An appeals court has ruled that the Environmental Protection Agency (EPA) under the Trump administration lacked the authority to terminate and reclaim $20 billion in climate funding that had already been distributed to nonprofit organizations. This decision restores access to these funds for eight nonprofits that had been affected by the EPA’s actions.
In February 2025, EPA Administrator Lee Zeldin, in coordination with the FBI and the Treasury Department, instructed Citibank to freeze the accounts of these nonprofits. The funds in question were allocated through the Inflation Reduction Act (IRA) to establish the Greenhouse Gas Reduction Fund, a $20 billion initiative aimed at promoting clean energy development.
The court’s ruling emphasized that the EPA’s attempt to retract the funding was based solely on policy disagreements and unlawfully withheld funds that had been appropriated by Congress. The judges noted that since the funds were already obligated and disbursed into the nonprofits’ accounts, subsequent legislation could not retroactively reclaim the money.
Despite this legal victory, the prolonged freeze has had significant repercussions for the affected organizations. For instance, Climate United’s CEO resigned in March and has yet to be replaced, while Power Forward Communities has been reduced to just two employees. Other nonprofits have also faced layoffs and operational challenges due to the funding freeze.
The EPA has a seven-day window to appeal the decision to the U.S. Supreme Court. However, the court’s clear stance on the illegality of the EPA’s actions may deter further legal challenges.
This ruling underscores the judiciary’s role in upholding the separation of powers and ensuring that executive agencies cannot unilaterally override congressional appropriations. It also highlights the potential instability that policy reversals can introduce into long-term initiatives, particularly in sectors like clean energy that require consistent support and funding.
