Shortly after assuming his new role as EPA administrator, Lee Zeldin accused the Biden administration of fraudulent activities in the distribution of funds made available through the Greenhouse Gas Reduction Fund (GGRF).
A March 11, 2025, EPA news release stated it was terminating funding for several grant recipients awarded under the National Clean Investment Fund (NCIF) and Clean Communities Investment Accelerator (CCIA) programs. The funding termination was based on “substantial concerns regarding the [GGRF] program integrity, the award process, programmatic fraud, waste, and abuse, and misalignment with agency’s priorities, which collectively undermine the fundamental goals and statutory objectives of the award.”
“The days of ‘throwing gold bars off the Titanic’ are over. The well documented incidents of misconduct, conflicts of interest, and potential fraud raise significant concerns and pose unacceptable risk. I have taken action to terminate these grants riddled with self-dealing and wasteful spending. EPA will be an exceptional steward of taxpayer dollars dedicated to our core mission of protecting human health and the environment, not a frivolous spender in the name of ‘climate equity,’” Zeldin said in the release.
Background
The GGRF, also known as the “green bank,” was created by the 2022 bipartisan Inflation Reduction Act (IRA).
“The $20 billion in limbo is part of a $27 billion program [created to provide] initial money for ‘green banks,’ which make loans meant to encourage solar, geothermal and other clean energy projects to reduce the burning of fossil fuels and the associated emissions that are driving climate change. The idea behind the program was that funds would help recipients attract private investments they otherwise would not be able to get,” according to The New York Times. “When the loans were repaid, the money would be lent again to other projects, creating a self-perpetuating source of funding.”
The public funds provide financial security for traditional lenders to finance clean energy projects.
Green banks aren’t a new concept and have already been established in many states, such as Connecticut, Texas, New Mexico, Louisiana, and Hawaii. Other countries have established similar programs, including Australia, Japan, and the United Kingdom.
“In setting up the NCIF and CCIA programs, EPA determined that grant funds should instead be held in a bank designated as a financial agent of the government,” states a Columbia Law School Climate Law blog post. “EPA designated Citibank as the financial agent for the NCIF and CCIA programs. Awardees were required to open deposit accounts at Citibank, drawdown their entire award balance from their ASAP (Department of Treasury’s Automated Standard Application Payments) accounts, and deposit it in their Citibank accounts. When President Trump was inaugurated, all eight NCIF and CCIA awardees had already set up their Citibank accounts and were accessing funds through them.
“According to NCIF and CCIA terms and conditions, to ensure federal oversight, EPA can reassert exclusive control over the Citibank accounts but only in certain circumstances. In order to send Citibank a ‘Notice of Exclusive Control,’ EPA must find ‘that the [Awardee] has failed to comply with the terms and conditions of [their] Award Agreement, and that noncompliance is substantial such that effective performance … is materially impaired or there is adequate evidence of waste, fraud, material misrepresentation of eligibility status, or abuse, and that EPA has initiated action … [to] terminate the Federal award.’”
NCIF program
Three grant recipients were selected under the $14 billion NCIF program to establish national clean financing institutions that deliver accessible, affordable financing for clean technology projects nationwide.
“These recipients are partnering with private-sector investors, developers, community organizations, and others to deploy projects, mobilize private capital at scale, and enable millions of Americans to benefit from the program through energy bill savings, cleaner air, job creation, and more,” states the EPA NCIF webpage. “All three grant recipients are dedicating a minimum of 40% of capital to low-income and disadvantaged communities.”
The grant recipients are:
- Climate United Fund—awarded $6.97 billion
- Coalition for Green Capital—awarded $5 billion
- Power Forward Communities—awarded $2 billion
CCIA program
Five recipients were selected under the $6 billion CCIA program to establish hubs that provide funding and technical assistance to community lenders working in low-income and disadvantaged communities, providing an immediate pathway to deploy projects in those communities while building the capacity of hundreds of community lenders to finance projects for years.
“Each of the grant recipients provides capitalization funding (typically up to $10 million per community lender), technical assistance subawards (typically up to $1 million per community lender), and technical assistance services to enable community lenders to provide financial assistance to deploy distributed energy, net-zero buildings, and zero-emissions transportation projects where they are needed most,” the EPA’s CCIA webpage says. “100% of capital under the CCIA is dedicated to low-income and disadvantaged communities.”
The grant recipients are:
- Opportunity Finance Network—awarded $2.29 billion
- Inclusiv—awarded $1.87 billion
- Justice Climate Fund—awarded $940 million
- Appalachian Community Capital—awarded $500 million
- National CDFI Network—awarded $400 million
Criminal investigations
While the Trump administration has been quite vocal about slashing government spending, it’s full-frontal assault on the GGRF is on a completely different level. In addition to immediately freezing the funds, Zeldin initiated criminal investigations through the U.S. Department of Justice (DOJ) and the Federal Bureau of Investigation (FBI) and referred “financial mismanagement” of the program to the EPA Office of Inspector General (OIG) for review.
Zeldin’s allegations prompted “the resignation of a top DC prosecutor who refused to open a grand jury investigation in the matter in part because she didn’t believe there was enough evidence to do so,” CNN reports.
Let the legal battles commence
On February 20, 2025, several news outlets reported that all NCIF and CCIA accounts had been frozen at the direction of the EPA, DOJ, and FBI.
On March 4, EPA information requests were sent to NCIF awardees, who were given a March 28 deadline to provide responses “needed for it to conduct a compliance review, for which it had a ‘current lack of critical information,’” according to the Climate Law blog.
Climate United Fund filed suit, challenging the account freeze against Citibank, the EPA, and Zeldin on March 8. The other two NCIF grant recipients, Coalition for Green Capital and Power Forward Communities, soon filed their own lawsuits, along with other sub-awardees. These lawsuits have been combined into one case.
CCIA awardees Inclusiv and Justice Climate Fund have also recently filed their own lawsuits, which are expected to be consolidated into the current case.
“On March 11, 2025—17 days before awardees’ responses to EPA’s information requests were due—EPA sent all NCIF and CCIA awardees a Notice of Termination,” the Climate Law blog says. “The notice purported to terminate the awardees’ GGRF grants effective immediately based on EPA’s ‘substantial concerns regarding program integrity, the award process, programmatic fraud, waste, and abuse, and misalignment with the Agency’s priorities.’ The awardees have added challenges to the termination to their lawsuit. On March 18, the D.C. District Court issued a temporary restraining order, enjoining EPA from giving effect to its termination notices and ordering EPA and Citibank not to transfer grant funds out of the awardees’ accounts.
“The three NCIF plaintiffs have raised several arguments in their lawsuits to challenge EPA’s unlawful funding freeze and subsequent grant termination. These include: that the freeze and terminations were arbitrary and capricious in violation of the Administrative Procedure Act (APA); were not in accordance with the IRA or regulations that govern federal grant funding; violated the Appropriations Clause and Due Process Clause of the Constitution; and breached contractual duties, among other arguments.”
Preliminary considerations
Plaintiffs requested a temporary restraining order (TRO) to prevent the termination of the grant awards.
A TRO is “an extraordinary remedy that should be granted only when the party seeking relief, by a clear showing, carries the burden of persuasion,” states the Memorandum Opinion issued by the court. “As with a preliminary injunction, a party seeking a TRO must establish:
- that he is likely to succeed on the merits
- that he is likely to suffer irreparable harm in the absence of preliminary relief
- that the balance of equities tips in his favor
- that an injunction is in the public interest.”
In a hearing that lasted nearly 3 hours on April 2, 2025, “U.S. District Judge Tanya Chutkan said the government had provided no substantial new evidence of wrongdoing by the nonprofit,” West Virginia TV station WBOY reports.
In her order, dated March 18, 2025, she wrote that “there are serious due process concerns and questions of whether EPA Defendants’ actions were ‘arbitrary, capricious, an abuse of discretion, [] otherwise not in accordance with law,’ contrary to statute, or unsupported by substantial evidence in violation of the APA.”
Her order further states, “In the termination letters, EPA Defendants vaguely reference ‘multiple ongoing investigations’ into ‘programmatic waste, fraud, and abuse and conflicts of interest’ but offer no specific information about such investigations, factual support for the decision, or an individualized explanation for each Plaintiff. This is insufficient. EPA may terminate the agreements for ‘waste, fraud, or abuse,’ but this requires ‘credible evidence of the commission of a violation of Federal criminal law involving fraud, conflict of interest, bribery, or gratuity violations found in Title 18 of the United States Code or a violation of the civil False Claims Act.’ At this stage, EPA Defendants have not provided the ‘credible evidence’ required.”
Additionally, she wrote that the grant awardee plaintiffs “have shown a substantial likelihood of success on the merits of its APA and due process claims” and “without release of the grant funds, imminent harm is unavoidable. Plaintiffs’ financing for their operations and projects all derive from the grant money, which is used to pay employees, pay rent, and fund projects. … Any transfer, re-allocation, or re-obligation of these funds would be an irreparable loss.”
As per EPA policy, agency officials have declined to discuss the case. However, Molly Vaseliou, an EPA spokeswoman, said that “the agency’s supporting documents provide a ‘fuller picture’ than what Mr. Zeldin’s critics have described,” The New York Times article notes.
Impacts
“The freeze is ‘going to be very devastating, especially for smaller businesses that really don’t have a lot of funding through which they can [wait] out months of not getting access to the money that was awarded to them,’” said Rachel Cleetus, senior policy director with the Climate and Energy program at the Union of Concerned Scientists, according to utility news site Utility Dive. “They will go bankrupt because they do not have a lot of cushion here, and they will obviously have to lay off people, and the benefits from the projects themselves for communities will not go forward.
“The revocation of grant funding leaves Cleetus concerned about the broader implications for the economy, she said, as ‘there has always been an implicit understanding and explicit understanding that contracts with the government were going to be respected, that the word of the U.S. government was good, and that is fundamentally being broken here.’”
What’s next?
Initial legal arguments indicate the grant funds will be restored.
“Given the strong arguments that the terminations were pretextual and unlawful, NCIF and CCIA grants will surely soon be restored to ensure that communities nationwide will reap the greenhouse gas reduction benefits promised in the IRA,” the Climate Law blog says.
“Even if these grants are later restored as result of court challenges, these terminations create market uncertainty and could limit private lenders’ willingness to finance clean energy projects. This would be a significant setback in reducing dangerous climate pollution — and it would likely be most harmful for smaller projects in low-income communities, which have historically faced the greatest burdens in obtaining private financing and thus stand to benefit most from these projects,” reports Executive Action Watch, a resource created by the Center on Budget and Policy Priorities.