On August 4, 2026, the Court of Appeals for the D.C. Circuit handed down its long awaited en banc decision in an appeal of a preliminary injunction issued in Climate United Fund v. Citibank, the case challenging the Environmental Protection Agency’s (EPA) unlawful termination of $20 billion in federal funding awarded through the Greenhouse Gas Reduction Fund (GGRF). A significant victory for the plaintiffs, the Court of Appeals’ decision upheld the preliminary injunction in its entirety. Still, the one-page decision leaves open questions about the future of the litigation. This blog post examines the decision and offers an initial analysis of what the decision means and what uncertainty remains.
Litigation Background
The GGRF was created by section 60103 of the Inflation Reduction Act (IRA) of 2022. That section appropriated $27 billion to EPA to make grants to states, municipalities, tribal governments, and eligible nonprofit organizations to finance the deployment of low-carbon technologies and carry out other greenhouse gas emission reduction activities. Under President Biden and as required by the IRA, EPA awarded $20 billion in grants to eight entities under the National Clean Investment Fund (NCIF) and Clean Communities Investment Accelerator (CCIA), two of the three GGRF programs. However, on March 11, 2025, EPA sent NCIF and CCIA awardees a Notice of Termination, purporting to terminate all NCIF and CCIA grants because of alleged “substantial concerns regarding program integrity, the award process, programmatic fraud, waste, and abuse, and misalignment with the Agency’s priorities.”
Climate United Fund v. Citibank, filed on March 8, 2025, is a consolidated lawsuit brought by all NCIF and CCIA awardees, plus some sub-awardees, to challenge the grant terminations as unlawful under the Administrative Procedure Act (APA), federal regulation, and the Constitution. On April 15, 2025, the D.C. District Court issued a preliminary injunction barring EPA and Citibank—a financial agent of the United States for the purpose of implementing the GGRF—from giving effect to the termination notices and requiring Citibank to disburse grant funds. More information about the NCIF and CCIA grant agreements, their terminations, and the plaintiffs’ claims can be found in a previous blog post here.
On April 16, 2025, EPA and Citibank appealed the preliminary injunction to the D.C. Circuit Court of Appeals. On September 2, 2025, a panel of three judges in the Court of Appeals issued its decision. The court set aside the preliminary injunction in its entirety, delivering a devastating blow to the GGRF awardees’ litigation prospects and the future of their critical projects. We took a close look at the Court of Appeals’ decision in a previous blog post, which spotlighted some critical flaws in the panel’s reasoning.
On December 17, 2025, the Court of Appeals granted the plaintiffs’ petition for the appeal to be reheard en banc, meaning that all active judges on the D.C. Circuit Court of Appeals would reconsider the appeal. Ten judges participated in the en banc rehearing: Chief Judge Srinivasan and circuit judges Millett, Pillard, Wilkins, Katsas, Rao, Walker, Childs, Pan, and Garcia.
Court of Appeals’ En Banc Decision
The Court of Appeals issued its en banc decision in the rehearing as a single-page per curium judgment without an accompanying opinion detailing the court’s reasoning. As the Sabin Center’s faculty director, Michael Gerrard, put it, the judgment is “screamingly good news for the plaintiffs.” Reversing the 3-judge panel’s course, the en banc court upheld the preliminary injunction in its entirety. As a result, EPA and Citibank are enjoined from continuing to freeze grant funds and otherwise giving effect to EPA’s March 2025 termination notices for the duration of the case. This is critical for the grantees’ ability to carry out their greenhouse gas reduction projects and to sustain the litigation, which still has a very long road ahead.
Although the practical outcome of the appeal is as good as the plaintiffs could have hoped for, the brevity of the court’s judgment requires some reading between the lines to understand the broader legal implications of the decision.
First: what we know. Six of the ten judges voted to affirm the preliminary injunction (in whole or at least in part) based on the plaintiffs’ APA claim that EPA violated the IRA. The judgment states, “(1) EPA, in attempting to terminate Plaintiffs’ grants and to claw back funds already disbursed into Plaintiffs’ bank accounts based solely on a policy disagreement with Section 60103, likely contravened the IRA’s mandatory appropriation, and (2) EPA has made no argument or showing that it would not still take those steps if the injunction were lifted.”
This is significant because it affirms that the Court of Appeals believes that the plaintiffs have a valid APA claim that can be heard by the District Court. Whether federal grantees have a valid APA claim to challenge terminated grants has been hotly contested across federal grant cases. The federal government has argued, and several courts have agreed, that plaintiffs must bring their grant termination cases in the Court of Federal Claims because they are essentially contract claims seeking monetary damages from the United States. (This issue is explained in more detail in a previous blog post.) Indeed, the 3-judge panel in the initial Climate United Fund appeal held that the District Court lacked jurisdiction over the plaintiffs’ APA and regulatory claims, finding them to be contract claims that belong in the Court of Federal Claims.
Although not saying so explicitly, the judgment implies that the Court of Appeals takes the position that the District Court has jurisdiction over the plaintiffs’ claims, which is a major victory for the plaintiffs. That said, the federal government plans to appeal the decision to the Supreme Court. On August 6, the government filed a motion to stay the Court of Appeals’ mandate pending a forthcoming petition for a writ of certiorari to the Supreme Court. If the Supreme Court grants certiorari, there is good reason to believe the Court will find the other way. See, for example, the Court’s previous signaling on this issue.
Second: what we don’t know. The impact of the One Big Beautiful Bill Act (OBBBA) on the plaintiffs’ APA claims remains unclear—the ten judges were equally split on that issue.
The OBBBA, which was enacted in July 2025, added an additional layer of complexity to the Climate United Fund litigation. Section 60002 of the OBBBA provided that section 60103 of the IRA—i.e., the section that created the GGRF—“is repealed and the unobligated balances of amounts made available to carry out that section (as in effect on the day before the date of enactment of this Act) are rescinded.” On rehearing, five judges found that this provision “likely does not affect the applicability of [IRA] Section 60103 to grant funds that were obligated and disbursed to the Plaintiffs at the time of the OBBBA’s enactment.” However, four judges concluded that, following the OBBBA’s repeal of IRA section 60103, EPA “likely could now take actions to terminate Plaintiffs’ grants without violating” the IRA. One judge, Judge Millett, found that “because the OBBBA rescinded Section 60103’s dedicated administrative funds, [] EPA likely cannot be enjoined to expend other general discretionary funds to continue administering the Section 60103 grants going forward.”
The Court of Appeals has clearly struggled with this issue. After oral argument, the court requested supplemental briefing from the parties on it specifically. In the supplemental briefs, the plaintiffs argued that the OBBBA “neither retroactively validates EPA’s illegal acts, nor affords the agency any more authority to shut down the grant programs and claw back Plaintiffs’ funds than it had before. Instead, Congress carefully crafted § 60002 to maintain the already-existing grant programs and already-obligated grant funds.” In contrast, the federal government argued that the repeal of the IRA provision—despite the clear distinction between obligated and unobligated funds in the OBBBA—means that EPA is free to dismantle the GGRF program. They assert that, “because EPA cannot violate a statute that no longer exists, plaintiffs’ statutory and related constitutional claims can longer [sic] sustain the preliminary injunction.”
Ultimately, it will be up to the District Court to decide the issue on the merits, and the Court of Appeals’ decision provides little guidance on how it should come out. If the District Court sides with the circuit judges who think the OBBBA allows EPA to “now take actions to terminate Plaintiffs’ grants without violating Section 60103 of the IRA,” it would likely conclude that it does not have jurisdiction over the case. EPA’s violation of the IRA is the source of the plaintiffs’ APA claims; without that, the only remaining source of EPA’s obligations are the grant agreements themselves and a challenge to EPA’s breach of the agreements would likely have to go to the Court of Federal Claims.
Alternatively, if the District Court were to adopt Judge Millett’s view that the OBBBA’s recission of GGRF administrative funds absolves EPA of the obligation to expend funds to continue administering the GGRF grants, the District Court may still retain jurisdiction but could be limited in the remedies that it could provide to the plaintiffs.
The Climate United Fund case is far from over, and the plaintiffs still have an uphill battle. But the Court of Appeals’ decision to uphold the preliminary injunction is a key victory for the plaintiffs. What happens next will depend largely on whether the Court of Appeals grants the government’s motion to stay the order and whether it ultimately appeals to the Supreme Court.
Olivia Guarna is the Climate Justice Fellow at the Sabin Center for Climate Change Law at Columbia Law School.
