Earlier this year, a coalition of energy conservation groups filed suit to force the Reagan administration to distribute $21.85 million that Congress had appropriated for the Solar Bank. The bank was created within the Housing and Urban Development Department in 1980 to provide low-interest loans for solar and energy conservation work, but no money has ever been disbursed. But in June, the court ordered HUD to distribute the funds as quickly as possible. HUD recently asked states to submit proposals for the program, saying it will target money to states that submit "innovative proposals." They are due by Oct. 15.

David Moulton, policy director of the Energy Conservation Coalition, said, "We're extremely pleased that HUD is proceeding, that's the fundamental point." But he criticized HUD for prohibiting grants for "active" solar systems, such as installing solar panels. (HUD argued that the grants are supposed to go to low-income families who can probably only afford energy conservation methods such as installing more insulation and caulking.) Moulton also noted that HUD plans to forbid states from using more than 2 percent of the funds for administrative costs, which he said "could have a chilling effect" on the financially strapped states. And he said cities, as well as states, should be allowed to apply.