Court Puts Kibosh On EPA Plan To Shout GOLD BARS And Steal $20B Climate Fund

Turns out internet memes do not override written contracts.

Pour one out for Lee Zeldin. The EPA administrator had such high hopes! All he had to do was shout “FRAUD! GOLD BARS! STACEY ABRAMS!” and he could steal $20 billion from climate activists and collect attaboys from Elon Musk and President Trump.

And he would have gotten away with it, too, if it weren’t for those meddlesome federal judges!

Zeldin had set his sights on $20 billion allocated by Congress in the 2022 Inflation Reduction Act. As part of the Greenhouse Gas Reduction Fund, the EPA made what were essentially block grants to umbrella groups to lend and grant out cash for environmental projects, particularly in economically disadvantaged areas. But then a former EPA staffer had the bad luck to get secretly recorded by Project Veritas talking about the effort to disburse those funds before the Trump administration came in out of fear that the new president’s goons would simply refuse to spend congressionally allocated funds. Which they did!

Zeldin has been trying to make this dumbass video a thing since he was confirmed to head the EPA. And so has the Justice Department.

The Washington Post reports that prosecutor Denise Cheung, a 24-year veteran of the DOJ, quit her job rather than write a letter to Citibank saying there was probable cause to freeze the cash. Despite that, Deputy Attorney General Emil Bove and acting US Attorney for DC Ed Martin kept trying to make the program into a crime.

On February 17, the FBI sent a “recommendation to place an administrative freeze” to Citibank, which is holding the funds for the subgrantees, “following credible information received by the Federal Bureau of Investigation that the above account(s) has been involved in possible criminal violations, including 18 § U.S.C. 371 (Conspiracy to defraud the United States) and 18 § U.S.C. 1343 (Wire fraud).”

A “recommendation” isn’t binding, but Citibank seems to have decided that pissing off the Trump administration wasn’t worth the smoke, so they obediently froze the funds.

On March 8, Climate United Fund (CUF), the largest grantee with a $6.97 billion award, sued Citibank, the EPA, Zeldin, Martin, and Attorney General Pam Bondi in federal court in DC. They lodged contract and tort claims against Citi, and accused the government defendants of violating due process and the Administrative Procedures Act. Two days later, the plaintiffs moved for a temporary restraining order (TRO) “enjoining EPA and EPA Administrator Zeldin from unlawfully suspending or terminating Climate United’s grant award, except as is permitted in accordance with the Account Control Agreement, the grant award, and applicable law.”

In an extremely squirrelly maneuver — which did not go unnoticed by the court! — the EPA asked for and got a 24-hour delay of the hearing, which was originally scheduled for March 11. During that delay, the EPA sent the plaintiffs a letter purporting to terminate the grants.

If that was an attempt to moot the TRO application, or at least make it harder for the plaintiffs to prove that the funds were being withheld arbitrarily, it failed utterly. Yesterday, Judge Tanya Chutkan granted a TRO barring the EPA from “taking action to implement the termination of Plaintiffs’ grants” and ordering Citibank to leave the disputed funds where they are.

This is a better result than most of the challenges to the Trump administration’s slash-and-burn cancellation of congressionally allocated disbursements. And the explanation for that lies in a declaration filed by EPA Chief of Staff Eric Amidon.

Amidon describes the statute and the grant process, implicitly acknowledging that what conservatives are calling a “slush fund” was set up by Congress to work in exactly this way. Then he notes that, in December of 2024, the EPA “issued an amended Grant Agreement to CUF that revised the compliance and termination provisions” making it harder for the government to arbitrarily cancel the contract, and adding “several critical oversight provisions to the list of conditions for which CUF would receive notice and opportunity to cure before EPA could assert contractual authority to find noncompliance.”

The amended contract made it impossible for the government to unilaterally cancel the agreement absent “‘credible evidence’ that CUF committed one or more serious federal crimes or actionable civil violations under the False Claims Act.” And on January 13, the agreement with Citibank was changed to make it harder for the EPA to unilaterally sweep in and steal the funds.

In short, the Biden administration tried to Trump-proof this grant on the way out the door.

To be clear, Amidon claims that the amendment only “purported” to amend the grant conditions. He hints darkly about Biden losing the election and points to the EPA’s “General Terms and Conditions for grant agreements” which allow for termination if “EPA determines that the objectives of the award are no longer consistent with funding priorities for achieving program goals.” The rest of the declaration is just whining about the structure of the grant, which he says doesn’t provide the EPA with sufficient opportunity to conduct oversight.

“The prior administration’s unprecedented choice to use a financial agent for EPA grants deprives the Government of immediate control over money held in CUF accounts at Citibank,” Amidon grouses, adding that “EPA lacks sufficient oversight and transparency into the use of grant funding because CUF acts as a pass-through for subrecipients, many of which are themselves pass-throughs, and EPA is not a party to agreements between CUF and the subrecipients.”

But that’s a criticism of the law itself, not evidence of wrongdoing, much less crime, by CUF. And none of it helps make the case that the EPA was entitled to grab the cash.

As Judge Chutkan notes, the statute lays out a multi-step process for terminating a grant. It involves a specific finding that the grant terms have been violated, and an opportunity for the grantee to come into compliance. It does not involve secret holds after the EPA administrator goes on TV and says without evidence that a congressional act amounts to a criminal scheme:

In the termination letters, EPA Defendants vaguely reference “multiple ongoing investigations” into “programmatic waste, fraud, and abuse and conflicts of interest” but offer no specific information about such investigations, factual support for the decision, or an individualized explanation for each Plaintiff. This is insufficient. EPA may terminate the agreements for “waste, fraud, or abuse,” but this requires “credible evidence of the commission of a violation of Federal criminal law involving fraud, conflict of interest, bribery, or gratuity violations found in Title 18 of the United States Code or a violation of the civil False Claims Act (31 U.S.C. §§ 3729-3733).” At this stage, EPA Defendants have not provided the “credible evidence” required.

In contrast, the plaintiffs have proven that they will be irreparably harmed if the EPA is allowed to steal the money out of the Citibank account. Most obviously, CUF will be forced to lay off staff and will be unable to pay its subgrantees. But also, if the EPA is allowed to un-grant the funds and allocate them somewhere else, they’re likely gone for good. Under binding DC Circuit precedent, “once the relevant funds have been obligated, a court cannot reach them in order to award relief.”

Holding that the EPA’s “vague and unsubstantiated assertions of fraud are insufficient,” Judge Chutkan ordered Zeldin to keep his filthy paws off the climate cash, at least for a few more weeks.

She also had time to poke a little fun at the Justice Department’s embarrassing lawyering in this case:

At the March 12 hearing, when asked why the grant was terminated, EPA Defendants stated that “the termination is based on the information contained in the termination letter.” When pressed to, at a minimum, even proffer such evidence, counsel for EPA Defendants was unable to, stating that he was only aware of media reports discussing the termination. This circular argument and unhelpful response was of no assistance to the court in discerning whether EPA Defendants followed the necessary steps to terminate the grant, or whether EPA Defendants had offered a reasoned explanation for the termination.

Impressive! Perhaps the EPA’s counsel will redeem himself on April 2 at the hearing on the motion for a preliminary injunction, along with CUF’s motion to unfreeze its money. Or maybe this case is crap, and Zeldin’s government-by-meme approach is destined to go down in flames in court.