Energy and Water Development and Related Agencies Appropriations Act, 2013
Floor Speech
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Mr. STEARNS. I rise to offer an amendment on behalf of myself, Mr. Scalise of Louisiana, Mrs. Adams of Florida and Mr. Broun of Georgia.
My colleagues, this simple amendment will prohibit the Department of Energy from using any funds included in this bill to subordinate any loan obligation to other financing in violation of the Energy Policy Act of 2005. That was the original intent of Congress.
As chairman of the Energy and Commerce Committee's Subcommittee on Oversight and Investigation, I've led the investigation into the administration's rushed decision to loan Solyndra, a California-based solar panel manufacturing company, $535 million in taxpayers' money that was ultimately lost.
During this investigation, it was uncovered that, shockingly, the Department of Energy knew as early as August 2009 that Solyndra would go bankrupt in September of 2011, but simply proceeded to risk more taxpayers' funds throughout that time.
The investigation also discovered that following meetings with outside investors, DOE made the unprecedented decision on December 10, 2010, to subordinate $75 million of taxpayer money so more private capital could be injected into Solyndra.
Subordination gave private investors' money priority over taxpayers' money, meaning that, in the event of bankruptcy, private investors would be paid back before the taxpayers. But Secretary Chu wasn't allowed to subordinate the taxpayers' money.
As I mentioned earlier, the Energy Policy Act of 2005 states that DOE loan guarantees are not to be subordinated to other financing, and it was clear what the intent of Congress was.
In fact, DOE went out of its way to violate the will of Congress and sought the opinion of outside counsel on the legality of the subordination. And based upon this opinion, they made a decision to subordinate. And it all hinged on the word ``is,'' the meaning of the word ``is.''
In a 17-page draft memo obtained by the Energy and Commerce Committee,
DOE's private attorneys, they seem to acknowledge that the law prohibits the subordination of Department-guaranteed funds. However, this draft memo was never finalized. Instead, an email was sent by a lawyer at the law firm stating that DOE's rationale for subordination was, ``it makes the best possible case based on a reasonable interpretation supported by restructuring policy arguments.''
Now, Secretary Chu also ignored important parts of the law. The law required the Energy Secretary to notify the Attorney General in the event of a default on a loan guarantee. In a December 13, 2010 letter to Solyndra, Jonathan Silver, then-executive director of the DOE's loan program, notified Solyndra it was in default. However, Secretary Chu did not alert the Attorney General, as required by law.
In addition, Treasury and OMB officials' emails clearly indicate they believed DOE's legal justification for placing taxpayers at the back of the line was inconsistent with their interpretation of the law, and advised DOE to seek a legal opinion from the Justice Department.
In an August 17, 2011, email, Department of the Treasury Assistant Secretary for Financial Markets Mary Miller sent an email to Jeffery Zients, Deputy Director of OMB, in which she stated:
Our legal counsel believes that the statute and the DOE regulations both require that the guaranteed loan should not be subordinate to any loan or other debt obligation.
It is clear, Mr. Chairman, that every step of the way the Department of Energy ignored the law and did whatever it wished in order to push through the subordination.
Our investigation continues. I and my colleagues on Energy and Commerce are working on a permanent legislation solution to ensure that taxpayers are never, ever again stuck paying hundreds of millions of dollars because of the Obama administration's risky bets and decisions to put taxpayers at the back of the line. I encourage all of my colleagues to support this amendment.
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