A divided federal appeals court on Aug. 4 prevented the Trump administration from terminating about $16 billion in Biden-era climate grants.
The court majority ruled that an effort by the U.S. Environmental Protection Agency (EPA) to claw back the funds based merely on a “policy disagreement” probably ran afoul of a mandatory congressional appropriation.
The case goes back to March 2025, when the EPA terminated the grants amid concerns about a lack of oversight and transparency. The program, known as the Greenhouse Gas Reduction Fund or “green bank,” was approved under the 2022 Inflation Reduction Act. The EPA awarded approximately $20 billion in grants to eight entities to finance climate-related projects.
He said the decision to end the program was based on “substantial concerns regarding program integrity, objections to the award process, programmatic fraud, waste and abuse, and misalignment with the agency’s priorities.”
Of the $20 billion, roughly $16 billion went to five nonprofit environmentalist groups that are the main plaintiffs in the underlying litigation.
The groups said they were unlawfully denied access to the funds that had already been awarded and that the freeze created hardships by making it difficult for them to operate.
In April 2025, U.S. District Judge Tanya Chutkan issued a preliminary injunction preventing the federal government from withholding the funds.
On July 4, 2025, President Donald Trump signed the One Big Beautiful Bill Act into law. Part of that legislation repealed the statutory authority for the green bank program and rescinded its unobligated balances.
In September 2025, a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit overturned Chutkan’s injunction on a 2–1 vote.
Writing for the majority of the panel, Circuit Judge Neomi Rao said the nonprofits’ arguments never belonged in federal district court.
The district court lacked jurisdiction, or authority, “to hear claims that the federal government terminated a grant agreement arbitrarily or with impunity,” the judge said.
The district court “abused its discretion in issuing the injunction,” and the grantees are unlikely to win their case on the merits “because their claims are essentially contractual,” she said.
The case should have been brought in the U.S. Court of Federal Claims, which has exclusive jurisdiction to hear such cases, Rao said.
The majority said the EPA cannot cancel the grants or require that the money be paid back to the government simply because it disagrees with the program’s goals.
The six judges found that the Inflation Reduction Act required the EPA to spend the money Congress set aside for the program. Trying to cancel the program and take back the funding already paid out based on a policy disagreement likely violated the law, they said.
The four-judge minority said the injunction was no longer justified because Congress abolished the program.
One of those four judges, Chief Judge Sri Srinivasan, said he would have voted the other way if the One Big Beautiful Bill Act had not repealed the green bank program.
Circuit Judge Karen Henderson did not participate in the decision. The order does not say why.
