Aug 4 (Reuters) - A federal appeals court said the U.S. Environmental Protection Agency cannot freeze about $20 billion of clean energy grants awarded to several nonprofit groups, handing a defeat to the Trump administration.
Tuesday's decision by a divided U.S. Court of Appeals in Washington, D.C. restored an April 2025 injunction against EPA Administrator Lee Zeldin's decision to terminate the grants, which had been awarded during the Biden administration with a goal of reducing greenhouse gas emissions.
The money for so-called National Clean Investment Fund and Clean Communities Investment Accelerator entities was expected to help fund renewable energy products, including in communities that have lacked access to green financing.
Funds came from the Greenhouse Gas Reduction Fund, a $27 billion program established in 2022 by Congress in former Democratic President Joe Biden's Inflation Reduction Act. No Republicans voted for that law.
The EPA said it is reviewing the decision. Its next steps could include an appeal to the U.S. Supreme Court. Lawyers for the nonprofits did not immediately respond to requests for comment.
Zeldin sought to freeze the grants in March 2025, saying they did not align with his agency's priorities and might be tainted by fraud, waste and abuse.
The injunction required the disbursement of the disputed funds, but was put on hold while the EPA appealed.
NO CLAWBACK BASED ON POLICY DISAGREEMENT
Last September, the appeals court sided with the agency, voting 2-1 that the nonprofits should have sued in the Court of Federal Claims, which hears monetary claims against the government.
In Tuesday's decision, an equally divided 10-judge panel of the court upheld the entire injunction, while six judges upheld the specific provision governing the grants.
The majority said the EPA's attempt to terminate the grants and claw back funds "based solely on a policy disagreement" likely violated the Inflation Reduction Act, and the EPA provided no assurance it would leave the funds alone if the injunction were lifted.
Four judges would have vacated the provision governing the grants. They cited Congress' passage last year of Republican President Donald Trump's One Big Beautiful Bill Act, which repealed the section of the 2022 law creating the grant program.
The disputed funds were being held by Citibank, and awarded to several entities such as the Climate United Fund, Coalition for Green Capital and various U.S. state-sponsored entities.
(Reporting by Jonathan Stempel in New York; Editing by Aurora Ellis)
