The full D.C. Circuit Court of Appeals reinstated an injunction barring the EPA from recouping billions in Biden-era climate grants, ruling the agency likely broke the law by terminating the program over a mere policy disagreement.
Six of ten judges on the D.C. Circuit sided against the Trump administration's Environmental Protection Agency on Tuesday, restoring a preliminary injunction that blocks the agency from suspending or terminating $20 billion in clean energy grants distributed to eight nonprofit organizations under the Biden administration's Inflation Reduction Act. The ruling reversed a smaller appellate panel's decision from roughly a year earlier that had canceled the injunction, handing the administration a significant legal setback in its effort to unwind Biden-era climate spending.
The en banc court found that the EPA's decision to terminate the grants was "based solely on a policy disagreement" and "likely contravened the IRA's mandatory appropriation." In plain terms, the judges said Congress wrote the spending into law, the money went out the door, and the EPA had no legal authority to yank it back just because the new administration disagreed with the program's purpose.
EPA Administrator Lee Zeldin had pledged to recoup the full $20 billion when he took office, framing the effort as part of the Trump administration's broader push to roll back Biden-era green energy programs. An EPA spokesperson told The Hill that the agency was "reviewing the judgment and considering next steps." One option still on the table: an appeal to the Supreme Court.
The dispute centers on the Greenhouse Gas Reduction Fund, a program created by the Inflation Reduction Act that funneled $20 billion through eight nonprofits to finance climate-friendly projects, everything from clean energy installations to efficiency upgrades. The Biden administration structured the money as mandatory appropriations, meaning Congress directed the funds to be spent rather than leaving them to the discretion of future administrations.
That legal structure is the crux of the problem for the EPA. The six-judge majority concluded that the agency cannot simply terminate grants and demand repayment when the underlying statute compelled the spending. A policy disagreement, however strongly held, does not override a congressional mandate.
The Trump administration has faced a broader pattern of legal resistance as it seeks to unwind Biden-era programs across multiple agencies. Courts have repeatedly scrutinized whether executive action can override congressionally directed spending, a question that touches on separation-of-powers disputes that have defined much of the current term.
A federal judge, identified by the Washington Examiner as Judge Tanya Chutkan, originally issued the preliminary injunction in April 2025, blocking the EPA from suspending or terminating the grants. A smaller panel of appellate judges later canceled that order. Tuesday's en banc ruling reversed the panel and restored Chutkan's injunction.
Four judges dissented. The article notes that some dissenters pointed to the One Big Beautiful Bill Act, the sweeping Republican legislative package, which repealed "unobligated" funds from the green bank program. The dissenters appeared to argue that Congress itself had moved to claw back at least some of the money, undermining the legal basis for the injunction.
Climate United Fund, one of the eight nonprofit grantees, issued a statement celebrating the ruling and characterizing the EPA's actions as flatly unlawful:
"Today, the DC Circuit Court judges affirmed what we have always known: EPA took actions to unlawfully freeze and dismantle the National Clean Investment Fund grant program. 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."
The group went further, arguing that the EPA's decisions carry real-world consequences for ordinary Americans:
"As hardworking Americans grapple with an affordability crisis, the impact of the EPA's decisions are far-reaching. This program was designed to lower energy costs, create good jobs, and improve public health. We will continue to pursue every legal avenue available to us to unfreeze funds on behalf of the communities we serve."
That framing, casting the green bank program as a lifeline for working families, is precisely the kind of rhetoric that frustrates conservative critics of the Inflation Reduction Act. The law directed $20 billion in taxpayer money to a handful of nonprofits with minimal accountability mechanisms, and the question of whether those funds actually lowered anyone's energy bills or created lasting jobs remains largely unanswered. Climate United's statement references "false allegations and misinformation" directed at the grantees but does not specify what those allegations were.
The administration's legal battles extend well beyond environmental policy. President Trump has simultaneously been navigating high-stakes court fights on multiple fronts, including taking the $83 million E. Jean Carroll judgment to the Supreme Court.
Congressional Republicans did not sit idle while the courts debated the green bank funds. The One Big Beautiful Bill Act, the party's sprawling legislative package, included a provision repealing "unobligated" funds from the program. That distinction matters. "Unobligated" funds are dollars that had been authorized but not yet committed to specific projects or disbursed to grantees. Funds already sitting in a nonprofit's bank account, as Climate United Fund claims its share is, may fall outside that repeal.
The ruling leaves several critical questions unresolved. How much of the $20 billion was actually disbursed before the EPA moved to terminate the program? How much remains "unobligated" and therefore subject to the legislative repeal? And what happens to funds that were frozen during the period when the injunction was canceled, did any money move back to the federal government during that window?
The EPA's statement that it is "considering next steps" leaves the door open for a Supreme Court appeal. Given the current Court's track record on executive power and administrative law, the administration may like its odds at the next level. But for now, the injunction stands, and the $20 billion remains beyond the EPA's reach.
The broader legal landscape for the Trump administration has grown increasingly complex, with federal courts weighing in on everything from environmental spending to financial disputes. Separate from the EPA fight, Trump has faced questions about financial institutions closing accounts and prosecutorial decisions that have drawn sharp rebukes from the White House itself.
The green bank fight illustrates a pattern that conservatives warned about throughout the Biden years. By structuring massive spending programs as mandatory appropriations and routing funds through outside organizations, the previous administration built legal barriers designed to outlast its own term. The Inflation Reduction Act did not simply authorize the green bank program, it commanded the spending, creating a statutory obligation that courts are now enforcing against the very administration trying to undo it.
That is not a failure of the Trump EPA's legal team. It is a feature of how the Biden administration engineered its climate agenda. The money was designed to be difficult to retrieve, and so far, the courts are proving that design effective.
Zeldin and the EPA still have options. The Supreme Court may take a different view of whether mandatory appropriations can be unwound by a subsequent administration acting through agency authority. Congressional Republicans have already moved legislatively on the unobligated portion. And the dissenting judges on the D.C. Circuit signaled that the legal question is far from settled.
But the ruling is a reminder that unwinding bad policy through executive action alone has limits, especially when the previous administration spent four years building legal fortifications around every dollar it spent. The real fix was always legislative, and conservatives who want that $20 billion back should be pressing Congress to finish the job the One Big Beautiful Bill started.
