The Trump administration did not have the authority to terminate and claw back funding that had already been disbursed to climate nonprofits, an appeals court ruled on Tuesday.
Eight nonprofit groups have been seeking to regain access to billions of dollars that had been deposited in their bank accounts after EPA Administrator Lee Zeldin, along with the FBI and the Treasury Department, ordered Citibank to freeze their accounts in February 2025.
The decision gives the groups access to their funding while the EPA decides whether to appeal to the U.S. Supreme Court. However, many of the organizations have had to enact significant cuts while their accounts were frozen.
The judgment upholds an injunction preventing the EPA from taking back money that had already been disbursed to the nonprofits’ bank accounts. Six of 10 judges on the U.S. Circuit Court of Appeals for the District of Columbia Circuit supported lifting the injunction.
The judges said that the EPA was attempting to claw back the funding “solely on a policy disagreement.” The move unlawfully withheld funding that had been appropriated by the Inflation Reduction Act (IRA) to create the Greenhouse Gas Reduction Fund, a $20 billion program to spur clean energy development.
Much of the funding would have created debt facilities that would help businesses and communities wean themselves off fossil fuels. Such loans have delinquency rates similar to those of commercial lenders.
The Trump EPA had argued that it had the authority to claw back funding because the One Big Beautiful Bill Act (OBBBA) repealed the part of the IRA that created the Greenhouse Gas Reduction Fund.
But the assenting judges said that because funds were already obligated and disbursed into the nonprofits’ accounts, the OBBBA didn’t have grounds to claw back the money. In other words, the government can’t make a new law to take back money it had already sent out.
While nonprofits celebrated the decision, it might be too little, too late for some of them.
Climate United’s CEO left in March and hasn’t been replaced, while Power Forward Communities only has two employees left, The New York Times reported. Others have had to lay off workers.
The EPA has seven days to file an appeal to the Supreme Court.
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