Sneak Preview: Court in Greenhouse Gas Fund Case Sides with EPA
(The following was excerpted from a recent Thompson Grants Compliance Expert article.) The U.S. Court of Appeals for the District of Columbia recently sided with the Environmental Protection Agency’s (EPA) efforts to claw back some $16 billion awarded under two grant programs of the Greenhouse Gas Reduction Fund (GGRF) program, overturning a lower court’s ruling earlier this year.
The 2-1 decision, supported by President Trump appointees Neomi Rao and Gregory Katsas, vacated a U.S. District Court’s April preliminary injunction that temporarily prevented EPA from recouping the funds, which were awarded via appropriations under the Inflation Reduction Act (IRA) (Pub. L. 117-169).
EPA awarded $20 billion in August 2024 to eight nonprofits pursuant to two of the IRA subprograms under the GGRF: the National Clean Investment Fund and the Clean Communities Investment Accelerator. Five of these grantees were plaintiffs in the case — Climate United Fund ($6.97 billion), Coalition for Green Capital ($5 billion), Power Forward Communities Inc. ($2 billion), Inclusiv Inc. ($1.87 billion) and Justice Climate Fund Inc. ($940 million).
Typically, grant funds are held by the Department of the Treasury and disbursed incrementally as grantees use the funds for program purposes. However, these grants were structured differently, using a “middleman” (i.e., Citibank) that would hold the funds as a “financial agent” of the U.S. The funds were to be transferred from Treasury to Citibank in a two-step transaction involving a drawdown by the grantee and a subsequent disbursement to the appropriate Citibank account.
When President Trump took office, EPA reviewed the grants and raised concerns about conflicts of interest during the award process, the political connections of the chosen grantees and lack of government oversight and control over tens of billions of dollars. In February, the Federal Bureau of Investigations recommended to Citibank that it place an administrative freeze on the account(s) associated with these grantees, and EPA in March terminated the grants.
(The full version of this story has now been made available to all for a limited time here.)
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