IMPACT: House committee slaps OMB with subpoena over loan guarantee

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Two months after Solyndra's accountant noted the solar firm's recurring losses and negative cash flows had helped raise doubts about "its ability to continue as a going concern," President Obama visited its Fremont, Calif., plant, heralding the project as "a symbol of promise." With Obama is the company's vice president, Ben Bierman (left) and CEO Chris Gronet.

Paul Chinn / Associated Press

 

Escalating its exploration of a loan guarantee benefiting a politically connected solar panel maker, the House Committee on Energy and Commerce subpoenaed the Office of Management and Budget Thursday for records revealing how it vetted the first energy loan guarantee under the Obama administration.

The Subcommittee on Oversight and Investigations, in a 14-8 vote on party lines, ordered the subpoena after a majority of lawmakers accused OMB of stonewalling an investigation into a loan guarantee that was announced with fanfare but has since drawn questions from government auditors and analysts. The committee seeks memos to or from the White House involving the loan guarantee.

The $535 million loan guarantee, awarded in 2009 to California-based Solyndra Inc., has become a flashpoint amid larger scrutiny over how well, and how fairly, the Department of Energy has doled out taxpayer dollars to bankroll green energy projects.

In all, DOE has announced 20 conditional commitments and completed 11 loan guarantees, infusing projects across the country with $11 billion in taxpayer backing. Several Energy Department guarantees, loans and grants have bankrolled companies whose financial backers include major supporters of the president, iWatch News and ABC News reported earlier this year.

Solyndra’s prime financiers include Oklahoma oil billionaire George Kaiser, a “bundler” of campaign donations who raised at least $50,000 for the president’s 2008 election effort and has often visited the White House. Kaiser has declined interview requests about the Solyndra loan guarantee. The company said politics played no role in its award, and Energy Department officials said each loan guarantee was awarded after careful review.

Yet other questions surfaced about the DOE-Solyndra deal. After scoring that maiden guarantee, the California firm last year laid off workers and cancelled a planned initial public offering. Earlier this year, DOE restructured the loan’s terms. Solyndra said it is financially stronger and that the guarantee will create the long-term jobs promised, but some in Congress say its earlier troubles raise real questions about how well the government vetted the financing.

In May, iWatch News and ABC disclosed that the Obama administration bypassed steps meant to protect taxpayers as it hurried to approve Solyndra’s guarantee—announcing a commitment to provide the backing in March 2009 before receiving completed marketing and legal reviews. Energy officials said they obtained all required reviews before closing the deal, and conducted proper due diligence before Secretary Steven Chu announced the loan guarantee.

Yet some members of Congress want to know more. Subcommittee Chairman Cliff Stearns, R-Fla., has been pressing for answers and wants OMB to turn over thousands of pages of records.

In February, the House committee launched an investigation into the DOE loan guarantee with a focus on the Solyndra financing, sending a letter asking Chu for a briefing and documents.

A month later, the committee sent a letter to OMB seeking all documents in its possession relating to the $535 million loan guarantee. While DOE issued the guarantee, OMB played a vital role in exploring potential risks with the taxpayer backed guarantee.

After Stearns accused OMB of failing to turn over most of the records sought, he called OMB Deputy Director Jeffrey Zients to testify at a June 24 hearing. Zients did not show, saying he had a scheduling conflict.

Afterward, Republican staff members of the committee met with their Democratic counterparts to discuss four categories of records being sought as part of the investigation. A July 12 memo described those records as: “1. All documents created or drafted by OMB (including reports and memos) relating to the Solyndra guarantee. 2. All communications between DOE and OMB relating to the Solyndra guarantee. 3. All communications among OMB personnel relating to the Solyndra guarantee (or, internal emails). 4. All communications between OMB and the White House relating to the Solyndra guarantee.”

Stearns said OMB turned over records for just the second category but held back even some of those.

 “The most important information in the documents—the risk ratings assigned to the Solyndra guarantee—were redacted,” Stearns said Thursday. “Committee asked OMB staff again about the other categories of documents the committee had requested, and whether OMB would produce them. As it has done repeatedly over the last four months, OMB refused to respond.”

He added: “We simply cannot allow executive branch agencies to pick and choose what they will produce, or whether they will produce it at all.…If OMB has nothing to hide, they should have turned the documents over four months ago and perhaps we would have been done with this investigation by now.”

Committee Democrats said OMB has been cooperating, meeting repeatedly with staff members and turning over well more than 1,000 records. Diana DeGette, D-Colo., the ranking Democrat on the subcommittee, accused Republicans of playing politics.

“It sure smells that way to me,” she said to Stearns.

Like other Democrats, Henry Waxman, D-Calif., said loan guarantees are fair game for committee inquiries.

But he called the investigation a “fishing expedition” with no evidence of wrongdoing. Echoing DeGette and other party members, Waxman said a move to issue a subpoena is “rash, premature and does not reflect responsible use of the subpoena power.”

Republicans noted that Waxman himself had led a subpoena to OMB under George Bush, moving much more quickly than the committee had in this case. Waxman said the facts in that earlier case called for a subpoena.

OMB did not take part in Thursday’s meeting. But afterward, the budget office said it has been working with the investigation.

“OMB has diligently identified—and provided the committee with access to—extensive information and documents regarding the subject of its inquiry,” Kenneth Baer, senior adviser and associate director for communications and strategic planning, said in a statement.      

“Given the more than 1,800 pages of documents and many hours of briefings provided to the committee, we wish its members were willing to continue working with us in a cooperative fashion. Either way, OMB will continue its efforts to cooperate with the Congress, and will be reviewing the subpoena and responding as appropriate."

Other committee members said the agency has been far from cooperative.

Joe Barton, a Texas Republican, said the budget office has shown “disdain and arrogance” in refusing to turn over records sought for months.

“We represent the people. We are the people’s house,” Barton said. “They are absolutely stonewalling us. Enough is enough.”

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