Appeals Court Bars EPA from Canceling $20B Climate Grants

A federal appeals court ruled on Tuesday, August 4, 2026, that the Environmental Protection Agency likely acted unlawfully in its attempt to cancel and claw back roughly $20 billion in clean energy grants, dealing a legal setback to the Trump administration's efforts to dismantle a key Biden-era climate program. The full U.S. Court of Appeals for the District of Columbia Circuit reinstated a preliminary injunction that blocks the EPA from terminating the grants, though the funds will not be released immediately as the ruling is temporarily on hold to allow for a potential appeal to the Supreme Court.

The dispute centers on the Greenhouse Gas Reduction Fund, a program created by Congress through the 2022 Inflation Reduction Act. Often called a "green bank," it was designed to provide federal money to nonprofit organizations, which would then issue loans and invest in small-scale clean energy projects, energy-efficient buildings, and related infrastructure. The EPA, under Administrator Lee Zeldin, moved to freeze and then terminate the grants in March 2025, alleging the program did not align with agency priorities and raising concerns about potential fraud, waste, and mismanagement.