Climate solution or ‘$20 billion gold bar scheme’? Explaining Minnesota’s lawsuit against Trump’s EPA.

An obscure Minnesota lending institution has found itself caught up in one of the nastiest fights over the Trump administration’s funding freeze for climate projects.

In March, Lee Zeldin, administrator of the U.S. Environmental Protection Agency (EPA), declared that the agency had unearthed a “gold bar scheme” — billions of taxpayer dollars that the Biden EPA had parked at “an outside financial institution in a manner that deliberately reduced the ability of EPA to conduct proper oversight.”

Zeldin was talking about the Greenhouse Gas Reduction Fund, which Congress created as part of the Inflation Reduction Act in 2022. The program included $20 billion for institutions known as green banks to loan to developers, businesses and nonprofits.

Minnesota’s state-run green bank, the Minnesota Climate Innovation Financial Authority, was awarded $25 million — a relatively small amount considering the size of the fund. But Minnesota’s funding was cut along with the rest of the program in Zeldin’s quest to end what he called wasteful and fraudulent government spending. Minnesota Attorney General Keith Ellison responded with a lawsuit against the federal agency and Citibank, which has possession of the funds, last week.

Here’s what you need to know about that lawsuit and the green banks behind it.

Green banks have been around for decades and are similar to regular banks, in that they provide loans, collect interest and leverage their assets under management to make money. They can be public, private or nonprofit entities.

But green banks fund projects that benefit the environment and the general public, whether that’s a solar array to reduce carbon emissions or helping a business cut its utility bills by making their office more energy efficient.

Green banks also tend to have more access to public funding since they provide a public service. Minnesota’s green bank is reducing energy costs for local businesses and helping the state achieve its climate goals, said Kari Groth Swan, the bank’s executive director.

The Trump administration has broadly targeted any Biden-era funding related to climate change and environmental justice in its cuts. Trump campaigned on a promise to do that.

Zeldin has argued that the green bank grants were “riddled with self-dealing and wasteful spending,” though courts so far have not found sufficient evidence to support those claims. One federal judge issued a temporary restraining order earlier this month, telling the Trump administration it couldn’t pull the money from Citibank, where the funding is being held in reimbursement accounts — a common government practice with federal grants.

No.

When Zeldin claimed to have found “gold bars,” saying “the days of ‘throwing gold bars off the Titanic’ are over,” he was referencing a hidden-camera video filmed by the right-wing group Project Veritas. In the video, an EPA employee describes the Biden administration’s efforts to rush grant money out before Trump took office as “throwing gold bars off the Titanic.”

Minnesota’s green bank, as well as green banks from California, Illinois and Maine, argue that the EPA and Citibank broke the law when they blocked them from accessing the grant funds.

“Congress appropriates federal dollars, and these have been duly appropriated,” Groth Swan said. “And so this is very unprecedented legal action, and that’s why Minnesota is being so assertive on our behalf in filing the claim.”

Specifically, the plaintiffs argue that the defendants violated the Administrative Procedures Act, which dictates procedures federal agencies must follow in decisionmaking, as well as the Impoundment Control Act, which prohibits a president or other government officials from refusing to release congressionally appropriated funds.

The EPA and Citibank declined to comment for this story

Since last year, Minnesota’s green bank has received more than $5 billion in loan requests. Seven projects have received loans, bank officials said.

Those loans include $4.7 million to install a geothermal heating system in a public housing complex in St. Paul, $1.2 million to install solar panels and battery storage at four Minneapolis Public Schools buildings and $4.5 million for energy efficiency upgrades and a new geothermal system at a youth shelter in Minneapolis.

Geothermal systems are an increasingly popular way to heat and cool buildings. Because they draw heat from the ground, they can be far more energy efficient than traditional HVAC systems.

“We were quite pleased by the level of interest and the number of projects statewide,” Groth Swan said.

Minnesota’s lawsuit, which was consolidated with an earlier lawsuit filed by other grant recipients, will now work its way through the courts. Plaintiffs expect a protracted legal battle.

Meanwhile, Groth Swan said, the state’s green bank will move forward with its loan applications with the expectation that the $25 million in federal funds will eventually be delivered. The bank has $100 million in state funding to work with, Groth Swan said, though she admits that without the federal money, “we’ll end up with capacity constraints” and some “good projects” won’t get funding.