A federal judge says some nonprofits awarded billions for a so-called green bank to finance clean energy and climate-friendly projects cannot have their contracts scrapped and must have access to some of the frozen money. The ruling is a defeat for President Donald Trump's Environmental Protection Agency, which argues the program is rife with financial mismanagement.
The order late Tuesday by U.S. District Judge Tanya Chutkan "gives us a chance to breathe after the EPA unlawfully 鈥� and without due process 鈥� terminated our awards and blocked access to funds that were appropriated by Congress and legally obligated,鈥� said Climate United CEO Beth Bafford.
The lawsuit by contends that the EPA, Administrator Lee Zeldin and Citibank, which held the grant money, illegally blocked the funds awarded last year and had jeopardized the organizations' operations.
Chutkan said Citibank must provide the money that was due to the nonprofits before the EPA had frozen their accounts in mid-February. The EPA immediately appealed.
The Greenhouse Gas Reduction Fund, commonly referred to as a 鈥済reen bank,鈥� was authorized by the 2022 Inflation Reduction Act under Democratic President Joe Biden. Its goals run counter to the Trump administration鈥檚 and its . Zeldin quickly made the bank a target, characterizing the $20 billion in grants as a 鈥済old bar鈥� scheme marred by conflicts of interest and potential fraud.
A federal prosecutor resigned after being asked to open a criminal investigation, saying there was not enough evidence to move ahead. The FBI and Treasury Department, in coordination with the EPA, pressured Citibank to freeze the grants, which it did, according to the nonprofits.
Last month, Zeldin , saying 鈥渨ell documented incidents of misconduct, conflicts of interest, and potential fraud raise significant concerns and pose unacceptable risk.鈥�
Chutkan paused that move, saying of wrongdoing. But the Republican administration, in a recent filing, asserted it was allowed to end the contracts based on oversight concerns and shifting priorities.
鈥淓PA鈥檚 new admission that it 鈥榙id not terminate for Plaintiffs鈥� noncompliance鈥� ... confirms that EPA鈥檚 invocation of 鈥榳aste, fraud, and abuse鈥� was arbitrary and pretextual鈥� the nonprofits said in a court filing.
Molly Vaseliou, the EPA's associate administrator for public affairs, contended that the court lacked the power to reinstate the money. She did not provide any new evidence and repeated unsubstantiated allegations of program abuse and conflicts of interest.
"We couldn鈥檛 be more confident in the merits of our appeal,鈥� she said in a statement.
The government has told the court the case is 鈥渏ust a run-of-the-mill (albeit large) contract dispute."
That argument is important because it could move the case to a different court that can only award a lump sum and not force the government to keep the grants in place.
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Michael Phillis, The Associated Press
