The Trump administration halts distribution of a $20 billion climate fund amid FBI criminal investigation, sparking legal battles and accusations of politically motivated actions.
Quick Takes
- The EPA and Department of Treasury have ordered Citibank to freeze disbursements from a $20 billion climate fund established during the final days of the Biden administration.
- An ongoing FBI criminal investigation has uncovered potential illegal conduct related to the fund’s operations, prompting the 30-day freeze.
- EPA Administrator Lee Zeldin has called for reclaiming the funds, which were designated for eight NGOs under the Greenhouse Gas Reduction Fund.
- Senator Sheldon Whitehouse has accused the administration of fabricating the investigation to serve political interests.
- Several recipient organizations have filed lawsuits against Citibank for breach of contract over the withheld funds.
Criminal Investigation Prompts Fund Freeze
The Trump administration has directed Citibank to freeze a $20 billion climate fund originally established by President Biden’s Environmental Protection Agency. The fund, part of the $27 billion Greenhouse Gas Reduction Fund created under the Inflation Reduction Act, has been inactive since President Trump took office. The freeze comes after instructions from both the EPA and the Department of Treasury, with officials citing an ongoing criminal investigation as the primary reason for halting all further disbursements from the fund for at least 30 days.
According to Citibank counsel K. Winn Allen, the financial institution is acting in accordance with government directives regarding the fund which is “subject to an ongoing criminal investigation.” Citibank has maintained that it is contractually obligated to follow federal government instructions and has emphasized its commitment to complying with all legal requirements while the investigation proceeds. The FBI’s involvement suggests serious concerns about how the climate funds were being managed or distributed.
Trump administration tells Citibank to freeze $20B for Biden-era climate ‘slush fund’ due to criminal probe
The Trump administration ordered Citibank to freeze a $20 billion slush fund for pop-up climate groups provided by then-lame-duck Joe Biden’s Environmental Protection…
— News News News (@NewsNew97351204) March 12, 2025
Political Controversy Surrounds Fund Allocation
EPA Administrator Lee Zeldin has been vocal about reclaiming the funds, describing recent actions as a significant achievement for deregulation. Critics of the original fund point out that the money was set to be distributed through eight politically connected non-governmental organizations, some of which were newly established entities with questionable qualifications. The Biden administration had structured the fund distribution during its final week in office, raising concerns about the timing and selection process for recipients.
“Citibank has … only done its best to serve its customers while following instructions from the government of the United States, to whom Citibank owes a duty of loyalty and at whose direction Citibank is contractually obligated to act,” wrote Citibank counsel K. Winn Allen.
The controversy has intensified as some payments had already been distributed before the freeze was implemented. Recipients included the Climate United Fund and the Coalition for Green Capital, organizations tasked with implementing climate initiatives. The EPA’s inspector general has launched an investigation into the fund’s management, further complicating the situation for those organizations expecting to receive financial support for ongoing environmental projects.
Legal Challenges Mount From Multiple Sides
The fund freeze has triggered a flurry of legal activity. Several recipient organizations, including Power Forward Communities, have filed lawsuits against Citibank for breach of contract over the withheld funds. Climate United has publicly stated that the fund freeze is harming Americans and causing delays to critical programs. The organization has accused the EPA of unlawfully terminating their grant agreement, further escalating tensions between environmental groups and the administration.
On the political front, Senator Sheldon Whitehouse has entered the fray, accusing the EPA of fabricating the criminal investigation as a pretext to interfere with the fund and serve President Trump’s interests. Whitehouse has formally requested information from Attorney General Pam Bondi and FBI Director Kash Patel regarding the investigation’s legitimacy. A court hearing has been scheduled to potentially reveal the specific misconduct allegations against Climate United, which could bring clarity to the situation that has left billions in environmental funding in limbo.
Sources:
- EPA accused of faking criminal investigation to claw back climate funds – Ars Technica
- Trump administration demands Citibank freeze Biden’s $20B climate slush fund due to criminal probe
