GAO Finds EPA Violated Law in Canceling Grant Funding
The EPA terminated a $19.1 million resilience grant without the required congressional notification.
Updated on Oct. 16, 2026 in Environmental
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Should federal agencies have the power to cancel pre-approved community grants for ideological reasons?
The Government Accountability Office (GAO) recently concluded that the Environmental Protection Agency (EPA) acted unlawfully by canceling a $19.1 million Community Change Grant. The agency terminated funding for the North Richmond Community Resilience Initiative in early 2025, citing opposition to DEI and environmental justice programs.
Why it matters
The report highlights a conflict over the agency's legal obligations to spend congressionally appropriated funds. By withholding the money without informing Congress, the EPA bypassed established oversight procedures for federal budget control.
The EPA withheld the $19.1 million grant awarded to Contra Costa County in spring 2025. The project aimed to construct a resilience center and plant 65 trees at Verde Elementary.
The players
Environmental Protection Agency
The federal agency tasked with environmental regulation that currently holds a mandate focused on shifting away from DEI and environmental justice programming.
Government Accountability Office
The non-partisan congressional watchdog responsible for auditing federal spending and ensuring agency compliance with budgetary laws.
John Garamendi
A U.S. Representative who is advocating for the reinstatement of funding for local resilience initiatives.
Mark DeSaulnier
A U.S. Representative who joined calls for the immediate return of the withheld $19 million in federal support.
The details
The GAO found the EPA violated the Impoundment Control Act of 1974, which restricts an agency's ability to withhold or delay the expenditure of appropriated funds without notifying Congress. The agency failed to submit a mandatory special message to lawmakers regarding the paused payments. While the EPA cited ideological concerns over DEI and environmental justice initiatives as the reason for termination, the lack of formal notification constitutes a procedural violation of federal spending laws.
Timeline
December 2024: Community Change Grants were announced.
Spring 2025: The EPA terminated the $19.1 million grant and paused payments.
October 7, 2026: The GAO published its report on the grant termination.
October 16, 2026: Representatives Garamendi and DeSaulnier issued a statement regarding the GAO findings.
The Tech Race
The EPA's actions represent a significant departure from standard administrative procedure under the Impoundment Control Act of 1974. This ruling highlights how executive agencies may attempt to leverage budget withholding to shift policy priorities away from prior environmental initiatives.
Residents of North Richmond, including those at Verde Elementary, currently face the loss of planned climate infrastructure like the proposed resilience center. Whether these specific funds can be recovered remains uncertain, as Congress has already rescinded the unobligated balances for the program.
The takeaway
The GAO ruling confirms the EPA bypassed formal oversight, though the path to recovering funds remains blocked by subsequent congressional rescissions. Observers should monitor whether this finding prompts future legislative reforms to tighten the impoundment process for federal grants.
Further reading
For broader context on current shifts in federal environmental spending, see our Environmental section.
Source note: This article includes information reported by Contra Costa Herald | News Of By and For The People of Contra Costa County, California.
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Should federal agencies have the power to cancel pre-approved community grants for ideological reasons?
