Climate Coalition Launches Lawsuit Against Trump Freeze

A coalition of organizations granted $7 billion in federal funds for climate and housing projects sued the Trump administration and Citibank on Saturday to restore its access to the money.

Climate United says it has been unable to retrieve the money it was supposed to get from the Environmental Protection Agency’s Greenhouse Gas Reduction Fund and has received no explanation from EPA or Citibank, which is managing $20 billion in fund grants under an arrangement with the federal government.

The suit asks a judge to issue injunctions ordering Citibank to disburse the money and prohibiting EPA from interfering with the funding.

The lawsuit represents the latest salvo over the Trump’s administration’s efforts to claw back congressionally appropriated dollars and dismantle former President Joe Biden’s climate policies. The Greenhouse Gas Reduction Fund is a big target as it is the largest program in Democrats’ 2022 climate law, the Inflation Reduction Act.

The complaint, filed in the U.S. District Court for the District of Columbia, maintains that the EPA and the bank are unlawfully withholding the money — echoing Democrats’ broader accusation that President Donald Trump’s efforts to hold back already appropriated and obligated dollars violate both contract law and the Constitution.

POLITICO earlier reported that the Justice Department is investigating the climate grants and has ordered recipients to testify in federal court later this month. Last month, a senior federal prosecutor in Washington resigned after complaining that her supervisors had pressured her to launch a criminal probe of the funding without sufficient evidence.

Spokespeople for EPA could not be immediately reached for comment about the new lawsuit. Citibank spokesperson Mark Costiglio said the company is reviewing the suit.

The suit accuses the EPA of violating the Administrative Procedure Act, calling the agency’s suspension or termination of the grant arbitrary, capricious, an abuse of discretion or otherwise unlawful. It also alleges that EPA and Administrator Lee Zeldin violated the Fifth Amendment’s due process clause, citing multiple public statements by Zeldin criticizing the climate program and outlining his intentions to freeze the funding.

Zeldin has repeatedly condemned the climate program as a “green slush fund” and accused the Biden administration of trying to evade oversight by rushing the money out the door before Trump took office. Trump himself weighed in during his address to Congress on Tuesday, pointing to one part of the Greenhouse Gas Reduction Fund as an example of “appalling waste.”

But the EPA has not issued a written determination that Climate United failed to comply with the terms of its grant agreement or presented any evidence of waste, fraud or other abuse, the lawsuit says.

“EPA has failed to provide Climate United with a reasoned explanation for its actions or a meaningful opportunity to object or to be heard,” the suit says.

The complaint also accuses Citibank of breach of contract for failing to disburse the grant funds. It says Citibank failed to comply with Climate United requests to access its funds on Feb. 18 and Feb. 21 without offering “any legal or factual basis” for denying those and subsequent requests to disburse dollars.

In his statement, Costiglio said Citibank “has been working with the federal government in its efforts to address government officials' concerns regarding this federal grant program. Our role as financial agent does not involve any discretion over which organizations receive grant funds. Citi will of course comply with any judicial decision.”

The $7 billion is meant to finance electric vehicle charging infrastructure, energy-efficient home construction and renewable energy projects.

Climate United said it does not have other funding to replace the frozen money and that private investment is not a viable replacement — the intent of the program was to use public funds to draw investment into areas the private sector historically avoided. The coalition said it has already been forced to defer compensation for certain employees to preserve cash, will run out of funds shortly to pay operating expenses without another funding source and could have to cut hours and furlough staff.

"Climate United’s access to its grant funding should be restored," the organization said in its lawsuit.

Zack Colman contributed to this report.