Energy Secretary Chu faces test on Solyndra loan
Thursday, November 17, 2011
WASHINGTON (AP) — Energy Secretary Steven Chu won a Nobel Prize in physics, but his handling of a solar energy loan has some critics calling him clueless.
Chu undoubtedly will face hostile questioning Thursday from House Republicans who are investigating the $528 million federal loan received by solar panel maker Solyndra before it went belly up, laying off its 1,100 workers.
Some Republicans, including presidential candidate Newt Gingrich, have called for Chu to be fired. Newly released emails show the White House considered doing just that earlier this year as the Obama administration braced for a political storm brewing over Solyndra.
The White House says Chu retains the president’s confidence, but that trust could be challenged when the energy secretary faces GOP critics for the first time. Chu is scheduled to be the sole witness as the House Energy and Commerce Committee continues a nine-month investigation.
“Although several red flags were raised over Solyndra’s financial stability, the Department of Energy and the White House decided to put taxpayer funds at risk,” said Rep. Cliff Stearns, R-Fla., who is leading the GOP investigation. “I look forward to asking Secretary Chu why these warnings were ignored.”
Besides the initial loan, Chu also will be asked to explain why he approved a restructuring of Solyndra’s debt that allowed two private investors to move ahead of taxpayers for repayment in case of default. He also will be asked about possible political influence by two major Obama campaign donors, Steve Spinner and George Kaiser.
Chu, in remarks prepared for delivery Thursday, was ready to play defense. He said the Solyndra loan was subject to “proper, rigorous scrutiny and healthy debate” before it was approved in 2009.
“While we are disappointed in the outcome of this particular loan, we support Congress’ mandate to finance the deployment of innovative technologies and believe that our portfolio of loans does so responsibly,” Chu said.
Solyndra was the first renewable-energy company to receive a loan guarantee under the 2009 stimulus law, and the Obama administration frequently promoted the company as a model for its clean energy program. Chu attended a September 2009 groundbreaking when the loan was announced, and President Barack Obama visited the company’s Fremont, Calif., headquarters last year.
Since then, the company’s implosion and revelations that the administration hurried a review of the loan in time for the groundbreaking has become an embarrassment for Chu and Obama and a rallying cry for GOP critics of the administration’s green energy program.
The Energy Department hired Spinner, a former sports fitness executive, to help monitor the loan guarantee program. Emails released to the committee show Spinner was actively involved in the Solyndra loan, despite pledging to step aside because his wife’s law firm represented the company.
Kaiser, an Oklahoma billionaire, invested $400 million in the solar company through an investment vehicle connected to a family foundation. Kaiser has said he played no part in helping Solyndra win the 2009 loan, but emails released last week show he discussed Solyndra with the White House on at least one occasion. Kaiser also directed business associates on how to approach the White House and Energy Department to help Solyndra deal with its financial problems.
Chu also may face questions about emails released Wednesday showing that Energy Department officials asked Solyndra to postpone an early round of layoffs until after the 2010 midterm elections. The company complied.
Chu said he still believes in renewable energy despite the Solyndra debacle.
“When it comes to the clean energy race, America faces a simple choice: Compete or accept defeat. I believe we can and must compete,” he said.
Chu’s department has cooperated with the energy panel’s investigation, providing more than 186,000 pages of documents, appearing at hearings and meeting with committee staff eight times, Chu said.
But the investigation became so combative that the committee voted along partisan lines to subpoena the White House for internal communications about Solyndra. GOP investigators have complained they’ve only received partial responses from the administration.
There’s little question the Solyndra case has tarnished Chu’s once-sterling reputation, a standing that caused Obama to belittle his own Nobel Peace Prize. At a speech earlier this year, Obama said Chu “actually deserved his Nobel Prize.”
Salo Zelermyer, a lawyer and former Energy Department official, said Chu’s political standing has been diminished by the Solyndra flap, but not beyond repair.
“There’s very little documentation about his personal involvement” in the Solyndra loan, Zelermyer said. Still, the case has raised doubts about the government’s role as an investor in clean technology and its ability to act as a sort of venture capitalist for renewable energy, he said.
“And obviously the plain facts of the loss of a half-billion dollars and 1,100 jobs for folks out in California have certainly cast a black cloud” over the renewable energy program, Zelermyer said.
Chu came to the administration as a scientist. His last job was director of the Lawrence Berkeley National Lab. While Chu’s intellect is held in high regard, the Solyndra case has raised questions about whether he could manage a politically fraught, $36 billion renewable energy loan program.
Kevin Book, an analyst at Clearview Energy Partners, called Chu’s testimony the culmination of months of political posturing by both sides.
“This is a political showdown and it should be interpreted as such,” Book said. “Questions are being fielded by a scientist, not a politician, and you get different kinds of answers in Washington than you get in a national lab,” Book said.
Fielding pointed questions about his judgment is a steep fall for Chu, who has won a reputation not only as an Obama favorite but as one of the smartest people in government. Obama repeatedly credits Chu with helping to plug the massive BP oil spill in the Gulf of Mexico last year.
In hindsight, Obama may have been better served by an energy secretary with more experience dealing with Capitol Hill, Zelermyer said.
The secretary’s job is more about leadership qualities than scientific knowledge, he and other experts said, noting that the department is a large bureaucracy with 20,000 employees and four times that number of private contractors.
Daniel J. Weiss, director of climate strategy at the liberal Center for American Progress, said he expects Chu to survive the Solyndra crisis.
“Dr. Chu didn’t get (the energy secretary’s job) because he’s good at glad-handing or giving a speech. He got it because he understands at a level most of us can’t the science behind global warming and clean energy,” Weiss said, calling Chu an effective advocate for clean technology.
Weiss and others said the more likely casualty of Solyndra is the clean-energy loan program, which has come under withering assault from Republicans and even some Democrats.
“You don’t need too many Solyndras before public support for this kind of funding collapses,” Book said.