A rare full-bench ruling hands the EPA a major setback — and reopens a fight over money Congress already approved.
A federal appeals court has changed course and once again blocked the Trump administration from taking back billions of dollars in climate funding that was awarded under the Biden administration’s signature Inflation Reduction Act.
On Tuesday, the full U.S. Court of Appeals for the District of Columbia Circuit reinstated part of an earlier preliminary injunction that stops the Environmental Protection Agency from clawing back money tied to the government’s “green bank” program. The decision reverses a ruling from just a few months earlier, when a smaller three-judge panel had thrown that injunction out.
Why this ruling matters
The reversal came from the entire bench of the appeals court — not a small panel — which is unusual. Full-court, or “en banc,” reviews are typically reserved for the most consequential cases, and the court’s decision to revisit its own recent ruling signals just how high the stakes are here.
In the end, the judges were closely split. Six of the ten judges sided with a lower-court judge, agreeing that the EPA likely broke the law when it terminated the grants and tried to recover the funds based on a policy disagreement. Doing so, the majority reasoned, would likely conflict with Congress’s clear direction to spend the money on the program.
For the administration, it’s a loss in one of its earliest and highest-profile attempts to unwind President Joe Biden’s climate agenda.
What the “green bank” actually is
The program at the center of the case is formally called the Greenhouse Gas Reduction Fund, but it’s widely known as a “green bank.” Created by the 2022 Inflation Reduction Act, it’s a $20 billion congressionally authorized program that channels money to nonprofit organizations. Those nonprofits, in turn, are supposed to make loans and investments in smaller-scale projects — think clean energy, energy-efficient buildings, and greener transportation.
EPA Administrator Lee Zeldin had made rolling back the program a priority. He accused the Climate United Fund and other nonprofits chosen to run the green bank of mismanagement and potential fraud, froze billions of dollars parked in a Citibank account, and moved to cancel their grants outright.
The nonprofits pushed back hard, denying any wrongdoing and suing the agency. They argued that the administration broke the law and violated the Constitution by refusing to spend money that Congress had already authorized. In a statement, Climate United said there remains no legal basis for terminating its award or clawing back funds that had already landed in its accounts, describing the government’s accusations as false.
How the case has bounced around the courts
This case has taken a winding path:
- April 2025 — U.S. District Judge Tanya Chutkan issued a preliminary injunction blocking the government from withholding the funds.
- July 2025 — President Trump signed his sweeping tax and spending package into law. Part of that legislation repealed the statute that established the green bank and rescinded money that hadn’t yet been formally obligated to recipients — adding a legal wrinkle to the fight.
- September 2025 — A divided three-judge panel of the D.C. Circuit voted 2–1 to overturn Chutkan’s injunction, ruling the administration had broad authority to cancel the grants.
- August 2026 — The full appeals court reinstated part of the injunction, putting the block back in place.
According to The Epoch Times, the latest ruling affects roughly $16 billion in disputed grants.
What happens next
The fight isn’t over. After the ruling came down, an EPA spokesperson said the agency was reviewing the judgment and weighing its next steps. Given how narrowly divided the court was — and the added complication created by the 2025 law repealing part of the program — the case could well continue up the appeals chain.
For now, though, the money stays put.