A recent ruling by a divided en banc US Court of Appeals for the DC Circuit has determined the Trump administration likely acted unlawfully when it terminated billions in Biden-era clean-energy grants. The court reinstated a core district court order that previously prevented the Environmental Protection Agency (EPA) from reclaiming these funds, posing a significant setback to the Trump administration’s efforts to unwind climate-related spending.
In a 6-4 decision in Climate United Fund v. Citibank, the appellate court’s ruling is paused to allow the EPA time to seek intervention from the Supreme Court. At the heart of the dispute is whether the recipients of these grants need to proceed through the Court of Federal Claims under the Tucker Act. This act limits claimants to monetary damages and channels those seeking injunctive relief to district court. The appellate court treated the grantees’ claims under the Administrative Procedure Act and constitutional law as addressing unlawful interference with funds, not merely contract disputes.
The case also unfolded amidst unique legislative developments. The 2025 One Big Beautiful Bill Act, a major legislative move during Trump’s second term, repealed provisions of the Inflation Reduction Act that created the funding program in question. Dissenting judges in the appeal argued that this repeal undermined the case for maintaining the injunction.
The Greenhouse Gas Reduction Fund, a $27 billion “green bank” initiative from the 2022 Inflation Reduction Act, had awarded $20 billion to eight nonprofits by August 2024. These grants aimed to finance clean-energy and efficiency projects via the National Clean Investment Fund and the Clean Communities Investment Accelerator. Recipients like Climate United Fund and the Coalition for Green Capital pursued legal action against the EPA after their funds were initially frozen and then terminated. EPA Administrator Lee Zeldin defended these actions, citing concerns of alleged waste and abuse, yet failed to produce evidence of fraud under scrutiny.
As the legal battle returns to district court, the repeal leaves critical questions regarding the legality of future fund terminations. Climate United’s Beth Bafford praised the decision, interpreting it as a reaffirmation of the EPA’s unlawful actions against the National Clean Investment Fund. Meanwhile, the EPA has not commented further as the situation develops.
This ruling not only highlights the complex interplay of legal, administrative, and legislative frameworks but also underscores ongoing debates about the priorities and management of climate-related initiatives within the US.