A federal judge has issued a temporary restraining order (TRO) against the Environmental Protection Agency (EPA) and Citibank after the agency unilaterally terminated billions of dollars in climate funding grants awarded to three nonprofit organizations.
The ruling, handed down by U.S. District Judge Tanya Chutkan, blocks the EPA from taking further action to implement the terminations and prevents Citibank from transferring or withholding the grant funds designated for the groups under the National Clean Investment Fund (NCIF).
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The decision follows lawsuits filed by Climate United Fund, Coalition for Green Capital, and Power Forward Communities—three nonprofit financial institutions awarded nearly $14 billion in federal grants through the Inflation Reduction Act to finance clean energy projects nationwide.
The dispute began in February 2025, when the newly appointed EPA Administrator Lee Zeldin announced a sweeping review of the Greenhouse Gas Reduction Fund (GGRF), which allocated $27 billion in climate financing as part of President Biden’s 2022 climate agenda.
Zeldin publicly questioned the legality of the grant program, calling it a “criminal scheme” and vowing to recover funds already distributed. The EPA subsequently froze the grant recipients’ access to their Citibank accounts, preventing them from disbursing funds to approved clean energy projects.
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On March 11, 2025, the EPA formally revoked the grants, citing “substantial concerns regarding program integrity, fraud, waste, abuse, and misalignment with agency priorities.” The termination notice provided no specific evidence of wrongdoing but referenced ongoing federal investigations into the grant process.
In her 23-page opinion, Judge Chutkan sharply criticized the EPA’s lack of due process and failure to follow federal grant termination procedures.
“EPA Defendants have not sufficiently explained why unilaterally terminating Plaintiffs’ grant awards was a rational precursor to reviewing the GGRF program,” she wrote. “Vague and unsubstantiated assertions of fraud are insufficient.”
The court found that the EPA had violated the Administrative Procedure Act (APA) and due process requirements by failing to:
- Provide clear justification for termination
- Offer the grantees an opportunity to respond
- Follow the agency’s own grant termination guidelines
Judge Chutkan also ruled that Citibank was contractually obligated to disburse funds to the nonprofits unless the EPA legally justified its intervention.
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The court determined that the plaintiffs faced “imminent and irreparable harm” if funding remained frozen.
According to legal filings:
- Climate United Fund had committed $392 million to solar energy projects, electric truck leasing programs, and tribal renewable energy initiatives.
- Power Forward Communities had allocated $539 million for affordable housing energy retrofits.
- Coalition for Green Capital had begun investing in community-based clean energy initiatives.
Without access to the funds, the organizations faced mass layoffs, contract defaults, and project cancellations.
“If Citibank transfers money out of these accounts, the funds will not be recoverable,” the court ruled. “This would constitute irreparable harm.”
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The temporary restraining order remains in effect while the court reviews the legality of the EPA’s actions. The Biden-era Inflation Reduction Act remains a key target of Republican efforts to dismantle climate-related funding, and this case is expected to set a precedent for future legal battles.
The EPA has not yet responded to the ruling, and Administrator Lee Zeldin has vowed to continue investigating the grant recipients for potential fraud and mismanagement.
With billions of dollars at stake, the case is likely to escalate as both sides prepare for a protracted legal fight over the future of federal climate finance programs.
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