US Appeals Court Blocks EPA Bid to Reclaim $20 Billion in Clean Energy Grants

A U.S. federal appeals court has ruled that the Environmental Protection Agency (EPA) cannot reclaim nearly $20 billion in clean energy grants awarded under the Biden administration, delivering a significant legal setback to the Trump administration’s efforts to roll back climate funding.

The decision reinstates an injunction issued in April 2025 that blocked EPA Administrator Lee Zeldin from terminating grants awarded through the Greenhouse Gas Reduction Fund, a $27 billion program established under the Inflation Reduction Act to expand financing for clean energy projects, particularly in underserved communities.

The grants support nonprofit organisations, including Climate United Fund and the Coalition for Green Capital, which use the funding to provide loans for renewable energy and other low-carbon initiatives. While the ruling prevents the EPA from clawing back the funds, the money will not be distributed immediately, giving the agency time to appeal to the U.S. Supreme Court.

The court’s majority found that the EPA’s attempt to cancel the grants appeared to be based primarily on a policy disagreement, rather than a legal basis, and could conflict with the Inflation Reduction Act. EPA had argued the grants no longer aligned with its priorities and raised concerns over potential fraud, waste and abuse.

The ruling marks a key development in the ongoing legal battle over federal climate funding and highlights the broader tension between changing political priorities and long-term clean energy investment programs. The outcome could influence the future of U.S. climate finance, renewable energy deployment and the stability of government-backed green investment initiatives.

The court blocking the $20 billion clawback preserves the clean-energy grant pipeline for now, but the reversal risk remains for the entire administration cycle. Our sustainability-due-diligence and market-intelligence teams help clients and their capital providers build clean-energy investment strategies that stay robust across ongoing federal-state litigation.