A divided en banc US Court of Appeals for the DC Circuit ruled Tuesday that the Trump administration likely acted unlawfully when it terminated billions of dollars in Biden-era clean-energy grants. The ruling reinstated the core of a district court order that had barred the Environmental Protection Agency (EPA) from clawing the money back.
The 6-4 decision in Climate United Fund v. Citibank is among the most consequential setbacks yet for the administration’s early efforts to unwind climate spending. The appellate court has stayed its judgment to let the EPA ask the Supreme Court to intervene.
The case centers on whether grant recipients challenging terminated awards must proceed in the Court of Federal Claims under the Tucker Act. Under the Tucker Act, only monetary damages are available and if an individual seeks injunctive relief, they must sue in district court. This jurisdictional question has cast a shadow over President Trump’s second term in office. A September 2025 panel vacated the injunction by finding the dispute to be contractual, belonging instead in the Claims Court. The full court disagreed, treating the grantees’ Administrative Procedure Act and constitutional claims as challenges to unlawful interference with funds they already own at Citibank rather than as contract disputes.
The judges splintered over a wrinkle that emerged mid-litigation which is the 2025 One Big Beautiful Bill Act. Congress’s main piece of legislation during the second Trump term. Its Section 60002 repealed the Inflation Reduction Act provision (42 U.S.C. § 7434) that created the program and rescinded money not yet obligated. The four dissenting judges would not have kept the injunction, reasoning that the repeal left the grantees unable to show the EPA block was still warranted.
The program at issue, the Greenhouse Gas Reduction Fund — a $27 billion “green bank” created by the 2022 Inflation Reduction Act — awarded $20 billion in August 2024 to eight nonprofits. It did so through two initiatives: the National Clean Investment Fund, and the Clean Communities Investment Accelerator. Both aimed to finance loans for clean-energy and efficiency projects. Five grantees accounting for roughly $16 billion sued after the EPA froze and then terminated their awards in early 2025. Chief among them were Climate United Fund ($6.97 billion) and the Coalition for Green Capital ($5 billion). EPA Administrator Lee Zeldin has defended the terminations as targeting what he called a “clear-cut case of waste and abuse” and suggested was criminal. Meanwhile, US District Judge Tanya Chutkan, who issued the injunction, found the agency produced no evidence of fraud when pressed and pivoted to broader oversight concerns.
Climate United CEO Beth Bafford welcomed the ruling. In a statement, she said the court confirmed the EPA acted to “unlawfully freeze and dismantle the National Clean Investment Fund.” The EPA did not respond to a request for comment. The dispute now returns to the district court, where the program’s repeal leaves open whether the agency may lawfully end the grants going forward.
