Beth Bafford is fighting to bring the benefits of clean energy and green jobs to communities across the US.
To do so, she is taking the Environmental Protection Agency to court.
Bafford leads Climate United, a coalition of community lenders for solar mini-grids, electric school buses and other cost-saving upgrades, that is expected to ask a judge today to unblock some $7 billion in funds that Trump administration threats have frozen in accounts at Citibank.
A temporary restraining order that compels Citi to free the bank accounts would allow Climate United to continue funding the $400 million in loans it has already approved. Under a financial agent agreement with the Environmental Protection Agency, Citibank is stewarding a total of $20 billion in Greenhouse Gas Reduction Funds. With $7 billion, Climate United had the largest allocation among eight groups that were awarded grants to establish what amounts to a distributed “green bank,” an ecosystem of underwriters to finance cost-saving improvements.
After failing to get an explanation for the holdup, Climate United filed suit against the EPA and Citi on Saturday for illegally withholding obligated funds.
Other GGRF awardees may join the suit to regain access to funds that have been frozen for nearly four weeks. But as the awardee with the largest staff, number of deals and awarded funds, Climate United has more immediately at stake. Citibank halted disbursement after the new administration conjured a welter of accusations, legal threats and investigations by the Department of Justice and FBI.
Some awardees have received letters asking for all documents and communications regarding the program and to appear before a grand jury in the coming weeks. Neither of the agencies or the Environmental Protection Agency have provided any evidence of fraud. A US attorney in Washington DC last month resigned rather than launch an investigation, arguing that there was no legal basis to do so.
“This isn’t about politics; it’s about economics,” Climate United’s Beth Bafford told ImpactAlpha.
Among the projects that Climate United has funded is a $32 million pre-construction loan for 18 solar power plants across the University of Arkansas system. The 66-megawatt project, the largest commercial solar deployment in Arkansas, is expected to save the university more than $120 million over the next quarter-century.
“As community lenders know, bringing clean energy, efficiency, and resiliency to homeowners, schools, and small businesses saves them money and makes our local communities stronger,” Bafford said. “That’s what we care about and that’s why we’re filing in court.”
Contingency planning
If possession is nine-tenths of the law, the Climate United suit should at least have a better chance than other efforts to unblock approved funding that has been frozen by the welter of actions of Trump administration officials.
The GGRF awardees have an advantage over advocates fighting to unblock, says, USAID funding for approved and in many cases, completed, humanitarian and development projects that has been held up despite court orders. In the case of the GGRF funding, the money has already left government coffers and is sitting in accounts at Citibank per a custodial contract that was signed last year.
That arrangement was meant to safeguard a historic accomplishment: Kickstarting America’s locally driven, bottom-up green revival with financing for projects to bring cleaner air, cheaper transportation, lower energy bills and good jobs to every block, every neighborhood, every state.
Such foresight reflects planning that anticipated just such a situation as has arisen under the Trump administration. The $20 billion was put on deposit at Citi not to evade oversight — it provides more transparency than alternative disbursement methods — but to guard against the impoundment of Congressionally approved and presidentially signed appropriations under the Inflation Reduction Act, a hard-fought legislative victory that was perhaps the signal achievement of the Biden administration.
Under the design of the Greenhouse Gas Reduction Fund, public monies were to be leveraged to bring in as much as seven times the amount in private financing. The profits from loans would be recycled to make new loans and create a self-sufficient lending network.
Climate United has already committed $400 million in loans — far more than other awardees to date. It has only drawn down about $100 million in GGRF funds, the organization says, leaving it unable to fulfill its commitments to developers and borrowers. Among the approved and partially funded deals that may be in limbo is a $250 commitment for 500 electric drayage trucks to be used at the ports of Los Angeles, Long Beach and other cities.
“Electric drayage trucks cost less to operate, but high upfront costs make it difficult for independent owner-operators and small fleets to transition to all-electric,” Bafford said in October when the deal was announced.
Citi has been caught in the middle. Zeldin has claimed that Citi “voluntarily” froze the GGRF funds; the bank was clearly pressured. Climate United’s suit claims it was the EPA that directed the bank to freeze the funds. The bank’s chief legal officer, Brent McIntosh, who is also a member of the executive management team, served in the first Trump administration’s Treasury department.
The suit will give Citi something of an out. If Climate United is granted a temporary restraining order, the bank will have no choice but to comply.
“Citi has been working with the federal government in its efforts to address government officials’ concerns regarding this federal grant program,” the bank shared in a statement to the NY TImes. “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.”
Leadership moment
Bafford has raised philanthropic dollars to pursue the lawsuit. Taking on the EPA means not only legal action, but an effort to push back against the slurs, conspiracy theories and misinformation being spread by Trump EPA chief Lee Zeldin and even the president himself.
The eight coalitions selected after a competitive process to distribute GGRF funds comprise a Who’s Who of leading organizations in community development, affordable housing, the energy transition and the great green revival. Climate United received nearly half of the $14 billion National Clean Investment Fund selected three groups to directly loan to community-based green projects and mobilize private capital.
Bafford came from Calvert Impact, which has structured and syndicated impact deals for decades. To create Climate United, Calvert teamed with the community development financial institutions Self-Help Ventures Fund and Community Preservation Corporation, both active affordable housing lenders. The three nonprofit CDFIs “bring a decades-long track record of successfully raising and deploying $30 billion in capital with a focus on low-income and disadvantaged communities,” the EPA noted in its award announcement last April.
CDFIs have become the bankers of shared prosperity.
In support of Climate United, Partners for Rural Transformation said in a statement, “These funds empower small businesses, build vital infrastructure, create affordable housing, invest in workforce development, and overall spark a wave of economic growth in rural America.” The nonprofit works in the Mississippi Delta, Appalachia, Native American communities and the rural south and west, shared
Bafford had been helping build the financial architecture of CDFIs for decades. During the Covid pandemic, CDFIs emerged as the preferred capillaries for driving access to affordable, responsible financing down to the small businesses and local projects that build thriving local economies — often in rural or low-income places where big banks were unable, or unwilling, to go.
With the economy reeling from shutdowns, President Trump in his first term engineered the Paycheck Protection Program to quickly distribute forgivable loans via the banking network to small businesses that kept their employees on the payroll. While most of the early funds went to well-connected companies and the clients of big banks, CDFIs and community lenders — which were included only later in the game — were able to get the aid to some of the smallest and most vulnerable businesses.
Bafford was instrumental in magnifying the impact of the small lenders by structuring “community recovery vehicles” that would buy loans from them to free up their capital. Such vehicles were set up in New York, California, the state of Washington and 15 states across the South to scale up community financing.
Abundance agenda
In the emerging parlance, the GGRF represented an “abundance agenda” to invest in the supply-side of low-cost clean energy that taps the sun, wind and geothermal heat, healthy, affordable housing, and other public goods that remain undercapitalized despite attractive financial returns.
The distributed ecosystem of lenders that was emerging is an innovative implementation of the idea of a national “green bank” that has long enjoyed bipartisan appeal as a way to finance clean energy solutions. Instead of standing up one giant institution, the architects of the GGRF created a distributed network that encompassed local green banks and a network of nonprofit community lenders with deep local roots. That way, the green financing network would ensure that communities across the US, even the most hard to reach and historically overlooked, could share in the benefits of a transition to a lower carbon, lower cost and healthier economy.
Increasing the supply of healthy food, green energy, affordable housing and other goods in short supply and high demand, advocates argue, can promote growth and improve living standards while holding down price increases.
The CDFIs are complementary to state-level green banks. The Coalition for Green Capital, a green bank nonprofit that was awarded $5 billion, had for 15 years worked to help establish state and local green banks that have catalyzed $20 billion into green projects. Its plan was to set up a network of at least one self-sustaining green bank in every state.
The coalition has not yet joined Climate United’s lawsuit. Before the election, coalition’s Reed Hundt, former chair of the Federal Communications Commission, predicted there might be a legal fight. “I will say that there is no lawful way to get the money back,” he told ImpactAlpha before the November election. “Any attempt to get the money back would be a violation of the Fifth Amendment of the Constitution as a takings.”
A third coalition, Power Forward Communities, brought together five respected nonprofits — Enterprise Community Partners, Local Initiatives Support Corp., Rewiring America, Habitat for Humanity, and United Way — to compete for the funding. The group was awarded $2 billion to devise tailored affordable housing solutions for single-family and multi-family housing owners and developers.
Under another GGRF program, the Clean Communities Investment Accelerator, five groups were awarded a total of $6 billion. The organizations, also with long track records, were to provide support and technical assistance to a wider range of community lenders that might not be familiar with green lending. The Opportunity Finance Network, for example, is a 40-year-old nonprofit CDFI association. The Justice Climate Fund, a network of more than 1,200 community lenders, and the nonprofit ImpactAssets, was assembled for the purposes of applying for the EPA grant.
The GGRF will drive “the decarbonization of homes that the climate demands,” Amir Kirkwood of Justice Climate Fund told ImpactAlpha last year, and “mobilize additional tens of billions of dollars of private capital to improve Americans’ homes.”
