Posted on Thu, Nov. 17, 2011
last updated: November 17, 2011 08:08:49 PM
WASHINGTON — In a politically charged hearing Thursday, Republicans in the House of Representatives accused Energy Secretary Steven Chu of breaking the law in how he handled the restructuring of a loan for the California solar-energy company Solyndra.
Chu said he did nothing illegal but instead made a tough decision that gave him the best shot at getting taxpayer money back that had been loaned to the company. Chu said his department's top lawyer said his plan was legal.
The hearing was filled with political attacks through five hours of questioning. Republicans scolded Chu and fired questions at him about what he knew and when he knew it, often cutting him off as he answered. One after another accused him of breaking the law.
Democrats fired back at Republicans and accused them of mishandling the investigation and siding with the oil, gas and coal industries against renewable energy.
The hearing by the Oversight and Investigations Subcommittee of the Energy and Commerce Committee was the first time Chu has testified about Solyndra, although his department has given the panel 186,000 pages of documents.
"As secretary of energy, the final decisions on Solyndra were mine, and I made them with the best interest of the taxpayer in mind," Chu said. "I want to be clear. Over the course of Solyndra's loan guarantee, I did not make any decision based on political considerations."
Solyndra was the first company to get money under a loan guarantee program for clean energy that Congress had put in place with bipartisan support. The company received a $535 million government loan in August 2009 to build a factory for making solar panels.
It needed more cash in late 2010 and turned to its investors. Two private companies agreed to lend Solyndra an additional $75 million, as long as they'd get their money back first, ahead of the government, if Solyndra failed and had to be liquidated. The Energy Department restructured its loan to make that possible.
The only alternative at the time would have been to force Solyndra into immediate bankruptcy, Chu said. He said he figured that if Solyndra could finish building its factory, the company would have a chance to succeed, and if it didn't, the factory could be sold to pay back debts.
Solyndra shut down in August and declared bankruptcy.
Chu said it was important to invest in clean energy because of climate change and economic opportunity, because solar will boom as prices fall with technological evolution. Clean energy technology is "the best sweet spot of what America has to offer," he said.
"This has a lot to do with America's economic prosperity in the future as well as the legacy we leave to our children," Chu said.
Republicans focused mainly on the changes in the loan, arguing that the law did not allow for taxpayers to be put second in line for repayment after private investors.
Chu said that was true for the original loan, but that his department's general counsel and other legal advisers said it was not the case when the loan needed to be restructured.
The hearing was barely two sentences old before Rep. Cliff Stearns, R-Fla., the subcommittee chairman, declared, "It is readily apparent that senior officials in the administration put politics before the stewardship of taxpayer dollars."
Stearns afterward told reporters that Chu should be fired because he didn't have the business smarts to see Solyndra's problems early on.
Rep. Fred Upton, R-Mich., chair of the full Energy and Commerce Committee, asked Chu: "Who is to apologize for the half-billion dollars that is out the door? The Department of Energy?"
"It's very unfortunate," Chu said. "But was there incompetence or political interest? No."
Chu said the bottom of the market was falling out on Solyndra. The price of solar panels was rapidly decreasing because of the global economic slowdown and declining demand in Europe as a result of a decrease in government subsidies for solar power there. Meanwhile, the Chinese government invested in Chinese solar companies, and they took an increasingly large share of the global market.
"Fundamentally, this company and several others got caught in a very, very bad tsunami, if you will," Chu said.
He said investors and analysts thought Solyndra had potential.
Among the investors was George Kaiser, a fundraiser for Obama's election. Chu said that "absolutely" the loan was "made only on the merits."
"So you don't operate in a total vacuum. You know who George Kaiser is, I'm sure?" asked Rep. Joe Barton, R-Texas.
Chu replied that he didn't know Kaiser's role in the campaign at the time of the loan and its restructuring.
Barton called Chu a "man of integrity" but accused him of breaking the law in putting taxpayers second in line after investors when the loan was restructured.
Rep. Steve Scalise, R-La., asked Chu if anyone at the White House put pressure on him to restructure the loan. Chu said no one ordered the restructuring.
Chu declined to say how many of the 38 companies that got loan guarantees for clean energy were in trouble. "A majority of the portfolio seems to be in good shape. A large majority," he said.
Rep. Henry Waxman, D-Calif., said that "House Republicans and their coal and oil industry allies are manufacturing a scandal."
"It is time for the Republicans to stop dancing on Solyndra's grave and get serious about energy policy," Waxman said.
Obama opponents have signaled that they intend to keep pressing on Solyndra against Obama and Democrats. Americans for Prosperity, a private group, started a $2.4 million TV ad campaign showcasing the Solyndra controversy as evidence that Obama's 'green jobs' initiatives are corrupt. The ad has more than 1 million hits on YouTube. The group was funded by conservative billionaire brothers and oil industry investors David and Charles Koch.
Chu kept his cool throughout the hearing, answering questions calmly.
Afterward, he told reporters that he was "happy to go before this committee. They have a very important task."
He added: "We really have nothing to hide, nothing to be ashamed of."
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