The Trump administration's effort to reclaim billions in climate funds from the Biden era hit a legal roadblock on Tuesday, as the full D.C. Circuit Court of Appeals reinstated a preliminary injunction that prevents the Environmental Protection Agency from rescinding the money.
The ruling reverses a decision by a smaller panel of judges who had previously lifted the injunction. The full bench's decision means the EPA cannot, for now, claw back the $20 billion distributed under the Inflation Reduction Act's "green bank" program, which was designed to finance projects that cut emissions or reduce pollution.
EPA Administrator Lee Zeldin had vowed to retrieve the funds shortly after taking office, arguing the program was wasteful and terminated. The agency's legal team contended that the money was no longer needed and that the termination was lawful.
However, the appeals court found that the EPA's action "likely contravened the IRA's mandatory appropriation" because the decision was "based solely on a policy disagreement." The judges wrote that the administration could not simply ignore the law's explicit direction to spend the funds.
Some judges on the circuit dissented, arguing that the organizations suing to protect the funds had not shown why the injunction was necessary after Republicans repealed the relevant section of the IRA as part of their "Big, Beautiful Bill." That repeal targeted "unobligated" funds, but the green bank money had already been allocated, creating a legal dispute over whether the administration could still seize it.
An EPA spokesperson said the agency is "reviewing the judgment and considering next steps," but did not respond to questions about the current status of the funds, which had been in limbo since the injunction was first lifted nearly a year ago.
This legal battle is part of a broader pattern of the Trump administration's attempts to roll back climate initiatives, a move that has sparked multiple lawsuits. For instance, two dozen Democratic states have sued over the latest tariff push, and the administration has faced similar challenges on other fronts.
The decision is a significant win for environmental groups and the green banks that were set to receive the funding. It underscores the judiciary's role in checking executive overreach, even as the administration continues to pursue its agenda.
As the legal fight continues, the future of the $20 billion remains uncertain, but for now, the funds are protected by court order.
