A Deadlocked Appeals Court Blocked the EPA From Clawing Back $20 Billion in Climate Grants

A federal appeals court ruled Tuesday that the Environmental Protection Agency cannot freeze roughly $20 billion in clean energy grants awarded to nonprofit lenders under the Biden administration, handing the Trump administration a significant defeat in a fight that has run for more than a year.

The decision by a divided U.S. Court of Appeals for the D.C. Circuit restored an April 2025 injunction against EPA Administrator Lee Zeldin's move to terminate the awards. Zeldin first sought to freeze the money in March 2025, saying the grants did not align with his agency's priorities and might be tainted by fraud, waste and abuse. The injunction had ordered the disputed funds disbursed, but was put on hold while the EPA appealed.

The money came from the Greenhouse Gas Reduction Fund, a $27 billion program Congress created in 2022 as part of the Inflation Reduction Act. No Republicans voted for that law. The $20 billion at issue went to eight entities under two headings — the National Clean Investment Fund and the Clean Communities Investment Accelerator — including the Climate United Fund, the Coalition for Green Capital and several state-sponsored organizations. The awards were designed to seed loans for renewable energy projects, with an emphasis on communities that have historically had little access to green financing. The disputed funds have been sitting at Citibank.

The court's own arithmetic tells the story of how contested this is. An evenly divided 10-judge panel upheld the entire injunction, while six judges specifically upheld the provision governing the grants. Those six wrote that the EPA's attempt to terminate the awards and claw back the money "based solely on a policy disagreement" likely violated the Inflation Reduction Act, and noted the agency had offered no assurance it would leave the funds alone if the injunction were lifted.

Four judges would have thrown out the grant provision. They pointed to Congress's passage last year of President Trump's One Big Beautiful Bill Act, which repealed the section of the 2022 law that created the program in the first place — an argument that the underlying authority is gone regardless of what the injunction says.

The ruling reverses the direction the same court had taken last September, when a 2-1 panel sided with the agency and held that the nonprofits should have filed in the Court of Federal Claims, the venue for monetary claims against the government. Tuesday's decision leaves that jurisdictional theory behind.

The EPA said it is reviewing the decision, and its options include an appeal to the Supreme Court. Lawyers for the nonprofits did not immediately respond to requests for comment. For now, the injunction stands and the money stays where the grant agreements put it — a rare instance of a court forcing the administration to spend appropriated funds it has publicly declared it does not want to spend.