A federal appeals court has overturned a lower court ruling that sought to shield billions of dollars in climate-related grants, siding with the Trump administration in a case that has intensified scrutiny over how taxpayer funds were pushed to environmental nonprofits in the closing days before President Trump took office.
The decision, issued Tuesday by the U.S. Court of Appeals for the D.C. Circuit, vacated an injunction from U.S. District Judge Tanya Chutkan, an Obama appointee.
Chutkan had previously barred the administration from freezing $20 billion in Biden-era funds held at Citibank under the Environmental Protection Agency’s (EPA) Greenhouse Gas Reduction Fund (GGRF).
The fund was created to support nonprofits in developing programs aimed at reducing greenhouse gas emissions, but critics argued its implementation was rushed and lacked sufficient accountability.
Former Rep. Lee Zeldin (R-NY), who leads the EPA’s oversight efforts, argued the grants were rushed out without proper safeguards, pointing to an undercover Project Veritas investigation that captured EPA Advisor Brent Efron admitting payouts were deliberately accelerated.
“It was an insurance policy against Trump winning,” Efron said in the recording. “Get the money out as fast as possible before they [Trump Administration] come in … it’s like we’re on the Titanic and we’re throwing gold bars off the edge.”
Zeldin said those revelations confirmed the need to halt disbursements, noting the rushed process bypassed normal safeguards and left taxpayers exposed.
Citibank had agreed to freeze the funds while the courts weighed the case.
The appeals court’s three-judge panel split 2–1, with Judges Neomi Rao and Gregory Katsas, both Trump appointees, forming the majority and Judge Cornelia Pillard, an Obama appointee, dissenting.
Writing for the majority, Rao criticized Chutkan’s order as overreaching.
“We conclude the district court abused its discretion in issuing the injunction. The grantees are not likely to succeed on the merits because their claims are essentially contractual, and therefore jurisdiction lies exclusively in the Court of Federal Claims,” Rao wrote.
“And while the district court had jurisdiction over the grantees’ constitutional claim, that claim is meritless. Moreover, the equities strongly favor the government, which on behalf of the public must ensure the proper oversight and management of this multi-billion-dollar fund.”
The nonprofits set to receive the money included the Coalition for Green Capital, Climate United Fund, Power Forward Communities, Opportunity Finance Network, Inclusiv and the Justice Climate Fund, among others, according to The Gateway Pundit.
Chutkan had ordered Citibank to release the funds by Thursday, a directive now nullified by the appellate ruling.
The outcome represents a major legal win for the Trump administration and a setback for the Biden-era environmental agenda.
Legal experts say the decision could set a precedent for future challenges to federal agencies that attempt to fast-track massive funding programs without thorough review, signaling a growing judicial skepticism of executive-branch spending.
The ruling also underscores the ongoing tension between courts and federal agencies when taxpayer money is distributed rapidly and without standard oversight.
For now, the $20 billion remains in limbo as the administration reconsiders how the fund will be handled.
Lawmakers on both sides of the aisle are expected to monitor the situation closely, as the case could influence how similar climate-related initiatives are structured and overseen in the future.
