"Vindictive" EPA accused of faking criminal investigation to claw back climate funds EPA faces a lawsuit seeking to unfreeze funds supporting low-income Americans. Ashley Belanger Mar 12, 2025 5:21 pm | 8 Credit: pijama61 | DigitalVision Vectors Credit: pijama61 | DigitalVision Vectors Story textSizeSmallStandardLargeWidth *StandardWideLinksStandardOrange* Subscribers only Learn moreOn Wednesday, a ranking member of the Senate Environment and Public Works Committee accused the Environmental Protection Agency (EPA) of "misusing law enforcement" to claw back climate funds and "humor" Donald Trumps "vindictive political whims."In a letter to Attorney General Pam Bondi and FBI Director Kash Patel, Senator Sheldon Whitehouse (D-R.I.) requested information about a supposed criminal investigation into the EPA's $27 billion Greenhouse Gas Reduction Fund (GGRF).Whitehouse alleged that there was no basis to freeze the funding. He claimed that Bondi and Patel "reverted to a pretextual criminal investigation to provide an alternative excuse to interfere" after "EPA Administrator Lee Zeldin announced via social media that he had 'found' $20 billion in EPA funds at Citibank and falsely suggested that the use of a financial agent agreementa commonly used financial tool that presidential administrations have used for centurieswas improper.""If DOJ and the FBI are aiding and abetting this unlawful plot, it crosses very significant redlines for the agency and its personnel," Whitehouse wrote.Far from a deal struck in the dark as Zeldin alleged, the terms of the agreement were announced publicly in April 2024, Whitehouse said. He also suggested the Trump administration was overstepping by "pursuing false allegations of criminal conduct, with the improper purpose to wrongfully freeze assets appropriated by Congress."Whitehouse requested responses from Bondi and Kash to his biggest questions by March 25. Critically, he's demanded "all evidence predicating a criminal investigation of the administration of and distribution of funds from the Greenhouse Gas Reduction Fund, including any seizure warrant applications and accompanying affidavits and exhibits."The senator is also hoping to better understand the timelineincluding asking officials to confirm if their investigation began before the Treasury terminated its agreement with Citibank or after. And he wants to know if Elon Musk's Department of Government Efficiency played any role in the efforts to freeze funding.Citibank revealed details of funding freezeBecause Citibank "holds accounts for grant recipients who receive funds from two GGRF programs, the National Clean Investment Fund (NCIF) and the Clean Communities Investment Accelerator," Whitehouse also sent a letter to Citibank about the supposedly "sham investigations."Citibank has until March 15 to provide more information on orders to freeze funding. More details on that front were shared today, however, in a court filing in a lawsuit raised by Climate Unitedone of eight NCIF awardees whose funding was suddenly frozen.In a motion opposing a request for a temporary restraining order forcing Citibank to unfreeze the funds, Citibank argued that it plays only an administrative role in managing accounts.According to Citibank, it cannot be liable for freezing the funds because it's legally required to follow instructions from the EPA and the Department of Treasury, and those agencies ordered Citibank "to pause all further disbursements from GGRF accounts, including those held by Climate United, until further notice."Citibank told the US district court that orders came to freeze the funding after "the government informed Citibank that the GGRF program was subject to an ongoing criminal investigation."Supposedly, the FBI received "credible information" that Climate United's Citibank account was "involved in possible criminal violations," allegedly including conspiracy to defraud the United States and wire fraud, Citibank's filing said. In a footnote, Citibank said that it also "learned" that the EPA was "deeply" concerned about "matters of financial mismanagement, conflicts of interest, and oversight failures."So, freezing the funds was viewed as necessary, the filing alleged, to prevent "misuse of funds." And Citibank claimed it had no authority to dispute "lawful" orders."Citibank is not vested with discretion to second-guess the governments concerns regarding the 'misconduct, waste, conflicts of interest, and potential fraud' that the government has stated is occurring," Citibank's filing said.Climate United, which describes itself as "a public-private investment fund that removes financial barriers to clean technologies," said in a press release that freezing the funds had already harmed "hard-working Americans who are struggling to pay for groceries and keep the lights on.""Small businesses and developers are unable to draw committed funds for project expenses, critical programs are delayed or paused, and Climate Uniteds reputation as a lender is impacted," Climate United said, rounding up stories from stakeholders already struggling through the freeze and urging, "this isnt about politics; its about economics."Apparently, Climate United felt deceived when the EPA asked for a 24-hour extension in the litigation that delayed Climate United's timeline for its request for a temporary restraining order. Seemingly the EPA took that time to allegedly illegally terminate Climate United's grant agreement, another Climate United court filing responding to the grant termination said. Had Climate United not granted the extension, the group suggested, an order may have blocked the termination.Regardless, Climate United told the court, the grant termination should have "no effect" on the court's ruling on a temporary restraining order."Such an order would be appropriate because the purported 'Notice of Grant Termination' is unlawful," Climate United's filing said."This is the EPAs latest attempt to unlawfully dismantle the congressionally appropriated National Clean Investment Fund," a Climate United spokesperson told Ars. "We remain focused on investing in projects that save Americans money, create jobs, and strengthen local communities. Our legally binding contract with the EPA cannot be lawfully terminated based on unsupported claims and misinformation, and we will continue to pursue legal action to protect the communities we serve."Citibank has suggested that "Climate United is unlikely to succeed on the merits of its claim against Citibank" and should be denied an emergency restraining order.But Climate United, like Whitehouse, wants to see evidence of alleged "waste, fraud, or abuse" that could possibly be grounds to terminate their grant. All parties met at a hearing Wednesday afternoon that could finally reveal what specific alleged misconduct led to the EPA's termination of Climate United's grant.Climate United insists that so far, the EPA has provided no evidence that Climate United violated any terms of the grant or even alleged that Climate United failed to comply with any terms or committed any misconduct otherwise."Waste, Fraud, and Abuse is a defined term," Climate United said. "It means 'credible evidence of the commission of a violation of federal criminal law involving fraud, conflict of interest, bribery, or gratuity violations.'" Rather than provide such evidence, the EPA's notice "contains no reference to Climate United at all," the group said.Ashley BelangerSenior Policy ReporterAshley BelangerSenior Policy Reporter Ashley is a senior policy reporter for Ars Technica, dedicated to tracking social impacts of emerging policies and new technologies. She is a Chicago-based journalist with 20 years of experience. 8 Comments