EPA Claims New Tax Bill Supports Legal Battle to Reclaim Green Bank Funds

The Environmental Protection Agency (EPA) asserts that the recent tax and policy bill passed by Congress should aid in its legal battle to reclaim billions in funds from a green bank initiative. The bill repeals the multibillion-dollar green bank, which was established to finance climate-friendly projects. Federal officials argue in a court filing that the Trump administration should be permitted to freeze the funding and cancel related contracts with nonprofits.

Climate United Fund and other nonprofits sued the EPA, its administrator Lee Zeldin, and Citibank in March, claiming illegal denial of access to billions awarded through the Greenhouse Gas Reduction Fund, commonly known as a “green bank.” This program was created by the 2022 Inflation Reduction Act. However, the new bill repeals the part of the 2022 law that established the green bank and rescinds money that hadn’t already been obligated to its recipients.

The EPA believes the bill should secure a victory in their ongoing court fight, currently being heard by a federal appeals court in Washington. With Congress having rescinded funding, the agency argues that an earlier federal judge’s decision forcing the EPA to release money to the groups should be reversed.

Climate United Fund disagrees, stating that most of the money had already been disbursed and is unaffected by the bill. CEO Beth Bafford claims any effort to reclaim the funds is an attempt to justify illegal actions. The Congressional Budget Office estimated that repealing the program would save only $19 million, aligning with its administrative expenses, indicating the bill doesn’t impact the multibillion-dollar grant awards.

According to the EPA, when the agency terminated the grants, the funds “became unobligated.” EPA spokesperson Brigit Hirsch stated that Congress’s intent in passing the bill was clear in repealing the program entirely and returning those billions in unobligated funds to the U.S. Treasury.

The green bank’s goals conflict with the Trump administration’s opposition to climate change policies and support for fossil fuels. Zeldin characterized the $20 billion in grants as a scheme marred by conflicts of interest and potential fraud, terminating the grants in March.

U.S. District Judge Tanya Chutkan previously ruled that the federal government failed to provide evidence of fraud when asked, deciding that the government couldn’t terminate the contracts and that the groups should have access to some of their frozen money. This order was put on hold during the EPA’s appeal.

The EPA argues that the nonprofits’ constitutional and statutory arguments don’t apply in what it sees as a simple contract fight. If the government successfully argues the case is a contract dispute, the EPA says it should be heard by a different court that can only award a lump sum, not force the government to keep the grants in place.

In its court filing, the EPA cited comments by Republican Sen. Shelley Moore Capito of West Virginia, chair of the Senate Committee on Environment and Public Works, as supportive of the agency’s position. Capito stated that the bill intended to rescind billions in funding that had been frozen, reflecting Congress’s concern with reducing the deficit and the EPA’s administration of the green bank under the Biden administration.

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