For the Greenhouse Gas Reduction Fund, the other shoe has dropped.
The Environmental Protection Agency is seeking to claw back some $20 billion in funding that was awarded last year to nonprofit lenders and green banks that are making loans for community infrastructure projects. The funds already are sitting in commercial accounts at Citibank.
The Greenhouse Gas Reduction Fund, or GGRF, the largest direct outlay of the Biden-era Inflation Reduction Act, sought to establish a nationwide network of lenders to underwrite loans for electric school buses and trucks, school solar projects, energy efficiency retrofits and other green community infrastructure projects. The GGRF was designed to leverage at least seven times the amount of public funding in private commercial capital.
The Trump administration appears hell bent on shutting that effort down.
Citibank is the financial agent for the $20 billion in GGRF funds that were awarded via two of its sub-programs, the National Clean Investment Fund and the Clean Communities Investment Accelerator. In a video posted to social media, EPA Administrator Lee Zeldin declared, “The financial agent agreement with the bank needs to be instantly terminated, and the bank must immediately return all of the gold bars that the Biden administration tossed off the Titanic.”
The reference is to a clandestine video recording of a former EPA employee who, at a loud party, used the “gold bars” phrase while discussing efforts to get funding out the door in the waning days of the Biden administration. The money was placed with Citi before the election in what was widely seen as an effort to protect the distributed “green bank” from political reversals.
Loans were being funded as recently as Wednesday.
“This scheme was the first of its kind in EPA history, and it was purposefully designed to obligate all of the money in a rush job with reduced oversight,” Zeldin said in his video. Without naming Citibank, he added, “There is zero reason to suspect any wrongdoing by the bank.” An EPA spokesperson declined to comment further.
Clawing back
Zeldin specifically called out Climate United, the coalition of Calvert Impact, Community Preservation Corp. and Self-Help, the North Carolina-based community development lender. Climate United was awarded $7 billion from the GGRF, the largest single award.
“We’re on the edge of our seats,” said an executive with one of the eight groups that were awarded the GGRF funds for project lending and to further distribute to community development financial institutions and state-level green banks.
Moving to claw back the funding from a private commercial bank would in all likelihood prompt a legal fight, but it wouldn’t be unprecedented. Just this week, the Department of Homeland Security got a federal judge’s permission to rescind $80 million from New York City’s bank accounts that had been allocated by the Federal Emergency Management Agency for housing migrants.
“There is no lawful way to get the money back, and any attempt to get the money back would be a violation of the Fifth Amendment of the Constitution as a takings,” Reed Hundt, founder of the Coalition for Green Capital, which was awarded $5 billion in GGRF funds, told ImpactAlpha before the November election. Hundt has since stepped down from his role. The takings clause states that the government cannot take private property for public use without just compensation.
Another person familiar with the situation, speaking on condition of anonymity, said such a claw back “would be a huge statement.” Absent proof of wrongdoing, “That would mean every and any bank doing business with the government is at risk of having business pulled and no customer rights are enforceable.” Citi did not immediately respond to a request for comment.
Elon Musk’s Department of Government Efficiency, or DOGE, has turned its attention to the EPA, reviewing contracts and payments via the agency’s EPA Acquisition System, E&E News reported. If they find contracts that run counter to the Trump administration’s priorities, they could request that “contract actions” be “terminated.”
The $14 billion National Clean Investment Fund was meant to finance clean-energy projects including green affordable housing, energy retrofits, community solar and EV charging infrastructure.
The $6 billion Clean Communities Investment Accelerator, or CCIA, designed to build the skill sets of community lenders who may not be familiar with underwriting solar projects or energy retrofits, or navigating the Inflation Reduction Act’s complex tax credits and incentives.
An additional $7 billion in GGRF funding for a third program, Solar For All, had been held by the EPA itself and was already largely frozen. Solar for All aimed to bring solar energy to 900,000 low-income and disadvantaged households.
All three of the programs had a focus on catalyzing projects and jobs in low income, rural, Tribal and other underserved communities.
Naming names
The explicit threat to claw back the GGRF funds comes after several days of escalating tweets charging fraud and abuse in programs funded by the Biden-era Inflation Reduction Act. Zeldin has promised a public airing of awards they claim amount to fraud or abuse. In a social media post, Zeldin promised “a big update” as soon as today.
Trump himself promised to name names in his news conference Wednesday. “There’s no chance that there’s not kickbacks or something going on. This is a massive fraud that’s been taking place,” he said.
In a memo reviewed by ImpactAlpha, the EPA’s Chad McIntosh, the acting deputy administrator, directed the agency to review all grants and awards suspected of being “fraudulent, abusive, duplicative, or implemented in a way that failed to safeguard Agency dollars.”
Programs “deemed inconsistent with necessary financial and oversight procedural requirement” could be referred “to ensure full accountability and prosecution where applicable,” McIntosh wrote. The EPA’s former inspector general, Sean O’Donnell, was one of the watchdogs fired last month along with more than a dozen other inspectors general.
Separately, John Sneed, the new head of the Department of Energy’s $400 billion Loan Programs Office, is reportedly reviewing loans and guarantees approved for a broad range of battery factories, electric vehicle manufacturing, advanced materials and other deals as he reorients the agency around Trump administration priorities, including oil, gas and nuclear power.
