The D.C. Circuit Court on Tuesday lifted a lower-court order and let the Trump administration cancel about $16 billion in climate grants that the Environmental Protection Agency gave to five nonprofits through the Inflation Reduction Act’s Greenhouse Gas Reduction Fund. The panel lifted the injunction and sent the case back to the district court.
Judge Neomi Rao, who wrote for the 2–1 majority, said that the grantees’ main claims are “essentially contractual,” which means that the U.S. Court of Federal Claims, not district court, is the right place for the case. She said that the equities “strongly favor the government,” which has to keep an eye on a program worth billions of dollars. Rao wrote, “EPA’s actions here are well within the Executive Branch’s power to make sure that Congress’ money is spent correctly.” Judge Cornelia Pillard disagreed with the opinion, but Judge Gregory Katsas agreed.
The case, Climate United Fund v. Citibank, N.A., Nos. 25-5122 & 25-5123, started after the EPA ended the awards in March 2025 because of worries about conflicts of interest, lack of oversight, and changes to grant terms at the last minute. The five plaintiffs who received grants were Climate United Fund ($6.97B), Coalition for Green Capital ($5B), Power Forward Communities ($2B), Inclusiv ($1.87B), and Justice Climate Fund ($940M).
The opinion explains how the EPA and Treasury used Citibank as a “financial agent” to hold and manage the money through account-control agreements. This was an unusual setup that gave the government full control over the accounts. The FBI suggested an administrative freeze, and the EPA sent the case to its inspector general. Later, the EPA sent termination notices.
The court also said that while the case was still going on, Congress got rid of the Greenhouse Gas Reduction Fund and the money that wasn’t needed. The appeal was not moot because the disputed grants were still due and parked at Citibank because of the injunction.
In dissent, Judge Pillard said that the majority’s approach “undercuts” the courts’ ability to police what she called the Executive’s “illegitimate seizure” of already-awarded funds. She also warned that sending the case to the Court of Federal Claims could damage projects that the grants were meant to pay for beyond repair.
What’s next? The ruling lifts the freeze and makes it harder for the plaintiffs to get what they want. They can only get what they want through contract-based remedies in the Court of Federal Claims. On remand, the district court will take care of any other problems.
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