Released on September 2, 2025
The US Court of Appeals has determined that President Donald Trump’s administration can move forward by ending more than $16 billion in federal grants awarded to climate change nonprofits.
On Tuesday, the US voted to overturn a lower court’s decision to ensure that the District of Columbia voted 2-1 to prevent the grant from being revoked.
Judge Neomi Rao, Trump’s appointee who wrote for the majority, argued that the lower courts had no authority to offer a ruling in the case.
Instead, she wrote that the case should have gone to a federal claims court dedicated to the measurement of the contract and financial disputes.
“The district courts have no jurisdiction to hear allegations that the federal government has terminated the grant agreement with arbitrarily or exemption,” writes Rao. “Arbitrary grant termination claims are essentially contractual.”
District courts should focus primarily on deciding on constitutional issues or legal disputes, she added.
Rao joined her decision by fellow Trump appointee Judge Gregory Cassas.
Cornelia Pillard, the Court of Appeals’ Opposition Judge, was appointed by former President Barack Obama.
She argued that the rollback of federal grants was a political action taken to reflect the Trump administration’s opposition to the Green Energy initiative.
Pillard also noted that federal funding is part of the Inflation Reduction Act. This was passed by Congress in 2022, including the biggest investment in climate change initiatives in US history.
Pillard wrote the Trump administration’s decision to settle federal grants “without offering to court any credible evidence or consistent reasons that could justify interference between plaintiffs’ money and obstruction of Congress’ law.”
The lawsuit on Tuesday was a continuation of a lawsuit filed by five of the eight nonprofits awarded $20 billion under the Inflation Reduction Act, a signature law passed under former President Joe Biden.
The funding was allocated to the Greenhouse Gas Reduction Fund, a program that funds the “Green Bank” project, designed to reduce air pollution, reduce greenhouse gas emissions and build clean energy infrastructures.
In anticipation of their spending, the funds were protected by Citibank, a well-known US financial institution.
But in February, Trump’s chosen Lee Zeldin, who leads the Environmental Protection Agency (EPA), posted a video on social media denounced funds as an example of government waste.
“To my surprise, about $2 billion in your taxes have been parked by the Biden EPA at external financial institutions,” Zeldin said. “This $20 billion pot was awarded to just eight entities and was then responsible for draining your money at the discretion of an NGO or other organization.”
“The days of irresponsibly shoveling cash boat roads to activist groups on the far left in the name of environmental justice and climate equity are over,” he added.
By March, Zeldin called on EPA inspectors to consider the Greenhouse Gas Reduction Fund, and payments for that fund had been frozen.
The Climate United Fund is one of five groups fighting for access to some of the funds worth around $16 million.
Other plaintiffs include Green Capital Coalition, Power Forward Community, and the Inclusive and Judicial Climate Fund.
In a statement after the ruling Tuesday, the Climate United Fund reaffirmed the view that the Trump administration “breaked the law” by seizing the funds back.
“We are disappointed with the panel’s decision, but we are stuck to the merits of the case. The EPA has illegally frozen funds that were legally mandated and paid, and fired them,” CEO Beth Bafford said.
“This is not the end of our path,” she added.
The Court of Appeals ruling on Tuesday reversed a lower court decision from Obama’s appointee, Judge Tanya Chatkan.
On April 15, she granted a provisional injunction over Zeldin’s decision, asking Trump’s EPA to pull back $200 billion and free the funds to Citibank.
She noted that the EPA “gived no legal justification for the dismissal” and that the decision to x funds threatened Congress’ powers over spending decisions.
However, Rao, a judge at the Court of Appeal, said in his decision on Tuesday that Zeldin had not restricted his decision to settle the grant.
