The Trump administration has declared it is killing $20 billion in congressionally appropriated funding for solar power, energy efficiency, electric vehicles, and other money-saving and carbon-cutting investments for U.S. companies and low-income communities across the country. It’s the latest escalation of a weekslong legal battle over a signature Biden-era climate program.
On Tuesday, Environmental Protection Agency Administrator Lee Zeldin announced the “termination” of the $20 billion in grants under the Greenhouse Gas Reduction Fund, a program created by the 2022 Inflation Reduction Act and commonly known as the federal “green bank” program. Zeldin claimed without evidence that the program is beset by “misconduct, conflicts of interest, and potential fraud.”
Zeldin has continually made such accusations since he first launched his attack on the green bank program in a video posted on X last month. In particular, Zeldin has repeated the notion that the allocated funds amount to “throwing gold bars off the Titanic” — a phrase uttered by a Biden EPA staffer that was captured out of context in a December video taken by Project Veritas. The right-wing group is notorious for conducting smear campaigns based on accusations that it cannot back up with evidence.
Tuesday’s announcement terminating the program comes on the eve of a court hearing in which a federal judge will review a lawsuit from one of the eight nonprofit coalitions that have been blocked from accessing money awarded last year. The lawsuit from Climate United Fund alleges that Trump administration officials have used the threat of criminal investigation to compel Citibank to freeze an account the bank manages for the nonprofit. Citibank holds all of the funding in a financial agency agreement, which puts federal funds in the custody of a private bank.
The nonprofits awarded grants from the program have already pledged hundreds of millions of dollars to projects such as installing solar for the University of Arkansas, financing the purchase of U.S.-built electric trucks and electric school buses, funding building energy-efficiency and clean energy upgrades, and issuing loans to Native American–led clean energy projects.
The Trump administration has faced multiple court challenges to its wide-ranging federal funding freezes over the past two months. But Climate United’s allegations that the Justice Department is using its power in the criminal court system to deny access to its funds distinguishes this case from the many other legal challenges brought to date. Climate United’s claims are backed by multiple news reports highlighting the role of the FBI and of interim U.S. attorney Ed Martin in the affair as well as pushback from career federal prosecutors and federal judges.
Climate United’s lawsuit alleges that Citibank’s freezing of funds is illegal and that the EPA has acted illegally by failing to follow the protocol that the program established for the agency to investigate and counter alleged fraud.
“EPA’s de facto suspension or termination of Climate United’s grant is arbitrary, capricious, and not in accordance with law,” Adam Unikowsky, a partner at Jenner & Block, wrote in the lawsuit filed Saturday in federal court in Washington, D.C. “EPA has offered no reasoned explanation for its action, which violates multiple statutes and regulations.”
EPA and Citibank have declined multiple requests for comment from news organizations including Canary Media. Climate United’s complaint states the bank and the agency have refused to explain to the nonprofit why its funding has been frozen.
Beth Bafford, CEO of Climate United, said in a Wednesday statement that the nonprofit intends to “remain focused on investing in projects that save Americans money, create jobs, and strengthen local communities. Our legally binding contract with the EPA cannot be lawfully terminated based on unsupported claims and misinformation, and we will continue to pursue legal action to protect the communities we serve.”
Other recipients of a portion of the $20 billion in frozen funds have also sued to regain access to the money. The Coalition for Green Capital filed a lawsuit against Citibank on Monday, and Power Forward Communities sued Citibank on Tuesday.
The Trump administration’s efforts to freeze funding have been rebuffed in several court battles over the past months. Lena Moffitt, executive director of advocacy group Evergreen Action, said in a Tuesday response to Zeldin’s termination announcement that the “11th-hour move to terminate $20 billion in clean energy funding is a lawless, desperate political stunt ahead of a court fight they know is an uphill battle.”
Moffitt added that the blocking of funds from the green bank program will “raise energy costs for low-income households, stall job creation, and kill investments in home energy upgrades, community solar, and small business clean energy projects across the country.”
It’s also hampering the ability of the recipients themselves to operate. After more than two weeks of being unable to access its funds, Climate United is running out of cash to pay operating expenses such as salaries and rent, its lawsuit states. It’s also unable to honor its financial commitments, which will “erode trust in Climate United as an institution, damage its reputation, and cause profound harm to the local organizations that rely on Climate United funds to develop critical energy projects that reduce energy costs and create jobs,” the lawsuit says.
“Our borrowers can’t draw funds, which means projects are stalled,” said a representative of one of the nonprofits, who was granted anonymity to speak frankly amidst online attacks against the organizations involved in the green bank program.
Unlike grants that are paid directly to recipients, the Greenhouse Gas Reduction Fund is set up as a lending and financing institution, this person added. That means that the $20 billion in federal funding will flow to companies and groups with the expectation that they will pay it back, often with additional interest payments, to the lenders, which can then use that incoming capital to make more investments.
This model was adopted from the green banks now operating in at least 17 states that have for more than a decade offered low-cost loans and other financial support for carbon- and pollution-reducing projects, with a focus on low-income and disadvantaged communities.
Longer-running green banks have successfully expanded their scope of lending by “de-risking” commercial opportunities such as solar and energy-efficiency projects for affordable housing. That’s allowed them to grow their pool of capital for making future loans, as well as brought in private-sector lenders to expand the markets they’ve helped de-risk.
In that sense, the program is “one of the savviest investments the federal government could make,” Adam Kent, director of green finance at the Natural Resources Defense Council, said in a Wednesday statement. Under the program’s guidelines on pulling private-sector capital in to match its financing, “every federal dollar can deliver an additional seven dollars of private investment,” he said.
“If the Trump administration really cared about lowering energy bills, creating jobs, addressing the budget deficit and growing the American economy, it would be leaning into this program,” Kent said. “Not cancelling legal contracts.”
