Appeals Court Rules Trump EPA Illegally Canceled $20B in Climate Funds

Court Reinstates Climate Funding

A U.S. Circuit Court of Appeals for the District of Columbia Circuit ruled that the Trump administration's Environmental Protection Agency (EPA) did not have the authority to cancel and reclaim $20 billion in climate funds. These funds had already been disbursed to the bank accounts of eight climate nonprofit groups. The ruling upholds an injunction that prevents the EPA from taking back the money.

Background of the Dispute

In February 2025, EPA Administrator Lee Zeldin, in conjunction with the FBI and Treasury Department, ordered Citibank to freeze the accounts of these nonprofits. The EPA argued it had the authority to claw back the funding because the One Big Beautiful Bill Act (OBBBA) repealed the part of the Inflation Reduction Act (IRA) that created the Greenhouse Gas Reduction Fund, the source of the $20 billion.

Court's Rationale

The appeals court, with six of ten judges supporting the decision, stated that the EPA's attempt to claw back the funding was based "solely on a policy disagreement." The judges determined that because the funds were already obligated and disbursed into the nonprofits' accounts, the OBBBA did not provide grounds to reclaim the money. This means the government cannot enact new legislation to retrieve funds it has already distributed.

Impact on Nonprofits and Future Steps

While the decision grants the nonprofits access to their funding, many have faced significant operational cuts and layoffs during the period their accounts were frozen. For example, Climate United's CEO left, and Power Forward Communities has only two employees remaining. The EPA has a seven-day window to decide whether to appeal this ruling to the U.S. Supreme Court.