What was the Department of Energy's role in loaning now-bankrupt solar panel maker Solyndra half a billion dollars? That was the focus of a Senate Energy and Natural Resources Committee hearing today to consider the nominations of three DOE officials, including Gregory Woods as general counsel.
"We have a colossal failure within the DOE loan guarantee program, calling into question every loan guarantee issued and any going forward,” said Sen. Lisa Murkowski (R-Alaska).
In 2009, DOE selected Solyndra to be the first recipient of a loan guarantee under the federal stimulus program. The company folded on Aug. 31, leaving taxpayers on the hook for the $535 million loan. The Washington Post reported yesterday that the Obama White House tried to rush through loan approval so Vice President Biden could announce it at a groundbreaking for the company’s new factory.
Sen. John Barrasso (R-Wy.) pressed Woods, who currently serves as deputy general counsel of the Department of Transportation and is a former partner at Debevoise & Plimpton, on the office’s duty to review loans. When Solyndra’s loan was restructured, Barrasso said, DOE lawyers allowed the federal debt to be subordinated to that of private investors. “Does the law allow private investors to get paid before taxpayers?” he asked. “Did the administration violate the law?”
Woods was noncommittal, replying that he would review the statute, and that as general counsel he’d “ensure all loans are made in accordance with the law, and evaluated in accordance with their technical and financial merit.”
Barrasso noted that DOE is slated to issue another $10 billion in loan guarantees by Sept. 30, and asked whether in light of Solyndra, it was appropriate to do so.
“If I’m confirmed before the decision is made, I’ll look at the transactions to make sure [the general counsel’s office] has done all the work necessary,” Woods said.
Murkowski pressed Woods on how the GC’s office worked with the rest of the agency in evaluating loans. “There’s a team of attorneys who review the transaction documents to make sure they’re consistent with the terms,” Woods said. But he added that to his knowledge, these lawyers are not involved in the underwriting process to determine the business merits of the venture.
“I’m hoping the finance guys aren’t just checking the boxes,” Murkowski said. “I don’t have the level of confidence I want to have. When we’re putting taxpayer dollars at risk, I want to know for a fact that we’ve got systems that work.”