After months of controversy and the personal involvement of President Trump, the Department of Energy announced last week that it was canceling a $4.9 billion loan guarantee slated for the construction of a massive interregional transmission line known as the Grain Belt Express.
As Latitude Media reported, the administration moved to cancel the loan — which had been conditionally approved by the Biden administration — against the advice of attorneys and staff inside the Loan Programs Office. In a brief statement the agency said it had reviewed the project and “found that the conditions necessary to issue the guarantee are unlikely to be met, and it is not critical for the federal government to have a role in supporting this project.”
DOE did not, however, elaborate on which conditions Grain Belt Express couldn’t meet, or the type of analysis the agency completed. Now though, at least one Democrat on the Hill is pushing back.
In a Tuesday letter to Energy Secretary Chris Wright, Senator Martin Heinrich (D-N.M), ranking member on the Senate Committee on Energy and Natural Resources, demanded that the agency more thoroughly explain its decision to terminate the loan, and its legal justification for doing so.
“The Department’s decision to abruptly terminate the conditional loan guarantee raises serious questions about the legality of the termination and this administration’s commitment to bringing down energy costs for millions of Americans,” Heinrich wrote. “Not only am I concerned that this move is illegal, but I am concerned that the federal government is eroding what little trust the private sector has in our ability to be reliable partners.”
Heinrich is seeking documents showing the key milestones established in the loan agreement and the timeline on which the project had to meet those precedents, as well as a “detailed and justified explanation” of which conditions DOE determined the project failed to meet.
Heinrich also wants Wright to explain whether or not his agency conducted analysis “to understand the implications on energy reliability, prices, and jobs before terminating the conditional commitment,” and to provide a list of all closed loans and conditional commitments DOE is reviewing.
Backing Grain Belt Express
The Biden administration issued its Grain Belt Express conditional commitment at the end of last year, after two years of due diligence on the project. Because the agreement was for a loan guarantee — backup for investors if a project defaults on its payments — DOE wasn’t actually slated to disperse any funds.
Amid ongoing chaos and upheaval at the Loan Programs Office in the early months of the second Trump administration, staff inside the office had been working to bring the terms of the loan more in line with the administration’s priorities; they were hopeful that it would be finalized later this year. The project had at least four more months to meet milestones outlined in the conditional commitment.
The project — which Invenergy has said will move forward with or without the support of the federal government — appears to be the first to fall victim to a months-long GOP campaign to undermine deals inked in the final days of the Biden administration. In December, Republicans sent then-LPO director Jigar Shah a cease and desist letter, accusing the office of “scrambling” to get deals through, and the DOE inspector general warned of “significant risk of fraud, waste, and abuse” inside the office. In the months since inauguration Secretary Wright has suggested, on multiple occasions before Congress, that LPO rushed through due diligence without adhering to proper procedure.
(Grain Belt, for its part, had applied for a loan guarantee around two years prior to securing it, in the middle of the Biden administration.)
Canceling the loan guarantee, Heinrich wrote in his letter, goes directly against the country’s massive need for transmission infrastructure, and the administration’s stated goals of creating jobs, lowering consumer energy prices, and strengthening the grid.
As Heinrich put it, “the decision to cancel the project’s loan guarantee appears to not have been based upon the merits of the project but rather come as the result of a nonsensical witch hunt.”
