The full bench of the D.C. Circuit Court of Appeals sided with green-energy grantees over the EPA on Tuesday, reinstating a preliminary injunction that temporarily bars the agency from recouping billions in Biden-era "green bank" funding, a setback for the Trump administration's effort to unwind the program.
The ruling reversed a decision by a smaller appellate panel that had previously canceled the injunction, handing a fresh legal obstacle to EPA Administrator Lee Zeldin, who pledged when he took office to recoup the $20 billion the Biden administration distributed under the Inflation Reduction Act for climate-friendly lending programs. The EPA said it had terminated the green bank program and moved to get the money back, but the full court found the agency's action "likely contravened the IRA's mandatory appropriation" because it was "based solely on a policy disagreement."
That language matters. The court did not say the EPA lacked authority to oversee how the funds were spent. It said the agency's rationale, a policy objection to the program, was not enough to override a congressional appropriation that the law made mandatory. In short, the judges told the executive branch it cannot simply refuse to spend money Congress directed it to spend, even if the current administration disagrees with the program's purpose.
The timing makes the ruling especially notable. Republicans in Congress had already repealed "unobligated" funds from the green bank program through the One Big Beautiful Bill Act, their sweeping legislative package. Some dissenting judges on the D.C. Circuit pointed to that fact, arguing the grantees had not demonstrated why the injunction was still necessary after Congress itself pulled unspent money from the program.
But the majority was unmoved. The distinction turns on a single word: "unobligated." Funds that had already been disbursed to grantees, money sitting in their bank accounts, are not "unobligated" in the legal sense. The injunction, as reinstated, appears to protect those already-distributed dollars from EPA clawback, even as Congress closed the spigot on future spending.
The decision adds to a growing pattern of federal courts checking executive-branch efforts to reverse prior administrations' spending commitments. The Trump administration has faced similar judicial resistance on immigration policy, where multiple appeals courts have pushed back on White House directives.
Climate United Fund, one of the grantees in the case, issued a statement celebrating the outcome. The group framed the ruling as confirmation that the EPA had acted outside the law.
"Today, the DC Circuit Court judges affirmed what we have always known: EPA took actions to unlawfully freeze and dismantle the National Clean Investment Fund grant program. Despite efforts to harm the awardees with false allegations and misinformation, there remains no legal basis for terminating our grant award and clawing back funds that were already disbursed in our bank accounts."
The group went further, tying the dispute to pocketbook concerns, as The Hill reported.
"As hardworking Americans grapple with an affordability crisis, the impact of the EPA's decisions are far-reaching. 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."
Climate United Fund's reference to "false allegations and misinformation" went unexplained in the statement. The group did not specify what claims it was rebutting, and the court's ruling, at least as described in available reporting, did not address those allegations directly.
The EPA offered a brief response, saying only that it was "reviewing the judgment and considering next steps." That language leaves the door open to an appeal, potentially to the Supreme Court. The Trump administration has not hesitated to escalate legal fights to the high court on other fronts, including its push to challenge lower-court rulings on mail-in voting.
The procedural road ahead remains unclear. The ruling reinstated only "part of" the preliminary injunction, and the decision did not specify, at least in the details available, exactly which portions of the original order were restored and which were not. How much of the $20 billion remains in grantee accounts versus how much was frozen or never disbursed is also unaddressed.
Those gaps matter. If the bulk of the money was already out the door before Zeldin moved to claw it back, the practical effect of the injunction is significant. If most of the funds were still unobligated when Congress repealed them through the One Big Beautiful Bill Act, the ruling may be narrower than it appears.
When Zeldin took over the EPA, he made the green bank program a target. The $20 billion in grants, distributed under the Inflation Reduction Act during the Biden administration, funded climate-focused lending programs designed to channel private capital into clean-energy projects. The Trump administration viewed the program as a policy it opposed and moved to terminate it.
The court's majority opinion suggests that disagreeing with a program's goals is not the same as having legal authority to kill it. The IRA's appropriation was mandatory, meaning Congress did not leave it to the executive branch's discretion whether to spend the money. The EPA's decision to terminate the program and demand funds back, the court found, likely violated that mandate.
That reasoning puts the administration in a bind. Even where Republican senators have pressed for faster judicial nominations to reshape the federal bench, the current courts have shown willingness to enforce statutory spending mandates against the executive branch regardless of which party controls the White House.
The dissenting judges on the D.C. Circuit raised a practical objection: Congress itself had already acted to repeal unobligated green bank funds. If the legislative branch pulled the plug, why should the courts step in to protect money that lawmakers no longer wanted spent? The majority apparently concluded that the congressional repeal and the EPA's clawback were legally distinct actions, one addressed future spending, the other targeted funds already in grantees' hands.
Tuesday's ruling fits a broader dynamic. Across multiple policy areas, federal courts have served as a brake on executive-branch efforts to reverse prior commitments. The administration has faced judicial pushback on tying federal funding to election security compliance, on immigration enforcement, and now on energy spending.
None of these rulings are final. Preliminary injunctions are temporary measures, and the merits of each case have yet to be decided. But the cumulative effect is a legal environment where the executive branch's ability to move fast on policy reversals is constrained by courts that insist on statutory authority, not just political will.
For conservatives, the ruling raises a legitimate tension. The green bank program funneled $20 billion in taxpayer money to climate-lending groups based on policy priorities many voters rejected at the ballot box. Zeldin's effort to recoup those funds reflected a mandate to stop spending money on programs the current administration, and arguably the current electorate, opposes. But the court's point is narrow and structural: Congress appropriated the money through mandatory spending, and the executive branch cannot undo that appropriation by fiat.
The right answer was always legislative, and Republicans in Congress recognized that when they repealed unobligated funds through the One Big Beautiful Bill Act. The question now is whether the courts will let the EPA reach back and recover money that was already out the door before Congress acted.
When the government hands out $20 billion and then changes its mind, the taxpayer is the one left holding the receipt, and the courts just made it harder to get a refund.