Report text available as:

  • TXT
  • PDF   (PDF provides a complete and accurate display of this text.) Tip ?

112th Congress                                            Rept. 112-652
                        HOUSE OF REPRESENTATIVES
 2d Session                                                      Part 1

======================================================================



 
                         NO MORE SOLYNDRAS ACT

                                _______
                                

 September 10, 2012.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

  Mr. Upton, from the Committee on Energy and Commerce, submitted the 
                               following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 6213]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 6213) to limit further taxpayer exposure from 
the loan guarantee program established under title XVII of the 
Energy Policy Act of 2005, having considered the same, report 
favorably thereon with an amendment and recommend that the bill 
as amended do pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     1
Purpose and Summary..............................................     4
Background and Need for Legislation..............................     5
Hearings.........................................................     9
Committee Consideration..........................................    10
Committee Votes..................................................    11
Committee Oversight Findings.....................................    20
Statement of General Performance, Goals, and Objectives..........    20
New Budget Authority, Entitlement Authority, and Tax Expenditures    20
Earmark..........................................................    20
Committee Cost Estimate..........................................    20
Congressional Budget Office Estimate.............................    20
Federal Mandates Statement.......................................    22
Advisory Committee Statement.....................................    22
Applicability to Legislative Branch..............................    22
Section-by-Section Analysis of Legislation.......................    22
Changes in Existing Law Made by the Bill, as Reported............    23
Dissenting Views.................................................    25
Exchange of Letters..............................................    32

                               Amendment

    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``No More Solyndras Act''.

SEC. 2. FINDINGS.

  The Congress makes the following findings:
          (1) President Obama took office amidst a weak economy and 
        high unemployment, yet he remained committed to advancing an 
        expansive ``green jobs'' agenda that received substantial 
        funding with the passage of the American Recovery and 
        Reinvestment Act of 2009, commonly known as the stimulus 
        package.
          (2) The stimulus package allocated $90 billion to various 
        green energy programs, and related appropriations provided $47 
        billion for loan guarantees authorized under title XVII of the 
        Energy Policy Act of 2005 (42 U.S.C. 16511 et seq.).
          (3) Such title XVII authorized the Secretary of Energy to 
        issue loan guarantees for projects that avoid, reduce, or 
        sequester air pollutants or greenhouse gases and employ new or 
        significantly improved technologies compared with commercial 
        technologies in service at the time the guarantee is issued.
          (4) Loan guarantees issued under such title XVII were 
        required to provide a reasonable prospect of repayment and were 
        expressly required to be subject to the condition that the 
        obligation is not subordinate to other financing.
          (5) The stimulus package expanded such title XVII by adding 
        section 1705 to include projects that use commercial technology 
        for renewable energy systems, electric power transmission 
        systems, and leading-edge biofuels projects and by 
        appropriating $6,000,000,000 in funding to pay the credit 
        subsidy costs for section 1705 loan guarantees for projects 
        that commence construction no later than September 30, 2011.
          (6) The Department of Energy, since the enactment of the 
        stimulus package, has issued loan guarantees under such title 
        XVII for 28 projects totaling $15,100,000,000 under the section 
        1705 program, and, according to the Government Accountability 
        Office, issued conditional loan guarantees for four projects 
        totaling $4,400,000,000 under the section 1705 program and four 
        projects totaling $10,600,000,000 under the section 1703 
        program.
          (7) Three of the first five companies that received section 
        1705 loan guarantees for their projects, Solyndra, Inc., Beacon 
        Power Corporation, and Abound Solar, Inc., have declared 
        bankruptcy.
          (8) The bankruptcy of the first section 1705 loan guarantee 
        recipient, Solyndra, Inc., could result in a loss to taxpayers 
        of over $530,000,000.
          (9) The investigation of the Solyndra loan guarantee by the 
        Committee on Energy and Commerce has demonstrated that the 
        review in 2009 of the Solyndra application by the Department of 
        Energy and the Office of Management and Budget was driven by 
        politics and ideology and divorced from economic reality where 
        the Department of Energy ignored concerns about the company's 
        financial condition and market for its products.
          (10) Despite an express provision in such title XVII 
        prohibiting subordination of the United States taxpayers' 
        financial interest, the Department of Energy restructured the 
        Solyndra loan guarantee in February 2011, resulting in the 
        taxpayers losing priority to Solyndra's investors in the event 
        of a default.
          (11) The Inspector General of the Department of the Treasury 
        concluded that it was unclear whether the Department of 
        Energy's consultation requirement with the Secretary of the 
        Treasury on the Solyndra loan guarantee was met; that the 
        consultation that did occur was rushed with the Department of 
        the Treasury expressing that ``the train really has left the 
        station on this deal''; and that no documentation was retained 
        as to how the Department of the Treasury's serious concerns 
        with the loan guarantee were addressed.
          (12) The Government Accountability Office concluded that the 
        Department of Energy Loan Guarantee Program under title XVII 
        has treated applicants inconsistently; that the Department of 
        Energy did not follow its own process for reviewing 
        applications and documenting its analysis and decisions, 
        increasing the likelihood of taxpayer exposure to financial 
        risk from a default; and that the Department of Energy's 
        absence of adequate documentation made it difficult for the 
        Department to defend its decisions on loan guarantees as sound 
        and fair.
          (13) A memorandum prepared for the President dated October 
        25, 2010, from Carol Browner, Ron Klain, and Larry Summers, 
        principal advisors to the President, noted the risk presented 
        by loan guarantee projects because most of the projects had 
        little ``skin in the game'' from private investors.
          (14) A January 2012 report conducted at the request of the 
        Chief of Staff to the President concluded that the portfolio of 
        projects the Department of Energy included in the loan program 
        were higher risk investments that private capital markets do 
        not generally invest in.
          (15) The Department of Energy's section 1705 program has 
        expired but the Department of Energy has announced that it will 
        continue to consider applications for loan guarantees under the 
        section 1703 program.
          (16) The Department of Energy has approximately 
        $34,000,000,000 in remaining lending authority to issue new 
        loan guarantees under the section 1703 program.

SEC. 3. SUNSET.

  (a) No New Applications.--The Secretary of Energy shall not issue any 
new loan guarantee pursuant to title XVII of the Energy Policy Act of 
2005 (42 U.S.C. 16511 et seq.) for any application submitted to the 
Department of Energy after December 31, 2011.
  (b) Pending Applications.--With respect to any application submitted 
pursuant to section 1703 or 1705 of the Energy Policy Act of 2005 
before December 31, 2011:
          (1) No guarantee shall be made until the Secretary of the 
        Treasury has provided to the Secretary of Energy a written 
        analysis of the financial terms and conditions of the proposed 
        loan guarantee, pursuant to section 1702(a) of the Energy 
        Policy Act of 2005 (42 U.S.C. 16512(a)).
          (2) The Secretary of the Treasury shall transmit the written 
        analysis required under paragraph (1) to the Secretary of 
        Energy not later than 30 days after receiving the proposal from 
        the Secretary of Energy.
          (3) Before making a guarantee under such title XVII, the 
        Secretary of Energy shall take into consideration the written 
        analysis made by the Secretary of the Treasury under paragraph 
        (1).
          (4) If the Secretary of Energy makes a guarantee that is not 
        consistent with the written analysis provided by the Secretary 
        of the Treasury under paragraph (1), not later than 30 days 
        after making such guarantee the Secretary of Energy shall 
        transmit to the Committee on Energy and Commerce of the House 
        of Representatives and the Committee on Energy and Natural 
        Resources of the Senate a written explanation of any material 
        inconsistencies.
  (c) Transparency.--
          (1) Reports to congress.--Not later than 60 days after making 
        a guarantee as provided in subsection (b), the Secretary of 
        Energy shall transmit to the Committee on Energy and Commerce 
        of the House of Representatives and the Committee on Energy and 
        Natural Resources of the Senate a report that includes 
        information regarding--
                  (A) the review and decisionmaking process utilized by 
                the Secretary in making the guarantee;
                  (B) the terms of the guarantee;
                  (C) the recipient; and
                  (D) the technology and project for which the loan 
                guarantee will be used.
          (2) Protecting confidential business information.--A report 
        under paragraph (1) shall provide all relevant information, but 
        the Secretary shall take all necessary steps to protect 
        confidential business information with respect to the recipient 
        of the loan guarantee and the technology used.

SEC. 4. RESTRUCTURING OF LOAN GUARANTEES.

  With respect to any restructuring of the terms of a loan guarantee 
issued pursuant to title XVII of the Energy Policy Act of 2005, the 
Secretary of Energy shall consult with the Secretary of the Treasury 
regarding any restructuring of the terms and conditions of the loan 
guarantee, including any deviations from the financial terms of the 
loan guarantee.

SEC. 5. RESTATING THE PROHIBITION ON SUBORDINATION.

  Section 1702(d)(3) of the Energy Policy Act of 2005 (42 U.S.C. 
16512(d)(3)) is amended by striking ``is not subordinate'' and 
inserting ``, including any reorganization, restructuring, or 
termination thereof, shall not at any time be subordinate''.

SEC. 6. ADMINISTRATIVE ACTIONS AND CIVIL PENALTIES.

  (a) In General.--Any Federal official who is responsible for the 
issuance of a loan guarantee under title XVII of the Energy Policy Act 
of 2005 in a manner that violates the requirements of such title or of 
this Act shall be--
          (1) subject to appropriate administrative discipline 
        including, when circumstances warrant, suspension from duty 
        without pay or removal from office; and
          (2) personally liable for a civil penalty in an amount of at 
        least $10,000 but not more than $50,000 for each violation.
  (b) Definition.--For purposes of this section, the term ``Federal 
official'' means--
          (1) an individual serving in a position in level I, II, III, 
        IV, or V of the Executive Schedule, as provided in subchapter 
        II of chapter 53 of title 5, United States Code; and
          (2) an individual serving in a Senior Executive Service 
        position, as provided in subchapter II of chapter 31 of title 
        5, United States Code.

SEC. 7. GAO STUDY OF FEDERAL SUBSIDIES IN ENERGY MARKETS.

  (a) In General.--The Comptroller General shall conduct a study of the 
Federal subsidies in energy markets provided from fiscal year 2003 
through fiscal year 2012.
  (b) Focus.--The study required under subsection (a) shall have 
particular focus on Federal subsidies in energy markets provided in 
support of--
          (1) electricity production, transmission, and consumption;
          (2) transportation fuels and infrastructure;
          (3) energy-related research and development; and
          (4) facilities that manufacture energy-related components.
  (c) Report.--Not later than 1 year after the date of enactment of 
this Act, the Comptroller General shall submit to the Committee on 
Energy and Commerce of the House of Representatives and the Committee 
on Energy and Natural Resources of the Senate a report that describes 
the results of the study conducted under subsection (a), including an 
identification and quantification of--
          (1) costs to the United States Treasury;
          (2) impacts on United States energy security;
          (3) impacts on electricity prices, including any potential 
        negative pricing impact on wholesale electricity markets;
          (4) impacts on transportation fuel prices;
          (5) impacts on private energy-related industries not 
        benefitting from Federal subsidies in energy markets;
          (6) any Federal subsidies in energy markets that are provided 
        to foreign persons or corporations; and
          (7) subsidies and direct financial interest any of the 15 
        foreign countries with the largest gross domestic product are 
        providing to support energy markets in their respective 
        countries.
  (d) Definition.--For purposes of this section, the term ``Federal 
subsidies'' means Federal grants, direct loans, loan guarantees, and 
tax credits, and other programmatic activities targeted at energy 
markets and related sectors, relating to specific energy technologies.

                          Purpose and Summary

    H.R. 6213, the ``No More Solyndras Act,'' was introduced by 
Representative Fred Upton (together with Reps. Stearns, Pitts, 
Terry, Stivers, Latham, Scott, Gingrey, Ellmers, Lance, Rogers, 
Whitfield, Burgess, Sullivan, Blackburn, Pompeo, Myrick, 
Harper, Flake and Olson) on July 26, 2012. The legislation 
limits further taxpayer exposure from the Department of Energy 
(DOE) loan guarantee program established under Title 17 of the 
Energy Policy Act of 2005. Key provisions of the bill:
     Prohibits DOE from issuing any Title 17 loan 
guarantees for applications submitted after December 31, 2011.
     Provides that Title 17 applications submitted 
prior to December 31, 2011, remain eligible to receive a DOE 
loan guarantee if certain conditions are satisfied.
     Requires written consultation from the Department 
of the Treasury evaluating the financial terms and conditions 
prior to initial issuance of a Title 17 loan guarantee.
     Provides for greater transparency by requiring 
that for any new guarantee issued pursuant to Title 17, DOE 
must, within 60 days of issuance, report to Congress on: (i) 
the review and decision-making process utilized by DOE in 
issuing the guarantee; (ii) the terms of the guarantee; (iii) 
the recipient; and (iv) the technology and project.
     Reaffirms that any loan guarantee obligation made 
pursuant to Title 17, including any reorganization, 
restructuring, or termination thereof, shall not, at any time, 
be subordinate to other financing and requires Department of 
Treasury consultation with respect to any restructuring.
     Subjects senior-level Federal officials and 
appointees to administrative actions and civil penalties for 
violations of any requirements of Title 17 of the Energy Policy 
Act of 2005 or the ``No More Solyndras Act.''
     Requires the Government Accountability Office to 
complete a study of the Federal subsidies in energy markets 
from FY 2003 through FY 2012.

                  Background and Need for Legislation

    There is no dispute that the Nation would benefit from an 
all-of-the-above energy policy that includes alternative as 
well as conventional energy sources. Nor is there much doubt 
that the energy mix will change over time to take advantage of 
new technological breakthroughs. But there is a right way and a 
wrong way to diversify the Nation's energy supply, and heavy-
handed government attempts to pick winners and losers have a 
long and unsuccessful history. Nonetheless, this was the 
approach taken by the Obama Administration in the 2009 stimulus 
package, which allocated $90 billion dollars for the so-called 
green energy economy. The results of the stimulus spending are 
largely in, and they are no better than Washington's past 
efforts to spur energy innovation and jobs by favoring specific 
companies and technologies. Particularly disappointing is the 
Administration's record on the loan guarantee program 
established under Title 17 of the Energy Policy Act of 2005.

           THE HISTORY OF THE TITLE 17 LOAN GUARANTEE PROGRAM

    Section 1703 of the Energy Policy Act of 2005 authorized 
the Department of Energy (DOE) to issue loan guarantees to 
projects investing in either innovative clean technologies or 
commercial-scale renewable energy that meet the following two 
criteria; (1) the projects ``avoid, reduce, or sequester air 
pollutants'' and (2) ``employ new or significantly improved 
technologies as compared to commercial technologies in service 
in the United States at the time the guarantee is issued.'' The 
Act listed ten different types of project categories that were 
eligible for funding, including renewable energy systems, 
advanced fossil energy technology, hydrogen fuel cell 
technology, advanced nuclear facilities, and efficient 
electrical generation and transmission. The goal of the program 
is to assist companies with promising projects meeting these 
criteria that are unable to attract sufficient private 
investment--hence the need for a Federal loan guarantee.
    However, the Bush Administration did not approve any loan 
guarantees under the program. This was due partly to the fact 
that the DOE office implementing the program was slow in being 
set up, and that program funding only became available in 2007. 
But even after the Bush DOE had the program up and running, it 
ran into difficulties finding applicants whose energy projects 
are meritorious, but unable to secure private financing absent 
loan guarantees. At a July 12, 2012, legislative hearing before 
the Energy and Power Subcommittee, Dr. David Kreutzer, Research 
Fellow in Energy Economics and Climate Change with the Heritage 
Foundation, testified about this inherent contradiction in the 
loan guarantee program. He stated that ``a program that seeks 
to fund projects that are both market viable and unable to get 
private financing will have to settle for projects that meet 
just one or neither of those criteria. That is, the projects 
are likely to fail, or they could have gotten private 
financing.''
    In retrospect, the Bush Administration's reluctance to 
approve any loan guarantees was fully justified. Nonetheless, 
the incoming Obama Administration treated the lack of approvals 
not as an indication of a flawed program but as a Bush DOE 
failing that needed to be corrected. The Obama DOE immediately 
accelerated the pace by which applications were processed. In 
addition, the American Recovery and Reinvestment Act of 2009 
(the stimulus package) created a new section 1705 to include 
for loan guarantees projects that use commercial technology for 
renewable energy systems, electric power transmission systems, 
and leading-edge biofuels projects. Further, the law 
appropriated $6 billion dollars in funding to pay the credit 
subsidy costs for projects that commence no later than 
September 30, 2011--further reducing the amount of private 
investment (i.e. ``skin in the game'') at risk on these 
projects. Shortly after passage of the stimulus package, 
subsequent related appropriations provided $47 billion for 
Title 17 loan guarantees.
    Within two years, more than $15 billion dollars in loan 
guarantees were approved for 28 projects, mostly related to 
solar and wind energy.

                          THE CASE OF SOLYNDRA

    None of the 28 projects can definitively be called a 
success at this time, but the single biggest failure thus far 
is Solyndra, the California-based solar panel maker that 
received a $527 million dollar loan guarantee in 2009, but went 
bankrupt nonetheless. Prior to Solyndra's bankruptcy--indeed 
right up to it--the company was the centerpiece of the Obama 
Administration's loan guarantee program, if not the entire 
stimulus package. In numerous public announcements, the 
Administration hailed the company as an important component of 
America's energy future and a source of green jobs. During a 
May 2010 visit to the company, the President explained that 
``the true engine of economic growth will always be companies 
like Solyndra,'' and that ``in a few months, Solyndra expects 
to hire a thousand workers to manufacture solar panels and sell 
them across America and around the world.''
    In reality, by the time of the President's visit to 
Solyndra, an independent audit had questioned the ability of 
the company to continue as a going concern. A few weeks after, 
Solyndra had to cancel its initial public offering. A year 
later--and only six months after a restructuring of the loan 
guarantee that subordinated the government's interest to 
Solyndra's private investors and thus put taxpayers at risk for 
more of the losses--the company went bankrupt and laid off the 
rest of its 1,900 employees.
    After an extensive 18 month investigation undertaken by the 
Oversight and Investigations Subcommittee, the Committee issued 
a Majority Staff Report, The Solyndra Failure, which documents 
serious problems throughout the Obama Administration's handling 
of the Solyndra loan guarantee.\1\ This report notes that 
Solyndra was one of the loan guarantee applications that the 
Bush Administration had expressed reservations about, but 
nonetheless it was the first one approved under the Obama 
Administration. In fact, the Bush DOE presciently raised doubts 
about Solyndra's financial condition and whether its solar 
panel designs gave the company any real advantage over 
competing products, but these concerns were quickly swept aside 
by the incoming Obama team.\2\ The report also provides 
evidence that safeguards built into the loan guarantee program 
were sidestepped, including required reviews of applications by 
the Office of Management and Budget (OMB) and the Department of 
the Treasury.\3\ In several instances, corners were apparently 
cut at the urging of the White House for the purpose of 
completing loan guarantee approvals ahead of planned public 
announcements. For example, one internal email from an OMB 
official to a policy advisor to Vice President Biden stated 
that ``[w]e have ended up in the situation of having to do 
rushed approvals on a couple of occasions (and we are worried 
about Solyndra at the end of the week). We would prefer to have 
sufficient time to do our due diligence reviews and have the 
approval set the date for the announcement rather than the 
other way around.''\4\
---------------------------------------------------------------------------
    \1\Committee on Energy and Commerce, Majority Staff Report, The 
Solyndra Failure, August 2, 2012, at http://energycommerce.house.gov/
Media/file/PDFs/Solyndra/solyndrareport.pdf; See also U.S. Government 
Accountability Office, GAO-10-627, Department of Energy: Further 
Actions Needed to Improve DOE's Ability To Evaluate and Implement The 
Loan Guarantee Program, July 2012, at http://www.gao.gov/new.items/
d10627.pdf.
    \2\Id. at 10-15.
    \3\Id. at 23-47.
    \4\Id. at 44.
---------------------------------------------------------------------------
    The report also documents many potential improprieties, 
such as the influence exerted by George Kaiser, Solyndra's 
largest investor.\5\
---------------------------------------------------------------------------
    \5\Id. at 144-145.
---------------------------------------------------------------------------
    Further, internal documents reveal that after Solyndra's 
precarious position became evident to the Administration, it 
considered additional costly steps to try to bail out the 
company rather than attempt to limit any further taxpayer 
liability.\6\ A second loan guarantee was proposed, as was 
large-scale government purchases of Solyndra's solar panels. 
Though neither was eventually pursued, DOE did agree to a 
restructuring of the loan that subordinated the taxpayers' 
interest to that of private investors, skirting statutory 
language that precluded subordination.\7\ Solyndra nonetheless 
went bankrupt in September of 2011, and the restructuring 
served only to raise the cost to the public.
---------------------------------------------------------------------------
    \6\Id. at 48-106.
    \7\Id. at 70-106.
---------------------------------------------------------------------------

                     OTHER LOAN GUARANTEE FAILURES

    Solyndra cannot be dismissed as the sole failure in an 
otherwise successful program to expand America's energy 
sources. Two others, Abound Solar and Beacon Power, have also 
gone bankrupt. Thus, three of the first five loan guarantee 
recipients have already failed, despite the large infusions of 
cash. Dr. Kreutzer categorizes these projects as those that 
``were not market viable, as demonstrated by subsequent 
economic performance. . . .'' Other defaults and bankruptcies 
may follow once the loan guarantee money runs out.
    Many loan guarantee recipients are avoiding bankruptcy not 
because their clean energy projects are paying off, but because 
their ownership interests include multi-billion dollar 
companies. Among those benefitting directly or through 
subsidiaries are Google, General Electric, Exelon, Goldman 
Sachs, Brookfield Asset Management, Sempra Energy, NextEra 
Energy Resources, Prologis, Abengoa, and others. Putting aside 
the question why such well-financed entities qualified for 
taxpayer-backed low-interest loans in the first place, it is 
difficult to describe any of their energy projects as Title 17 
successes since they clearly could have been funded without 
government assistance.
    In fairness, many of these loan guarantee projects are 
still underway, and in most cases it is premature to 
conclusively call them failures. Indeed, twelve companies were 
approved for loan guarantees as recently as September of 2011, 
which was the last month of eligibility under section 1705. It 
is worth noting that several were approved after Solyndra's 
announced bankruptcy that month, which should have put the 
Administration on notice that there were serious problems with 
its program.
    Nonetheless, the outlook for outstanding loan guarantee 
projects is not particularly good, and there is little 
indication that any are likely to achieve significant 
technological breakthroughs or appreciably contribute to the 
Nation's energy supply. In contrast, a genuinely transformative 
energy success story has emerged over the time that the Title 
17 program has been in existence--the innovations in drilling 
technologies that have led to substantial increases in domestic 
natural gas and oil production--but this occurred without loan 
guarantees or other Federal subsidies.
    Part of the failure may be due to loan guarantees being 
awarded for reasons other than merit. Indeed, The Solyndra 
Failure documents potential improprieties in the 
Administration's choice of Solyndra and in its handling of the 
company's loan guarantee application. But the bigger issue is 
whether elected officials and bureaucrats should assume the 
role of venture capitalists, and whether they are capable of 
making the best choices even if acting in good faith. As Dr. 
Kreutzer noted, ``loan guarantees are based on the false 
premise that the Department of Energy can systematically 
discover commercially viable investment projects that private 
investors have overlooked.''
    The Federal government has played a constructive role in 
energy policy in the conduct of basic energy research, and it 
is here that DOE and the national energy laboratories have a 
decades-long record of significant contributions. However, the 
loan guarantee program represents a departure from this core 
competency. The experience with loan guarantees argues against 
a Federal role in financing specific companies at the 
commercialization stage.

              THE TRUE COST OF THE LOAN GUARANTEE PROGRAM

    The cost of the loan guarantee failures goes well beyond 
the tax dollars needed to repay the loans in default. The real 
cost is the damage to the goal of energy innovation. By 
choosing certain energy companies for special treatment, the 
loan guarantee program hinders other companies, including ones 
that may be pursuing more promising and innovative ideas. 
Indeed, the history of such programs is that they discourage 
private investment in energy projects bypassed by the 
government.\8\ The former head of a loan guarantee recipient 
admitted that ``the existence of an 800-pound gorilla putting 
massive capital behind select start-ups is sucking the air away 
from the rest of the venture capital ecosystem.''\9\ Dr. 
Kreutzer warned that ``loan guarantees can misallocate capital 
and reduce overall output.''
---------------------------------------------------------------------------
    \8\Statement of Monte Canfield, Jr., Director, Office of Special 
Programs, General Accounting Office, before Committee on Banking, 
Housing and Urban Affairs, United States Senate, April 12-14, 1976, p. 
134, at http://fraser.stlouisfed.org/docs/historical/congressional/
197605sen--energyindact1975.pdf p. 134.
    \9\Wall Street Journal, Venture Capitol: New VC Force, by Neil 
King, Jr., at http://online.wsj.com/article/SB126074549073889853.html.
---------------------------------------------------------------------------
    This is also why the loan guarantee program has failed as a 
job creator. Clearly, the bankrupt companies no longer support 
any jobs, and the solvent ones do so at great cost--$12.8 
million per permanent job.\10\ But when one considers the 
potential job losses as resulting from capital being siphoned 
away from the rest of the economy, the program may well be a 
net job destroyer.\11\
---------------------------------------------------------------------------
    \10\DOE Loan Guarantee Program Office, ``Our Projects,'' available 
at: https://lpo.energy.gov/?page--id=45.
    \11\See Committee on Energy and Commerce, Majority Staff Report, 
Not Very Green, Not Many Jobs: An Assessment of the Obama 
Administration's Green Jobs Agenda,'' June 2012, at http://
energycommerce.house.gov/Media/file/PDFs/062212GreenJobsReport.pdf.
---------------------------------------------------------------------------
    Thus, the damage done by Title 17 loan guarantees is two-
fold--the Federal government invariably wastes money picking 
losers like Solyndra, and the program makes it harder for 
potential winners to emerge. The end result is 
counterproductive to achieving the nation's energy goals.

                     SUPPORTERS OF THE LEGISLATION

    Supporters of the legislation include American Commitment, 
American Conservative Union, American Energy Alliance, 
Americans for Prosperity, Americans for Tax Reform, Cost of 
Government Center, Citizens Against Government Waste, Heritage 
Action, and Let Freedom Ring.

                                Hearings

    On July 12, 2012, the Subcommittee on Energy and Power and 
the Subcommittee on Oversight and Investigations held a joint 
legislative hearing on a discussion draft of the ``No More 
Solyndras Act'' and received testimony from:
           Mr. David G. Frantz, Acting Executive 
        Director, Loan Guarantee Program Office, U.S. 
        Department of Energy;
           Dr. David W. Kreutzer. Research Fellow in 
        Energy Economics and Climate Change, Heritage 
        Foundation;
           Ms. Diana Furchtgott-Roth, Senior Fellow, 
        Manhattan Institute for Policy Research; and
           Mr. Kenneth Berlin, General Counsel & Senior 
        Vice President for Policy and Programming, Coalition 
        for Green Capital.

                        Committee Consideration

    Representatives Upton and Stearns released a discussion 
draft of the ``No More Solyndras Act'' on July 9, 2012. On July 
12, 2012, the Subcommittee on Energy and Power and the 
Subcommittee on Oversight and Investigations held a joint 
legislative hearing on the discussion draft. A revised 
discussion draft was released on July 16, 2012.
    On July 25, 2012, the Subcommittee on Energy and Power 
favorably reported the discussion draft, as amended, to the 
full Committee by roll call vote of 14 ayes and 9 nays. During 
the markup, 6 amendments were offered of which 1 was adopted.
    On July 26, 2012, H.R. 6213, the ``No More Solyndras Act'' 
was introduced by Representative Upton (together with Reps. 
Stearns, Pitts, Terry, Stivers, Latham, Scott, Gingrey, 
Ellmers, Lance, Rogers, Whitfield, Burgess, Sullivan, 
Blackburn, Pompeo, Myrick, Harper, Flake and Olson).
    On July 31, 2012, and August 1, 2012, the Committee on 
Energy and Commerce met in open markup session. During the 
markup, 12 amendments were offered of which 4 were adopted. On 
August 1, 2012, the Committee ordered H.R. 6213 favorably 
reported to the House, as amended, by roll call vote of 29 ayes 
and 19 nays.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. The 
following are the recorded votes taken on amendments offered to 
the measure, including the names of those Members voting for 
and against. A motion by Mr. Upton to order H.R. 6213, reported 
to the House, as amended, was agreed to by a record vote of 29 
ayes and 19 nays.



                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee made findings that are 
reflected in this report.

        Statement of General Performance, Goals, and Objectives

    H.R. 6213, the ``No More Solyndras Act,'' limits further 
taxpayer exposure from the loan guarantee program established 
under Title 17 of the Energy Policy Act of 2005.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that H.R. 
6213, the ``No More Solyndras Act,'' would result in no new or 
increased budget authority, entitlement authority, or tax 
expenditures or revenues.

                                Earmarks

    In compliance with clause 9(e), 9(f), and 9(g) of rule XXI 
of the Rules of the House of Representatives, the Committee 
finds that H.R. 6213, the ``No More Solyndras Act,'' contains 
no earmarks, limited tax benefits, or limited tariff benefits.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                                 September 4, 2012.
Hon. Fred Upton,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 6213, the No More 
Solyndras Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Kathleen 
Gramp.
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

H.R. 6213--No More Solyndras Act

    CBO estimates that implementing H.R. 6213 would cost about 
$1 million over the 2013-2017 period, assuming appropriation of 
the necessary amounts. Pay-as-you-go procedures would apply to 
this legislation because it would affect direct spending and 
revenues. CBO estimates, however, that those impacts would be 
insignificant over the 2013-2022 period.
    H.R. 6213 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of state, local, or tribal 
governments.
    H.R. 6213 would revise the terms and conditions governing 
the Department of Energy's (DOE's) loan guarantee program for 
advanced energy technologies, which was established under title 
17 of the Energy Policy Act of 2005. It would restrict 
eligibility for future guarantees to projects that submitted 
applications before December 31, 2011, require the Secretary of 
the Treasury to review those guarantees, and direct DOE to 
consult with the Treasury regarding any changes in the terms 
and conditions of a loan guarantee. The bill also would impose 
certain administrative sanctions and civil penalties on federal 
officials who violate the requirements of the title 17 program 
and would direct the Government Accountability Office (GAO) to 
prepare a comprehensive report on federal energy subsidies.
    Based on the cost of similar activities, CBO estimates that 
preparing the GAO study on federal energy subsidies required by 
H.R. 6213 would cost about $1 million, assuming appropriation 
of the necessary amounts. CBO estimates that other provisions 
in the bill would have no significant impact on spending 
subject to appropriation. Although limiting eligibility for new 
loan guarantees could affect the need for future 
appropriations, CBO has no basis for projecting a change in 
DOE's program costs under this bill because the title 17 
program received no funding or obligational authority in fiscal 
year 2012 and could use its existing obligational authority for 
projects that applied for loan guarantees prior to December 31, 
2011.
    Similarly, CBO estimates that implementing H.R. 6213 would 
have a negligible impact on spending by the Department of the 
Treasury because the new procedural requirements in this 
legislation would apply to a small number of projects and 
involve assessments similar to those done under current law. 
Most of the Treasury's expenditures would be subject to annual 
appropriations, but any costs incurred by the Federal Financing 
Bank (FFB) would affect direct spending because the FFB's 
operations are funded by fees that can be spent without further 
appropriation.\1\ CBO estimates, however, that any such effects 
on direct spending would be minimal over the 2013-2022 period.
---------------------------------------------------------------------------
    \1\The FFB is a government corporation under the supervision of the 
Secretary of the Treasury that is responsible for various federal 
financial activities, including purchasing obligations fully guaranteed 
by other agencies such as DOE.
---------------------------------------------------------------------------
    Finally, H.R. 6213 would make certain federal employees 
personally liable for civil penalties ranging from $10,000 to 
$50,000 for each violation of any of the requirements of the 
laws governing the title 17 program. CBO estimates that the 
amounts collected from such civil penalties, which are recorded 
in the budget as revenues, would not be significant over the 
2013-2022 period.
    The CBO staff contact for this estimate is Kathleen Gramp. 
The estimate was approved by Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

               Section-by-Section Analysis of Legislation


Section 1: Short title

    Section 1 provides the short title of ``No More Solyndras 
Act.''

Section 2: Findings

    Section 2 sets forth findings regarding the Department of 
Energy (DOE) Loan Guarantee Program under Title 17 of the 
Energy Policy Act of 2005, and highlights key findings of the 
Energy and Commerce Committee's investigation into the loan 
guarantee issued to Solyndra Corporation.

Section 3: Sunset

    Section 3(a) prohibits DOE from issuing any loan guarantees 
pursuant to Title 17 of the Energy Policy Act of 2005 for 
applications submitted after December 31, 2011.
    Section 3(b) provides that, with respect to any application 
submitted pursuant to Title 17 of the Energy Policy Act of 2005 
prior to December 31, 2011:
     No guarantee shall be issued until the Secretary 
of the Treasury (Treasury) has provided DOE a written analysis 
of the financial terms and conditions of the proposed loan 
guarantee.
     Treasury shall submit its written analysis to DOE 
not later than 30 days after receiving the proposal from DOE.
     Before DOE makes a guarantee under Title 17, it 
shall take into consideration the written analysis made by 
Treasury.
     If DOE makes a loan guarantee that is not 
consistent with the written analysis provided by Treasury, DOE 
must, within 30 days of issuance, provide a written report to 
Congress explaining any material inconsistencies.
    Section 3(c) provides that for any new guarantee issued, 
DOE must, within 60 days of issuance, report to Congress on: 
(i) the review and decision-making process utilized by DOE in 
issuing the guarantee; (ii) the terms of the guarantee; (iii) 
the recipient; and (iv) the technology and project.

Section 4: Restructuring of loan guarantees

    Section 4 provides that, with respect to any restructuring 
of the terms of a loan guarantee issued pursuant to Title 17 of 
the Energy Policy Act of 2005, DOE shall consult with Treasury 
regarding any restructuring of the terms and conditions of the 
loan guarantee, including any deviations from the financial 
terms of the loan guarantee.

Section 5: Restating the prohibition on subordination

    Section 1702(d)(3) of the Energy Policy Act of 2005 
provides that ``the obligation shall be subject to the 
condition that the obligation is not subordinate to other 
financing.'' It is the position of the Committee that this 
language unambiguously establishes that subordination of the 
loan guarantee obligation to other financing is prohibited at 
any time. Section 5 amends section 1702(d)(3) to reaffirm that 
the loan guarantee obligation, including any reorganization, 
restructuring, or termination thereof, shall not at any time be 
subordinate to other financing.

Section 6: Administrative actions and civil penalties

    Section 6 subjects Federal officials serving in a position 
in level I, II, III, IV, or V of the Executive Schedule or 
serving in a Senior Executive Service position to 
administrative actions and civil penalties for violations of 
any requirements of Title 17 of the Energy Policy Act of 2005 
or the ``No More Solyndras Act.''

Section 7: GAO study of Federal subsidies in energy markets

    Section 7(a) requires the Government Accountability Office 
(GAO) to complete a study of the Federal subsidies in energy 
markets from FY 2003 through FY 2012. The term ``federal 
subsidies'' is defined as ``Federal grants, direct loans, loan 
guarantees, and tax credits, and other programmatic activities 
targeted at energy markets and related sectors, relating to 
specific energy technologies.''
    Section 7(b) requires the study to have a particular focus 
on federal subsidies in energy markets provided in support of 
electricity production, transmission, and consumption; 
transportation fuels and infrastructure; energy-related 
research and development; and facilities that manufacture 
energy-related components.
    Section 7(c) requires that GAO submit to Congress within a 
year of enactment of the ``No More Solyndras Act'' a report 
that describes the results of the study, including an 
identification and quantification of: costs to the United 
States Treasury; impacts on United States energy security; 
impacts on electricity prices, including any potential negative 
pricing impact on wholesale electricity markets; impacts on 
transportation fuel prices; impacts on private energy-related 
industries not benefitting from federal subsidies in energy 
markets; any Federal subsidies in energy markets that are 
provided to foreign persons or corporations; and subsidies and 
direct financial interest any of the 15 foreign countries with 
the largest gross domestic product are providing to support 
energy markets in their respective countries.

         Changes in Existing Law Made by the Bill, as Reported

In compliance with clause 3(e) of rule XIII of the Rules of the 
House of Representatives, changes in existing law made by the 
bill, as reported, are shown as follows (new matter is printed 
in italic and existing law in which no change is proposed is 
shown in roman):

ENERGY POLICY ACT OF 2005

           *       *       *       *       *       *       *


TITLE XVII--INCENTIVES FOR INNOVATIVE TECHNOLOGIES

           *       *       *       *       *       *       *


SEC. 1702. TERMS AND CONDITIONS.

(a) * * *

           *       *       *       *       *       *       *

(d) Repayment.--
        (1) * * *

           *       *       *       *       *       *       *

        (3) Subordination.--The obligation shall be subject to 
        the condition that the obligation [is not subordinate], 
        including any reorganization, restructuring, or 
        termination thereof, shall not at any time be 
        subordinate to other financing.

           *       *       *       *       *       *       *


                            DISSENTING VIEWS

                       I. Purpose of Legislation

    The bill's supporters have claimed that this legislation 
will terminate the Department of Energy's (DOE) Title XVII loan 
guarantee program. On July 19, 2012, Chairman Whitfield, 
referring to the relevant sections of Title XVII, said: ``We 
are totally committed to ending this 1703, 1705 program.'' 
Similarly, at the August 1, 2012, full committee markup of the 
bill, Chairman Whitfield stated: ``I just philosophically think 
we need to stop this program. We have an opportunity to do it 
with this bill.'' At the same full committee markup, Chairman 
Stearns stated: ``We need to get the government out of the 
venture capitalist business, and we can start by getting rid of 
Title XVII.'' He claimed that the bill ``will phase out DOE's 
flawed loan guarantee program under Title XVII of the Energy 
Policy Act of 2005.''
    This description of the bill's purpose and effect is 
misleading and inaccurate. The bill does not terminate, end, or 
phase out the loan guarantee program. Under this bill, DOE can 
use its existing authority to issue $34 billion in new loan 
guarantees. DOE can issue those loan guarantees tomorrow, next 
year, or twenty years from now. The bill establishes no end 
date for the program. As explained in more detail below, the 
bill would prohibit DOE from considering any applications for 
loan guarantees submitted after December 31, 2011.
    At the July 12, 2012, legislative hearing, David Frantz, 
the Acting Executive Director of DOE's Loan Programs Office, 
explained that the bill does not terminate the loan guarantee 
program. At the July 25, 2012, Energy and Power Subcommittee 
markup of the bill, Committee counsel confirmed that the bill 
does not terminate the program and that, under the bill, DOE 
could use its existing authority to issue $34 billion in 
additional loan guarantees at any time in the future. Chairman 
Whitfield conceded this point during the August 1, 2012, full 
committee markup, stating:

        So while it is appealing to end the project right now, 
        let us just end the program right now, not consider any 
        of these pending applications, I think the better view 
        is, let us let the Department of Energy go through the 
        remainder of these applications that are already 
        pending and let them make that decision. But there is 
        only $34 billion left.

    A vote on an amendment offered by Rep. Markey during the 
full committee markup demonstrated that the purpose of the 
legislation is not to terminate the loan guarantee program. 
Rep. Markey's amendment would have expressly prohibited DOE 
from issuing any new Title XVII loan guarantees without 
exception, effectively terminating the program. The amendment 
was overwhelmingly defeated on a bipartisan basis by a vote of 
3 to 39. Twenty-five Republican members of the Committee, 
including Chairmen Upton, Stearns, and Whitfield, voted against 
the amendment.

           II. Bill Summary: H.R. 6213, No More Solyndras Act

                 A. INACCURATE AND MISLEADING FINDINGS

    Section 2 of the bill includes several misleading and 
inaccurate statements. For example, finding number 9 states 
that the Committee's investigation into Solyndra ``has 
demonstrated that the review in 2009 of the Solyndra 
application by the Department of Energy and the Office of 
Management and Budget was driven by politics and ideology and 
divorced from economic reality where the Department of Energy 
ignored concerns about the company's financial condition and 
market for its products.'' This statement is not supported by 
the evidence before the Committee.
    The Department of Energy awarded the loan guarantee to 
Solyndra in 2009 after more than two years of thorough due 
diligence carried out by reputable independent third party 
experts and career professionals working at DOE through the 
Bush and Obama Administrations. The findings suggest that no 
one but short-sighted officials at the Department of Energy 
thought Solyndra had a chance of succeeding, but this is 
revisionist history. While, in hindsight, failed investments 
may look obvious, in 2009 there were many astute investors and 
market observers who thought that Solyndra was a smart 
investment. The company had raised nearly $1 billion from 
sophisticated private investors, including Argonaut Ventures, 
Madrone Capital, Redpoint Ventures, and Rockport Capital 
Partners. Moreover, in 2010 after Solyndra was awarded the loan 
guarantee, the Massachusetts Institute of Technology's 
Technology Review, ranked Solyndra as one of the ``50 Most 
Innovative Companies in the World'' and the Wall Street Journal 
ranked Solyndra number one on its list of ``The Next Big Thing: 
Top 10 Venture Backed Clean Technology Companies.''\1\ The 
career officials at DOE stress tested Solyndra's financial 
projections by estimating the impact of a 40% drop in solar 
prices. Solyndra passed this stress test, but went bankrupt 
when solar prices dropped a staggering 70% in a two year 
period--largely because of intense Chinese competition.
---------------------------------------------------------------------------
    \1\The 50 Most Innovative Companies in 2010, MIT Technology Review 
(Feb. 23, 2010) and Wall Street Journal Ranks the Next Big Thing: The 
Top 10 Venture Backed Clean Technology Companies, Wall Street Journal 
(Mar. 4, 2010).
---------------------------------------------------------------------------
    There is no evidence before the Committee that the decision 
to award the loan was ``driven by politics and ideology.'' 
Instead, the voluminous record before the Committee, including 
over 300,000 pages of documents and more than 60 hours of 
interviews with the key officials who reviewed the loan 
guarantee reveals that all decisions on the loan were made on 
the merits after thorough and independent review, and that 
political considerations did not affect the key decisions on 
the loan guarantee.
    The Committee interviewed 14 individuals involved in the 
Solyndra loan guarantee, including White House officials, OMB 
officials, Energy Department officials, and private investors. 
The Committee also heard testimony from six additional 
officials involved in the guarantee, including the Secretary of 
Energy. Many of these individuals were career officials; one 
was a Bush Administration appointee. Every individual was asked 
whether political contributions played a role in the decisions 
on Solyndra. They unanimously said there was no political 
influence in these decisions. At the July 12, 2012, legislative 
hearing, David Frantz, a career civil servant who was the first 
employee and director of the loan guarantee program in 2007 
under the Bush Administration, testified: ``To the very best of 
my knowledge, through the whole history of the program from its 
inception to today, it has not been driven by any political 
considerations whatsoever.''
    The Committee report compounds the problems with this 
misleading finding by stating that there were ``potential 
improprieties'' in the Solyndra loan process ``such as the 
influence exerted by George Kaiser, Solyndra's largest 
investor,'' that ``corners were apparently cut at the urging of 
the White House'' during the Obama Administration's review of 
the Solyndra loan guarantee, and that upon taking office the 
Obama Administration ``quickly swept aside'' the Bush 
Administration's concerns about Solyndra's viability and 
awarded the loan guarantee. These claims are inaccurate and 
ignore key exculpatory evidence received by the Committee.
    The Committee report's unfounded claims about ``potential 
improprieties'' related to George Kaiser ignore the fact that 
the key White House officials who were supposedly involved told 
Committee staff that they were unaware of Mr. Kaiser's 
contributions to the President until they became public through 
the Committee's investigation. These same White House officials 
also told Committee staff that they did not seek to ``cut 
corners'' in the review of the Solyndra loan guarantee nor did 
they have any involvement in the substance of the decisions 
about the loan guarantee. The career staff at DOE and OMB 
confirmed that they felt no White House pressure related to 
their decisions on the loan guarantee, that their decisions 
were made purely on the merits, and that no corners were cut. 
Finally, career officials and a Bush Administration political 
appointee who worked on the Solyndra loan at DOE in both the 
Bush and Obama Administrations told Committee staff that 
advancing the first loan guarantee was a key priority of both 
Administrations and that Solyndra's application was not 
improperly accelerated at the start of the Obama 
Administration.
    Finding number 10 states that ``despite an express 
provision . . . prohibiting subordination of the United States 
taxpayers' financial interest, the Department of Energy 
restructured the Solyndra loan guarantee.'' The Committee's 
investigation revealed that when Solyndra faced severe 
financial strain, it required new capital from investors in 
late 2010 and early 2011. DOE looked carefully at the text of 
the Title 17 loan guarantee statute and concluded that although 
subordination was not allowed during the origination process 
for the loan guarantee, it was permitted in the event that a 
loan needed to be restructured. The most senior lawyers at DOE, 
the Loan Program's outside counsel, and the top legal counsel 
at OMB all agreed with this decision. When the Democratic staff 
of the Committee sought an outside opinion from the former 
general counsel at DOE, she concurred with DOE's analysis. 
Furthermore, the independent consultant Herb Alison, who 
reviewed the DOE loan program, stated that DOE ``should have 
some flexibility to subordinate because that may be the best 
way . . . to recover some money for taxpayers. Because by 
subordinating, it may make it possible to attract additional 
funding . . . which can help that project succeed.''\2\
---------------------------------------------------------------------------
    \2\Senate Committee on Energy and Natural Resources, Testimony of 
Herb Allison, Independent Consultant, Hearing on the Allison Report on 
DOE Loan Guarantee Program, 112th Cong. (Mar. 13, 2012).
---------------------------------------------------------------------------
    Finding number 12 states that a Government Accountability 
Office (GAO) report found that the DOE loan guarantee program 
``has treated applicants inconsistently.'' The record before 
the Committee has provided no evidence of political favoritism 
in the loan guarantee program, and the GAO report provides no 
evidence that any ``inconsistent treatment'' impacted the 
decision to grant a loan guarantee or was in any way connected 
to political considerations.\3\ DOE responded to the GAO report 
by stating, in part, that ``within each solicitation the rules 
have been applied consistently and no applicants have been 
disadvantaged.''\4\
---------------------------------------------------------------------------
    \3\Government Accountability Office, Further Actions Are Needed to 
Improve DOE's Ability to Evaluate and Implement the Loan Guarantee 
Program (July 2010) (GAO-10-627).
    \4\Id. at 26.
---------------------------------------------------------------------------
    The findings give the misleading impression that the DOE 
loan programs have been a failure. But this is not true. The 
projects already financed by the program are expected to 
support nearly 60,000 jobs and save nearly 300 million gallons 
of gasoline per year. The program has supported six power 
generation projects that are already complete and nine projects 
that are sending power to the electricity grid. The program is 
funding one of the world's largest wind farms, the world's 
largest concentrated solar generation project, the world's 
largest photovoltaic solar power plant, and the nation's first 
two all-electric vehicle manufacturing facilities. The program 
has allowed private investors to come off the sidelines to 
invest tens of billions of dollars and create thousands of 
jobs.
    After the Solyndra bankruptcy, the White House retained 
Herb Allison to conduct an independent review of the loan 
guarantee program. Mr. Allison previously served as the 
Assistant Secretary of the Treasury for Financial Stability, 
President and CEO of Fannie Mae after it was placed into 
conservatorship, Chairman, President and CEO of TIAA-CREF, and 
National Finance Committee Chair for Senator John McCain's 
presidential campaign. His report, which was conducted free 
from any Department or White House influence, examined the 
overall loan guarantee portfolio.
    Mr. Allison found that the Department's loan guarantee 
program is fulfilling Congress' intent to fund ``innovative 
alternative energy projects employing technologies that [have] 
not reached commercial maturity and involved more risk than is 
typical for project and corporate debt financing.''\5\ In fact, 
Mr. Allison found that the overall loan portfolio is 
significantly less risky than both the Department and Congress 
expected. The report estimated potential losses in the 
portfolio and found them to be $2 billion less than the 
Department had previously estimated and $7 billion less than 
the reserve amount that Congress set aside to cover losses.\6\ 
According to Mr. Allison, some losses in the portfolio were 
anticipated, but overall the portfolio is performing well.
---------------------------------------------------------------------------
    \5\The Independent Consultant, Report of the Independent 
Consultant's Review with Respect to the Department of Energy Loan and 
Loan Guarantee Portfolio (Jan. 31, 2012) (available online at 
www.whitehouse.gov/sites/default/files/docs/report--on--doe--loan--
and--guarantee--portfolio.pdf) at 17.
    \6\Id. at 32.
---------------------------------------------------------------------------

                     B. PICKING WINNERS AND LOSERS

    Section 3 provides that DOE shall not issue any new loan 
guarantees for any applications submitted after December 31, 
2011. DOE is permitted to issue new loan guarantees with 
existing or future loan guarantee authority but only for 
applications submitted by that date. According to DOE, 
approximately 50 applications were submitted by December 31, 
2011, and were not withdrawn, rejected, or awarded a final loan 
guarantee. Under the bill, only this arbitrary pool of 
applications would be eligible for new loan guarantees. Even 
though the purpose of the loan guarantee program is to foster 
innovative technologies, DOE would be prohibited from issuing 
new solicitations or considering new applications for 
innovative nuclear, fossil, or renewable energy technologies. 
As a result, tens of billions of dollars of new loan guarantees 
can be issued in the years to come, but those guarantees may 
not be used to support the most innovative and promising 
technologies. As David Frantz, the Acting Executive Director of 
DOE's Loan Programs Office, explained at the July 12, 2012, 
legislative hearing: ``going forward, the Department would 
increasingly be unable to guarantee loans with the newest and 
most innovative technologies, particularly in the area of 
nuclear and renewable projects.''
    For example, DOE currently has $10.2 billion in uncommitted 
loan guarantee authority for nuclear generation projects. Under 
the bill, this loan guarantee authority and any additional 
future loan guarantee authority for nuclear projects could only 
be used to award guarantees to the nuclear project applications 
submitted prior to December 31, 2011. If a new applicant has a 
ground-breaking small modular reactor or next generation 
nuclear technology, DOE would be prohibited from providing 
support for such a project.
    At the July 25, 2012, Energy and Power Subcommittee markup 
of the bill, supporters of the bill claimed that the bill was 
drafted to allow DOE to issue $34 billion more in loan 
guarantees to grandfathered applicants who submitted 
applications prior to December 31, 2011, because DOE might 
incur liability if it did not issue loan guarantees to 
applicants with conditional commitments or even applicants that 
had merely begun due diligence. There is no support for this 
claim. The text of the loan guarantee program regulations, 
solicitations, and term sheets makes it clear that DOE can 
decide not to issue a loan guarantee for any reason at any 
time.\7\ There is no contractual obligation to issue a final 
loan guarantee.
---------------------------------------------------------------------------
    \2\See, e.g., 10 C.F.R. 609.2 (stating: ``the Secretary may 
terminate a Conditional Commitment for any reason at any time prior to 
the execution of the Loan Guarantee Agreement'').
---------------------------------------------------------------------------

           C. PERSONAL CIVIL LIABILITY FOR FEDERAL EMPLOYEES

    Section 6 was added by a subcommittee amendment offered by 
Rep. Burgess and modified by a full committee amendment offered 
by Rep. Burgess. It provides that ``any federal official who is 
responsible for the issuance of a loan guarantee'' under the 
program in a manner that violates the requirements of Title 
XVII or this bill shall be (1) subject to appropriate 
administrative discipline and (2) personally liable for a civil 
penalty of at least $10,000 and up to $50,000 for each 
violation. During the full committee markup, Rep. Burgess 
described the provision as giving ``real teeth toward ensuring 
that the egregious activities which occurred during the lead-up 
to the subordination of taxpayer dollars will never occur 
again.''
    This broad provision subjects federal employees to punitive 
personal civil liability penalties. The provision defines the 
term ``federal official'' as an individual serving in an 
Executive Schedule or Senior Executive Service position, 
including career civil servants. However, the provision does 
not define or provide any limits on the term ``who is 
responsible for the issuance of a loan guarantee.'' It is 
unclear whether ``any federal official who is responsible for 
the issuance of a loan guarantee'' includes the Secretary of 
Energy, the members of the Credit Review Board, the members of 
the Credit Committee, the Executive Director of the Loan 
Programs Office, or officials at the Office of Management and 
Budget. The inclusion of career Senior Executive Service 
employees in the definition of ``federal official'' suggests 
that a large number of individuals could be subject to civil 
liability penalties under this provision.
    The uncertainty about which federal employees are 
potentially subject to this new civil liability is exacerbated 
by the breadth of the civil liability itself. The language of 
the provision does not limit liability to individuals who 
knowingly or intentionally violate a requirement of Title XVII. 
Under this provision, any federal official who unintentionally 
violates a requirement of Title XVII or who relies in good 
faith on legal advice from DOE attorneys when making a decision 
that is later determined to violate a requirement of Title XVII 
would face personal liability for substantial civil penalties.
    Moreover, the language of the provision does not appear to 
apply to the restructuring of a loan guarantee, which was the 
stated purpose of the provision's author. On its face, the 
provision applies to federal officials responsible for the 
issuance of a loan guarantee in a manner that violates the 
requirements of Title XVII, not federal officials responsible 
for the restructuring of a previously-issued loan guarantee.

                          D. SKEWED GAO STUDY

    Section 7 was added by a full committee amendment offered 
by Rep. Pompeo. It requires a GAO study of federal subsidies in 
energy markets provided in fiscal years 2003 through 2012. The 
term ``federal subsidies'' is defined to include grants, direct 
loans, loan guarantees, and tax credits.
    This definition of ``federal subsidies'' would skew the GAO 
analysis by excluding consideration of significant subsidies 
that oil companies have received for decades. Under this 
provision, the study would exclude analysis of key tax policies 
that benefit the oil industry, such as certain tax deductions, 
accelerated depreciation, and master limited partnerships. Such 
an analysis would provide an incomplete and inaccurate picture 
of U.S. energy subsidies.
    A second-degree amendment offered by Rep. Waxman during the 
full committee markup would have expanded the definition of 
``federal subsidies'' to include these longstanding ``tax 
policies'' but was defeated. The second-degree amendment also 
would have ensured that the study examined the economic 
importance of U.S. leadership in clean energy technology 
development and manufacturing.
    For the reasons stated above, we dissent from the views 
contained in the Committee's report.
                                   Henry A. Waxman.
                                   Bobby L. Rush.
                                   Diana DeGette.