UA System Solar Project Frozen in Legal Limbo

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The Trump administration’s distaste for clean energy has put an ax over the state’s largest commercial solar energy project ever: a planned $100 million system of arrays for the University of Arkansas System.

The project, announced nearly two years ago by the UA System and Scenic Hill Solar, the Little Rock renewable energy developer, drew fire from the administration in February.

That’s when the EPA froze $6.97 billion in Greenhouse Gas Reduction Fund grants to the Climate United Fund, Scenic Hill’s national partner in the UA project.

Climate United, a public-private investment fund based in Bethesda, Maryland, focuses on clean energy projects. It announced in October that it would provide $31.8 million as a pre-construction loan for the UA System project. The plan is for Scenic Hill to develop 18 solar arrays with 66 megawatts of capacity. That’s enough juice to save the system $120 million on electricity over 25 years, benefiting 70,000 students and 17,000 employees.

“Climate United is the first green bank, as they are called, to get a loan out, ” Scenic Hill CEO Bill Halter told this reporter in October.

But Trump’s EPA froze the GGRF money on Feb. 16, and said in a March 3 news release that it did so to perform “a comprehensive review” of financial mismanagement, conflicts of interest and “oversight failures” in the program.

EPA Administrator Lee Zeldin announced Feb. 13 that the administration was targeting some $20 billion in funds that “were parked at an outside financial institution by the Biden EPA.” The announcement went on: “We will review every penny that has gone out the door,” Zeldin said. “The days of irresponsibly shoveling boatloads of cash to far-left activist groups in the name of environmental justice and climate equality are over.”

Of course, the authority of a new administration to undo the actions of a previous Congress is legally suspect.

Climate United sued the EPA on March 7, asking the U.S. District Court in Washington, D.C., to unfreeze and disburse the money, which is being held by Citibank.

On April 15, federal Judge Tanya Chutkan granted Climate United’s request for an injunction, finding that it had a strong claim based on the constitutional concept of separation of powers. “EPA lacks the authority to effectively dismantle a program the Congress established,” she wrote.

That ruling survived less than a day. The U.S. Court of Appeals for the District of Columbia Circuit issued a stay on freeing up the money. Circuit Judges Neomi Rao, Gregory Katsas and Nina Pillard stayed Chutkan’s order “insofar as it enables or requires Citibank to release, disburse, transfer, otherwise move, or allow access to funds.”

Climate United’s fellow plaintiffs are the Coalition for Green Capital and Power Forward Communities, fellow green banks in line to get $5 billion and $2 billion, respectively, of the GGRF money.

Halter, the Scenic Hill CEO and former lieutenant governor of Arkansas, told Arkansas Business it was premature to discuss the case.

Climate United said on March 28 that it has answered EPA oversight questions on its expenses and expenditures. Over 12 months of working with the agency, Climate United said, “EPA has had access to hundreds of documents, transaction-level visibility into our bank accounts, and robust budget and compliance requirements.”

The green bank said 96% of its total expenditures and investment provided financial assistance directly to projects and communities, “exceeding the EPA-approved budget amount of 88%,” and that only 2.8% of total expenditures went to administrative costs, “well below the EPA approved threshold of 7.6%.”