Blink and you might miss the latest in the ongoing skirmish between grantees of Biden-era climate funds and the Trump administration, which has blocked and attempted to terminate billions of dollars worth of grant awards.
A federal judge in Washington, DC late Tuesday night ordered that $20 billion in funds be released. That might crack open a small window for grantees of a federal “green bank” program to access funds that have been frozen in a Citibank account for more than eight weeks.
That window could close, as the Environmental Protection Agency, which oversees the program, attempts to block it.
The frozen funds were to be used to make loans for energy retrofits, community solar, EV charging and other projects meant to lower costs and clean the air in communities across the US.
The program, the Greenhouse Gas Reduction Fund, part of the Inflation Reduction Act, was designed to seed a nationwide network of green lenders – a sort of distributed green bank — that would fill a gap for such loans, especially in underserved communities. Interest from the loans would ensure that the program would continue long after its 7-year term. It was also designed to leverage public funding to mobilize seven times the amount in private capital.
The case was brought by the nonprofit coalitions Climate United, the Coalition for Green Capital and Power Forward Communities, which charge that the Environmental Protection Agency has unlawfully withheld the congressionally appropriated funds and tried to terminate the grants. Another awardee, the California Infrastructure Development Bank, recently joined the suit.
The order by federal judge Tanya Chutkan gave Citibank, the financial custodian of the funds, until Thursday at 1pm ET to comply. EPA quickly appealed the decisions and filed to “stay” the order. A decision on the latter could come before the deadline for Citi to unfreeze the funds.
Local projects
Grantees are hoping they will be able to access at least some of the $625 million in delayed requests to fulfill loans they have already approved and to cover staff and operational expenses before EPA’s next legal move.
“Today’s decision gives us a chance to breathe after the EPA unlawfully — and without due process — terminated our awards and blocked access to funds that were appropriated by Congress and legally obligated,” said Climate United CEO Beth Bafford. “After a year-long application process, we were hired to do a job that we’ve done for decades: investing in communities and strengthening markets. We want to get back to work.”
Climate United has approved some $400 million in loans — far more than other awardees. 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 $31.8 million loan for 18 solar plants for the University of Arkansas System, and a $250 commitment for 500 electric drayage trucks to be used at ports in Southern California. It also earmarked $30 million in grants to cover pre-development costs for clean energy projects, starting in native communities.
“Any efforts to undermine today’s ruling will jeopardize local projects already under construction and cost thousands of good-paying jobs,” said Bafford.
The Coalition for Green Capital, a network of state green banks, has distributed $1.8 billion to sub-grantees, including GreenieRE, an impact-focused reinsurance company, and Coventry Structured Investments, which provides securitization and mezzanine financing, which are also affected by the freeze. The subgrantees had approved a half-dozen loans by the end of 2024, totalling nearly $34 million, according to a court filing. The loans are expected to bring in an additional $192 million in private capital and $2.2 million in non-GGRF public funding.
Power Forward Communities, a coalition made up of housing and finance nonprofits, has committed $539 million to preserve and build affordable housing. “The PFC coalition has a robust pipeline of projects that will deliver real savings to Americans living in rural, urban and tribal communities all over the country at a time when they need it most,” said Tim Mayopoulos, the group’s CEO and former CEO of Fannie Mae. “We are eager to resume fulfilling our obligation to lower housing costs and utility bills for American families.”
Unfettered power
The ruling was the second time Judge Chutkan has challenged the EPA’s legal basis to terminate the grant program. In March, she issued a temporary restraining order to prevent EPA from moving the funds from Citibank and terminating the grants. In court hearings, she has seemed exasperated by EPA’s shifting claims, “circular” logic and failure to back up its allegations of fraud and waste.
Separately, a federal judge in Rhode Island ordered the EPA, the Department of Energy and other agencies to release grant funds awarded under the IRA and bipartisan infrastructure law. That suit, brought by a half-dozen community groups, represented by the legal nonprofit Democracy Forward, rests on many of the same legal arguments EPA has made in the GGRF case.
“Agencies do not have unlimited authority to further a President’s agenda, nor do they have unfettered power to hamstring in perpetuity two statutes passed by Congress during the previous administration,” wrote Judge Mary McElroy, a Trump appointee.
