The Inspector General Said the Grants Were Clean. The Administration Killed Them Anyway.

In Far Rockaway, New York, an organization called the Rockaway Initiative for Sustainability and Equity had plans to restore sand dunes, build a native plant nursery, remove waste from flood-prone lots, and create local jobs protecting a community that Hurricane Sandy nearly destroyed. In Gwinnett County, Georgia, the Lucky Shoals Community Association was awarded nearly $20 million to build a community resilience hub and replace lead pipes. In Rhode Island, a food policy coalition had $19 million for composting infrastructure and food scrap collection programs across Providence.

All of these projects were funded through the EPA's Community Change Grants Program — a $2 billion initiative created by the Inflation Reduction Act of 2022 to direct resources to communities bearing disproportionate environmental and health burdens. All of them cleared a rigorous competitive review process. And all of them were terminated by the Trump administration in May 2025.

On March 4, 2026, the EPA's own Office of Inspector General published Report No. 26-E-0016 — and the findings were unambiguous. The Community Change Grants were properly awarded. The agency implemented effective controls. It adhered to all applicable requirements. The OIG identified no issues warranting recommendations.

Zero. Not a single finding of fraud, waste, abuse, or procedural error across $1.5 billion in awards.

How the Largest Environmental Justice Investment Got Dismantled

The Community Change Grants Program was the centerpiece of the Inflation Reduction Act's environmental justice provisions. Congress allocated $2 billion specifically for competitive grants to community-based organizations, local governments, and tribal nations working on projects that addressed pollution, climate vulnerabilities, and public health threats in overburdened communities.

The EPA designed the program in two tracks. Track I, covering approximately $1.5 billion, funded 80 large-scale grants for comprehensive community projects — the lead pipe replacements, resilience hubs, energy efficiency upgrades, microgrid installations, and environmental remediation efforts that communities had been planning for years. Track II covered smaller, more targeted awards.

The application process was extensive. The EPA tailored evaluation criteria to the program's statutory requirements under the Inflation Reduction Act. Independent review panels — 167 reviewers in total — scored applications across 45 distinct criteria. Software-generated ranked lists ensured that reviewer scores, not administrative discretion, determined which applications advanced. Selection decisions were documented in detailed memorandums at each stage.

The EPA conducted five separate selection rounds before finalizing its 80 Track I awards. Organizations that received funding had survived one of the most rigorous competitive processes in EPA grant-making history.

Then, in May 2025, the administration terminated all 80 Track I grants. The stated justification was fiscal responsibility — a characterization that the Inspector General's report now contradicts by finding the awards were made properly and in compliance with all applicable requirements.

Two months later, the One Big Beautiful Bill Act rescinded the program's remaining unobligated funds entirely. Congress did not merely pause the program — it eliminated the funding authorization, ensuring that even a future administration could not restart it without new legislation.

What the Inspector General Actually Found

The OIG's evaluation was methodical. Auditors reviewed approximately 1,200 individual scoresheets spanning five selection rounds. They interviewed key personnel involved in the review and selection process. They assessed compliance across 45 evaluation criteria, examining everything from how the EPA structured its review panels to how it documented selection decisions.

The findings supported the program at every level:

Evaluation criteria were properly designed. The EPA tailored its scoring rubric to the specific statutory requirements of the Inflation Reduction Act, ensuring that applications were judged against the program's legislative intent rather than generic grant-making standards.

Independent review panels functioned as designed. The 167 reviewers operated independently, scoring applications without interference from political appointees or senior agency leadership. The review panels were structured to prevent conflicts of interest and ensure technical competence in evaluating the diverse project types submitted.

Rankings were software-generated. Application rankings were produced algorithmically from reviewer scores, eliminating the possibility that administrative preferences influenced which projects advanced. This is a significant finding — it means the selection process was insulated from the kind of political steering that critics had implied.

Selection decisions were documented. The EPA produced detailed memorandums at each stage of the process, creating a paper trail that the OIG could audit comprehensively. The documentation showed that selection decisions followed directly from the ranked application lists.

The OIG report is 26 pages of audit findings that add up to a single conclusion: the system worked exactly as it was supposed to.

The Legal Landscape

The termination of Community Change Grants has generated significant legal activity. Earthjustice, representing a coalition of nonprofits, tribal governments, and local government entities, filed suit challenging the terminations. The Lawyers for Good Government's Court of Federal Claims Clinic has connected more than 50 organizations with legal assistance to pursue claims against the government.

The legal arguments center on whether the administration had the authority to terminate grants that had been properly awarded under congressional appropriation. The Impoundment Control Act of 1974 generally prohibits the executive branch from withholding funds that Congress has appropriated. However, the One Big Beautiful Bill Act's rescission of remaining funds complicates the legal picture — Congress itself acted to eliminate the funding, albeit through a legislative vehicle that many environmental advocates argue was used to circumvent the normal appropriations process.

For organizations that had already begun spending against their awards — hiring staff, signing contracts with vendors, initiating project work based on federal award notifications — the termination created immediate financial exposure. Federal grant recipients who incur costs in reliance on valid award notifications may have claims for those costs even if the underlying grant is subsequently terminated. But pursuing those claims through the Court of Federal Claims is a lengthy and uncertain process.

The OIG report strengthens the legal position of terminated grantees significantly. An inspector general finding that the awards were properly made undermines any argument that the terminations were justified by program deficiencies. It shifts the framing from "the EPA made bad awards that needed to be corrected" to "the administration terminated properly-made awards for reasons unrelated to program integrity."

What Was Actually Lost

The 80 terminated Track I grants represented the most significant federal investment in environmental justice in American history. The projects were concentrated in communities that environmental health researchers have documented as bearing disproportionate pollution burdens — areas near industrial facilities, superfund sites, major transportation corridors, and aging infrastructure systems.

The project types reflected the breadth of environmental challenges these communities face:

Infrastructure upgrades. Lead pipe replacement, stormwater management improvements, and wastewater system modernization in communities where aging systems create direct health hazards.

Energy systems. Microgrid installations and energy efficiency retrofits that reduce both pollution exposure and utility costs in communities where energy burden — the percentage of household income spent on energy — is often three to four times the national average.

Food systems. Composting infrastructure, food waste diversion programs, and community food production facilities that address both environmental contamination from waste disposal and food access challenges.

Climate resilience. Coastal restoration, flood mitigation infrastructure, and community resilience hubs that provide emergency shelter and services during extreme weather events — exactly the kind of pre-disaster investment that programs like FEMA's BRIC have been designed to support.

Workforce development. Many grants included job creation components, training local residents to perform the environmental remediation, infrastructure installation, and maintenance work that the projects required. These were not fly-in-fly-out contractor jobs — they were designed to build permanent local capacity.

The termination did not just cancel projects. It disrupted organizational capacity in communities that had invested months or years in application development, partnership building, and project planning. Staff hired in anticipation of grant-funded work were laid off. Community partnerships that took years to build were strained. And the signal sent to these communities — that federal commitments can be made and unmade regardless of merit — will make future engagement with federal programs harder.

Where Environmental Justice Organizations Go From Here

The Community Change Grants are not coming back under the current administration. The legislative rescission ensures that. But the underlying needs have not disappeared, and multiple funding pathways remain viable for organizations that had been planning environmental justice work.

Pursue legal claims for incurred costs. Organizations that spent money in reliance on valid award notifications should consult with legal counsel about claims through the Court of Federal Claims. The Lawyers for Good Government clinic and Earthjustice are both actively connecting affected organizations with pro bono legal assistance. The OIG report provides substantial evidentiary support for these claims.

Redirect to state and foundation funding. Several states have established their own environmental justice grant programs, some explicitly designed to fill gaps left by federal retrenchment. California's Community Air Protection Program, New York's Environmental Justice grant program, and similar state-level initiatives offer alternative funding for projects that align with Community Change Grant objectives. Foundation funding for environmental justice has also increased — the Kresge Foundation's Climate Change, Health and Equity initiative and the Robert Wood Johnson Foundation's environmental health programs are actively deploying capital.

Restructure projects for other federal programs. Components of terminated Community Change Grant projects may be eligible under other federal programs that remain active. Lead pipe replacement projects can seek funding through the EPA's Drinking Water State Revolving Fund. Energy efficiency work may qualify for Department of Energy Weatherization Assistance Program funding. Stormwater and flood mitigation projects may be eligible under FEMA's Hazard Mitigation Grant Program or the reinstated BRIC program.

Document everything. The Inspector General's report vindicates the process. Organizations should preserve all documentation related to their Community Change Grant applications, award notifications, expenditures, and termination notices. This documentation supports both legal claims and future grant applications that can demonstrate the rigor of prior federal review.

Build the record for future legislation. The statutory authority for the Community Change Grants Program was created by Congress and can be created again. Environmental justice advocates are already working to include similar provisions in future legislation. Organizations that documented the impact of the program's termination on their communities create the evidentiary record that legislative advocates need.

The Inspector General's report did what oversight is supposed to do — it evaluated the facts and reported them without regard for political convenience. The finding that $1.5 billion in grants were properly awarded does not bring those grants back. But it establishes, on the official record, that the termination was not about protecting taxpayers from waste. For organizations rebuilding their funding strategies, Granted can help identify the alternative federal, state, and foundation programs that align with the environmental justice work their communities still need.