The Environmental Protection Agency said it has cancelled a $2 billion grant for climate and clean energy programs that have been frozen for weeks.
The funds are caught up in escalating controversy, including the EPA, the Department of Justice, the Federal Bureau of Investigation and Citibank, where funds are retained and now frozen, prompting lawsuits from three nonprofits.
The grant was issued to a total of eight nonprofits through the Greenhouse Gas Reduction Fund and received $27 billion in funding from Congress through the Inflation Reduction Act of 2022.
However, EPA administrator Lee Zeldin has tried to hold back money since taking office by citing hidden camera videos from Project Veritas, a conservative group known for using secret recordings to embarrass political antagonists as evidence, saying they are part of the “plan.”
The EPA can cancel the grant agreement if it is able to document examples of waste, fraud, or abuse by grantors. But that didn't happen at this point.
Yesterday, Democrats on the House Energy and Commerce Committee began an investigation into what they said as a freeze on EPA funds. Zeldin's “False and Misleading Statement.”
Two nonprofit grant recipients, Climate United and Green Capital, said they will fight the cancellation. A court hearing in the related cases is scheduled for Wednesday.
This is what we know about $2 billion in funding and being targeted by the EPA.
How the controversy began
In February, Zeldin announced that he had found billions of dollars in “Gold Bar” grant funds at Citibank, calling the Greenhouse Gas Reduction Fund (or “Green Bank”) grant program a “scheme” and a “unsupervised rush job.”
Zeldin is focused on cutting spending in the Trump administration, promoting government efficiency and work. He has cancelled many other EPA contracts, bringing the agency's statements to about $2 billion across more than 400 initiatives in total.
The “Gold Bar” comment was a reference to a video released by Project Veritas in December, which likened the agency's efforts to spend federal funds on climate programs before Brent Efron, an EPA employee at the time, took over to throw away the “gold stick” from the Titanic faction.
Efron's lawyers deny that his client is referring to the Greenhouse Gas Reduction Fund.
After Zeldin's statement, Ed Martin, an interim US lawyer in Washington, DC, asked federal prosecutor Dennis Chan to freeze the $20 billion Citibank holds. However, she suddenly resigned after deciding that there was not enough evidence to freeze funds. The FBI and the Department of Justice continued their investigation.
Last week, Zeldin also introduced the matter to his agency's representative inspector for his third simultaneous investigation.
The nonprofit grant recipients began implementing legal defenses last weekend when Climate United sued the EPA and Citibank, claiming they had illegally withholding money. The other two recipients filed a lawsuit against Citibank the following day.
A hearing on the request for a temporary restraining order to release Climate United funds was scheduled for Wednesday in U.S. District Court for the District of Columbia.
What nonprofits say
The cancellation surprised Climate United, a nonprofit organization awarded about $7 billion, said Beth Bafford, the group's chief executive. She said she received the official layoff letter 30 minutes before the agency issued its official statement.
The nonprofit has not been able to access Citibank account funds since mid-February. The funds are held there under an agreement between the EPA and the bank.
Without the promised funds, some groups said they have struggled to pay their staff.
In a closing letter viewed by the New York Times, the EPA said it had identified “material defects” in the program, including proper monitoring and lack of inappropriate or speculative allocation. It provided no evidence.
Calling the EPA's decision “fraud and illegal” and said the Green Capital coalition, one of its biggest winners, is considering legal options.
What we know about the $20 billion program
The $20 billion program is designed to provide low-cost loans to businesses and developers for climate initiatives. This includes installing solar panels and renovating your home for greater energy efficiency.
The EPA has distributed money to eight nonprofit organizations. This was planning to distribute the money as a loan and subsidize it to a local “Green Bank” or credit union.
The idea was that federal dollar commitments would attract private investment in green projects.
Zeldin creates much of the fact that a $2 billion grant was held at Citibank, portraying the EPA's decision to use external financial institutions as intermediates as an attempt to destroy surveillance.
Grant recipients and former EPA officials disputed this characterization, saying the agency has fully visualized transactions through the Citibank accounts of nonprofit organizations and their subrecipants.
It is not clear how much of the $20 billion was spent before the freeze was introduced.
An EPA spokesperson said he couldn't answer how much money was loaned out by the nonprofit because the funds were spent under the Biden administration.
Citibank did not respond to requests for comment.
