U.S. Appeals Court Backs Trump EPA in Terminating $16 Billion Climate Grants

A federal appeals court has ruled that the Trump administration can move forward with terminating more than $16 billion in climate grants awarded under President Joe Biden’s 2022 Inflation Reduction Act. The decision marks a major setback for nonprofit groups that had been selected to receive the funds to cut greenhouse gas emissions.

In a 2-1 decision, the U.S. Court of Appeals for the District of Columbia Circuit found that a lower court lacked jurisdiction to block the Environmental Protection Agency (EPA) from freezing the grants, which were distributed through the Greenhouse Gas Reduction Fund.

Writing for the majority, Judge Neomi Rao, a Trump appointee, argued that disputes over the grants were contractual in nature and should be heard in the Court of Federal Claims. She added that the EPA acted within its discretion to terminate the program.

The ruling reverses a preliminary injunction issued in April by U.S. District Judge Tanya Chutkan, who had ordered Citibank-holding the funds-to release the money to groups including Climate United Fund, Coalition for Green Capital, Power Forward Communities, Inclusiv, and Justice Climate Fund.

Judge Cornelia Pillard, an Obama appointee, dissented, calling the EPA’s actions an “unlawful nullification of Congress’s duly enacted policy.”

While the EPA welcomed the ruling, Climate United CEO Beth Bafford said the nonprofits remain committed to fighting for communities poised to benefit from clean and affordable energy.

The D.C. Circuit 2-1 ruling reversing the preliminary injunction on $16 billion Greenhouse Gas Reduction Fund grant terminations reflects substantive federal-court judicial-authority reallocation on climate-grant disputes. Moving these matters to the Court of Federal Claims changes the litigation architecture in ways that materially affect nonprofit recipients' recovery pathways.

The Judge-Pillard dissent characterisation of "unlawful nullification of Congress's duly enacted policy" captures the underlying constitutional-authority tension. Once Congress has appropriated funds and directed programme design, unilateral executive-branch termination raises separation-of-powers questions that ultimately require Supreme Court resolution.

For nonprofit climate-organisations affected, financial institutions supporting community solar and low-income clean-energy investment, and their advisors, Cognitud's ESG strategy and transformation, responsible investment and market intelligence teams help clients evaluate exposure under federal-programme-termination uncertainty, structure investment strategies robust across ongoing legal proceedings, and prepare disclosures aligned with ISSB and jurisdictional community-clean-energy frameworks.