A legal battle between the Environmental Protection Agency and several climate groups resumed in a federal appeals court on Tuesday, in a rehearing of a case involving the Trump administration’s termination of $20 billion in clean energy grants.
The U.S. Court of Appeals for the District of Columbia Circuit on Tuesday began to reconsider the EPA’s decision to freeze funding awarded through the Greenhouse Gas Reduction Fund, a $27 billion program created under the 2022 Inflation Reduction Act.
The program distributed $20 billion of those funds to eight nonprofit organizations for clean energy projects across the country. Last year, the EPA froze the grants and attempted to terminate them, arguing that the Biden administration improperly distributed them by routing them through Citibank.
The EPA’s efforts to cancel the grant money were quickly met with litigation from three climate groups: Climate United, Coalition for Green Capital, and Power Forward Communities.
In April 2025, U.S. District Judge Tanya Chutkan issued a preliminary injunction preventing the EPA from terminating the grants. But in September, a divided three-judge panel of the D.C. Circuit ruled 2-1 that the district court lacked jurisdiction.
The climate groups then sought review by the full appeals court, which is now rehearing the case.
EPA Administrator Lee Zeldin has said that there was “fraud, waste, abuse” in the distribution of funds to these programs.
The administrator has called the funds “gold bars,” referring to an undercover video released last year in which a former EPA employee said the Biden administration was trying to disburse promised funds quickly before the next administration.
“It truly feels like we’re on the Titanic, and we’re throwing like gold bars off the edge,” the former employee said in the video.
Justice Department attorney Yaakov Roth, who argued on behalf of the EPA, told the panel of judges that “the inability to do proper oversight of funds creates an opportunity for waste and abuse that … the EPA cannot properly police.”
The contracts lacked oversight, Roth said, adding that he did not believe it was unreasonable to say “we are cutting this off right now, and then we can start over on fixing it.”
However, there’s been a change in circumstances with the passage of the Trump administration’s One Big Beautiful Bill Act, which repealed Section 134 of the Clean Air Act that established the program created by the Inflation Reduction Act, and it rescinded any unobligated balances of funds.
Roth said the legislation affects the agency’s authority to reissue the grants because Congress has ended the program.
“At this point, EPA could not restore the program because the statute has been repealed,” Roth said.
He added that, before the legislation, the EPA said it would reobligate the funds and restore the program.
Adam Unikowsky, the attorney arguing on behalf of Climate United and the other grantees, said that the EPA offered “no rational explanation for why it suspended the grants” and immediately sought to terminate the grant programs.
Unikowsky spoke about the OBBBA rescinding of the program and funds. He argued that the legislation repealed “unobligated” funds, but at the time, the grantees’ funds remained obligated because of an injunction. He said the repeal of the program was tied to the rescission of unobligated balances.
Unikowsky said the bill “didn’t purport to rescind the obligated funds, even if those funds were de-obligated afterwards.”
RUNDOWN: THE GREEN GROUPS THAT GOT THE $20 BILLION IN ‘GOLD BARS’ FROM THE EPA
He added that “it’s important to recognize that we’re not really asking EPA to do anything at this point other than not interfere with our property interest in the contract … and not dismantle the entire program.”
The Greenhouse Gas Reduction Fund was given a total of $27 billion but divided the funds into three programs, which distributed $7 billion to Solar for All, $14 billion to the National Clean Investment Fund, and $6 billion to the Clean Communities Investment Accelerator. The EPA has also sought to cut funding for the Solar for All program.
