diff --git a/java/google/registry/proxy/handler/QuotaHandler.java b/java/google/registry/proxy/handler/QuotaHandler.java
index 1381d72c9..183e89a7b 100644
--- a/java/google/registry/proxy/handler/QuotaHandler.java
+++ b/java/google/registry/proxy/handler/QuotaHandler.java
@@ -156,7 +156,9 @@ public abstract class QuotaHandler extends ChannelInboundHandlerAdapter {
     public void channelInactive(ChannelHandlerContext ctx) {
       // If no reads occurred before the connection is inactive (for example when the handshake
       // is not successful), no quota is leased and therefore no return is needed.
-      if (quotaResponse != null) {
+      // Note that the quota response can be a failure, in which case no token was leased to us from
+      // the token store. Consequently no return is necessary.
+      if (quotaResponse != null && quotaResponse.success()) {
         Future<?> unusedFuture = quotaManager.releaseQuota(QuotaRebate.create(quotaResponse));
       }
       ctx.fireChannelInactive();
diff --git a/javatests/google/registry/proxy/handler/EppQuotaHandlerTest.java b/javatests/google/registry/proxy/handler/EppQuotaHandlerTest.java
index 1669df3a0..df2211aa9 100644
--- a/javatests/google/registry/proxy/handler/EppQuotaHandlerTest.java
+++ b/javatests/google/registry/proxy/handler/EppQuotaHandlerTest.java
@@ -109,7 +109,11 @@ public class EppQuotaHandlerTest {
         .thenReturn(QuotaResponse.create(false, clientCertHash, now));
     OverQuotaException e =
         assertThrows(OverQuotaException.class, () -> channel.writeInbound(message));
+    ChannelFuture unusedFuture = channel.close();
     assertThat(e).hasMessageThat().contains(clientCertHash);
+    verify(quotaManager).acquireQuota(QuotaRequest.create(clientCertHash));
+    // Make sure that quotaManager.releaseQuota() is not called when the channel closes.
+    verifyNoMoreInteractions(quotaManager);
     verify(metrics).registerQuotaRejection("epp", clientCertHash);
     verifyNoMoreInteractions(metrics);
   }