A federal appeals court on Tuesday heard arguments over the Trump administration's cancellation of a $20 billion 'green bank' programme, with judges questioning whether officials fabricated reasons to block the funds and whether the nonprofits chosen to run the programme had a right to the money.
The U.S. Court of Appeals for the District of Columbia Circuit is considering the fate of the Greenhouse Gas Reduction Fund, a Biden-era initiative aimed at financing clean energy projects. The Trump administration targeted the programme after President Donald Trump returned to office in January 2025, freezing funds and cancelling grants to nonprofits including Climate United Fund.
Judges pressed both sides during three hours of oral arguments. They questioned the administration's allegations of mismanagement and fraud, which were not substantiated in earlier court filings, and whether the nonprofits could access the money after Congress repealed part of the law that established the green bank in July 2025.
An attorney for the Environmental Protection Agency (EPA) faced scrutiny over what one judge called shifting reasons for cancelling the grants. The government initially froze funds without detailed explanation, alleging waste and fraud, then shifted to concerns about insufficient EPA oversight. EPA attorney Yaakov Roth argued the government has wide latitude on contracting decisions and that any disputes should be handled in a different court.
A lawyer for the nonprofits argued that the EPA had already allocated the money by placing it in a Citibank account for the programme's use. However, judges questioned whether the funds were truly under the nonprofits' control. Adam Unikowsky, representing Climate United Fund, said the EPA's actions were unlawful before Congress rescinded parts of the law, adding that repeal does not retroactively legalise illegal actions.
The full appeals court agreed to rehear the case after a three-judge panel ruled in September that the administration had broad power to cancel contracts without facing lawsuits in federal district court. That ruling is now under review in a rare en banc hearing.
