WASHINGTON — Federal judges delivered pointed criticism Tuesday during a heated three-hour hearing over the Trump administration’s cancellation of a massive $20 billion clean energy financing program, with the court challenging both government officials and nonprofit organizations involved in the dispute.
The full U.S. Court of Appeals for the District of Columbia Circuit examined the controversial termination of the Greenhouse Gas Reduction Fund, a Biden-era initiative designed to boost clean energy investments that Trump officials have moved to eliminate since taking office.
During the proceedings, judges pressed EPA representatives about what appeared to be constantly changing explanations for shutting down contracts with nonprofit groups selected to operate the so-called “green bank.” The court noted that federal officials initially froze funding in February 2025 without detailed justification while claiming waste and fraud, then later cited concerns about insufficient EPA supervision of the program.
EPA attorney Yaakov Roth defended the government’s actions, stating: “The way these were structured was fundamentally inappropriate and unacceptable and required doing them over.”
Roth maintained that federal agencies possess extensive authority over contracting decisions and argued that any legal challenges should be handled through a different court system that could only award monetary damages, not reinstate program access.
The legal battle centers on whether the Trump administration acted lawfully when it targeted the program after President Trump returned to office in January 2025. EPA Administrator Lee Zeldin moved aggressively to recover the funds, making allegations of fraud and conflicts of interest that judges noted were not supported with evidence in court documents.
The program had awarded $20 billion to organizations including Climate United Fund and other nonprofits, with former EPA Administrator Michael Regan selecting these groups to finance thousands of climate change and environmental justice projects. The money was officially distributed in August 2024 and placed in a Citibank account for program use.
However, judges also questioned the nonprofit organizations about whether they truly controlled the frozen funds and whether they could legally access money after Congress repealed portions of the 2022 law that originally created the green bank program in July.
Climate United Fund attorney Adam Unikowsky argued that the EPA had already violated the law before Congress made those changes. “Repealing a statute doesn’t retroactively render an illegal action legal,” he told the court.
The case reached the full appeals court after a three-judge panel ruled in September that federal officials have broad power to cancel congressionally appropriated funds without facing lawsuits in federal district court. That 2-1 decision, written by Trump appointee Judge Neomi Rao, directed the dispute to federal claims court for contract issues.
Judge Cornelia Pillard, an Obama appointee who dissented from that ruling, argued the outcome weakened not only the green bank groups but also Congress’s constitutional authority to set policy and control government spending.
The September decision had overruled U.S. District Judge Tanya Chutkan, who previously found that the EPA could not justify Administrator Zeldin’s misconduct allegations and ordered that the nonprofit contracts should not be terminated. That ruling remains suspended while the EPA’s appeal continues.
The full court’s decision to rehear this case signals its significant legal importance, as the complete appeals court rarely agrees to reconsider three-judge panel decisions.
