Green card is different from US citizenship. Although, the actual physical green card can in fat expire, status as LPR does not expire. Similarly, the fact that a US passport has expired, does not make the owner less a US citizen. You can renew her granny's green card by filing Form I-90 with CIS. Since she has been an LPR for over 5 years, she appears eligible for citizenship and hence you may file an N-400 citizenship application for her as well.
Answered on May 17th, 2013 at 2:34 PM