorry, I know I'm not trying to do contracts here, but do you have us understanding of how those two provisions in the contract work together?

[02:32:28] Speaker 14:
Is the termination language narrowed or something?

[02:32:31] Speaker 14:
Assuming, because it was obviously at the time when you assumed there was going to be a statute.

[02:32:34] Speaker 10:
I want to think a little more about it, but my understanding of the way this works is that if one grantee is terminated,

[02:32:40] Speaker 10:
then the funds are potentially re-obligated to other grantees, but if they're all terminated at the same time, then that goes away.

[02:32:49] Speaker 14:
They couldn't find a new grantee.

[02:32:51] Speaker 10:
Well, that's not contemplated by these agreements.

[02:32:54] Speaker 10:
I think if the whole program is terminated, then the re-obligation to the other grantees just goes away because there isn't a lot of other grantees obligated to.

[02:33:02] Speaker 14:
I think it says not re-obligate, but de-obligate uncommitted funds

[02:33:08] Speaker 14:
and then re-obligate them.

[02:33:10] Speaker 14:
So they de-obligate.

[02:33:13] Speaker 14:
Well, first of all, what is uncommitted funds?

[02:33:16] Speaker 10:
I want to think about this answer a little bit more and then brief these issues.

[02:33:23] Speaker 10:
That's fair.

[02:33:24] Speaker 13:
So you can vote the APA as the basis for your constitutional claim.

[02:33:32] Speaker 13:
But you primarily relied on an implied clause of action for equitable relief.

[02:33:37] Speaker 13:
I'm just curious about that strategy and whether or not we can address your constitutional claim just through the APA.

[02:33:44] Speaker 10:
So I think the court can address the claim through the APA.

[02:33:47] Speaker 10:
The APA permits the court to enjoin illegal federal action that's contrary to law.

[02:33:52] Speaker 10:
Law includes constitutional law.

[02:33:54] Speaker 10:
If the court concludes that there isn't jurisdiction under the APA, which obviously we don't agree with that, then I think the court could separately consider an implied action that the government has taken action in violation of the constitution.

[02:34:05] Speaker 10:
That's really not the way I'd suggest the court resolve the case.

[02:34:07] Speaker 10:
I think the court should just say that there is jurisdiction under the APA, including to consider a constitutional violation.

[02:34:13] Speaker 06:
And just tying up the loose end to that loose end on Dalton and your theory that this

[02:34:25] Speaker 06:
because it is a constitutional claim.

[02:34:32] Speaker 06:
In order to rule in your favor on that ground, would we have to create a circuit split with the Fourth Circuit on Sustainability Institute, or can you distinguish that case?

[02:34:45] Speaker 10:
I think that it is distinguishable.

[02:34:46] Speaker 10:
I mean, I don't

[02:34:48] Speaker 10:
So, I don't view the facts of sustainability incident as analogous to this one there's an entire statutory subsection that's being terminated I don't think that was the facts of sustainability case I mean here, we're setting these like traditions of the GGRF not just like isolated programs but.

[02:35:03] Speaker 10:
statutory programs.

[02:35:05] Speaker 10:
You'll see 7434 A2 and A3 are just these like full-fledged statutory programs that are being shut down.

[02:35:14] Speaker 06:
So maybe that's bleeding into my second and last question, which is, can you help us think about the line between statutory violations that don't become

[02:35:31] Speaker 06:
constitutional claims through the take care clause or the vesting clause or whatever, and those that do.

[02:35:40] Speaker 06:
Because everyone agrees there has to be some line.

[02:35:42] Speaker 10:
There definitely has to be some line.

[02:35:44] Speaker 10:
So what do you think it is?

[02:35:45] Speaker 10:
So I think there's really two characteristics of EPA's action that establish that this is really a separation of powers violation and not just a mere statutory violation.

[02:35:54] Speaker 10:
So I guess the first thing is the dismantlement, the program for which Congress has appropriated funds.

[02:36:00] Speaker 10:
When Congress has the power of the purse, and there's cases such as Kendall that say that it's a constitutional violation, separation of powers violation, not just a pure statutory violation, when EPA or when federal government refuses to spend money that Congress has appropriated and directed to spend money.

[02:36:16] Speaker 10:
And so the full dismantlement of a congressionally authorized and funded program, I think, is different from a mere dispute over how far a statute reaches.

[02:36:24] Speaker 10:
And I guess the second aspect of this case I would highlight

[02:36:27] Speaker 10:
is just the total absence of statutory authority to undo and redo the program.

[02:36:32] Speaker 10:
Because the GGRF, it just says the grants will be made before September 24.

[02:36:37] Speaker 10:
And as to undoing and redoing the program afterwards, there's no like, nothing is arguably in the statute allows the undoing and restarting.

[02:36:45] Speaker 06:
So very colloquially, the line is how

[02:36:49] Speaker 06:
how big is the violation and how obvious is the violation?

[02:36:54] Speaker 10:
Well, that's true for like the second part of my answer, like the absence of statutory authority versus merely debate over the scope.

[02:37:01] Speaker 10:
The first part of my answer is separate.

[02:37:02] Speaker 10:
It has to do with the dismantlement of a program that's funded by appropriations.

[02:37:06] Speaker 06:
I think that any micro violation, any micro good faith close call on the statute violation is

[02:37:15] Speaker 06:
going to be an Article 2 problem if it's a spending statute?

[02:37:18] Speaker 10:
I don't think I'd say that.

[02:37:19] Speaker 10:
And I agree there's probably some area of borderline cases.

[02:37:22] Speaker 10:
But when you have these explicit statutes that are just being shut down, then I think it's far enough on the other side.

[02:37:29] Speaker 15:
Thank you.

[02:37:30] Speaker 15:
Is your distinction from Dalton in part?

[02:37:33] Speaker 15:
So Dalton is really saying any statutory violation can be repackaged as a failure to take care.

[02:37:41] Speaker 15:
It's the president and Dalton doesn't

[02:37:45] Speaker 15:
go through the statutorily prescribed recommendation steps before closing a base and could just say we would violate the statute, but oh no, can't because you can't see the president or Franklin or the APA.

[02:37:58] Speaker 15:
But here it's a more particular constitutional problem, which is the impoundment, the effective impoundment.

[02:38:05] Speaker 15:
And not every, you know, statutory violation can be repackaged as, you know, an appropriation

[02:38:15] Speaker 15:
violation is basically, you know, disregarding subverting Congress's mandate that this money be spent for this purpose.

[02:38:26] Speaker 15:
I mean, it just seems to me the logic, the end run concern that Dalton raises, which is very real and is a way of enforcing Congress's power to shape and preclude judicial review in certain circumstances.

[02:38:43] Speaker 15:
doesn't apply if the constitutional defect is an appropriations-based one.

[02:38:51] Speaker 10:
I think that's right.

[02:38:52] Speaker 10:
There was no appropriations issue in Dalton.

[02:38:54] Speaker 10:
I mean, the question was about whether the president had followed certain procedures in deciding whether to close the base.

[02:38:59] Speaker 10:
There's no doubt that the president had the authority to make the closure.

[02:39:02] Speaker 10:
It's just whether the statutory procedures were followed that were at issue.

[02:39:06] Speaker 10:
It's not as though Congress passed a statute saying that there shall be the base.

[02:39:09] Speaker 10:
And then the president just says, well, I disagree with this act of Congress.

[02:39:12] Speaker 10:
I'm shutting it down.

[02:39:13] Speaker 10:
And my attempt, the first answer to Judge Katz's was also yes, the appropriations aspect of this case, the special constitutional considerations by virtue of Congress's power of the burst that are presented when the government shuts down a program that was authorized by Congress because you know the appropriation clause does say that

[02:39:30] Speaker 10:
President can't spend money that's not authorized.

[02:39:33] Speaker 10:
And the flip side of that is that it has to spend money that was.

[02:39:35] Speaker 10:
I realize I've gone on for a very long time.

[02:39:37] Speaker 09:
Yes, I may.

[02:39:38] Speaker 09:
And if you're trying to police the line between a mere ultra virus or statutory violation or receiving a statutory authority and a constitutional violation, is there an aspect in which that is also a factual finding by the district court?

[02:39:52] Speaker 09:
For example, dismantling a whole program seems to fall comfortably

[02:39:57] Speaker 09:
or should at least raise some issues of separation of powers if the program was authorized by Congress and the president decides he doesn't want to abide by it at all, versus a factual finding that these are individual violations of particular statutes or a particular grant.

[02:40:15] Speaker 09:
It just seems that there's a factual aspect to this, like dismantling a whole agency versus firing people.

[02:40:22] Speaker 09:
I just think that there's a factual aspect in how you characterize

[02:40:25] Speaker 09:
What's going on.

[02:40:27] Speaker 10:
So I think the cleanest and simplest way to resolve this case is to take that factual finding as a given towards clear error when the clear error issue is not argued by the government.

[02:40:35] Speaker 10:
And then, based on that factual record, the court can reach the conclusion that this dismantlement was occurring.

[02:40:41] Speaker 10:
And then certain legal consequences will follow from that.

[02:40:43] Speaker 10:
And the court doesn't need to really get into the close cases of when a statutory violation rises to the level of a constitutional violation, because wherever that line is, just refusing to follow a statute and shutting down a program authorized by a statute, we think it crosses that line.

[02:40:58] Speaker 12:
Thank you, counsel.

[02:41:11] Speaker 01:
Good morning, Your Honors and may it please the court.

[02:41:13] Speaker 01:
Diana Kim on behalf of the state banks.

[02:41:15] Speaker 01:
I'd like to use my time to highlight two features of this case that are important to the Tucker Act issue.

[02:41:20] Speaker 01:
First, the fact that the state banks have no contract with EPA makes clear that their claims are not based on any contract.

[02:41:27] Speaker 01:
Second, the plaintiffs own the funds in their accounts and are seeking to stop EPA's interference with those funds, not in order of payment of money from the government, which means that their claims are based on a property right, not a contract right.

[02:41:40] Speaker 01:
We think that this gives the court a relatively narrow ground for affirming the injunction in this case without needing to address other questions that might arise in cases where the grants are structured differently.

[02:41:49] Speaker 01:
I welcome the court's questions.

[02:41:52] Speaker 08:
Ms.

[02:41:52] Speaker 08:
Kim, do you have any further responses to how we should think about cases like

[02:41:56] Speaker 08:
in reach or, you know, the cases involving 18 USC 641.

[02:42:03] Speaker 01:
Yes, your honor.

[02:42:04] Speaker 01:
We did address and read Joliet in the state bank's brief.

[02:42:08] Speaker 01:
And we agree with Mr. Unikowski's reading of that case, that the court there was not saying that grants always belong to the grantor until they're expended.

[02:42:17] Speaker 01:
It says that it depends on the specific terms of the grant agreement.

[02:42:21] Speaker 01:
And the terms of this grant agreement and the purpose of the entire GGRF was that the grantees would own the funds from the outright.

[02:42:28] Speaker 08:
So that answer that Mr. Unikowski gave then

[02:42:30] Speaker 08:
similarly puts you back to the court of federal claims.

[02:42:33] Speaker 08:
If the entire claim that this is a property right turns on the contracts, that is a contract claim that gets channeled to the court of federal claims.

[02:42:44] Speaker 01:
I disagree with that, Your Honor, for two reasons.

[02:42:45] Speaker 01:
First, from the perspective of the state banks, the state banks' claims turn on the sub-grant agreement between the primary grantees and the state banks.

[02:42:53] Speaker 01:
EPA is not a party to that agreement, so that's not a contract with the United States for purposes of the Tucker Act.

[02:42:58] Speaker 01:
But second,

[02:42:59] Speaker 08:
But your premise is that this is property of the primary grantees.

[02:43:06] Speaker 01:
Our claims are premised on the fact that

[02:43:08] Speaker 01:
The state banks property is their property.

[02:43:11] Speaker 01:
The primary grantees property is their property.

[02:43:13] Speaker 01:
But if I might get to the second question, which I think the second answer, which I think will address your question, that was also true in land and mega pulse.

[02:43:20] Speaker 01:
The property rights at issue there were based on a contract in land.

[02:43:24] Speaker 01:
The plaintiff's claim was that they owned the property, which was the shares because they were collateral under the contract and they had paid under the contract and mega pulse.

[02:43:32] Speaker 01:
Also, there is no dispute in those cases about

[02:43:36] Speaker 08:
property interest.

[02:43:37] Speaker 08:
And there are a number of cases that suggest grant money, whether held by grantees or by a third party, remain effectively the property of the United States.

[02:43:48] Speaker 08:
So there can be other cases about contractual property, but they don't involve grant money that has not yet been spent for a intended purpose.

[02:43:57] Speaker 01:
I respectfully disagree that there wasn't a dispute in those cases.

[02:44:00] Speaker 01:
There was a dispute.

[02:44:00] Speaker 01:
The government and land had argued that under the contract, we own the shares because they had been transferred outright.

[02:44:07] Speaker 01:
Similarly, in Megapulse, the government had argued that under the contract, we have a contractual right to release the money because it's not limited rights data under the contract.

[02:44:15] Speaker 01:
And in both of those cases, this court and the Supreme Court recognized that it was a property right, even though you had to resolve a contractual dispute in order to answer the property-based question.

[02:44:26] Speaker 08:
coming from the Seventh Circuit cases and some of these other criminal conversion cases is that grants are treated differently because of the way appropriations work and grants by the United States work.

[02:44:39] Speaker 08:
As long as there's supervision and control, which I think, I mean, I can go through lots of examples of how the government maintains supervision and control over these grant funds, even when they're at Citibank.

[02:44:50] Speaker 08:
You know, that is a unique circumstance that doesn't fit under land or mega.

[02:44:55] Speaker 01:
So two responses to that, your honor.

[02:44:57] Speaker 01:
One, the mechanism of control that the EPA has over the primary grantees funds is a security interest in their accounts.

[02:45:03] Speaker 01:
And it is versus Fox.

[02:45:05] Speaker 01:
The Supreme Court said that the fact that the government has a security lien is actually evidence that it is not the property owner.

[02:45:11] Speaker 01:
It is the person against whom the government has the lien that is the property owner.

[02:45:15] Speaker 01:
And second, with respect to the supervision and control, again, I would point out that the state banks are in a slightly different position because the state banks have no contract with the federal government.

[02:45:25] Speaker 01:
The federal government's relationship is with the primary grantees and the state banks' relationship is with the primary grantees.

[02:45:32] Speaker 14:
I think for those... No, please, please, Your Honor.

[02:45:39] Speaker 01:
Well, our funds have been frozen as well.

[02:45:43] Speaker 01:
Because you have to make accounts at Citibank or did you choose to, we had to make our accounts at Citibank are and I would note that with respect to the sub grant agreement or I just wasn't clear is that part of the sub grant agreement or.

[02:45:56] Speaker 01:
It's also part of our account control agreement with the primary grantees in Citibank that our accounts are at Citibank.

[02:46:02] Speaker 01:
And that does give EPA the ability to see how we're using the funds just as it sees how the primary grantees are using the funds.

[02:46:09] Speaker 01:
It's just not through a contractual relationship.

[02:46:12] Speaker 01:
Does the government also have a security interest?

[02:46:14] Speaker 01:
No, Your Honor, it has no security interest in our accounts.

[02:46:18] Speaker 01:
And I think that that's relevant because for the purposes of the state banks, I would direct your honors to the Ninth Circuit's decision and community legal services where the court there found significant the fact that the subcontractors had no contract with the federal government and that was a basis for keeping the subcontractors claims in district court rather than sending them to the court of federal claims.

[02:46:37] Speaker 01:
I would know that it is really odd that EPA wants to argue here that the state banks are bringing essentially a contractual claim, but then to turn around and go to the Court of Federal Claims and say that the state banks can't bring a contract claim there.

[02:46:49] Speaker 01:
I think that's something contradictory, and it would leave the state banks with no form of judicial review for their property-based violations.

[02:46:59] Speaker 12:
Make sure my colleagues don't have additional questions for you.

[02:47:05] Speaker 13:
Thank you, counsel.

[02:47:06] Speaker 13:
I'm going to ask one, sorry.

[02:47:08] Speaker 13:
So if we're inclined to affirm, what's our narrowest constitutional rule?

[02:47:13] Speaker 13:
I mean, for example, are we just going to say something like the executive may not dismantle a congressionally mandated program by freezing and terminating all grants on policy disagreement alone?

[02:47:24] Speaker 13:
Or is even that too narrow?

[02:47:26] Speaker 01:
We think that that would be a sufficient constitutional holding that would affirm the full injunction below.

[02:47:35] Speaker 12:
Thank you, counsel.

[02:47:38] Speaker 12:
Four minutes for rebuttal.

[02:47:41] Speaker 05:
Thank you.

[02:47:42] Speaker 05:
I'll try to cover three points.

[02:47:44] Speaker 05:
One is about title.

[02:47:46] Speaker 05:
One is about the statutory claim and one is about the impact of the repeal.

[02:47:50] Speaker 05:
So on title, which is where Kent and my friend started, I think it's just a red herring at this stage of the case.

[02:47:55] Speaker 05:
Again, this injunction is about the terminations of the grants.

[02:48:00] Speaker 05:
That's what they sued to enjoin.

[02:48:02] Speaker 05:
That is what the district court enjoined.

[02:48:04] Speaker 05:
That means the grants were reinstated and the contractual relationships were revived.

[02:48:09] Speaker 05:
That's the injunction we appealed.

[02:48:11] Speaker 14:
The injunction also prohibits you from raising the funds.

[02:48:15] Speaker 05:
Only, Your Honor, only if you read the court's opinion, that flowed from the court's ruling on termination.

[02:48:22] Speaker 14:
I don't mean flowed from, it was the next paragraph, but yes.

[02:48:25] Speaker 05:
In the order, it's a separate paragraph.

[02:48:27] Speaker 14:
Cannot limit access to funds and accounts.

[02:48:30] Speaker 14:
Yes.

[02:48:30] Speaker 14:
Cannot limit access to funds.

[02:48:33] Speaker 05:
Right, that's the third paragraph of the order.

[02:48:36] Speaker 05:
If you read the court's opinion justifying the order, that part is premised on the conclusion that the terminations were invalid and ineffective.

[02:48:44] Speaker 05:
So the grants are back on, therefore you cannot touch their money.

[02:48:48] Speaker 05:
So I don't mind the therefore.

[02:48:50] Speaker 05:
The problem is with the predicate about the termination of the grants.

[02:48:53] Speaker 05:
That's the part we're appealing and we're saying the court can't do that.

[02:48:57] Speaker 05:
And I would say in response to Judge Garcia's question, the injunction is not limited to the March terminations.

[02:49:03] Speaker 05:
That's the first paragraph of the order.

[02:49:05] Speaker 05:
The second paragraph of the order says, an EPA can't terminate the grants going forward unless it's consistent with various things, including the terms of the grants, which again confirms this is a contract issue, ultimately.

[02:49:18] Speaker 04:
And that part of the injunction is clearly... I thought what you had just said confirmed how I was thinking about it.

[02:49:26] Speaker 04:
What's enjoined is the predicate for the entire injunction is you cannot effectuate the March 11th

[02:49:32] Speaker 04:
termination and the rest of it just says, and you can't do other things that will flow from that unless it's consistent with the grant agreement.

[02:49:39] Speaker 04:
So you read this to have enjoined you from terminating the case through a new agency, terminating these contracts through a new agency process on May 11th?

[02:49:50] Speaker 04:
Yes, I think that's the second paragraph says that.

[02:49:53] Speaker 04:
It says, except as authorized permitted by the ACA, the grant award.

[02:49:57] Speaker 04:
This whole case is about setting aside agency action.

[02:50:00] Speaker 05:
But again, the district court's basis for saying that the March terminations improper was the grant award.

[02:50:07] Speaker 05:
It's inconsistent with the terms of the grant.

[02:50:10] Speaker 14:
And so under the second paragraph of the order, we would not be able to... Except it's permitted by the grant regulations and applicable law.

[02:50:17] Speaker 14:
Right.

[02:50:18] Speaker 14:
So if the law changes in a way that would allow you to do this... Saying you do it again in a way that complies with my opinion.

[02:50:24] Speaker 05:
I think it's right, but your honor, it's an and.

[02:50:26] Speaker 05:
So I think we would have, in order to comply with this injunction, we would have to, it would have to be justified under all of those, or put another way, we would have to show that none of those pose the barrier.

[02:50:36] Speaker 05:
And again, the district court's principle theory was the terms of the grant don't allow for terminations under these circumstances.

[02:50:43] Speaker 05:
So I think to comply with the injunction, we would not be able to terminate unless we satisfy the district court's reading of the contract terms.

[02:50:51] Speaker 05:
Which is a problem that is not what the court's allowed to do that is specific.

[02:50:56] Speaker 14:
Also said here, if you need to change or modify things to the government go back to the district court after the repeal and say.

[02:51:07] Speaker 14:
Look what's happened.

[02:51:09] Speaker 14:
We believe we can now do this.

[02:51:10] Speaker 05:
Let us not go back to the district court since the case has been on appeal.

[02:51:14] Speaker 05:
I do think that one of the takeaways from some of the questions here and potentially depending on what the court does, if the problem turns out to be in this court's view that, look, terminating the contracts was inconsistent with the IRA, well, the IRA is now gone.

[02:51:31] Speaker 05:
So I suppose we could, the day after the mandate goes back, we could,

[02:51:36] Speaker 05:
terminate again based on the same grounds and say, well, there can't possibly be a statutory claim anymore.

[02:51:43] Speaker 05:
There's no statute to found it on.

[02:51:47] Speaker 05:
But I think that kind of tends to show our principal point, which is this injunction is overbroad, is not supported by the claims.

[02:51:56] Speaker 05:
And just on the statutory claim in particular,

[02:52:01] Speaker 05:
At times council seem to be saying that after September 2024 there could be no terminations at all without violating the statute.

[02:52:08] Speaker 05:
That I think has to be wrong contracts themselves contemplate termination at least under certain circumstances, and it would be extraordinary if the government had no power after.

[02:52:17] Speaker 05:
the expiration to terminate for any reason whatsoever.

[02:52:20] Speaker 05:
So I don't think that could be the theory.

[02:52:22] Speaker 15:
So it really has to be extraordinary.

[02:52:25] Speaker 15:
One thing that strikes me about your entire case is that it acts as if the only remedies for the government have to sound in contract where I mean, there are all kinds of things the government can do.

[02:52:38] Speaker 15:
It can seek recoupment.

[02:52:43] Speaker 15:
It can under separate statutes, it can

[02:52:47] Speaker 15:
file for misuse of funds under the False Claims Act.

[02:52:51] Speaker 15:
You know, there are any number of things that would protect the government.

[02:52:55] Speaker 15:
So it doesn't seem extraordinary to me actually that there might not be, I mean, there is also in the contract a provision saying, you know, for fraud, waste, fraud and abuse, which you disavowed as happening here.

[02:53:11] Speaker 05:
So- If their statutory claim was correct,

[02:53:14] Speaker 05:
It wouldn't matter how much fraud, waste, and abuse we could stand up and prove.

[02:53:18] Speaker 05:
If it was after September 30th, 2024, we have to continue for five years in a contractual relationship with them.

[02:53:25] Speaker 15:
That can't be wrong.

[02:53:26] Speaker 15:
No, don't you have recruitment statutory authority?

[02:53:28] Speaker 15:
If a grantee violates a grant and not in accordance with his terms, you go after them.

[02:53:34] Speaker 05:
But Your Honor, we also would terminate the grant so that we don't have to continue to engage with this person for another five years.

[02:53:39] Speaker 15:
I'm just saying you're acting as if everything has to be packaged into the grant, and it just doesn't seem

[02:53:44] Speaker 05:
Maybe it doesn't, but the contract clearly contemplates termination.

[02:53:47] Speaker 05:
Termination is routine.

[02:53:49] Speaker 05:
And I've never seen any case say that after an appropriation expires, the government loses all power to terminate the grant.

[02:53:55] Speaker 15:
When you go to the, if the plaintiffs refile as you believe they should in the court of federal claims and say, you canceled these contracts for reasons that are not authorized in the grant agreement, what's your defense?

[02:54:14] Speaker 05:
we will argue that we were acting consistent with the contract.

[02:54:17] Speaker 15:
And how so?

[02:54:19] Speaker 05:
Based on the argument I made earlier about the original terms and conditions being incorporated.

[02:54:25] Speaker 05:
And look, as I said earlier, we would also do discovery and we would not be limited in that instance to the administrative record.

[02:54:31] Speaker 05:
So we might well be able to show other grounds for termination.

[02:54:35] Speaker 05:
It's unable to be an APA case.

[02:54:36] Speaker 15:
You would say that you were acting consistent with the contract, that the ground to terminate because it's not consistent with

[02:54:45] Speaker 15:
policy preferences of the administration is actually in the contract.

[02:54:50] Speaker 05:
Yes.

[02:54:50] Speaker 05:
And to be clear, what's inconsistent with priorities is the oversight provisions.

[02:54:55] Speaker 05:
That's the inconsistency that we assert and would assert.

[02:54:59] Speaker 05:
And look, if we lost, we would pay the damages that the Court of Federal Appliance awards.

[02:55:03] Speaker 05:
And maybe the damages would be the full amount.

[02:55:05] Speaker 05:
If they're right about title,

[02:55:08] Speaker 05:
And if we actually were able to successfully recoup that money through closeout, and then they said it was a breach of contract, we would have had $20 billion in the bank, and now we have zero, they can make that argument as a damages argument to the Court of Federal Claims.

[02:55:22] Speaker 05:
We would certainly oppose it.

[02:55:23] Speaker 05:
Again, I don't think it's a plausible reading.

[02:55:25] Speaker 05:
I'm going to Judge Mallette's question.

[02:55:27] Speaker 05:
If their reading was right, then again, it wouldn't matter if we were able to stand up and prove criminal conduct.

[02:55:34] Speaker 05:
They would get to keep the $20 billion, at least as a matter of contract.

[02:55:38] Speaker 05:
And that seems like that's not tenable.

[02:55:40] Speaker 05:
It also seems inconsistent with the fact that the contract contemplates a de-obligation and re-obligation.

[02:55:46] Speaker 05:
And by the way, the original version of the contract didn't limit re-obligation to these grantees.

[02:55:51] Speaker 05:
That was added at the last minute before the inauguration and we would reserve the right to challenge the legitimacy of that modification.

[02:55:58] Speaker 11:
You had, you had a, when you started you said you had three points, and I think you could simply make whatever you didn't get to make.

[02:56:06] Speaker 05:
Yeah, sorry.

[02:56:08] Speaker 05:
The only last point I'll make is on the statutory claim, since I don't think it can be a bright line rule, no, nothing after September 2024, it's got to be about what was EPA doing or trying to do.

[02:56:21] Speaker 05:
And that's where they get into the, well, they weren't really going to do replacement grants in the way that they were allowed.

[02:56:26] Speaker 05:
The right way to challenge that is to let us do the replacement grants.

[02:56:29] Speaker 05:
And if they think the replacement grants are inconsistent with federal appropriations law, they could have sued.

[02:56:34] Speaker 05:
But nobody let us get to that point.

[02:56:35] Speaker 05:
Of course, now it's too late.

[02:56:37] Speaker 05:
We can't do the replacement grants because of the statute.

[02:56:39] Speaker 05:
Yes.

[02:56:40] Speaker 05:
But at the time, that would have been the way to handle that problem.

[02:56:43] Speaker 05:
Hypothetically about whether a replacement grant that we never had the chance to do is or isn't consistent with some obscure GAO opinions that we may not even agree with.

[02:56:52] Speaker 09:
Do we not get to that if we credit the district courts finding that you were just going to dismantle the program?

[02:56:58] Speaker 09:
You don't even get to replace it.

[02:57:00] Speaker 05:
I think we do in the sense of we get to it through at least the remedial aspect of is is enjoining the notices of termination an appropriate remedy when the problem is not the termination.

[02:57:11] Speaker 05:
The problem is not re-obligating the money afterwards in the way that would have been permissible under federal appropriations law, which everyone agrees there was some way to do it.

[02:57:21] Speaker 05:
We just never had the chance to actually do it.

[02:57:23] Speaker 09:
And before you sit down, can you just, the state banks argument, like, do you agree that their claims are not properly in the court of federal claims?

[02:57:30] Speaker 09:
And if so, does that mean you want the grantees' claims to go to the court of federal claims while the subgrantees stay in the district court?

[02:57:37] Speaker 05:
No.

[02:57:38] Speaker 05:
So the subgrantees are not parties to a contract with EPA.

[02:57:42] Speaker 05:
So the subgrantees, unless they can show that they are intended third-party beneficiaries,

[02:57:47] Speaker 05:
would probably not have claims under the Tucker Act.

[02:57:50] Speaker 05:
That doesn't mean they can go to federal court under the APA instead.

[02:57:53] Speaker 05:
It means they're precluded from seeking relief on contractual grounds.

[02:57:57] Speaker 05:
And they cited a case from the Ninth Circuit.

[02:57:59] Speaker 05:
The Ninth Circuit subsequently in Thakur versus Trump was presented with that exact argument

[02:58:05] Speaker 05:
and granted a stay pending appeal based on our Tucker Act argument.

[02:58:10] Speaker 05:
And just yesterday denied reconsideration and on bank, nobody calling for a vote.

[02:58:13] Speaker 05:
So everyone understands when Congress limits relief in the Tucker Act says you can't get specific performance, that doesn't mean non-parties can get specific performance through the back door.

[02:58:24] Speaker 05:
It means they can't bring contractual claims at all.

[02:58:28] Speaker 05:
Thank you, council.

[02:58:29] Speaker 05:
Thank you to all council.

[02:58:30] Speaker 12:
We'll take this case under submission.