Fallout continues from US EPA effort to claw back $20 bil in climate funds

Projects are in limbo and US senators are asking for an investigation more than a week after the US Environmental Protection Agency administrator demanded $20 billion in climate finance funds under the 2022 Inflation Reduction Act be returned to the US Treasury.

One $7 billion program, Solar for All, was back in business as of late Feb. 20. Maryland's Solar for All recipients were among those able to access their payment portals again, Katherine Magruder with the Maryland Clean Energy Center confirmed in an email.

Other contracted recipients of IRA funding from two Greenhouse Gas Reduction Fund programs remain unable to access their accounts, according to at least one group tasked with channeling such investments. Citing legal concerns, the group asked not to be identified.

EPA Administrator Lee Zeldin caused upheaval in the US Attorney's Office in Washington, DC, with allegations that tax dollars were deliberately wasted on the Greenhouse Gas Reduction Fund. Zeldin said in a Feb. 12 video announcement that he would ask the US Department of Justice to investigate the EPA's decision under former President Joe Biden to set up an agreement allowing Citibank to process the $20 billion in payments.

Fund freeze refused

Denise Cheung, head of the criminal division at the US Attorney's Office, had been asked to investigate the Biden-era contract with the bank. She was asked to resign Feb. 18 after refusing to tell Citigroup to freeze the money.

The fallout continued the following day when four senators asked the DOJ's independent inspector general to investigate media reports that Cheung had been pressured to probe a crime without evidence of wrongdoing.

"The Justice Department's authority to freeze assets is a serious power that it should exercise only when supported by evidence that the assets can be traced to a crime," senators Ed Markey of Massachusetts, Sheldon Whitehouse of Rhode Island, Chris Van Hollen of Maryland and Bernie Sanders of Vermont wrote in their letter to Inspector General Michael Horowitz.

"The reports that Ms. Cheung was pressured to circumvent this standard suggest a deliberate attempt to weaponize the Justice Department for political purposes," the senators added.

Citibank declined to comment when contacted by email.

Arrangement not unusual

The two funds in question are the National Clean Investment Fund and the Clean Communities Investment Accelerator. The funding, among other things, set up a first-of-a-kind nationwide network of green banks to jump-start clean energy projects and help mobilize private capital.

The US Department of the Treasury's agreement with the bank was a first for the EPA but an arrangement the federal government has used since the 1860s, according to Zealan Hoover, a former EPA official under Biden who worked on the implementation of IRA funding.

The awards to fund the network of nonprofit green banks were made in August 2024, Hoover said in a recent interview.

Republicans in Congress have raised issues over the EPA funding in the past. In a May 2024 letter to then-EPA Administrator Michael Regan, several lawmakers wrote that the agency had funneled money to political allies with ties to previous presidents or the Democratic Party.