The subcommittee cast its vote on the back of a report released by the committee, which examined the legality of the restructuring of Solyndras US$535 million loan guarantee by the Department of Energy (DOE). It stated that without the proper authority or analysis, and when it was evident the company was "running out of cash", DOE "agreed on the terms of the restructuring and the preferential treatment of private investors".
"When DOE agreed to subordinate its obligation to third-party financing, it did so in violation of the law," stated the House Energy and Commerce Committee. "(T)he absence of a subordination scenario in DOEs financial modeling assumptions strongly suggests that, prior to the restructuring, DOE and other Executive Branch agencies knew that subordination was not a legal option. The manner in which DOEs memorandum was drafted and the reaction of other Executive Branch agencies cast further doubt on the legal conclusions of DOE."
The emotively-named No More Solyndras Act is seeking to completely phase out the "mismanaged loan guarantee program" and prevent the DOE from issuing loan guarantees for those applications received from the start of 2012. Existing applications and loans will also be subjected to new constraints.
Specifically, in addition to barring DOE from restructuring and loan guarantee terms without Treasury consultation, the act also aims to stop the "subordination of U.S. taxpayers dollars to any other investors". Republican Michael C. Burgess has also introduced an amendment to the draft, which would see federal employees and appointees penalized for violating the requirements of the Title XVII loan guarantee program.
While the act has been dubbed a political tool for Capitol Hill Republicans to influence voters, full committee Chairman Fred Upton (and Oversight and Investigations Subcommittee Chairman Cliff Stearns, who authored the legislation, state that the phase out will provide guarantees that "taxpayers are never again on the hook for risky government bets."
Responding to the news, however, president of the Solar Energy Industry Association (SEIA), Rhone Resch said that despite Congress and the administration having identified ways to improve the program, the provisions approved by the subcommittee "simply ‘throws the baby out with the bathwater’."
He added that the program has already proved successful. "In solar alone, the program is providing crucial financing to support the construction of 11 utility-scale solar power plants in the Southwest that will produce 2,700 megawatts of safe, clean power enough to power 630,000 homes. These are financially sound projects with guaranteed revenue streams."
However, in a critical statement, Republican Ed Whitfield berated, "It is time the federal government quits throwing money at failed programs. Solyndra is not the only instance of a loan guarantee recipient going bankrupt that had major administration supporters among its ownership interests. All things considered, three failed companies that received loans is more than enough reason to declare the program a failure and put an end to it.
"I truly believe that this subcommittees work to reform the train wreck of costly new EPA regulations would do more to reinvigorate private sector innovation than the Title XVII program as well as other government handouts."