A federal appeals court ruled Tuesday that the Trump administration illegally moved to claw back billions of dollars from a Biden-era “green bank” program, reviving a funding fight that has dragged through the courts for more than a year.
The full U.S. Court of Appeals for the District of Columbia Circuit voted to reinstate a preliminary injunction that blocks the Environmental Protection Agency from terminating grants issued under the Greenhouse Gas Reduction Fund. The ruling reverses a smaller three-judge panel decision from last September that had let the EPA proceed with canceling the awards.
The fund, created under the Inflation Reduction Act, sent $20 billion to eight nonprofits tasked with financing loans for solar panels, energy-efficient buildings and clean transportation projects. EPA Administrator Lee Zeldin froze the money shortly after taking office, accusing the recipient groups of self-dealing, conflicts of interest and inadequate federal oversight.
“Twenty billion of your tax dollars were parked at an outside financial institution, in a deliberate effort to limit government oversight,” Zeldin said in a video posted to X when he first moved to terminate the grants.
Climate United Fund, the lead plaintiff and one of the largest grant recipients, disputed the fraud allegations from the start and sued to get its money back. The nonprofit called Tuesday’s decision a vindication.
“Today, the DC Circuit Court judges affirmed what we have always known: EPA took actions to unlawfully freeze and dismantle the National Clean Investment Fund grant program,” the group said in a written statement. “Despite efforts to harm the awardees with false allegations and misinformation, there remains no legal basis for terminating our grant award and clawing back funds that were already disbursed in our bank accounts.”
The court’s majority found that the EPA’s termination “likely contravened the IRA’s mandatory appropriation” and appeared to be “based solely on a policy disagreement” rather than any documented wrongdoing.
Not every judge on the panel agreed. Several dissenting judges argued the nonprofits failed to show why the injunction was still necessary after congressional Republicans repealed the fund’s unobligated balances earlier this year as part of their reconciliation package, the law known on Capitol Hill as the “Big, Beautiful Bill.”
An EPA spokesperson said Tuesday afternoon the agency was “reviewing the judgment and considering next steps.” The spokesperson did not respond to a request for a status update on where the disputed funds currently sit, nearly a year after a lower court injunction blocking the clawback was first thrown out.
The ruling does not resolve the underlying fraud allegations Zeldin leveled against the grant recipients when he moved to shut the program down last year. That dispute remains unresolved in the litigation, which centers on whether Congress’s original appropriation legally obligates the government to release the funds regardless of the EPA’s oversight concerns.
