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House GOP looks to make legal case in Solyndra loan debacle
House Republicans are working overtime to show the Obama administration broke the law when it restructured a $535 million loan guarantee to Solyndra, the now-bankrupt California solar company.
Their focus is on the Energy Department’s decision to restructure the loan guarantee in February so that investors who provided additional funding to Solyndra would be repaid before the federal government if the company folded.
“Once we establish clearly that DOE broke the law, that will send a very strong message,” Rep. Cliff Stearns (R-Fla.), the chairman of the committee’s investigative panel, told The Hill during a short interview in the Capitol.
Stearns said Republicans will intensify their focus on the restructuring in the coming weeks, including through a subcommittee hearing with Energy Department officials.
“The next step after that is to see why [Energy Secretary Steven Chu] did it, and [whether it is] tied to the White House and President Obama’s inner circle,” Stearns said, referring to Chu’s decision to approve the restructuring agreement.”
Stearns also said he hopes to hear testimony from outside legal experts on the restructuring.
“I think we’ll take the DOE legal opinion and run it by some experts and get a consensus,” he said.
The GOP has pummeled the administration for green-lighting the loan guarantee in 2009, and Republican investigations turned up a slew of politically damaging emails that raise questions about the administration’s decisionmaking.
Yet there have been signs that the Solyndra controversy is not catching on as a political issue with the public at large. An early September poll of voters in Ohio, a critical battleground state for the president, showed that just 11 percent of those polled said they have heard a “great deal” about the incident.
“Thus far, Solyndra is still news junkie fodder and not dinner table conversation,” says a Sept. 26 memo from GOP firm Public Opinion Strategies and Democratic firm Fairbank, Maslin, Maullin, Metz & Associates.
The Energy Department dismisses allegations that it violated the law when it restructured the loan guarantee.
A six-page memo, authored by Energy Department Loan Programs Office Chief Counsel Susan Richardson, says the restructuring meets the statutory requirements outlined in a portion of the 2005 energy law that created the Energy Department’s loan guarantee program.
“On the current facts, the Loan Programs Office has determined that the proposed restructuring offers the best prospect of eventual repayment in full of the Borrower’s obligations under the Loan Guarantee Agreement, and is demonstrably preferable to a liquidation of the Borrower,” the memo says.
“In light of that determination, we conclude that the proposed subordination of the Borrower’s obligations to DOE is consistent with both the text and the purposes of [the law].”
Even if Republicans fail to make a legal case against the administration, the fact that the loan was restructured so that investors would be paid before taxpayers could be politically damaging.
At a hearing Friday, Republicans on the investigative subcommittee blasted the Energy Department for “subordinating” the taxpayer interest in the restructuring agreement, arguing the administration was more concerned with protecting Solyndra investors than the taxpayer.
Republicans heard testimony from two Treasury Department officials Friday on the restructuring. One of the witnesses — Gary Burner, the chief financial officer for Treasury’s Federal Financing Bank — raised questions about the Energy Department’s plan to restructure the loan.
Internal emails show that Burner told officials with DOE’s loan programs office in February that they might need approval from the Justice Department before approving the restructuring of the Solyndra loan guarantee.
A separate Treasury official, Assistant Secretary for Financial Markets Mary J. Miller, wrote to a White House Office of Management and Budget official in August of this year stating that Treasury believed the “subordination” of the taxpayer interest in the restructuring agreement was illegal.
Miller — who did not testify at Friday’s hearing — also said in the August email that DOE hadn’t been sharing information with Treasury on Solyndra’s finances and the loan restructuring. Republicans say that is a violation of the 2005 energy law that created the energy loan guarantee program.
At the hearing, the Treasury Department officials declined to speculate as to whether the restructuring was a violation of the law. But Burner did say that he had never seen a loan restructured to subordinate the taxpayer’s interest to that of investors.
Stearns said his constituents are angry about the loan guarantee.
“It’s not just anger, it’s outrage that this sort of stuff would go on, especially in this economy,” he said.
Clean-energy advocates, however, say Republicans are grasping at straws in order to score political points.
“Republicans are turning this into a political issue to discredit the president going into an election year,” Natural Resources Defense Council spokesman Bob Keefe said. “That’s sad enough. But they’re also jeopardizing what could be one our country’s most promising industries.”
