The Trump administration is hitting legal roadblocks in its attempt to revoke $20 billion in climate grants, but its efforts are already achieving one of the president’s key aims: throttling a crucial part of Joe Biden’s clean energy agenda.
In Fort Worth, Texas, one affordable housing developer scrapped plans to add solar to a 116-unit project — and two other deals may soon collapse entirely. In North Carolina, energy efficiency upgrades at a small rural college are on hold. Also in peril is a New Mexico initiative meant to offer below-market loans that would help low- and middle-income people buy furnaces, add solar panels and reduce energy costs.
All told, hundreds of organizations depending on cash from the Environmental Protection Agency’s Greenhouse Gas Reduction Fund must wait out a potentially lengthy courtroom battle before receiving money that the Biden administration had awarded and distributed before President Donald Trump took office. Would-be participants also face potential risks to their reputations as Trump and EPA Administrator Lee Zeldin wage unyielding public attacks on the climate grants, which the administration has alleged without evidence are marred by potential fraud and waste.
The Justice Department has also launched a criminal investigation into the grant program, over the objections of a career prosecutor in D.C. who resigned in February.
Nine organizations waiting on shares of the climate funding told POLITICO that the controversy is stalling their projects, which range from financing programs for energy efficiency improvements to powering wastewater treatment plants with solar. The snarl could also force them to cancel projects designed to help people lower their energy costs.
Megan Lasch, president of the Texas affordable housing developer O-SDA Industries, scrambled to replace program funding that she said “evaporated” overnight for a 116-unit affordable housing project in Fort Worth, a city where both home and rent prices are rising. She needed to replace $4 million but only found $3 million — and at a higher interest rate — forcing her to scrap plans to add solar power. She’s struggling to plug multimillion-dollar holes for deals with private financiers on two other Fort Worth projects, one of which is supposed to close next month although that timing is now uncertain.
“It's actually really scary,” she said, adding: “A lot of developers could go belly-up over the situation.”
Brian Depew, executive director of the Center for Rural Affairs, a rural development organization based in Lyons, Nebraska, said he warned a solar developer that the work they were doing was at risk because the federal funding has not materialized. Depew is assessing how the rural development nonprofit can continue the work it had planned to reduce consumers’ energy costs through the Greenhouse Gas Reduction Fund.
“They're asking, ‘Are you really going to have this money?’” Depew said. “It’s kicked off a lot of uncertainty at all levels.”
Trump’s critics including Democratic Sen. Chris Van Hollen of Maryland, Sen. Ed Markey of Massachusetts and Rep. Debbie Dingell of Michigan have derided what they call “sham” investigations by the FBI and Justice Department into the program. On Tuesday, a federal judge rejected EPA’s attempt to terminate the grant recipients’ contracts, saying the agency had not offered evidence to back up its claims of waste, fraud and abuse, though she did not immediately restore the groups’ access to the money.
But the EPA’s tactics have already had an impact: Renowned charities Habitat for Humanity International and United Way Worldwide departed nonprofit coalition Power Forward Communities, which is suing EPA to restore access to its $2 billion grant. Habitat and United Way both cited the need to conserve financial resources amid a likely protracted legal fight with EPA.
Habitat said that while it is “confident these issues will be resolved favorably” for the grantees, it “must remain committed to stewarding our resources in pursuit of core mission delivery rather than on unprecedented legal battles.”
One supporter of the climate programs accused Trump’s appointees of pursuing dubious tactics to obstruct the work.
“They know that a lot of this isn’t legal,” said Chris Castro, chief sustainability officer at Climate First Bank who has advised the Coalition for Green Capital, one of the three nonprofit grantees suing EPA. “The purpose was to stall.”
EPA said it would not comment on pending litigation, but Zeldin has commented often on the program. He has accused the Biden administration of rushing the funds out the door with a structure that gave EPA little oversight of the federal money flow, calling the program “riddled with self-dealing and wasteful spending.”
“This scheme was the first of its kind in EPA history and it was purposefully designed to obligate all of the money in a rush job with reduced oversight,” he said last month.
The Biden administration selected eight nonprofits for $20 billion of Greenhouse Gas Reduction Fund grants, which are held at Citibank under an arrangement with the federal government. Those organizations said they would award shares of those funds to hundreds of other local development institutions for clean energy, energy efficiency and housing projects. The Biden administration said each public dollar would leverage an additional $7 in private capital.
But now, in light of the Trump administration’s broadsides against the program, nonprofits waiting on the funds say private sector interest is chilled.
“The headwinds are significant. The disruption just makes it hard to proceed,” said Melissa Malkin-Weber, co-director of the North Carolina Clean Energy Fund, which is counting on the money to finance $51 million of projects in North and South Carolina. “The missed opportunities to really benefit people in the Carolinas is the real heartbreak right now.”
Even if the money begins to flow, private investors will have to weigh whether it’s worth partnering with a program the Trump administration is determined to fight.
The relentless attacks could turn the program politically toxic even in a Trump-loving state like Indiana, said Alex Crowley, executive director of the Indiana Energy Independence Fund.
“It will slow down the willingness of private capital to become involved,” he said. “There's a kind of residual effect that happens regardless of the federal funding coming down.”
A sub-awardee in a conservative Western state said Trump’s animosity and misinformation about the program is complicating efforts to attract private investors. The organization may have to significantly scale back initiatives like helping people pay for energy efficiency retrofits without the federal funds, leaving millions of dollars worth of projects without backing, said the person, who was granted anonymity to discuss sensitive financial information.
“It certainly has a cooling effect,” the person said.
That reality is straining resources and culling operations across the country, especially in communities that have long struggled to draw private investment like rural areas and neighborhoods where people lack access to traditional forms of credit.
The freeze is causing “hesitation from private capital sources — and also hesitation from developers, contractors that we might hire to do the work,” the Center for Rural Affairs’ Depew said. “Capital markets abhor uncertainty.”
Missouri Green Banc Executive Director John Harris said losing the funds would “hinder our ability to leverage private capital and sustain impactful projects.” He said those private markets “are key to sustainable community support.”
New Mexico community lender Homewise will have to “be creative” and “redirect our strategy” to fulfill a new plan to finance energy efficiency improvements to help low- and middle-income New Mexico households reduce their energy bills, deputy CEO Johanna Gilligan said. The mortgage lender had been counting on Greenhouse Gas Reduction Fund money that remains frozen.
But how long any of this takes to resolve is anyone’s guess. Zeldin has vowed to keep fighting the program, saying in a statement posted Tuesday on X that he “will not rest until these hard-earned taxpayer dollars are returned to the U.S. Treasury.”
Other institutions suggested that the Justice Department probe has injected additional uncertainty beyond a mere legal dispute.
Illinois Finance Authority Executive Director Chris Meister, whose organization sued EPA and Citibank on Wednesday over its stalled $109 million sub-award, said in an email he is “equally concerned by the manner in which [the Trump administration is] seeking to deny” access to funds. He referenced news reports that showed political officials at the FBI and Justice Department had initiated investigations against the advice of career staff.
And pushing back against EPA’s claims is daunting in the face of the federal government’s unlimited resources. Litigation costs are “a significant factor and variable” for the nonprofits, said Adam Kent, director of blended and inclusive finance at the environmental group Natural Resources Defense Council, who is leading calls coordinating more than 100 groups interested in the funding.
Many nonprofits awaiting funds from the primary grantees cannot afford a lengthy legal battle, said Climate First Bank’s Castro, who helped set up the fund as a Biden administration Energy Department official. Some are even discussing laying off staff or moving on from the grant program — which he said might be the Trump administration’s goal.
“They're kind of saying, ‘Hey, maybe this might not be worth us getting some of these grant dollars, and we might have to pivot our strategy,’” he said. “Which, again, helps [EPA] and their overall purpose of what they're trying to do.”
Comments
Post a Comment