US court deals blow to Trump’s bid to scrap climate grant programme

A US federal appeals court has determined that the Trump administration's effort to terminate a major clean energy financing programme likely constituted unlawful action. The full Court of Appeals for the District of Columbia reversed a previous three-judge panel decision, ruling that the Environmental Protection Agency cannot freeze approximately $20 billion in grants designated for nonprofit organizations implementing clean energy projects.

The Greenhouse Gas Reduction Fund, established through Congress via President Joe Biden's 2022 Inflation Reduction Act, was designed to distribute federal funds to nonprofit entities that would provide loans and investments in small-scale energy projects, energy-efficient building improvements, and clean energy infrastructure development. EPA Administrator Lee Zeldin has sought to dismantle the programme, contending that it misaligns with agency priorities and alleging that recipient organizations engaged in fraud, waste, and mismanagement.

Zeldin characterized the fund as wasteful government spending in public statements, describing the $20 billion allocation to eight entities as irresponsible distribution of taxpayer resources to activist organizations. Following these assertions, the EPA froze billions of dollars held at Citibank pending distribution as grants. The affected organizations, including the Climate United Fund and Coalition for Green Capital, denied wrongdoing and initiated legal action, arguing that the administration was illegally withholding congressionally approved funds and terminating the programme based on policy opposition rather than evidence of misconduct.

The appeals court majority concluded that the EPA's termination attempt "based solely on a policy disagreement" likely violated the Inflation Reduction Act and that the agency had not provided adequate assurance that funds would remain protected if the injunction were lifted. The ruling restores an earlier order issued by US District Judge Tanya Chutkan. However, the decision has been temporarily stayed to permit the EPA to petition the US Supreme Court for intervention, delaying immediate fund release.