Huntingburg Council discusses potential legal battle over solar moratorium

The City of Huntingburg’s attempt to halt approval of commercial solar development plans through a moratorium could face legal challenges, according to the city attorney’s assessment presented to the council Tuesday evening.

The moratorium, passed in November, was initiated in response to the AES Crossvine solar development after residents raised concerns about the Battery Energy Storage System included in the project.

The council also directed the planning director to determine whether AES would need to refile construction permits, as it appeared AES had not met the original permit timeframe requirements for the area within Huntingburg’s extraterritorial jurisdiction.

In effect, if AES were required to refile for the construction permits, the moratorium would halt the permitting process until it was lifted or new permitting procedures were enacted.

Last Tuesday, City Attorney Phil Schneider informed the council that Indiana courts have determined such moratoria constitute amendments to zoning ordinances, requiring plan commission hearings and public notice before adoption.

“Unless we follow that procedure, any kind of a moratorium on approval and development plans is ineffective. It is not a valid ordinance or not a valid city action,” Schneider said. “It is unlawful and could be determined to be unlawful taking of their property without due process because you’re essentially depriving developers of the investment that they made in their development.”

The legal complications extend beyond procedural issues. Indiana’s vested rights statute protects developers who have properly filed applications, preventing municipalities from changing rules retroactively for at least three years after the initial application.

“Once an applicant files a petition for one of these types of permits or approvals, you can’t change the rules on them. You have to use the rules that were in place at the time they filed the application,” Schneider explained.

Schneider admitted he was unaware of the statute when he suggested the council could enact the moratorium.

AES Crossvine has responded aggressively to the city’s notice that their development plan approval had lapsed, indicating they will appeal to the Board of Zoning Appeals. The company claims construction commenced in August 2023, when it received approval, citing industry standards that include front-end design, engineering, equipment procurement, and off-site assembly as construction activities.

The company reported investing $72 million in equipment and $230 million in lease acquisitions, relying on zoning ordinances in effect at the time it filed its application. These substantial investments strengthen their legal position under the vested rights statute, Scheider surmised.

As intended, the moratorium would not affect the Battery Energy Storage System since it isn’t located within Huntingburg’s extraterritorial jurisdiction.

However, residents remain concerned about the proximity of these facilities to schools and homes. Kevin Schnell, a mechanical engineer, addressed the council on battery safety risks, explaining that lithium battery fires cannot be extinguished and will continue to burn without oxygen.

He also pointed to the risk to nearby crops.

“It is essentially non-radioactive fallout. It’s a bunch of heavy metals that will get deposited over a very large area when one of these batteries goes up,” Schnell said. “Even something just the size of a car can contaminate, like, 10 miles away because of the plume of smoke.”

The size of the BESS planned for the Crossvine Solar project is especially concerning for Schnell.

“If you are talking about a battery system that can store enough energy to even appreciably power a house or two for a given day, that is a massive amount of chemical hazardous waster that has the potential to scatter itself uncontrollably,” Schnell told the council.

Councilman Jeff Bounds expressed concern about being misled regarding battery storage components of the original project. The development plan included energy storage systems, but batteries were not explicitly mentioned in the initial presentations.

Mayor Neil Elkins explained that the developers met the requirements of the city’s unified development ordinance.

“The UDO itself is pretty lax, in my opinion,” Elkins added.

Bounds asked whether the landowners were aware that the BESS would be included in the project. Schneider stated that the leases disclosed the presence of energy storage systems, though he wasn’t sure whether they described them as batteries.

He also reminded Bounds that the systems aren’t in the city’s jurisdiction, to which Bounds compared the situation to having a peeing section in a public pool or a smoking section in a restaurant. “It doesn’t matter if it is on our side of the line or somebody elses,” he said.

Schneider reminded him that he was attempting to prevent the city from facing a “very expensive” lawsuit.

“They’ve got over $230 million invested in this,” he said. “They are not going to walk away from this. They’re not going to let the City of Huntingburg to tell them they can’t do what they want to do when they know we can’t prohibit it.”

Schneider also acknowledged a potential conflict of interest, having previously represented landowners in lease negotiations for the project. He recommended that the city obtain a second legal opinion, noting that his former clients would benefit financially from the project’s success.

He told the council that at the time, he didn’t anticipate a conflict because the city was fine with solar energy generation and its ordinances permitted it.

Schneider stated that representation had ceased and recommended that the city obtain a second legal opinion.

“Because that is an apparent conflict of interest that I have, I would encourage you to get a second opinion and not rely on my opinion,” Schneider said.

Bounds agreed that they should consider it “for the sake of public appearance.”

Schneider explained that, as it stands, AES has been ordered to reapply for a permit, but with the moratorium in place, it may not be approved.

He explained that AES plans on appealing to the Board of Zoning Appeals on Jan. 2. “If they did not reverse your decision, they (AES) would appeal to the circuit or superior court,” Schneider explained.

He said the city could consider, before then, lifting the moratorium. Doing so would not authorize the company to proceed, as the permit remains an issue, Schneider said.

“It doesn’t undermine the fact that we think they haven’t started construction,” said Councilman Steve McPherron.

Bounds connected the dots for the council. “You’re suggesting they likely won’t resubmit if they think there is still a moratorium in place,” he asked Schneider.

Schneider told him that was what he felt they would do and that AES would appeal to the courts for relief.

“How long can all that take?” Bounds asked.

Schneider said he didn’t know.

“It depends on who runs out of money first,” he told Bounds.

Bounds suggested they hold off on a resolution if they plan to seek advice from another law firm with more experience in these types of proceedings. The council agreed to seek another opinion before reversing the moratorium resolution.

However, the council did pass a resolution to initiate zoning amendments requiring future commercial solar facilities to obtain special exception permits from the Board of Zoning Appeals. This change would require public hearings for future projects, but it cannot be applied retroactively to the AES development.