Congress returns this week and plans to kick off their short stint in Washington before heading back to the campaign trail with a bill misleadingly called the “No More Solyndras Act.” The bill’s purported goal is to stop the siphoning of taxpayer dollars from the program that spawned Solyndra, but instead it locks taxpayers into providing billions more in high-risk loan guarantees. The icing on the cake is it even ensures the project that we named “Another Solyndra”last fall (a.k.a. the United States Enrichment Corporation or USEC) can still go out the door.
Under the current bill all loan-guarantee applications that have been submitted to the Department of Energy (DOE) remain eligible to receive federal backing. No new loan guarantees can come in — but since DOE isn’t currently soliciting new applications, it’s unclear to us how this really helps at all. But we know where it hurts — many, many very expensive and very risky projects already in the pipeline will stay there.
The total number of projects this bill grandfathers in isn’t publically available — par for the course with this highly secretive program — but we know it’s a lot. Our research points to nearly 100 projects that claim to have applied. DOE says there are 50 “active” projects. Among the farthest along are an $8 billion loan guarantee for Southern Company and its partners for a nuclear reactor project in Georgia and a $2 billion loan guarantee for a uranium-enrichment facility in Eagle Creek, Idaho. Both of these projects, despite their financial, legal, and technical challenges have secured conditional commitments.
Moving down the list is another one of our favorite projects — the subject of our last joint op-ed — a loan guarantee for USEC. Currently in line to receive a $2 billion loan guarantee for an enrichment facility in Piketon, Ohio. USEC has been a hot topic this summer, winning themselves a $200 million bailout from the DOE. Why do they need it? Well it could have something to do with the fact that their stock has been trading at less than $1 per share for months. They’ve even won a junk-bond credit rating from both Moody’s and Standard & Poor’s. Sounds like a sucker bet to us.
This time the unpopular, but right, thing to do is end the program — outright. The DOE program’s lack of transparency has led to ethical questions, its operational flaws have led to oversight and accountability problems, and its structural flaws provide lending terms that even in the lending heyday were far too generous. The program saddles taxpayers with up to 80 percent of the debt load for these projects.
We are happy the bill stops new loan guarantees and that it works to reverse DOE’s ability to subordinate taxpayers’ right to reclaim lost assets in the event of default, and it brings the Department of Treasury into the process. But “No More Solyndras”? More like “Still More Solyndras!”
The “No More Solyndras Act” breezed through the Energy and Commerce Committee just before the congressional summer recess and its prospects on the floor look equally bright. The bill is scheduled to come up this week. In these fiscally tough times, you’d think Congress would be tightening the purse strings anywhere they could, but the allure of keeping pet projects in line, all the while declaring victory for taxpayers, is proving to be stronger than the will to truly protect taxpayers.
But all hope is not lost. Several members of Congress have led efforts to end the program, including polar-opposite representatives Tom McClintock (R., Calif.) and Dennis Kucinich (D., Ohio). Furthermore, a few members of the Energy and Commerce Committee voted to end the full program during the bill’s mark-up, including Representatives Pompeo (R., Kan.), Scalise (R., La.) and Burgess (R., Tex.). If the House has an open debate, you’ve got to hope that the fiscal conservatives will stand up again for the taxpayer — and that others will smarten up and follow their lead.