The fate of $20-billion in Biden-era U.S. Environmental Protection Agency green infrastructure grant funds held by Citibank is now being decided in two courts. 

Following EPA’s April 15 appeal of a federal judge’s order to release available funds to grant recipients, the Washington, D.C. appeals court on April 16 granted the agency a preliminary injunction that continues to block grantees from accessing funding. The funds have been frozen since mid-February after federal agencies told Citibank to cut off access

“Overnight, billions of dollars appropriated by Congress were frozen,” D.C. District Court Judge Tanya S. Chutkan wrote in her opinion memo. “Nationwide projects were halted, workplans were disrupted, and millions of dollars in approved transactions with committed partners could not be disbursed.” She ordered Citibank to disburse funds, writing that grant recipients are “likely to succeed on the merits,” and “face immediate, irreparable harm” from being unable to access the money

The order lasted less than a day. The D.C. appellate court has given EPA until April 19 to file an amended stay-motion relating to the order and opinion. 

The funds were appropriated by Congress under the Inflation Reduction Act’s Greenhouse Gas Reduction Fund. Split between the $14-billion National Clean Investment Fund and the $6-billion Clean Communities Investment Accelerator, the funds are set up to work similarly to a green bank, with grant recipients using the money to finance green infrastructure and renewable energy projects. 

Committed investments to date by the three nonprofit groups comprising the National Clean Investment Fund and who are among the plaintiffs in the suit—Coalition for Green Capital, Climate United Fund and Power Forward Communities—total more than $1 billion. They include pre-construction financing for utility-scale solar projects for Tribes and rural communities in Oregon and Idaho; adaptive reuse projects in Texas and Iowa to create energy efficient affordable housing; and a resilience and energy efficiency retrofit of a senior apartment building in Vancouver, Wash, among other projects.

EPA initially paused the funding over what it said were oversight concerns in a letter sent to the groups weeks after the funds were frozen, asking them for more information as the qgency implemented more controls. After he groups sued it and Citibank, EPA informed them it had terminated their grants entirely one day before a March 11 scheduled hearing in district court, seeking to reclaim the funds. 

“Given the severity of the alleged misconduct, waste, conflicts of interest, and potential fraud within the .program, the Administrator is conducting a comprehensive review. Concurrent investigations by the Department of Justice and Federal Bureau of Investigation are underway,” wrote EPA Acting Deputy Administrator W.C. Mclntosh in a March 2 letter to the Office of the Inspector General. 

In her order, Chutkan wrote that EPA was unable to offer evidence of “waste, fraud and abuse” claims it had previously made. The investigations did not turn up any evidence, she said. “EPA provided no individualized reasoning as to anything Plaintiffs themselves did—instead referencing generalized and unsubstantiated reasons for termination.”

A temporary restraining order issued by Chutkan in March blocks cancellation of the grants and prevents Citibank from returning funds to EPA. The appellate court has kept that in place. 

“Despite a robust and clear decision, the appeal is no surprise. We remain firm on the merits of our case and will keep working to deliver on our promises to communities across America,” wrote Climate United in a LinkedIn post.