US Justice Department blocks Trump's attempt to eliminate a $20 billion climate fund

A U.S. federal appeals court ruled Tuesday that the Trump administration likely broke the law by seeking to cancel a clean energy subsidy program worth some $20 billion. The money will not be released immediately, however.

The federal appeals court for the District of Columbia, sitting as a full panel, issued a ruling Tuesday that contradicts a previous decision by the same court. The judges determined that the Environmental Protection Agency (EPA) could not freeze funds from the Greenhouse Gas Reduction Fund, a program created by Congress under the inflation reduction law signed by Joe Biden in 2022.

This fund, often referred to as the "green bank," was designed to distribute federal funding to non-profit organizations tasked with providing loans and investing in clean energy projects, energy-efficient buildings, and low-carbon infrastructure. Eight entities had received the loans, deposited with Citibank, before the EPA froze them earlier this year.

EPA Administrator Lee Zeldin justified the decision by denouncing fraud, waste, and mismanagement. In a video posted on social media in February, he criticized "$20 billion of your tax dollars parked in an outside financial institution by Biden's EPA," adding that "the days of dumping truckloads of cash into far-left activist groups in the name of environmental justice" were over.

Five recipient organizations, including the Climate United Fund and the Coalition for Green Capital, challenged the freeze in court, claiming the administration was illegally withholding funds already approved by Congress. They denied any wrongdoing and argued the move was aimed at sabotaging the program for ideological reasons, not based on evidence of fraud.

The majority of judges sided with the organizations, finding that the EPA's attempt to terminate the grants and reclaim the funds "solely on the basis of a political disagreement" likely violated the Inflation Reduction Act. The court also noted that the agency had provided no assurance that the funds would remain intact if the injunction were lifted.

The decision reinstates an order issued last year by Federal Judge Tanya Chutkan, who concluded that the EPA had not justified the cancellation of the grants and warned that the administration was encroaching on Congress's prerogatives regarding government spending. However, it overturns a September ruling by a three-judge panel of the same court, which had sided with the administration.

The decision is temporarily suspended, however, while the EPA appeals to the Supreme Court. The funds will therefore not be released immediately. This case is part of a series of legal disputes surrounding the dismantling by Donald Trump climate policies inherited from his predecessor, since his return to the White House.