A divided federal appeals court on Tuesday blocked the Trump administration from terminating a $20 billion green bank program created by the Inflation Reduction Act, handing a significant win to nonprofits selected to run the Biden-era clean energy initiative.
The U.S. Court of Appeals for the District of Columbia Circuit ruled that the Trump administration improperly terminated the Greenhouse Gas Reduction Fund, which provides money to nonprofits that make loans and invest in small energy projects, energy-efficient buildings, and transportation infrastructure. Climate United Fund and other grantees won’t have immediate access to their frozen funds, as the court has placed the decision on hold for several days to allow EPA time to seek Supreme Court intervention.
EPA Administrator Lee Zeldin had accused the nonprofits of mismanagement and potential fraud, freezing billions placed in a Citibank account for the program before terminating their grants. The groups disputed the allegations and sued, arguing the Trump administration violated federal law and the Constitution by refusing to spend money Congress had authorized. “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,” Climate United Fund said in a statement.
The ruling represents a reversal of fortune for the nonprofits. In September 2025, a three-judge panel of the same appeals court had ruled 2-1 in favor of the Trump administration, saying it had broad power to cancel the grants without facing legal challenges. The full court agreed to rehear the case in February 2026, a rare decision reserved for the most important cases. Six of the ten judges on the full court now agreed the EPA likely violated the law when it terminated the grants based on a policy disagreement rather than legal authority.
The green bank was created by the Inflation Reduction Act, Biden’s signature climate legislation enacted in 2022. The program was designed to provide low-cost financing for clean energy projects through a network of nonprofits. Last year, President Trump’s tax and spending bill repealed part of the law and rescinded money that hadn’t yet been obligated to recipients, adding legal complexity to the administration’s termination efforts.
U.S. District Judge Tanya Chutkan had previously ruled that when the federal government was asked for evidence of fraud, the agency failed to provide it and shifted to more general concerns about EPA oversight. Chutkan found the government cannot violate the law to terminate contracts and that the groups should have access to their frozen money. That order was put on hold during the appeal process.
Zeldin told Fox News in early 2025 that he suspected the green bank “was a clear-cut case of waste and abuse” that “in my opinion, is criminal.” The EPA did not immediately provide comment on Tuesday’s ruling. The nonprofits’ lawyer argued that the agency had already allocated the money by placing it in the Citibank account for the program’s use, while EPA contended the matter should be heard by a different court focused on contract disputes rather than constitutional claims.
The decision represents one of the Trump administration’s earliest legal losses in its effort to dismantle Biden’s climate initiatives, though the case is far from resolved with the EPA expected to appeal to the Supreme Court.
Sources
- Los Angeles Times — Details of the appeals court ruling, judge statements, and EPA Administrator Zeldin’s accusations
- The Columbian — Confirmation of the divided appeals court decision and nonprofits’ response
- Climate Case Chart — Background on the Climate United Fund v. Citibank case and court proceedings
- Court Listener — Timeline of case arguments and rulings in the DC Circuit
- Inside Climate News — Context on the green bank program and litigation history
