A federal judge issued a temporary restraining order on Tuesday blocking the Environmental Protection Agency from pulling $14 billion in climate grant funding out of accounts at Citibank, where it has been held since late last year.
The grant funding has been caught up in a controversy for the last month after Lee Zeldin, the E.P.A.’s administrator, repeatedly suggested that the funds were vulnerable to fraud and that the selection of recipients under the Biden administration was marred by political favoritism. Mr. Zeldin has also linked the funds to a hidden-camera video released by Project Veritas last year.
U.S. District Judge Tanya S. Chutkan ruled that the E.P.A. had not offered “credible evidence” in support of its efforts to block the grants, nor had it followed proper procedures in canceling them.
The ruling comes after the E.P.A.’s attempts last week to terminate $20 billion in grants, the latest escalation in a weekslong dispute between the agency and eight nonprofits that were awarded funding to finance renewable energy and other climate projects last year. The funds have been frozen since mid-February at the request of the Trump administration.
Under the ruling, the E.P.A. cannot move forward with the grant termination process until the case makes its way through the courts, and Citibank is not allowed to transfer the funds back to the federal government if asked. The order addresses lawsuits from three of the nonprofits and affects $14 billion of the $20 billion in grants.
The judge’s decision fell short of ordering Citibank to allow grant recipients to withdraw money from their accounts.
A lawyer for Climate United, a nonprofit that was supposed to receive nearly $7 billion, had asked for access to some of the money, citing concerns about furloughing employees and paying rent. In a filing on Tuesday, Climate United said it was able to pause plans to furlough staff members after a donor offered a temporary emergency grant.
In a statement, the chief executive of Climate United, Beth Bafford, called the ruling a “strong step in the right direction.”
A spokesperson for Climate United said the organization plans to file for an injunction to release the funds in the coming days and expects a hearing to follow in the next few weeks.
In response to request for comment, the E.P.A. referred to a statement by Mr. Zeldin, posted on X, in which he emphasized the fact that the funds remain frozen. “I will not rest until these hard-earned taxpayer dollars are returned to the U.S. Treasury,” he said.
