DC Circuit Reinstates Injunction Blocking EPA From Rescinding $20B in Climate Funds

08/05/2026 / By Iva Greene

The U.S. Court of Appeals for the D.C. Circuit, sitting en banc, ruled Tuesday that a preliminary injunction barring the Environmental Protection Agency (EPA) from rescinding billions of dollars in climate grant funds remains in effect. A divided federal appeals court on Aug. 4 prevented the Trump administration from terminating the Biden-era climate grants, according to The Epoch Times. ^[1]

The ruling reverses a previous three-judge panel decision that had allowed the termination to proceed, and it covers approximately $20 billion allocated under the Inflation Reduction Act of 2022. A three-judge panel had ruled 2-1 on Sept. 2 to uphold the freeze on funding from the Greenhouse Gas Reduction Fund, which the act created; the plaintiffs requested a rehearing en banc on Sept. 10, and the court agreed to rehear the case, according to Utility Dive. ^[2]

The case, Climate United Fund v. Citibank, was brought by nonprofit recipients of the grants, which sued the EPA and its administrator, Lee Zeldin, after the agency moved to recover the money, according to The Epoch Times. ^[3]

Background: Green Bank Funding and EPA Termination

The funds were issued by the Biden administration to green banks, which were expected to award grants and loans for projects aimed at reducing pollution and addressing climate change. The grantee groups said they were unlawfully denied access to funds that were previously awarded to them and that the funding freeze created hardships, according to The Epoch Times. ^[3]

Shortly after taking office, EPA Administrator Lee Zeldin said the agency would recoup the $20 billion. The case goes back to March 2025, when the EPA terminated the grants amid concerns about a lack of oversight and transparency, according to The Epoch Times. ^[1] The agency later terminated the program and sought the return of the money.

An EPA spokesperson said the agency was “reviewing the judgment and considering next steps” and did not respond to a request for a status update on the funds.

Court’s Rationale and Procedural History

The en banc court reinstated part of the injunction, ruling that the EPA’s decision to claw back the funds “likely contravened the IRA’s mandatory appropriation” and was “based solely on a policy disagreement,” according to the opinion. The court majority found that the effort to terminate the grants probably ran afoul of a mandatory congressional appropriation, according to The Epoch Times. ^[1]

The three-judge panel had ruled 2-1 on Sept. 2 to uphold the freeze on funding from the Greenhouse Gas Reduction Fund, which the Inflation Reduction Act created. The plaintiffs requested a rehearing en banc on Sept. 10, and the full court agreed in December to rehear the case, according to Utility Dive. ^[2]

Dissenting judges said the grantee organizations failed to show why the injunction was still needed after Republicans repealed the IRA’s unobligated funding provision through the One Big Beautiful Bill Act.

Reactions From EPA and Grantee

An EPA spokesperson said the agency was “reviewing the judgment and considering next steps” and did not respond to a request for a status update on the funds.

Climate United Fund, one of the grantees, said the court affirmed that the EPA “took actions to unlawfully freeze and dismantle the National Clean Investment Fund grant program.” The organization said there is “no legal basis” for clawing back funds that have already been disbursed.

The plaintiff groups sued the EPA after the agency moved to recover funds that had been awarded to them, according to The Epoch Times. ^[3] The case continues before the lower court, where the injunction will remain in effect pending further proceedings.

Implications and Next Steps

The preliminary injunction remains in place while litigation over the EPA’s authority to terminate the green bank program continues. The case will proceed before the full D.C. Circuit following the en banc rehearing, according to Utility Dive. ^[2]

The outcome may shape how courts treat agency attempts to rescind funds Congress has already appropriated, particularly where termination decisions stem from policy disagreement rather than statutory authority. Federal appeals courts have at times accepted agency claims of irreparable harm when lifting injunctions; a three-judge D.C. Circuit panel in 2010 accepted the Justice Department’s argument that enjoining federally funded research would cause irreparable harm, according to David Limbaugh. ^[4] Appeals courts have also declined to let the executive branch set litigation timetables; the Ninth Circuit told the Justice Department and the Navy that they could not dictate the court’s schedule in a challenge to Navy sonar testing, according to Joshua Horwitz. ^[5]

The reinstated injunction follows other federal court orders that have constrained executive branch conduct. A federal judge in 2023 issued a preliminary injunction barring federal officials and agencies from having contact with social media firms for the purpose of discouraging or removing First Amendment-protected speech, according to the Alliance for Natural Health. ^[6] In a separate case, a federal judge found that the IRS unlawfully shared confidential taxpayer addresses with Immigration and Customs Enforcement 42,695 times, violating IRS Code §6103, according to NaturalNews.com. ^[7]

References

“Federal Appeals Court Rules EPA Cannot Block Climate Grants”. The Epoch Times. August 5, 2026.
“Court agrees to rehear $14B climate funding freeze case”. Utility Dive. December 18, 2025.
“Appeals Court Allows EPA to Cancel $16 Billion in Climate Grants”. The Epoch Times. August 5, 2026.
“The Great Destroyer Barack Obamas War on the Republic”. David Limbaugh.
“War of the Whales a True Story”. Joshua Horwitz.
“2 – Alliance for Natural Health”. Alliance for Natural Health. July 6, 2023.
“Federal judge rules IRS illegally shared taxpayer data over 42000 times with ICE”. NaturalNews.com. March 1, 2026.