The Trump administration has frozen a $20 billion climate fund established during the Biden era as the FBI investigates alleged criminal misconduct connected to the program, leaving environmental organizations in limbo and sparking a political firestorm.
Key Insights
- President Trump’s EPA and Treasury Department ordered Citibank to halt all transactions from the $20 billion Greenhouse Gas Reduction Fund amid an FBI investigation.
- EPA Administrator Lee Zeldin has pushed to reclaim the funds, which were established during the final week of President Biden’s term through the Inflation Reduction Act.
- Democratic Senator Sheldon Whitehouse has accused the administration of fabricating the investigation as a pretext to dismantle Biden-era climate initiatives.
- Several climate organizations that were promised funding have filed lawsuits against Citibank for breach of contract over the withheld disbursements.
FBI Investigation Halts Multi-Billion Dollar Climate Program
The Environmental Protection Agency under President Trump has directed Citibank to freeze a massive $20 billion climate fund originally established by the Biden administration. This action follows instructions from both the EPA and Department of Treasury to “pause all further disbursements” from the Greenhouse Gas Reduction Fund, which was created during President Biden’s final week in office. The fund, part of Biden’s signature Inflation Reduction Act, had allocated $27 billion for clean energy investments but has remained largely inactive since President Trump took office.
According to court documents, federal authorities cited an ongoing criminal investigation as justification for the freeze. Citibank’s counsel, K. Winn Allen, confirmed the fund is “subject to an ongoing criminal investigation” with the FBI requesting a minimum 30-day pause on all transactions. The financial institution has maintained it is simply following government directives while fulfilling its legal obligations to federal authorities who oversee the program.
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 Battle Erupts Over Fund’s Future
EPA Administrator Lee Zeldin has been vocal about reclaiming the climate funds, describing the situation as a landmark moment for deregulation. The Trump administration has expressed concerns about how the money was being distributed, noting that several beneficiary organizations appear to be politically connected non-governmental organizations with questionable qualifications. Some of these groups were newly established specifically to receive climate funding, raising red flags about potential misuse of taxpayer dollars.
“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,” Citibank counsel K. Winn Allen wrote.
The situation has drawn sharp criticism from Democratic lawmakers, particularly Senator Sheldon Whitehouse, who has accused the administration of “misusing law enforcement” to advance political objectives. In a strongly worded letter to Attorney General Pam Bondi and FBI Director Kash Patel, Whitehouse alleged the investigation is merely a pretext designed to dismantle Biden’s climate legacy rather than address actual financial impropriety. His letter requested detailed information about the nature and scope of the purported investigation.
Legal Challenges Mount as Funds Remain Frozen
Several organizations promised funding through the Greenhouse Gas Reduction Fund have now taken legal action against Citibank. Power Forward Communities and Climate United have filed breach of contract lawsuits, claiming the fund freeze is causing significant harm to Americans by delaying critical climate programs. Climate United specifically accused the EPA of unlawfully terminating their grant agreement without proper cause or procedure. A recent court hearing sought to uncover the specific misconduct allegations against Climate United.
An attorney for Citibank has revealed that the financial institution had “been instructed by EPA and the Department of Treasury to pause all further disbursements”
Before the freeze, some disbursements had already been made to organizations including the Climate United Fund and the Coalition for Green Capital. The status of these already-distributed funds remains unclear as the investigation continues. Citibank maintains it is caught in the middle of a government dispute, emphasizing its obligation to follow federal directives while simultaneously facing legal challenges from organizations expecting promised funding. The bank has indicated it will continue complying with any court rulings that emerge from the ongoing litigation.
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
