House Committee on Energy and Commerce Meets to Discuss the “No More Solyndras Act”
On Thursday July 12, 2012, the House Committee on Energy and Commerce held a hearing to discuss the “No More Solyndras Act,” a bill to cease all new loan guarantees for energy companies issued by the Department of Energy (DOE) and to thoroughly investigate the merits of any applications currently in process. The bill also prohibits the restructuring of any loan guarantees without treasury consultation and forbids the DOE from subordinating U.S. tax dollars to other financing. The “No More Solyndras Act” was drafted by House Republicans in response to the bankruptcy of three companies that received substantial loan guarantees under section 1705 of Title XVII of the Energy Policy Act of 2005. While the main focus of the hearing was on the “No More Solyndras Act,” testimony was also heard in consideration of the “Smart Energy Act,” a bill to implement energy efficient technologies in federal buildings.
In their opening statements, Rep. Fred Upton (R-MI), Chairman of the House Energy and Commerce Committee, along with Rep. Ed Whitfield (R-KY), Chairman of the Energy and Power Subcommittee, and Rep. Cliff Stearns (R-FL), Chairman of the Oversight and Investigations Subcommittee, argued in favor of the “No More Solyndras Act.” Rep. Whitfield cited flaws of the original legislation as reasons for supporting the bill including a lack of transparency, high cost for taxpayers, and a provision that allowed subordination of taxpayer money to pay back investors first, in case of bankruptcy.
David Frantz, Acting Executive Director of the DOE Loan Programs Office, was first to testify. Frantz argued in favor of the loan program stating that it was originally created with strong bipartisan support and remains a critical part of the Federal Government’s support for renewable energy technology development. Frantz highlighted the success of the loan program detailing the projects it financed including one of the largest wind farms in the world, a large-scale cellulosic ethanol plant, and numerous solar facilities. Yet despite Frantz’s testimony praising the program, many of the committee members had questions regarding the DOE’s decision to finance such risky projects and subordinate the loans.
The most vocal opponents of the DOE loan guarantees were Rep. Steve Scalise (R-LA) and Chairman Whitfield. Both questioned Frantz on where the law stated that DOE had the authority to subordinate loan guarantees. While most committee members expressed concern over the actions of the DOE, not all were ready to scrap the loan program altogether. Chairman Joe Barton (R-TX) celebrated the loan policy as a positive step and asserted that we should not “throw the baby out with bathwater” but instead reform the program to make sure we don’t make the same mistakes of the past. Rep. Diana DeGette (D-CO) questioned the Chairman Stearns’ assertion that the committee had conducted a full investigation on what happened with the Solyndra loan guarantee, and Rep. Waxman stressed that these loan guarantees were exactly what the country needed to finance projects that would reduce carbon emissions and prevent droughts and heat waves like the one experienced just last week.
After a short lunch break, a second panel convened to further discuss the benefits and consequences of loan guarantees. Dr. David Kreutzer of the Heritage Foundation and Ms. Diana Furchtgott-Roth of the Manhattan Institute for Policy Research both agreed that the government should not being in the business of picking winners and losers by issuing loan guarantees at all. Mr. Kenneth Berlin disagreed stating that the only way to see true energy innovation was through government involvement.
Afterwards, a third panel was held to further discuss the “Smart Energy Act,” however the discussion mostly consisted of witnesses stating that the act is an easy and affordable way to improve energy efficiency and save money. The committee seemed to agree. Despite opposition to the way the DOE handled loan guarantees, it does not seem like the entire Committee on Energy and Commerce is ready to give up on the measure just yet.