Appeals Court Restores Access to $20 Billion in U.S. Climate Funds

U.S. appeals court has ruled that the Trump administration did not have the legal authority to terminate and reclaim billions of dollars in climate funding that had already been distributed to nonprofit organisations, handing a significant victory to eight groups fighting to regain access to their frozen accounts.

The nonprofits sued after EPA Administrator Lee Zeldin, together with the FBI and the Treasury Department, directed Citibank to freeze accounts holding funds that had been disbursed through the Greenhouse Gas Reduction Fund in February 2025. The ruling restores access to the funding while the Environmental Protection Agency considers whether to appeal the decision to the U.S. Supreme Court.

Although the organisations can now access the money, several have already been forced to make deep cuts, including layoffs and leadership changes, during the months their accounts remained frozen.

Appeals court upholds injunction

The decision upholds a lower court injunction preventing the EPA from clawing back money that had already been deposited into the nonprofits’ bank accounts. Six of the ten judges on the U.S. Court of Appeals for the District of Columbia Circuit voted in favour of maintaining the injunction.

The majority concluded that theEPA’ss attempt to recover the funds was based primarily on a policy disagreement rather than lawful authority. The judges said the agency had improperly withheld funding that Congress had appropriated through the Inflation Reduction Act to establish the $20 billion Greenhouse Gas Reduction Fund.

Court rejectsEPA’ss legal argument

The Trump administration argued that the One Big Beautiful Bill Act repealed the section of the Inflation Reduction Act that created the climate programme, giving the EPA authority to recover the money.

The appeals court disagreed, ruling that because the funds had already been legally obligated and transferred into the nonprofits’ accounts, the later legislation did not authorise the government to reclaim them after disbursement.

Nonprofits continue to face challenges

The Greenhouse Gas Reduction Fund was designed to support clean energy projects, including financing programmes intended to help businesses and communities transition away from fossil fuels.

Despite the favourable ruling, several organisations have suffered lasting consequences. Climate United’s chief executive stepped down earlier this year, while Power Forward Communities has reportedly been reduced to only two employees. Other nonprofits participating in the programme have also carried out workforce reductions while waiting for the legal dispute to be resolved.

The EPA now has seven days to decide whether it will ask the U.S. Supreme Court to review the case.