A coalition of climate and housing organizations has filed a lawsuit against the Trump administration and Citibank, accusing them of unlawfully withholding $7 billion in federal grant funds meant for clean energy and infrastructure projects.
EPA and Citibank Accused of Blocking Funds
The lawsuit, filed in the U.S. District Court for the District of Columbia, claims that the Environmental Protection Agency (EPA) and Citibank have failed to release the money granted to Climate United under the Greenhouse Gas Reduction Fund, part of the 2022 Inflation Reduction Act.
Climate United alleges that Citibank has refused to disburse the funds without explanation and that the EPA, led by Administrator Lee Zeldin, has arbitrarily suspended the grant. The group argues that this violates the Administrative Procedure Act and the Fifth Amendment’s due process clause.
Political Battle Over Climate Funding
The lawsuit marks the latest confrontation over Trump’s efforts to roll back Biden-era climate initiatives. Trump and Zeldin have publicly criticized the fund as a “green slush fund”, with Trump calling it an example of “appalling waste” in his address to Congress.
Despite these claims, the lawsuit states that the EPA has not provided any evidence of fraud or misuse of funds and has not issued a formal decision explaining the freeze.
Citibank’s Role and Legal Ramifications
Citibank, which was tasked with administering $20 billion in total climate grants, is also being sued for breach of contract. Climate United says Citibank ignored multiple requests to access funds, failing to provide any legal or factual basis for denying them.
In response, Citibank spokesperson Mark Costiglio said the bank is reviewing the lawsuit and emphasized that it is following federal government directives:
“Our role as financial agent does not involve any discretion over which organizations receive grant funds. Citi will of course comply with any judicial decision.”
Impact on Climate Projects
The $7 billion grant was allocated to fund:
✅ Electric vehicle (EV) charging infrastructure
✅ Energy-efficient home construction
✅ Renewable energy projects
With the funds frozen, Climate United says it has no alternative funding sources and is facing financial distress, including:
🔸 Deferred employee compensation
🔸 Potential furloughs and reduced hours
🔸 Halted or delayed projects in disadvantaged communities
The lawsuit seeks an injunction forcing Citibank to release the funds and preventing the EPA from further interference.
Justice Department Investigation Adds Tension
Meanwhile, the Justice Department is investigating the climate grants, with recipients ordered to testify in federal court. The probe has sparked controversy, as a senior federal prosecutor resigned last month, alleging that she was pressured to launch a criminal investigation without sufficient evidence.
What’s Next?
If the court rules in Climate United’s favor, it could force the Trump administration to release the funds—setting a precedent for other blocked grants. A ruling against the coalition could embolden further rollbacks of Biden’s climate policies.
As the legal battle unfolds, the outcome will shape the future of federal climate funding and green infrastructure investment in the U.S.
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