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EPA Under Fire for Withholding $20 Billion in Climate Grants Amidst Fraud Allegations
The Environmental Protection Agency (EPA), led by Administrator Lee Zeldin, has faced intense scrutiny in recent months following his vociferous claims of “insane” mismanagement by the Biden administration regarding $20 billion in climate grants. These grants, intended to bolster clean energy initiatives, are now at the center of a legal dispute, with many of Zeldin’s accusations appearing to lack factual support and some being demonstrably untrue. This controversy raises concerns over the future of critical environmental funding and the projects it supports.
Trump Administration’s Claims Questioned
Zeldin asserted that the grant program, approved by Congress as part of the 2022 Inflation Reduction Act and designed to distribute funds to nonprofit organizations for community-based renewable energy projects, was “exposed to waste, fraud, and abuse.” Substantiating this claim would enable the EPA to reclaim the allocated $20 billion, which was designated for eight nonprofit groups to finance initiatives like solar panel installations on community centers and geothermal systems for subsidized housing.
However, despite a judge’s request, the Trump administration has thus far failed to provide concrete evidence of financial irregularities. Consequently, several nonprofits are now pursuing legal action against the agency for breach of contract, as the EPA has actively prevented them from accessing the approved funds.
Legal Experts Skeptical of EPA’s Justification
The legal standoff is scheduled to proceed in federal court, with legal experts expressing increasing doubt about the EPA’s arguments. Richard Lazarus, a Harvard University environmental law professor, described the agency’s position as “just nonsense.”
Lazarus stated his initial shock at Zeldin’s accusations concerning the $20 billion grant program. Upon reviewing the Trump administration’s court filings, intended to substantiate the claims of fraud and abuse, he found a stark disconnect.
“They come in with huge press releases claiming all kinds of things, criminal misconduct, corruption, and then the documents that are filed in court don’t match that rhetoric,” Lazarus commented, labeling the situation as “completely and utterly irresponsible.”
EPA spokeswoman Molly Vaseliou declined to comment directly on the ongoing litigation. However, she maintained that the agency’s submitted documentation provides a “fuller picture” than depicted by Zeldin’s critics.
Shifting Justifications for Grant Cancellation
In a recent court filing on March 26, the EPA introduced a new rationale for rescinding the climate grants, arguing that these funds no longer align with the Trump administration’s policy objectives. The funds, initially intended for disbursement, are currently frozen at Citibank, the financial institution selected by the Biden EPA to manage the accounts.
Accusations of Mismanagement and the “Gold Bars” Analogy
The disputed $20 billion is part of a larger $27 billion Greenhouse Gas Reduction Fund established by Congress in the 2022 climate legislation. This fund was designed to provide initial capital for “green banks,” entities that offer loans to promote solar, geothermal, and other clean energy projects aimed at reducing fossil fuel reliance and mitigating climate change-related emissions.
The program’s underlying principle was that these funds would enable recipients to attract private investment that would otherwise be inaccessible. Loan repayments would then be reinvested in subsequent projects, creating a sustainable funding mechanism.
The sheer scale of the program – $27 billion, tripling the EPA’s annual budget – introduced a significant financial component to an agency traditionally focused on environmental regulation.
Biden administration officials have asserted that the program’s design and the selection of grant recipients adhered to rigorous protocols. Court documents reveal that applicants were required to meet specific eligibility criteria, and their submissions underwent evaluation by hundreds of federal employees utilizing a standardized scoring system.
The “Gold Bars” Allegation and Project Veritas Video
Following the selection of eight nonprofit groups in April 2024, Citibank was designated to distribute the funds. The EPA was legally mandated to finalize grantee selection by September 2024.
Shortly after assuming office, Zeldin urged Citibank to return the funds and issued a press release alleging that the Trump administration had uncovered “gold bars” “parked” at a financial institution during the Biden administration.
The “gold bars” reference alluded to a covertly recorded video produced by Project Veritas, a right-wing group notorious for attempting to discredit political adversaries through surreptitious recordings.
In the video, filmed during the final days of the Biden administration, an EPA staff member likened the agency’s efforts to expend federal funds before the presidential transition to discarding “gold bars” from the Titanic.
Zeldin and the EPA have consistently cited this video as purported evidence of impropriety.
In February, Denise Cheung, a seasoned prosecutor in the U.S. Attorney’s Office for the District of Columbia, resigned after Ed Martin, the interim U.S. Attorney appointed by President Trump, reportedly requested her resignation for refusing to order Citibank to freeze the nonprofit’s funds, citing insufficient evidence of misuse.
Subsequently, the Department of Justice and the FBI initiated an inquiry into the funds, and Zeldin referred the program to his agency’s acting inspector general for a separate investigation. In mid-February, Citibank, acting on the Trump administration’s request, froze the nonprofits’ bank accounts.
Scrutiny of Other Trump Administration Claims
While the EPA’s use of a private bank for financial transactions was unprecedented for the agency, the federal government has a history of utilizing private financial agents. A 2016 Government Accountability Office report indicated that one Treasury Department bureau alone employed 20 financial agents at that time.
Claims Involving Stacey Abrams and Power Forward Communities
Following the freezing of funds at Citibank, further accusations from the Trump administration emerged. In his address to Congress in March, President Trump asserted that a nonprofit “headed up” by Stacey Abrams, a Democratic figure and former Georgia gubernatorial candidate, received $1.9 billion, characterizing it as “appalling waste.”
Abrams briefly served as senior counsel for Rewiring America, one of five nonprofit groups comprising Power Forward Communities, an umbrella organization designated to receive nearly $2 billion from the EPA’s $20 billion program.
However, the CEO of Power Forward Communities clarified that Abrams did not lead Rewiring America, received no personal funds, and had no affiliation with the parent organization.
Questions Regarding Power Forward Communities’ Finances and Oversight
In a letter to his agency’s acting inspector general in early March, Zeldin presented what he termed “documented evidence of financial misconduct.”
Zeldin highlighted Power Forward Communities’ reported revenue of only $100 in 2023, questioning how an organization with such limited resources could qualify for a $2 billion grant.
However, Power Forward Communities was specifically established to apply for the EPA program and comprised established organizations such as Habitat for Humanity and United Way, in addition to Rewiring America.
Zeldin also contended that the program’s structure “removed $20 billion from governmental oversight.” Court filings, however, indicate that the EPA retained the ability to monitor transactions within the Citibank accounts.
Allegations Against Former EPA Official Jahi Wise
Zeldin also accused Jahi Wise, a former EPA official who oversaw the grant program, of steering billions to his former employer, the Coalition for Green Capital, a grant recipient organization.
“Corrupt at its core!” Zeldin declared on social media, alleging Wise’s failure to recuse himself from funding decisions.
Conversely, court filings reveal that Wise signed two ethics pledges, accessible to Zeldin within EPA files, limiting his involvement in decisions concerning climate grant applicants and prohibiting contact with his former employer.
Wise declined to comment, and the Coalition for Green Capital did not respond to requests for comment.
Circular Reasoning and “Alice in Wonderland Process”
The Trump administration’s accusations of malfeasance appear to rely on a pattern of circular reasoning: initial allegations emerge in conservative media or on social media, prompting the EPA to cite the need for investigation, and then using the existence of the investigation as validation of wrongdoing.
John Podesta, former climate advisor to President Biden, characterized Zeldin’s actions as “an Alice in Wonderland process, hurling meritless, unsubstantiated allegations that only serve as an excuse to break the law and the legal commitments of the United States government.”
In its most recent legal filings, the EPA has shifted its argument, suggesting that regardless of fraud or inadequate oversight, the agency can terminate the contracts simply because the projects no longer align with the Trump administration’s priorities.
The EPA has further contended that the prior administration altered contract terms “in the twilight of the prior administration” to complicate grant termination for the incoming administration based on noncompliance or misconduct.
William W. Buzbee, a law professor at Georgetown University Law Center, stated that modifying contract terms is within legal bounds. He noted that the agency’s recent legal filings represent a “backpedaling from all of the more extreme accusations” concerning fraud, waste, and abuse.
Nonprofits Face Growing Financial Strain
The protracted funding freeze has placed significant financial pressure on the nonprofit grant recipients. Concerns are mounting regarding employee salaries, office rent, and the ability to meet critical project deadlines.
United Way and Habitat for Humanity Withdraw from Power Forward Communities
Signs of this strain are emerging, as both United Way and Habitat for Humanity have withdrawn from Power Forward Communities, citing the need to prioritize their core charitable missions over protracted legal battles, according to statements provided to The Times.
The funding impasse also jeopardizes the viability of local projects that were promised loans or investments.
Lafayette Lofts Project in Iowa and Broader Project Uncertainty
The Lafayette Lofts project in Clinton, Iowa, a rural Mississippi River community, exemplifies projects now in limbo, according to court documents. This 119-year-old building is undergoing conversion into affordable housing units. The developer intended to utilize a green bank loan to install solar panels and a geothermal heating and cooling system – features that traditional lenders are often hesitant to finance.
Other affected projects include a 46-home affordable rental community in Michigan for individuals recovering from addiction, a New Jersey health center, and a solar development on Ohio landfills intended to power an auto manufacturing plant.
“Its unfortunate this stuff gets caught up in politics,” remarked Brent Crittenden, the Lafayette Lofts developer. “Our industry moves slowly and when changes get made acutely it does make it extremely challenging.”