Appeals Court Bars the EPA From Clawing Back $20 Billion in Climate Grants — Recipients Could Start Drawing Funds Within a Week

A divided U.S. Court of Appeals for the D.C. Circuit ruled on Aug. 4, 2026, that the Environmental Protection Agency may not terminate or claw back roughly $20 billion in unspent clean-energy grants awarded to nonprofit recipients under the Greenhouse Gas Reduction Fund, a $27 billion program Congress created in the 2022 Inflation Reduction Act. The panel restored an April 2025 injunction against EPA Administrator Lee Zeldin’s decision to cancel the awards. According to the ruling, terminating the grants and recovering the money “based solely on a policy disagreement” likely violated the statute, and the agency offered no assurance it would leave the funds alone if the injunction were lifted.

The dispute turns on how far an administration may go in unwinding spending Congress has already authorized and an agency has already obligated. Recipients include the Climate United Fund, the Coalition for Green Capital and several state-sponsored entities; the money was directed at financing renewable-energy projects in communities with limited access to green lending. Zeldin has said he “will not rest” until he recovers as much of the $20 billion as possible.

Under the court’s order, the stay that had frozen the money in bank accounts must lift, and recipients could begin drawing funds as soon as the following week. EPA said it was reviewing the judgment and weighing next steps; the administration may ask the Supreme Court to keep the freeze in place first.