Full DC Circuit Rules EPA Illegally Killed $20 Billion Climate Slush Fund, But Money Stays Frozen For Now

What Happened

The full U.S. Court of Appeals for the District of Columbia Circuit ruled Tuesday that the Trump administration illegally terminated a $20 billion Biden-era climate grant program, according to the Associated Press and Newsday.

Six of ten judges found the Environmental Protection Agency likely broke the law when it canceled grants and tried to claw back money already disbursed to nonprofits running the Greenhouse Gas Reduction Fund, commonly called the "green bank."

The money isn't moving yet. The court put its ruling on hold for several days, giving EPA time to ask the Supreme Court to intervene, per the AP.

The Program And The Fight

Congress created the Greenhouse Gas Reduction Fund through the Inflation Reduction Act. It handed $20 billion to nonprofits, who were supposed to turn around and make loans for small energy projects, energy-efficient buildings, and transportation.

Climate United Fund was one of the groups picked to run it. EPA Administrator Lee Zeldin froze the money, which was sitting in a Citibank account, and then terminated the grants outright.

Zeldin didn't mince words about why. He told Fox News early last year that he suspected the green bank "was a clear-cut case of waste and abuse" that "in my opinion, is criminal."

That's a serious accusation. If true, freezing taxpayer money tied up in a rushed, end-of-administration handout would be exactly the kind of oversight conservatives have demanded for years. Nobody should get a pass on fraud just because the money was earmarked for a popular cause.

When the case reached federal court, EPA didn't back up the fraud claim with evidence. U.S. District Judge Tanya Chutkan noted last year that when the government was pressed for proof of fraud, the agency didn't produce any and instead pivoted to broader, vaguer complaints about how EPA had structured its oversight of the program.

Climate United Fund pushed back hard on the accusations. "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 said in a statement.

No fraud charges have been filed against Climate United Fund or the other nonprofits. No indictment exists. The allegation of criminal conduct came from Zeldin's public comments, not from a prosecution or a formal agency finding backed by evidence in court.

The Legal Whiplash

This case has bounced around. In September, a three-judge panel on the same D.C. Circuit sided with the administration, ruling EPA had broad authority to cancel grants without having to defend the legality of that decision in federal court first.

The full appeals court then took the unusual step of agreeing to rehear the case, something reserved for genuinely consequential disputes. Tuesday's ruling reverses that earlier panel decision.

Congress added another wrinkle last year. Trump's tax and spending bill repealed part of the Inflation Reduction Act provision that created the green bank and clawed back any money not yet formally obligated to recipients. That means even if the nonprofits win this round, the legal fight over how much of the $20 billion actually survives isn't settled.

What EPA Hasn't Said

EPA did not immediately provide comment following the ruling, according to both the AP and Newsday. Neither report indicates the agency has announced plans for a Supreme Court appeal, only that it now has a short window to decide.

The Larger Question

This case sits at a real constitutional question, not just a climate policy dispute. Congress authorized this spending. The administration argues it has the executive authority to cut off funds it believes are being wasted or mismanaged, especially when it flags fraud concerns.

The nonprofits argue the administration can't simply refuse to spend money Congress directed it to spend, based on a policy disagreement dressed up as a fraud allegation that was never proven. Six of ten appellate judges agreed with that view Tuesday.

Whether the Supreme Court takes this up, and how fast, will determine if $20 billion in frozen climate funding gets released or stays locked up while the broader legal fight over presidential impoundment power grinds on.