WASHINGTON – The multi-billion dollar Environmental Protection Agency program, designed to drive investments in improving energy efficiency across the country, is tied to a legal battle that threatens to promote planned projects across the US, focusing on affordable housing, adoption of electric vehicles, and more.

The EPA said last month it has ended grants related to the $27 billion Greenhouse Gas Reduction Fund, a program created by Congress as part of the Inflation Reduction Act 2022“…based on substantial concerns about program integrity, award process, program fraud, waste, abuse, and inconsistent with agency priorities,” President Joe Biden signed the law.

The funds were already spread across Citibank awardee bank accounts as part of the program.

However, documents related to the lawsuit say the Trump administration has directed City to freeze activities on those accounts. As a result, organizations across the country have already awarded money or are under high consultation to obtain funds, and have no access to capital for planned projects.

The project aims to add solar panels to schools, from installing energy-efficient technology in affordable housing units to the schools, with the aim of adding resident utility bills.

“We’re a state organization that funds clean energy projects,” said Cariglos Swan, executive director of the Minnesota Department of Climate Innovation and Finance.

Gross-Swan’s organization was awarded $25 million by the Green Capital Union, one of the groups that allocated funds from the Greenhouse Gas Reduction Fund.

Seed Energy Efficiency Project

The fund’s goal is to reduce greenhouse gases by promoting investment in energy-efficient technologies and other initiatives.

“We’ll lend it out, we’ll get it back and do it again,” Gross Swann said. “It works like a revolving loan fund.”

The Minnesota Climate Innovation Finance Authority is one of many people betting on fundraising from the Greenhouse Gas Reduction Fund to help bring these projects off the ground. Organizations rely on this money to further fill a much larger funding pool, including capital from outside investors.

In Minnesota, for example, the $25 million Minnesota Department of Climate Innovation Finance has been awarded by the federal program, with about a fifth of Capital Gross Swan planning to go to many projects.

According to Gross Swann, it includes creating an older school that has become more energy efficient and transformed into employee development sites with solar and storage technology to maintain lights during the bad weather.

Her organization is also planning to lend money to the ice hockey arena for a new electric cooling system so that the EPA can stop using toxins it hopes to remove ice rinks.

A lawsuit to remove funds

The Minnesota Department of Climate Innovation Finance is one of several organizations that last month sued both the EPA and Citibank over a freeze on funds from the Greenhouse Gas Reduction Fund.

The fund attracted anger from Republicans long before President Donald Trump returned to the White House. With Democrats who had a majority in Congressional meeting rooms White House 2022, Passed the law Creating a program Without Republicans supporting it.

After Trump took office, his EPA said it had ended $20 billion in grants from the fund, and the recipient sued to maintain the funds.

Last month, a federal judge ruled that Citibank could not move any of the federal funds in question from the account, and said the agency had not provided “reliable evidence” that there was “waste, fraud or abuse” associated with the grant agreement.

When a Justice Department lawyer was asked last month in court whether he could provide evidence that the law was violated through conflicts of interest or fraud, the lawyer said he wasn’t. The attorney listed as representing the EPA did not respond to requests for comment, and an EPA spokesperson said in an email that he had not commented on the pending lawsuit.

On April 2, the court held a hearing over the plaintiff’s request for a temporary injunction, but the judge has not yet ruled.

Citibank said Climate United spokesman Brooke Durham, one of the litigation funders and plaintiffs, said Citibank maintained the money in the awardee’s accounts. But one thing that Durham and others have expressed concern is the uncertainty surrounding the greenhouse gas reduction fund money that will affect other investors in these projects.

“From developers to community lenders to private capital, there are a lot of people who rely on these investments across the field,” Durham said.

Citibank declined to comment.

EPA administrator Lee Zeldin addressed the Greenhouse Reduction Fund the same day the judge issued a temporary restraining order. Posts on social media platform xclaims that the grant is “troubled by self-dealing and wasted spending.”

“I won’t take a break until these hard-earned taxpayer dollars are returned to the US Treasury,” he said in the post.

A letter from the EPA last month to the agency’s inspector raised concerns about the structure of the grant award and bank account agreements, claiming that the grant awarded to former Biden officials’ employers violated profit dispute standards.

I’m looking for an alternative

The temporary restraint order does not stop potential funders from trying to find alternative funding to maintain the project.

Megan Lasch, owner and president of O-SDA Industries, a Texas-based affordable housing organization, said her organization went through a process to get $4 million in funding from one of the groups already funded by the Greenhouse Gas Reduction Fund for a $30 million affordable home renovation in Southwest Fort Worth.

The project focuses on 116 home renovations, most of which are two bedroom units and three bedroom units. Lasch’s Company aims to lower residents’ utility bills by installing energy-efficient lighting fixtures and more efficient heating and air conditioning systems.

“It’s really important dollars that many developers, real estate professionals use it in the capital stack to help create and store affordable homes,” Rush said.

Rush said her company would call another nonprofit organization in favor of “any Mary” and get loans to fill the potential void from the federal money O-SDA relied on, but the plan is to pay the organization back. She said she is not optimistic that other projects could move forward without federal funding.

“I think there are some developments that don’t happen because there’s no other source where we can get some of these deals done right now,” she said.

Increased consumer costs

Like Lasch, as well as Homewise, a New Mexico-based housing-focused developer and financial company, Deputy CEO Johanna Gilligan, he was working to raise funds from various programs under the Greenhouse Gas Reduction Fund, moving on to the due diligence process.

Gilligan said he hopes either the state or the charity can step in to fill the funds void.

Homewise’s plan is to use money in the program to help low-to-medium homeowners in big cities like Albuquerque and Santa Fe to reduce utility costs by taking on energy efficiency upgrades.

As part of that program, HomeWise will send representatives to people’s homes to help them understand how they can lose energy and reduce costs. The person might explain the tax credits and rebates that people can use, Gilligan said. She described the program as a “one-stop shop for improving energy efficiency,” and stated that the organization’s goal is to ensure that these processes are understood by everyday people.

“That’s the real loss here,” she said. “For working class people and those who make a big contribution to the economy, often… this change makes it difficult for them to help them improve their homes and save money on their bills.”

Robert Sheppard, co-founder of Vital Housing, an affordable housing investment company working in the Pacific Northwest, said his company was awarded an interest loan of 3% from one of the organizations funded by the Greenhouse Gas Reduction Fund. The plan is to limit utility costs for residents with $1.5 million in loans to reduce carbon emissions and energy use in an affordable housing project in Portland, Oregon.

“There is no source of information to replace funding at this point,” said Shepherd, who raised a total of $24 million for the project. Without federal funding, residents will see higher energy costs, he said.

“We won’t do the work that is scheduled to be done, which leaves behind carbon exposure and keeps energy costs at a level above some level for residents and buildings,” he said.

Aside from the dollar, some federal money recipients expressed concern that the agency’s attitude towards the program could still be an issue for them, even if the funds could be withdrawn again.

“We can win the fight to get rid of funds, but we need to make sure we have an EPA that understands the value of our mission and the value of our mission,” said Grosswan, Minnesota.

Last updated at 2:19pm, April 4, 2025