Federal Showdown over Solyndra Comes to a Head

by William Yeatman on July 25, 2011

in Blog, Features

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A government showdown between the Congress and the President will come to a head this morning at 9 A.M. That’s the deadline set by the House Oversight and Investigations Subcommittee (of the Energy and Commerce Committee) for the Office of Management and Budget to produce  documents relating to the Department of Energy Loan Programs Office’s* issuance of a loan guarantee to Solyndra, Inc. The Subcommittee took the rare step of subpoenaing the executive branch agency on Thursday, July 14, by a party-line vote, 14-8.

Here’s the background. In late 2009, Solyndra, a manufacturer of solar rooftop components, was the recipient of the first loan guarantee issued by the Department of Energy pursuant to the “Section 1705 program” created by the 2009 stimulus. Only months after receiving the $535 million loan guarantee, Solyndra pulled back on a planned public offering after a PricewaterhouseCooper’s audit found that the company’s finances “raise substantial doubt about its ability to continue as a going concern.” In November 2010, the company announced that it would shutter a plant and lay off 170 employees. Last week, Solyndra CEO Brian Harrison made the rounds on Capitol Hill to perform damage control. I suspect that whatever rosy financial numbers he presented were influenced heavily by the billions of dollars in renewable energy subsidies that are still trickling out of the Department of Energy. (So much for the stimulus mantra, “temporary, targeted, and timely,” right?). As such, I wouldn’t trust any data put forth by any renewable energy company until after the stimulus money is (finally) spent.

In addition to Solyndra’s financial troubles, the Oversight and Investigations Subcommittee was piqued by the possibility that the solar company’s loan guarantee had been influenced by politics. As has been reported by ABC News and iWatch News, Solyndra’s primary financial backer was a “bundler” (i.e., big-time fundraiser) for then-Senator Barack Obama’s Presidential campaign. Also suspicious is the timing of Solyndra’s loan guarantee. It was closed 10 months before the next such loan guarantee; in the ten months thereafter, 10 loan guarantee were closed. It certainly seems as if the Solyndra loan guarantee was rushed out the door. The Subcommittee would like to know why.

In January, the Subcommittee opened its investigation. On March 14, it requested documentation on the loan guarantee from the Office of Management and Budget, which has an oversight role with regard to the Department of Energy’s Loan Programs Office, but OMB has refused to produce the documents.  The subcommittee convened a hearing June 24 to hear directly from OMB Deputy Director Jeffrey Zients, but he refused to show up to testify.

The OMB’s obfuscation forced the Oversight and Investigation Subcommittee’s hand.  According to Subcommittee Chairman Cliff Stearns, “Voting to authorize this subpoena is a necessary step in carrying out this Committee’s constitutional obligations.  We simply cannot allow executive branch agencies to pick and choose what they will produce, or whether they will produce it at all.  We are the stewards of the taxpayers’ money, and we need to ensure that the billions of dollars appropriated for the DOE Loan Guarantee Program are properly invested.” Hear, hear!

In all likelihood, the OMB will produce the bare minimum of documentation, if it bothers to respond at all. I’ll update when I know more.

* [N.B. The Department of Energy’s Loan Programs Office administers the Loan Guarantee Program. It was created in 2005 in order to promote “innovative” clean energy technologies. The program makes easy credit available for politically favored industries by promising to cover privately held debt with taxpayer money in case the borrower defaults. This is known as a loan guarantee. To hedge against the possibility of default, borrowers are required to pay a “credit subsidy cost”—a fee roughly equivalent to the value of the risk that the government takes in making the loan. In addition to calculating the “credit subsidy cost,” the OMB has role overseeing the Department of Energy’s Loan Programs Office.

The 2009 stimulus bill created a parallel program within the Loan Programs Office, known as the Section 1705 program. Unlike the loan guarantee program created in 2005, the Section 1705 program was appropriated $6 billion to cover the credit subsidy cost for eligible “green” projects. For these loans, like the one guaranteed for Solyndra, the public is fully on the hook.]

BobRGeologist July 26, 2011 at 2:55 am

I have never doubted that AGW is a total fraud. I stand committed that the geological setting is totally against runaway temperatures, a condition that has no place in the record of past climates. We are still in a glacial climate with iced up polar regions. At present we have warmed only a few degrees C from the last Pleistocene glacial maximum of 23,000 years ago. Our present condition is an Inererglacial phase that has lasted at least 10,000 years named the Holocene. A temperature graph of the Holocene shows a fluctuating climate with at least 4 periods of warming as warm as it is today. My concern with the present hysteria about greenhouse gases is that it has condemned the only support our weak Sun has to prevent our Earth becoming a permanent ice ball. (Tillites, metamorphosed sediments formed only by glacial action
found within the tropics. Rock dated 700 million and around 2 billion years ago).

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