March 20, 2012 — -- Energy Secretary Steven Chu defended his agency today against allegations the Obama administration cut corners to get funding approved for a number of alternative energy projects, including $1.6 billion in loans for two massive solar installations.
As Chu testified before the House Oversight and Reform Committee, Republicans claimed their investigators found evidence the administration had ignored objections from within the department to approve risky ventures, and suggested companies with political ties to the White House had benefitted.
Rep. Jim Jordan, R-Ohio, told Chu he believed many loan recipients had credit ratings that would classify them as "junk" investments. Alleging a culture of "cronyism," at the agency, Jordan claimed 23 of 27 businesses approved for federal loans had connections to campaign donors or administration officials, including former economic adviser Larry Summers.
Interrupting the secretary at times during his testimony, Jordan told Chu, "There's no other conclusion you can reach. You helped your friends or you guys were incompetent."
Chu defended the integrity of the loan process. "We've put in place an aggressive monitoring system to ensure that the department and its grantees spend recovery act funds wisely," he said. "The department takes any case of waste, fraud or abuse very seriously."
Chu said he wasn't aware of many of the alleged connections but said department guidelines would have prevented any of the individuals from participating in discussions that would have influenced the loan process. Further, Chu says the decision would have come from career agency employees, not political appointees who could be influenced by their party.
Agency officials and Democrats maintain criticisms of the process are aimed at scoring political points. After the hearing, Chu told reporters that Republicans on the Congressional committees investigating the Obama administration's green energy program and federal loans to the failed solar firm Solyndra had turned up no evidence of cronyism.
"After hundreds of thousands of pages of documents sent over, there's not any whiff that this was a politically influenced decision," said Chu, according to Politico. "That's true of all the loans."
The committee's ranking member, Rep. Elijah Cummings, D-Maryland, said although the Solyndra investigation had raised legitimate concerns, it did not "support unsubstantiated allegations that the department engaged in criminal conduct or made its funding decisions based on political favoritism, pay-to-play relationships or outright corruption."
"We have to be responsible about our oversight," he said. "We cannot simply attack any program that has the words 'Obama' and 'clean air' attached to them."
At the heart of Tuesday's debate was the Energy Department's decision to grant $1.6 billion in loans to First Solar, an Arizona-based construction company that assembles enormous solar generation plants before turning them over to local utility companies. The funds were used for projects in Arizona and California.
To be approved for the loan, First Solar had to show it was developing new, innovative technology for use in the projects. The company offered what it called a "single axis tracker," a variant of a device used to orient solar panels toward the sun.
Republicans cited an internal email from the director of the loan program's technical division as evidence that the Energy Department cut corners.
"Be clear this is not an innovation," wrote Dong Kim just six weeks before the loan was approved. "The record will show we did not grade this as an innovation."
Kim also wrote, "someone keeps changing" internal memos to label project as meeting the innovative requirements.
Department of Energy officials, however, have noted that Kim ultimately signed off on the project as innovative, as did senior loan officers who conducted their own review.
Energy Department spokesman Damien LaVera told ABC News he believed the GOP had "cherry-picked" thousands of emails to invent a misleading controversy.
Chu told the committee that although the single axis tracker was not an entirely new technology, its use by First Solar was much larger in scale than any previous application and had been modified to boost efficiency.
"The question was, can you get a large project and the additional capital expense of tracking to make it work with at that time relatively low-efficiency panels, which were lower-cost to make," said Chu.
Today's hearing came as major private investors including Google and Warren Buffett are pushing into the solar industry. Bloomberg reports solar developers are promising investment returns of 15 percent, four times the rate of Treasury securities.