Citi must keep climate grants frozen for now: Appeals court

Christopher Dilts/Bloomberg

Citigroup will remain stuck in the middle of a legal battle between climate groups and the Trump administration for at least a few more days.

After a federal judge ordered Citi to disburse previously awarded EPA funds to climate groups, a panel of appeals court judges in the District of Columbia ruled late Wednesday that Citi must hold onto the funds for now.

The three-judge panel also ordered the EPA, which is appealing the district judge's ruling, to file its motion for a stay on the judge's order by Sunday evening.

New York-based Citi, which has been embroiled in the legal back-and-forth since February, said Wednesday in a court filing that it would also be seeking an administrative stay "while taking no position on the motion for stay pending appeal."

Citi added that due to its own disbursement processes, the Good Friday holiday and the appeals court's direction, the earliest that it could begin processing disbursing grant funds would be Monday, April 21.

Citi maintained in the filing that it was following the court's directives, and would comply with the appeals court's decisions. A Citi spokesperson declined to comment on Thursday.

Earlier this week, U.S. District Judge Tanya Chutkan ruled that the megabank could not transfer the more-than $15 billion in question back to the EPA, and must instead pay out hundreds of millions of dollars that were requested before the funds were suspended.

An EPA spokesperson said in an email Thursday that the district court judge doesn't have the jurisdiction for her decision.

"We couldn't be more confident in the merits of our appeal and will take every possible step to protect hard-earned taxpayer dollars," an EPA spokesperson said.

The bank's role in the ordeal has been complicated. Citi serves as the financial agent for the EPA's Greenhouse Gas Reduction Fund — a program approved by Congress in 2022, which was designed to grant more than $20 billion in funds for climate-focused initiatives in under-resourced areas.

While the climate groups say their contracts with the bank call for Citi to unlock their account access, the bank maintains that it has a fiduciary duty to the government, which supersedes its agreements with the grantees.

The Trump administration directed Citi to freeze the funds earlier this year, before attempting to end the program. Chutkan's order this week barred the EPA and the Treasury Department from terminating the grants or from causing Citi to obstruct the climate groups' access to the money.

Litigation

Citi must disburse federal climate grants, judge rules

U.S. District Judge Tanya Chutkan said the Environmental Protection Agency could not suspend the previously awarded funds. The case put Citigroup in the crossfire of a legal battle between climate groups and the Trump administration.

By Catherine Leffert

April 16

In February, Citi froze some of the grant recipients' accounts at the request of the FBI, which cited concerns of wire fraud and conspiracy to defraud the U.S. A few weeks later, the Treasury Department told Citi to stop disbursing any of the Greenhouse Gas Reduction Fund money.

The EPA spokesperson said Thursday: "The abuse within these programs run rampant with self-dealing and conflicts of interest, unqualified recipients, and deliberately limited agency oversight."

Chutkan wrote in her order that the EPA hadn't provided adequate evidence to back its claims of "programmatic fraud, waste and abuse."

Citi has said in court filings that its connection with the grant program was "narrow and limited," and didn't entail making decisions about whether funds should be disbursed, or determining compliance with the grant agreement.