Four state green banks sued the EPA and Citibank over a “highly irregular and illegal” effort to claw back $20 billion of congressionally appropriated funds for climate projects.

The Environmental Protection Agency under President Donald Trump blew past the constitutional separation of powers and the Administrative Procedure Act when it terminated Greenhouse Gas Reduction Fund awards earlier this month, according to a complaint filed Wednesday in the US District Court for the District of Columbia.

The plaintiffs—California Infrastructure and Economic Development Bank, Efficiency Maine Trust, Illinois Finance Authority, and Minnesota ...