March 18 (Reuters) - A U.S. judge on Tuesday temporarily

blocked the U.S. Environmental Protection Agency from recovering

grant funds issued as part of a $20 billion climate funding

program that Republican President Donald Trump's administration

has moved to terminate.

U.S. District Judge Tanya Chutkan in Washington issued a

temporary restraining order halting the EPA's termination of

three environmental nonprofit groups' grant agreements and

barring Citibank from dispersing grant funding held at the bank

in their accounts.

Chutkan said it appeared the EPA failed to take the legally

required steps necessary to terminate grants worth a combined

$13.97 million that were awarded to Climate United, Coalition

for Green Capital and Power Forward Communities.

She said that while EPA claimed it terminated the grants due

to "substantial concerns" about fraud, waste and abuse, it

provided only "vague and unsubstantiated assertions" to back up

those claims in court.

Absent a court order preserving the status quo as the

litigation proceeds, Chutkan said those groups would face

imminent harm if Citibank transferred money the groups use to

pay employees, pay rent and fund projects out of those accounts.

"If Citibank transfers money out of these accounts, the

funds will not be recoverable," wrote Chutkan, an appointee of

former Democratic U.S. President Barack Obama.

The EPA and Citigroup ( C/PN ), Citibank's parent company, did

not respond to requests for comment.

EPA Lee Zeldin had publicized his campaign to claw back

money from the Greenhouse Gas Reduction Fund, which Congress

authorized in 2022 as part of the Inflation Reduction Act during

then Democratic U.S. President Joe Biden's tenure in 2022 to

kick-start projects aimed at curbing pollution.

The EPA under Zeldin's watch has maintained that the program

did not align with the agency's priorities, and it cited

concerns with potential fraud, waste and abuse. Zeldin has said

that the FBI and Justice Department are also investigating.

Their grant funding was required to be held at Citibank. The

three nonprofits sued last week to challenge the EPA's

termination of their grants and Citibank's withholding of the

money, arguing the agency's decisions were arbitrary.

Climate United CEO Beth Bafford in a statement called

Tuesday's ruling "a strong step in the right direction," and

said the organization would work in the coming weeks towards a

long-term solution.

(Reporting by Nate Raymond in Boston)