Trump Admin Freezes Biden-Era Climate Fund Amid Criminal Investigation

Person in FBI jacket using laptop at desk

The Trump administration has frozen a $20 billion climate fund established during Biden’s final days in office, as FBI investigators uncover potential criminal violations by recipient organizations.

Key Takeaways

  • President Trump’s EPA has ordered Citibank to freeze disbursements from the $20 billion Greenhouse Gas Reduction Fund established under the Biden administration.
  • The freeze follows a criminal investigation by the FBI that revealed possible illegal activities associated with the fund’s recipient organizations.
  • EPA Administrator Lee Zeldin has called for the funds to be reclaimed, describing the action as a “consequential day of deregulation in U.S. history.”
  • Several environmental organizations have sued Citibank for breach of contract over the withheld payments.
  • Senator Sheldon Whitehouse has accused the EPA of using the investigation as a pretext to dismantle Biden-era climate initiatives.

Criminal Investigation Halts Billion-Dollar Fund

Citibank has suspended payments from the $20 billion Greenhouse Gas Reduction Fund (GGRF) following direct orders from the Environmental Protection Agency and Treasury Department. The fund, established during former President Biden’s final week in office, was intended to support clean energy investments through eight non-governmental organizations. The freeze comes after FBI officials gathered evidence suggesting possible criminal violations by fund recipients, prompting a request to halt disbursements for at least 30 days while the investigation proceeds.

Citibank has “been instructed by EPA and the Department of Treasury to pause all further disbursements,” stated a Citibank attorney, confirming the bank’s compliance with federal authorities. The fund had remained largely inactive since President Trump took office in January, though some payments had already been distributed to organizations including the Climate United Fund and the Coalition for Green Capital.

Fund Recipients Fight Back Against Freeze

The suspension of funds has triggered legal challenges from several environmental organizations that were slated to receive grants from the GGRF. Power Forward Communities and other recipients have filed lawsuits against Citibank, claiming breach of contract over the withheld payments. Climate United, one of the principal recipients under investigation, has accused the EPA of unlawfully terminating their grant agreement and argued that the fund freeze harms Americans by delaying critical environmental programs.

“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,” explained Citibank counsel K. Winn Allen in response to the legal challenges.

Political Controversy Surrounds Investigation

The fund freeze has become a flashpoint in Washington, with Democratic Senator Sheldon Whitehouse accusing the Trump administration of manufacturing the investigation to dismantle Biden-era climate policies. Whitehouse has sent formal inquiries to Attorney General Pam Bondi and FBI Director Kash Patel seeking information about the legitimacy of the criminal investigation. In his correspondence, Whitehouse characterized the investigation as potentially serving President Trump’s “vindictive political whims.”

Meanwhile, EPA Administrator Lee Zeldin has defended the action, highlighting concerns about the qualifications of some recipient organizations. The Inspector General of the EPA is conducting a parallel investigation into the fund’s administration. The court recently held a hearing that may reveal the specific misconduct allegations against Climate United and other recipients, adding another chapter to this developing controversy.

Origins and Scale of the Contested Fund

The Greenhouse Gas Reduction Fund originated as part of Biden’s signature Inflation Reduction Act, which allocated $27 billion for clean energy investments. Critics have questioned the timing of the fund’s establishment in the final days of the Biden administration and raised concerns about the selection process for recipient organizations. The administration had designated eight politically connected NGOs to distribute the funds, some of which are relatively new entities with limited track records in environmental grant management.

With $20 billion currently frozen and under investigation, the outcome of this case will significantly impact the future of U.S. environmental policy and set precedents for how transitioning administrations handle financial commitments made by their predecessors. The status of already disbursed funds remains unclear as the investigation unfolds.

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Sources:

  1. EPA accused of faking criminal investigation to claw back climate funds – Ars Technica
  2. Trump administration demands Citibank freeze Biden’s $20B climate slush fund due to criminal probe

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