In a legal filing Monday, the Environmental Protection Agency did not provide direct evidence of waste, fraud, or abuse in a $20 billion climate grant program that the agency canceled citing “unacceptable risk.”
For weeks, the grant program has been mired in controversy, with its funds frozen, as the E.P.A. attempted to claw back money that was approved by Congress for clean energy programs. At least three of the grant recipients have filed lawsuits seeking access to the funds they were promised.
Last week, a federal judge ordered the E.P.A. to justify its moves to freeze the funds and cancel the program. The motion stemmed from a lawsuit brought by Climate United, a nonprofit group that was supposed to receive $7 billion under the initiative.
But in response to the judge’s order on Monday, the E.P.A. did not present new direct evidence. Instead, it referred to unidentified media reports as well as a video released last year by Project Veritas, a conservative group known for using covert recordings to embarrass its political opponents.
The video, filmed in a social setting, showed an E.P.A. staff member at the time, talking about the outgoing Biden administration’s efforts to quickly spend federal money. He compared it to throwing “gold bars” off the Titanic. A lawyer for the former staff member has since said he was not referring to the $20 billion grant program.
But Lee Zeldin, the E.P.A. administrator, has seized on the video and has repeatedly suggested the grants were vulnerable to fraud. At the request of the Trump administration, the $20 billion allocated to eight nonprofit groups have been frozen in accounts held at Citibank.
The situation escalated earlier this month when Climate United, which was supposed to receive $7 billion of the funds, sued the E.P.A. and Citibank in the U.S. District Court for the District of Columbia, demanding the release of the funds.
The money was intended to help financial institutions offer low-interest loans to businesses and developers for various climate initiatives like building solar arrays and insulating homes to make them more energy efficient.
In a hearing last Wednesday, a lawyer for Climate United said that the funding freeze had meant the organization couldn’t pay staff, and was at risk of eviction from its offices.
Climate United asked Judge Tanya S. Chutkan for a temporary restraining order releasing some of the funds while the lawsuit is resolved. But on March 11, the evening before a scheduled hearing on the restraining order, the E.P.A. terminated the eight grants outright.
The E.P.A. does have the authority to cancel the agreements if it finds waste, fraud, or abuse. But the agency has so far not produced direct evidence of that and grant recipients say the claims are baseless.
“These claims are not only misleading and undermining a critical effort to drive American energy independence, local resilience, and job creation in communities, but are consistent with a number of factual inaccuracies and misinformation communicated by the E.P.A.,” said a spokesman for the Opportunity Finance Network, which received a $2.3 billion grant, in a statement.
Judge Chutkan gave the E.P.A. until Monday to justify the grant terminations and submit any evidence of waste, fraud or abuse.
In a Monday filing, Eric Amidon, the E.P.A. chief of staff, reiterated claims that contracts were revised after the election to weaken oversight. He pointed to the Project Veritas video as well as media articles purporting to uncover conflicts of interest between grant recipients and the Biden administration.
The agency’s filing also mentioned an ongoing investigation by the Justice Department and the F.B.I., as well as a separate investigation by the agency’s acting inspector general.
The E.P.A. filing also said that Climate United’s grant no longer aligned with the agency’s priorities.
Judge Chutkan is expected to decide whether to order release of the funds that is sought by Climate United.
In response to a request for comment, the E.P.A. referred to Monday’s filing. Climate United and Citibank declined to comment.
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