US judge blocks Trump's EPA from clawing back climate grants

By Nate Raymond

(Reuters) -A U.S. judge on Tuesday temporarily blocked the U.S. Environmental Protection Agency from recovering grant funds issued as part of a $20 billion climate funding program that President Donald Trump's administration has moved to terminate.

U.S. District Judge Tanya Chutkan in Washington issued a temporary restraining order halting the EPA's termination of three environmental nonprofit groups' grant agreements and barring Citibank from dispersing grant funding held at the bank in their accounts.

Those grants were terminated as part of EPA Administrator Lee Zeldin's campaign to claw back money from the Greenhouse Gas Reduction Fund, which Congress authorized in 2022 as part of the Inflation Reduction Act during then President Joe Biden's tenure in 2022 to kick-start projects aimed at curbing pollution.

The EPA under Zeldin's watch has maintained the program did not align with the agency's priorities, and it cited concerns with potential fraud, waste and abuse. The EPA has said the FBI and Justice Department are also investigating the program, including for potential fraud, waste and abuse.

But Chutkan said it appeared the EPA failed to take the legally required steps necessary to terminate $13.97 million of grants awarded to Climate United, Coalition for Green Capital and Power Forward Communities.

Chutkan said that while the EPA claimed it terminated them due to "substantial concerns" about fraud, waste and abuse, it provided only "vague and unsubstantiated assertions" to back up those claims.

Absent a court order preserving the status quo as the litigation proceeds, Chutkan said those groups would face imminent harm if Citibank transferred money the groups use to pay employees, pay rent and fund projects out of those accounts.

"If Citibank transfers money out of these accounts, the funds will not be recoverable," wrote Chutkan, an appointee of former Democratic U.S. President Barack Obama.

Zeldin in a statement said he would not rest until the funds were returned to the U.S. Treasury, saying they were "riddled with self-dealing and wasteful spending."

Citigroup, Citibank's parent company, did not respond to a request for comment.

The decision was an initial victory for the nonprofits, who sued earlier this month over the EPA's termination of their grants and Citibank's withholding of the money.

Climate United CEO Beth Bafford in a statement called Tuesday's ruling "a strong step in the right direction," and said the organization would work in the coming weeks towards a long-term solution.

(Reporting by Nate Raymond in Boston; Editing by Jamie Freed)