A divided federal appeals court determined that the Trump administration acted unlawfully in terminating billions of dollars allocated to clean energy initiatives managed by a coalition of nonprofits. The decision represents a setback for the administration’s efforts to dismantle climate-related programs established during the previous administration.
The Greenhouse Gas Reduction Fund, a $20 billion congressionally authorized program commonly referred to as a “green bank,” was designed to distribute funds to nonprofits that would then finance loans and investments in small-scale energy projects, energy efficiency improvements, and transportation initiatives. EPA Administrator Lee Zeldin had frozen and terminated the grants, alleging mismanagement and potential fraud among the recipient organizations. The nonprofits disputed these accusations and challenged the terminations in court, arguing the administration violated applicable law and constitutional requirements regarding congressionally authorized spending.
The full Court of Appeals for the District of Columbia revisited an earlier decision in which a three-judge panel had sided with the Trump administration. The majority of the full court, comprised of six judges, concluded that the EPA likely violated the underlying 2022 legislation when terminating the grants based on policy disagreement. However, one judge in this majority expressed concerns about whether the clean energy groups could access funds going forward, given that a subsequent Trump administration tax and spending bill had repealed portions of the original legislation establishing the program.
A lower court judge had previously ruled that the government could not violate law to terminate the contracts and that the organizations should have access to frozen funds. The four judges who dissented from the majority’s conclusion argued that the Trump administration’s tax and spending bill likely granted the EPA authority to end the grants entirely.
The court’s order will be held pending several days to allow the EPA opportunity to petition the Supreme Court for intervention. The nonprofits involved in managing the green bank will not immediately regain access to their funds despite the appeals court ruling in their favor. The EPA did not provide immediate comment on the decision. The green bank was initially established through the 2022 Inflation Reduction Act, a signature priority of the Biden administration designed to advance clean energy initiatives and climate-related projects.
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