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Watchdog: Texas company illegally charged Energy Dept. $2.5 million in expenses

Watchdog: Texas company illegally charged Energy Dept. $2.5 million in expenses
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A government watchdog has found that a Texas energy company likely charged the Department of Energy $2.5 million in extraneous expenditures ranging from spa services to lobbying costs.

The Energy Department's Office of Inspector General identified more than $2.5 million in expenses Summitt Texas Clean Energy charged to project that they considered potentially unallowable, according to an inspector general report released Feb. 8.

Summit was awarded a contract with the Energy Department in 2010 for a $1.7 billion cooperative agreement to work on the department's Clean Coal Power Initiative, described by the report as "a partnership with industry to demonstrate advanced coal-based technologies." 

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Summit charged the federal government for more than $1.2 million in potential lobbying costs and $1.3 million in potentially prohibited travel expenses, the audit found.

According to the report, Summit charged the Energy Department to employ three lobbying consultants.

The inspector general found that one of the consultants in particular, who was paid the majority of the fee — $1 million — met with law firms working on behalf of the clean coal project. These firms' services had previously been deemed unallowable lobbying costs.

It is illegal to use federal funds to lobby government officials.

In regards to the appearance of lobbying with federal funds, Summit told the inspector general that the activities were "to obtain clarification on an Internal Revenue Service rule regarding the taxability of grant funds, not to change legislation," according to the report.

The inspector general, however, determined this to be untrue calling their interpretation "a legislative fix.”

The audit also found that Summit charged the Energy Department $650,000 for consultant costs, which included charges for first-class travel, a spa service, limousine services and alcohol.

Summit also charged about $325,000 for catering on a private jet, travel expenses to attend a charity event and banquet room rental expenses, all things the inspector general determined "did not appear to be business-related."

The report said officials found the potential unallowable travel charges the most alarming due to the fact that Summit's total travel budget increased from about $713,000 to over $3 million. 

The inspector general in part blamed Energy Department's Office of Fossil Energy for failing to consistently exercise "sound project and financial management practices in its oversight of the project."

The department terminated the project with Summit in 2016 citing "significant project delays had occurred due to the Project’s inability to secure private financing." 

Summit filed for Chapter 7 bankruptcy in October.