A divided federal appeals court on Sept. 2 ruled that the Trump administration may terminate $16 billion in grants to nonprofits intended to finance climate-related projects.
The three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit voted 2–1 to reverse U.S. District Judge Tanya Chutkan’s injunction preventing the federal government from withholding the funds.
In the case Climate United Fund v. Citibank, environmentalists sued the Environmental Protection Agency (EPA)—which had custody of the funds—and its administrator, Lee Zeldin.
The groups said they were unlawfully denied access to the funds that were previously awarded to them and that the funding freeze created hardships by making it difficult for them to operate.
In March, 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 and saw the EPA award $20 billion in grants to eight entities to launch climate-related projects.
In announcing the cancellation of the program, Zeldin described it as a “gold bar” scheme.
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.”
Writing for the majority, Circuit Judge Neomi Rao said the nonprofits’ arguments did not belong 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.
“We conclude EPA did not violate the Inflation Reduction Act when it terminated these grants. The grantees have identified no statutory provision that barred the cancellation of the grants,” she added.
The D.C. Circuit Court vacated the injunction and sent the case back to the district court for reconsideration.
Circuit Judge Cornelia Pillard filed a dissenting opinion.
After the Trump administration took over from the Biden administration in January, the EPA participated in a “hunt for reasons to shut down the congressionally mandated program and claw back the funding that had already been disbursed to Plaintiffs and committed to infrastructure projects,” she said.
To date, Pillard said, the EPA has “succeeded in depriving Plaintiffs of access to their funding for six months,” which has “already caused Plaintiffs to default on promised loans and scuttled affordable housing and energy projects implementing Congress’s vision.”
“EPA has done all that without presenting to any court any credible evidence or coherent reason that could justify its interference with Plaintiffs’ money and its sabotage of Congress’s law,” she added.
Katabella Roberts contributed to this report.
This article by Matthew Vadum appeared Sept. 2, 2025, in The Epoch Times. It was updated Sept. 4, 2025.