Court Restores $20B in Climate Funds to Nonprofits

After months of frozen bank accounts and painful layoffs, eight climate organizations can finally access the billions of dollars that federal law had promised them.

On Tuesday, a federal appeals court ruled that the EPA overstepped its authority when it tried to take back $20 billion in climate funding that had already been deposited into nonprofit bank accounts. Six of ten judges on the U.S. Circuit Court of Appeals for the District of Columbia Circuit agreed that once money is legally sent out, the government can't simply change its mind and demand it back.

The funds came from the Inflation Reduction Act's Greenhouse Gas Reduction Fund, a program designed to help businesses and communities make the switch from fossil fuels to clean energy. The nonprofits planned to use the money to create loan programs with repayment rates as solid as any commercial bank.

But in February 2025, EPA Administrator Lee Zeldin worked with the FBI and Treasury Department to freeze the accounts at Citibank. The Trump administration argued that a new law, the One Big Beautiful Bill Act, had repealed the program and gave them authority to claw the money back.

The judges disagreed. They found the EPA was trying to reverse funding "solely on a policy disagreement" and had no legal right to take back money that Congress had already appropriated and agencies had already disbursed.

The Bright Side

While legal battles raged in courtrooms, these organizations didn't give up on their mission. Despite uncertainty about whether they'd ever see their funding again, many continued planning programs that could help thousands of communities access affordable clean energy loans.

The court's decision sets an important precedent: agencies can't undo congressional spending decisions just because leadership changes. Future programs now have stronger protection once funds are legally distributed.

The ruling gives the nonprofits immediate access to their accounts while the EPA has seven days to decide whether to appeal to the Supreme Court. For now, the organizations can restart their work helping communities reduce emissions and lower energy costs at the same time.

Some groups faced serious setbacks during the freeze, including layoffs and leadership departures. But with their funding restored, they can rebuild and get back to the work voters elected Congress to fund in the first place.