Judges Halt Trump EPA’s Bid to Cancel $20 Billion in Climate Grants
A federal appeals court has delivered a major setback to President Donald Trump’s effort to dismantle one of the largest clean-energy financing programs created under former President Joe Biden.
The court ruled that the Environmental Protection Agency likely acted unlawfully when it attempted to cancel roughly $20 billion in previously awarded climate grants, raising a broader question about how far a new president can go when reversing federal spending decisions made by a previous administration.
The full U.S. Court of Appeals for the District of Columbia Circuit reinstated a preliminary injunction preventing the EPA from terminating the grants and reclaiming money already placed in accounts at Citibank.
The decision reverses a September 2025 ruling by a smaller three-judge panel that had sided with the Trump administration. However, the ruling does not mean the money will begin flowing immediately.
The court temporarily delayed the effect of its order, giving the EPA time to ask the U.S. Supreme Court to intervene. The agency said it was reviewing the decision and considering its next legal steps.
A $27 Billion Climate Program at the Center of the Fight
The dispute centers on the Greenhouse Gas Reduction Fund, a $27 billion program Congress established through the 2022 Inflation Reduction Act.
The initiative was designed to use federal funding to attract private investment into clean-energy projects, including renewable-energy systems, energy-efficient buildings and infrastructure improvements in communities that often struggle to secure affordable financing.
Of the program’s total funding, $20 billion was awarded through two initiatives: the $14 billion National Clean Investment Fund and the $6 billion Clean Communities Investment Accelerator.
Eight organizations were selected to manage the money and support loans or investments in projects intended to reduce pollution, lower household energy costs, and expand access to clean technology.
When the awards were announced in 2024, the Biden-era EPA said the recipients could attract nearly $7 in private investment for every $1 in federal funding. More than 70 percent of the money was expected to benefit low-income and disadvantaged communities.
Trump’s EPA Moved to Cancel the Awards
EPA Administrator Lee Zeldin moved to terminate the grants in March 2025. Zeldin argued that the awards did not reflect the Trump administration’s priorities and raised concerns about possible waste, conflicts of interest, weak oversight and the qualifications of some recipients.
The EPA froze money being held at Citibank and attempted to recover funds that had already been transferred into accounts belonging to the grant recipients. The recipient organizations denied wrongdoing.
Groups including the Climate United Fund and the Coalition for Green Capital sued, arguing that the administration could not erase grants approved by Congress simply because a new president opposed the climate policies behind them. That argument gained support from six judges on the appeals court.
They concluded that the EPA likely violated the Inflation Reduction Act by attempting to terminate the grants “based solely on a policy disagreement.” The judges also said the agency had not provided sufficient assurance that the disputed funds would remain untouched if the injunction were removed.
Court raises Questions about Presidential Power
The decision restores an order first issued by U.S. District Judge Tanya Chutkan in April 2025. Chutkan found that the EPA had not adequately justified its decision to cancel the grants. She also warned that the executive branch risked intruding on Congress’s constitutional authority to decide how federal money should be spent.
That issue gives the case significance beyond climate policy. Presidents generally have broad power to change agency priorities. However, the appeals court’s reasoning suggests that political or ideological disagreement may not be enough to cancel grants that were lawfully authorized, awarded and funded.
In other words, an incoming administration may change future policy, but it cannot automatically treat previously committed federal money as though Congress had never approved it.
Later Repeal Complicates the Case
The dispute remains legally complicated because Congress later repealed the section of the Inflation Reduction Act that created the Greenhouse Gas Reduction Fund. The Republican-backed legislation also rescinded money that had not yet been obligated.
Four appeals court judges argued that the repeal weakened the nonprofits’ case and could give the EPA authority to terminate the grants. They would have removed the portion of the injunction specifically protecting the awards.
The contested $20 billion, however, had already been awarded and placed in designated accounts before the repeal. That distinction is now central to the case: whether an administration can reclaim previously obligated grant money after Congress eliminates the program that originally authorized it.
Billions remain frozen as Supreme Court fight looms
For the grant recipients, the ruling preserves the possibility that delayed clean-energy projects may eventually move forward.
Climate United has said it is owed $7 billion and maintains that the government has no lawful basis for terminating its award.The Coalition for Green Capital said it hopes to resume investments intended to make cleaner and more affordable energy available across the country.
Critics of the program are unlikely to abandon their concerns. They have questioned how quickly the grants were awarded, whether nonprofit intermediaries should control such large sums and whether the EPA established enough safeguards before committing the money.
Those arguments could become central if the administration asks the Supreme Court to take up the case. For now, the disputed money remains frozen, but the grants themselves remain alive.
The appeals court’s ruling has temporarily stopped the Trump administration from wiping away one of Biden’s most ambitious climate-financing programs. The next legal battle could determine not only the future of $20 billion in clean-energy investment, but also how much power future presidents have to undo federal spending decisions they inherit.
