Groups Frozen Out Of $20b In Epa Cash Fear Bankruptcy

Eight nonprofits caught in a legal crossfire over $20 billion in Biden-era climate grants are racing toward a funding cliff.

The groups have been shut out of their accounts at Citibank since Feb. 18 because of a still-unexplained freeze imposed amid criticism from President Donald Trump’s administration.

On Tuesday, the standoff enters a new phase — groups will no longer have grant money to make investments or basic needs such as payroll and rent.

It’s the latest fallout from the Trump administration’s effort to claw back tens of billions of dollars from former President Joe Biden’s massive climate and clean energy agenda, including money that agencies had already legally contracted and even placed in bank accounts for recipients to spend. A senior federal prosecutor resigned last week after saying Justice Department officials had pressured her to launch a criminal investigation into the $20 billion in Environmental Protection Agency climate grants, despite a lack of evidence of wrongdoing.

The $20 billion comes from a program, called the Greenhouse Gas Reduction Fund, that was intended to ramp up clean-energy technology finance in low-income communities.

While EPA Administrator Lee Zeldin has portrayed the program as an example of federal agencies “shoveling boat loads of cash to far-left activist groups,” the agency has faced questions about its legal authority to hold up the grant money without evidence of fraud.

Of the eight grant recipients, five told POLITICO's E&E News on Friday that they remain shut out of the Citibank accounts containing the balance of their grants with no explanation from the bank or the Trump administration. The other three groups didn’t respond to calls Friday but are believed to be facing the same situation.

One awardee told E&E News that it won’t be able to make payroll and would begin defaulting on contracts with project partners by March 7. It is trying to raise funds to cover the shortfall.

Other recipients — especially long-established nonprofits with more resources — can cover their basic expenses in the short term. But all five groups said a prolonged funding freeze would lead to bankruptcies and defaults.

The nonprofits are using the money from the Greenhouse Gas Reduction Fund, created by Biden’s Inflation Reduction Act, to offer loans for efforts such as solar installations and electric buses. But some of their borrowers are pausing projects or reconsidering their participation because of concerns that the grantees won’t be able to deliver on their lending commitments.

"Our borrowers need to be able to access funds to be able to move these projects forward, and that hangs in the balance right now if this continues,” said an official for one of the awardees, who like the others was granted anonymity to speak for fear of retaliation.

EPA officials did not respond to requests for comment.

The leader of one grant recipient, a coalition of nonprofits called Power Forward Communities, told POLITICO this week that it still intends to deploy its initial $539 milliondisbursement from the grant, saying he’s “confident” Citibank will honor its funding agreements. Citibank did not respond to requests for comment.

Citibank’s contract with the recipients doesn’t permit it to freeze the accounts for longer than 48 hours unless EPA starts the process of retaking exclusive control of an account — something that is permitted only in cases of fraud, according to several awardees.

Zeldin said Tuesday on Fox Business that retrieving the funds is “now being worked through between the Justice Department and Citibank.”

The Washington Post reported Thursday that the FBI has questioned EPA employees about the Greenhouse Gas Reduction Fund programs. But the newspaper reported that the office of acting Deputy Attorney General Emil Bove had struggled to find a career prosecutor willing to request a warrant for the funds. A U.S. magistrate judge in the District of Columbia rejected one request for a seizure warrant for the money, the Post said.

DOJ did not respond to requests for comment.

Several awardees argued that only a lawsuit would force Citibank to explain its legal reasoning for not releasing the funds. But they’ve been reluctant to sue, citing a good working relationship with the bank in the past.

On Wednesday, Democratic California Attorney General Rob Bonta sent a letter to Citibank asking it to release the funds, two awardees said. His office did not respond to requests for comment. Awardees expect other Democratic attorneys general and governors to write their own letters soon.

Awardees are also doing outreach to allies on Capitol Hill, including Republicans whose districts stand to benefit from investments under the program. Some analyses show that more of the funding has flowed to red states and districts than to blue ones.

Last week, the bipartisan National Governors Association proposed a resolution calling for “ensuring the federal government meets its already committed obligations for federally funded projects across states, territories and Commonwealths.”

Awardees told E&E News that the lack of information about why Citibank is sitting on the funds makes it difficult to sue for their release. “It’s hard to know what the legal options are when we don’t know what actions were taken,” said an official for one awardee.

Some of the awardees said they are considering filing lawsuits against the bank, hoping to give it cover to release the funds and provide information about its interactions with EPA and the Justice Department.

Others plan to sit on the sidelines for now. Zeldin and some Republican lawmakers have focused mostly on the three recipients of one component of the $20 billion program, the $14 billion National Clean Investment Fund. Some awardees under a second, smaller program for nonprofit lenders serving poorer communities say they’re reluctant to draw attention to themselves.

“We’ve been operating in a gray zone,” said an official for one of them. “We haven’t been targeted and trying to keep a low profile.”

Tim Cama contributed to this report.