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By Canary Media
A federal appeals court finds the EPA acted improperly in terminating grants to boost clean energy projects. The Trump administration may appeal to the Supreme Court.
A federal appeals court has ruled that the Environmental Protection Agency acted improperly in terminating billions of dollars of “green bank” financing last year, setting up a potential showdown before the U.S. Supreme Court over one of the Trump administration’s earliest attacks on a key Biden-era climate program.
Tuesday’s divided ruling from the U.S. Court of Appeals for the D.C. Circuit is a victory for the nonprofit groups targeted by EPA Administrator Lee Zeldin as part of a broader attack on the Biden administration’s clean energy and climate spending.
In March 2025, the EPA moved to freeze $20 billion in funding under the Greenhouse Gas Reduction Fund (GGRF), which was created by the 2022 Inflation Reduction Act and is commonly known as the federal “green bank” program. The ambitious effort was meant to inject large-scale federal funding into climate and clean-energy lending pioneered by state-level green banks — lending institutions that have successfully enabled $21.8 billion in public-private investment to date.
The idea was to put federal money to work to boost financing for clean energy and climate-oriented projects in communities that have traditionally lacked access to it. That could spur a virtuous cycle that could yield between $150 billion to $250 billion in private-sector investment over the next 10 years, according to an April 2023 analysis by consultancy McKinsey.
That effort has been frozen in its tracks by the current EPA, forcing the nonprofits awarded grants to curtail operations. Those groups argued that the EPA’s actions violated the law by not spending money authorized by Congress.
“Despite efforts to harm the awardees with false allegations and misinformation, there remains no legal basis for terminating our grant award,” a spokesperson for Climate United, a consortium awarded $7 billion in GGRF funds, said in a Tuesday statement.
Before the EPA froze its funds, Climate United had committed hundreds of millions of dollars for solar projects for the University of Arkansas, financing to help small-scale trucking firms buy U.S.-built electric trucks in California, upgrades to shift buildings to clean energy and make them more efficient, and Native American–led clean energy projects. Only a fraction of those funds have been disbursed.
Because it hasn’t received its promised GGRF funding, Climate United — a partnership between investment firm Calvert Impact, multifamily affordable-housing financier Community Preservation Corp., and community-development financial institution Self-Help — has lost its CEO and had to reduce staffing. Meanwhile, plans have been scaled back at a network of state and county green banks and other community-development financing institutions that had counted on using federal funds.
In April 2025, a lawsuit brought by GGRF recipients won an early favorable ruling in federal district court, which the EPA appealed. A three-judge panel at the D.C. Circuit Court ruled 2–1 in the EPA’s favor in September, but the full appeals court decided to take up the case for review, leading to this week’s decision.
That doesn’t mean grant recipients can now get their money, however. The EPA has several days to file an appeal with the U.S. Supreme Court. The EPA did not immediately respond to emails and phone calls seeking comment on Tuesday. But Zeldin has vowed to fight to claw back the $20 billion in GGRF grants.
Another $7 billion in GGRF funds for the federal Solar for All program have also been terminated by the EPA, and legal challenges to that action are underway. The EPA has faced other recent legal defeats as it tries to terminate Biden-era climate funding.
GGRF recipients have continued to undertake smaller-scale financing deals and remain ready to resume projects if their full funding is restored, the Climate United spokesperson told Canary Media. “This program was designed to lower energy costs, create good jobs, and improve public health. We will continue to pursue every legal avenue available to us to unfreeze funds on behalf of the communities we serve.”
Jeff St. John
is chief reporter and policy specialist at Canary Media. He covers innovative grid technologies, rooftop solar and batteries, clean hydrogen, EV charging, and more.
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