Green Energy — News & Analysis

Divided federal appeals court says Trump administration was wrong to terminate climate funds (August 4, 2026)

WASHINGTON — A divided federal appeals court said on Tuesday, August 4, 2026, that the Trump administration improperly terminated billions of dollars in funds to boost clean energy projects, handing a win to a coalition of nonprofits picked to run the Biden-era effort. Climate United Fund and the other nonprofits will not have access to their funds immediately, as the decision was put on hold for several days to give the Environmental Protection Agency time to ask the Supreme Court to step in. The judgment by the full U.S. Court of Appeals for the District of Columbia is a loss for the administration in one of its earliest efforts to dismantle President Joe Biden's campaign to reduce climate-warming greenhouse gases. The Greenhouse Gas Reduction Fund, commonly called a "green bank," is a $20 billion congressionally authorized program that provided money to nonprofits that would then make loans and invest in small energy projects, energy-efficient buildings and transportation. EPA Administrator Lee Zeldin accused the nonprofits of mismanagement and potential fraud, froze billions that had been placed in a Citibank account for the program, and then terminated their grants; the groups disputed any wrongdoing and sued, arguing the administration broke the law and violated the Constitution by not spending money authorized by Congress.

Six of 10 judges agreed with a lower court judge that the Trump EPA likely violated the 2022 law when it terminated the grants and tried to claw back funds based on a policy disagreement. One of those six said Trump's tax and spending bill complicated whether the clean energy groups could access funds going forward; the remaining four broadly disagreed with the majority and sided with the EPA, saying that after the bill the agency likely would have authority to end the grants. The green bank was created by the 2022 Inflation Reduction Act, and Trump's tax and spending bill last year repealed part of the law that established it and rescinded money not already obligated to recipients, adding a layer of complication to the case. In September, a divided three-judge panel of the same appeals court had overturned a lower court and said the administration had broad power to cancel grants without facing charges of illegality in federal court; the full court agreed to revisit that decision, a rare occurrence reserved for the most important cases. U.S. District Judge Tanya Chutkan ruled last year that when the federal government was asked for evidence of fraud, the agency did not provide it and shifted its position to more general concerns about the level of EPA oversight. Climate United said in a statement that "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 EPA did not immediately provide comment.