Introduction to the Greenhouse Gas Reduction Fund

In recent court filings, Citibank disclosed that it has been requested by the FBI, the Environmental Protection Agency (EPA), the EPA’s inspector general, and the Treasury Department to freeze the accounts of several nonprofit organizations and state government agencies.

Background on the Frozen Accounts

Although the accounts in question were initially frozen in February, newly released documents have shed more light on the situation, including providing a comprehensive list of nonprofits currently under FBI scrutiny.

The Greenhouse Gas Reduction Fund and Its Purpose

The funds in question were distributed as part of the $27 billion Greenhouse Gas Reduction Fund, established by the Inflation Reduction Act, a law enacted by Congress in 2022. The EPA received $14 billion for a National Clean Investment Fund, which offers grants to green banks.

Functionality of Green Banks

Green banks utilize these funds to finance clean technology projects across the country. Startups with commercially viable technologies were eligible to receive financing to bring their projects to fruition.

Funding Utilization and Repayment

The majority of the funding was intended for loans, which were expected to be repaid and recycled for future lending. Green banks typically exhibit delinquency rates comparable to those of commercial and residential portfolios held by other commercial lenders.

Citibank’s Role and Contract with the EPA

Citibank was selected as the financial agent to administer these funds, holding them in accounts under the names of the awardees. Additionally, Citibank is administering a separate $6 billion Clean Communities Investment Accelerator program. The EPA’s contract with Citibank was publicly announced in April 2024.

FBI’s Request and Its Implications

The FBI has requested that Citibank implement 30-day administrative freezes on accounts held by nonprofits that received green bank funding. Furthermore, the FBI has asked for the freeze of other nonprofit and state government agency accounts, including those of Habitat for Humanity, United Way, the Colorado Clean Energy Fund, and the New York State Department of Taxation and Finance.

Legal Action and Controversy

Three nonprofits that received green bank funds have filed a lawsuit against Citibank, seeking the release of the funds in their accounts.

EPA Administrator’s Concerns

EPA Administrator Lee Zeldin has expressed that the Greenhouse Gas Reduction Fund does not align with the agency’s priorities, citing concerns about fraud, although he has not provided evidence to support these claims.