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THE ADMINISTRATION’S BET ON ABOUND SOLAR: 

ASSESSING THE COSTS TO THE AMERICAN 

TAXPAYERS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON REGULATORY AFFAIRS, 

STIMULUS OVERSIGHT AND GOVERNMENT 

SPENDING 

OF THE

COMMITTEE ON OVERSIGHT 

AND GOVERNMENT REFORM 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

JULY 18, 2012 

Serial No. 112–167 

Printed for the use of the Committee on Oversight and Government Reform 

( 

Available via the World Wide Web: http://www.fdsys.gov 

http://www.house.gov/reform 

(II) 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM 

DARRELL E. ISSA, California, Chairman 

DAN BURTON, Indiana 

JOHN L. MICA, Florida 

TODD RUSSELL PLATTS, Pennsylvania 

MICHAEL R. TURNER, Ohio 

PATRICK T. MCHENRY, North Carolina 

JIM JORDAN, Ohio 

JASON CHAFFETZ, Utah 

CONNIE MACK, Florida 

TIM WALBERG, Michigan 

JAMES LANKFORD, Oklahoma 

JUSTIN AMASH, Michigan 

ANN MARIE BUERKLE, New York 

PAUL A. GOSAR, Arizona 

RAU ́ L R. LABRADOR, Idaho 

PATRICK MEEHAN, Pennsylvania 

SCOTT DESJARLAIS, Tennessee 

JOE WALSH, Illinois 

TREY GOWDY, South Carolina 

DENNIS A. ROSS, Florida 

FRANK C. GUINTA, New Hampshire 

BLAKE FARENTHOLD, Texas 

MIKE KELLY, Pennsylvania 

ELIJAH E. CUMMINGS, Maryland, Ranking 

Minority Member 

EDOLPHUS TOWNS, New York 

CAROLYN B. MALONEY, New York 

ELEANOR HOLMES NORTON, District of 

Columbia 

DENNIS J. KUCINICH, Ohio 

JOHN F. TIERNEY, Massachusetts 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

JIM COOPER, Tennessee 

GERALD E. CONNOLLY, Virginia 

MIKE QUIGLEY, Illinois 

DANNY K. DAVIS, Illinois 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

JOHN A. YARMUTH, Kentucky 

CHRISTOPHER S. MURPHY, Connecticut 

JACKIE SPEIER, California 

LAWRENCE J. BRADY, Staff Director 

JOHN D. CUADERES, Deputy Staff Director 

ROBERT BORDEN, General Counsel 

LINDA A. GOOD, Chief Clerk 

DAVID RAPALLO, Minority Staff Director 

SUBCOMMITTEE ON REGULATORY AFFAIRS, STIMULUS OVERSIGHT AND GOVERNMENT

SPENDING

JIM JORDAN, Ohio, Chairman 

ANN MARIE BUERKLE, New York, Vice 

Chairwoman 

CONNIE MACK, Florida 

RAU ́ L R. LABRADOR, Idaho 

SCOTT DESJARLAIS, Tennessee 

FRANK C. GUINTA, New Hampshire 

MIKE KELLY, Pennsylvania 

DENNIS J. KUCINICH, Ohio, Ranking 

Minority Member 

JIM COOPER, Tennessee 

JACKIE SPEIER, California 

BRUCE L. BRALEY, Iowa 

(III) 

C O N T E N T S 

Page 

Hearing held on July 18, 2012 ............................................................................... 1 

WITNESSES 

Mr. Craig Witsoe, Former Chief Executive Officer, Abound Solar, Inc. 

Oral Statement ................................................................................................. 10 

Written Statement ............................................................................................ 12 

Mr. Tom Tiller, Former Chairman of the Board Abound Solar, Inc. 

Oral Statement ................................................................................................. 15 

Written Statement ............................................................................................ 17 

Mr. David Frantz, Acting Executive Director, Loan Programs Office, U.S. 

Department of Energy 

Oral Statement ................................................................................................. 21 

Written Statement ............................................................................................ 24 

Mr. Jonathan Silver, Former Executive Director, Loan Program Office, U.S. 

Department of Energy 

Oral Statement ................................................................................................. 29 

Written Statement ............................................................................................ 32 

Ms. Veronique De Rugy, Senior Research Fellow, Mercatus Center at George 

Mason University 

Oral Statement ................................................................................................. 72 

Written Statement ............................................................................................ 74 

Mr. Gregory Kats, President, Capital E 

Oral Statement ................................................................................................. 85 

Written Statement ............................................................................................ 87 

APPENDIX 

Continuation of this Committee’s oversight of the Department of Energy’s 

effort to promote green energy ............................................................................ 105 

(1) 

THE ADMINISTRATION’S BET ON ABOUND 

SOLAR: ASSESSING THE COSTS TO THE 

AMERICAN TAXPAYERS 

Wednesday, July 18, 2012, 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON REGULATORY AFFAIRS, STIMULUS

OVERSIGHT, AND GOVERNMENT SPENDING, 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, 

Washington, D.C. 

The subcommittee met, pursuant to call, at 10:05 a.m., in Room 

2154, Rayburn House Office Building, Hon. Jim Jordan [chairman 

of the subcommittee] presiding. 

Present: Representatives Jordan, Buerkle, Labrador, DesJarlais, 

Guinta, Kelly, Kucinich, and Welch. 

Also Present: Representatives Issa, Gowdy, and Cummings. 

Staff Present: Will L. Boyington, Majority Staff Assistant; Molly 

Boyl, Majority Parliamentarian; Lawrence J. Brady, Majority Staff 

Director; Drew Colliatie, Majority Staff Assistant; John Cuaderes, 

Majority Deputy Staff Director; Adam P. Fromm, Majority Director 

of Member Liaison and Committee Operations; Linda Good, Majority Chief Clerk; Tyler Grimm, Majority Professional Staff Member; 

Christopher Hixon, Majority Deputy Chief Counsel, Oversight; 

Mark D. Marin, Majority Director of Oversight; Laura L. Rush, 

Majority Deputy Chief Clerk; Jeff Solsby, Majority Senior Communications Advisor; Jaron Bourke, Minority Director of Administration; Ashley Etienne, Minority Director of Communications; Susanne Sachsman Grooms, Minority Chief Counsel; Jennifer Hoffman, Minority Press Secretary; Nicholas Kamau, Minority Counsel; 

Chris Knauer, Minority Senior Investigator; Adam Koshkin, Minority Staff Assistant; Brian Quinn, Minority Counsel; Dave Rapallo, 

Minority Staff Director; and Donald Sherman, Minority Counsel. 

Mr. JORDAN. The hearing on the Administration’s Bet on Abound 

Solar: Assessing the Cost to the American Taxpayers will come to 

order. 

You guys know the routine; we do our opening. You have to listen to us for a few minutes and then we will give you each five 

minutes for your testimony. I know we have several other members 

coming. We had conference meetings this morning, so they will be 

here shortly. But we will get started. I will do my opening statement, then we will turn to the gentleman from Ohio for his. 

Today’s hearing continues this Committee’s oversight of the Department of Energy’s efforts to promote green energy. After 

Solyndra went bankrupt in August of last year, major questions 

2 

arose about the nature of the decision-making process at the Department of Energy and how safe American taxpayers were in light 

of the risks associated with the decisions made by political appointees at the Department. 

It is becoming abundantly clear that billions of dollars of the 

public’s money was put at undue risk. The Committee’s investigation has revealed a pattern of incompetence, carelessness, and cronyism at President Obama’s Department of Energy. The DOE Inspector General has testified that the money given to the Department via the stimulus was akin to attaching ‘‘a garden hose to a 

fire hydrant.’’ DOE was flooded with cash and did not have the infrastructure to spend it in a sound fashion. Abound Solar received a $400 million loan guarantee from DOE 

and is the third major bankruptcy within the loan’s portfolio. This 

decision to grant this company taxpayer support will end up costing taxpayers up to $70 million. 

Had it not been for the attention drawn to problems with the 

loan program, DOE officials could have continued running the office in a cavalier fashion and the losses may have been much greater. 

As defenders of the Administration’s green energy agenda are 

likely to point out, letters were written by both Democrats and Republicans to the DOE supporting Abound. Ultimately, however, the 

decision to issue this loan guarantee, despite overwhelming evidence that the company was a bad bet, fell on the shoulders of the 

Department of Energy. 

To a large degree, this decision rested with the two individuals 

testifying here today, the former and current heads of DOE’s loan 

program office, Mr. Silver and Mr. Frantz. These two political appointees at the front lines of the loan program were responsible for 

safeguarding taxpayers from undue risk, and they failed in that 

task. In the case of Mr. Silver, instead of protecting taxpayers, evidence has emerged that he actively aided companies in pushing 

through their loan guarantees, despite the risk to taxpayers. 

The close political and financial ties many of these companies 

had to the Obama Administration are remarkable. We have a trillion dollar deficit, sky-high unemployment, and instead of getting 

people back to work, taxdollars were directed to friends and political allies. Allowing the DOE to play venture capitalist gods with 

the people’s money is a mistake we should never allow to happen 

again. 

For nearly two months, Chairman Issa and I have been requesting that Secretary Chu come back to testify before the Committee 

to explain developments uncovered in our investigation. So far, Secretary Chu has been unwilling to come and explain these developments. In fact, the Department of Energy has obstructed our efforts 

at every step of the way. 

Just this week the DOE actively interfered with our efforts to obtain documents from Mr. Silver prior to this hearing. Many people 

don’t realize that the Obama Administration is not the first to experience the folly of loan guarantees. When President Carter authorized $20 billion for an alternative energy loan guarantee program, taxpayers lost a tremendous amount of money. Afterward, 

many agreed we should never issue loan guarantee for clean enVerDate Aug 31 2005 10:42 Aug 28, 2012 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 C:\DOCS\75588.TXT APRIL
3 

ergy projects again. That debacle is detailed in the Committee’s report released in March of this year. 

However, there are another three companies in bankruptcy and, 

unfortunately, it seems safe to say that Abound will not be the last 

to fail. 

I did not vote for the stimulus which provided these funds and, 

frankly, I find it absurd that the President is trying to force expensive so-called green energy down the throats of the American people. However, despite my disagreements on the policy, I think we 

can all agree that there is something fundamentally flawed about 

the implementation of this policy by the Department of Energy and 

its Loan Program Office, which has rewarded friends of the Administration at the expense of the American people. 

With that, I will yield to the gentleman from Ohio for his opening statement. 

Mr. KUCINICH. Thank you very much, Mr. Chairman. I welcome 

the opportunity to hear from the witnesses today, and although I 

am sure that each of you will provide the Subcommittee with valuable testimony, I am concerned that my colleagues in the Majority 

have other interests. 

And even before we received a single document from the Department of Energy or one of the loan guarantee recipients, our Chairman called the 1705 program a broad scandal, characterized by allegations of pay-to-play relationships, and yet we found no evidence 

of such a scandal or cronyism. And I think it is really important 

for this Committee to proceed from facts. We may assume some 

things, but we shouldn’t be making statements based on our assumptions; we should be making statements based on facts that 

the Committee process uncovers. I think that is a much more serious way to proceed with the work of this Committee. 

What this Committee has discovered is that Democrats and Republicans alike have consistently supported the loan guarantee program, whether here in Congress, in State Houses across this Country, or in the private investor community. Meanwhile, throughout 

this investigation, there is a real scandal that has been underneath 

it that we need to address, and that is the systematic, illegal 

dumping of subsidized Chinese solar panels in the U.S. So we are 

attacking our own business people here. Meanwhile, the Chinese 

are eating our lunch in this market while we are fighting with each 

other. It doesn’t make any sense at all. 

In December 2011, the United States International Trade Commission found that the American solar industry ‘‘materially injured 

by reason of imports from China.’’ In May the Department of Commerce reached a preliminary determination that China was dumping solar panels in U.S. markets. Now, this is in violation of U.S. 

trade law. Now, there is an effort to level the playing field, so the 

Commerce Department proposed a 30 percent tariff on Chinese 

solar panels. 

Today you will hear from the former heads of Abound Solar 

about how illegal Chinese dumping hurt its ability to compete and 

ultimately contributed to the company’s bankruptcy. We will also 

hear again from Greg Kats, a venture capitalist with substantial 

experience in the renewable energy sector, who will tell us that 

China’s aggressive actions threaten U.S. businesses and job creVerDate Aug 31 2005 10:42 Aug 28, 2012 Jkt 000000 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 C:\DOCS\75588.TXT APRIL
4 

ation, and we should be investing more, investing more, not less, 

in green technology to promote our economic and environmental future. 

I mean, think about it, Members. If we direct our attention to attacking each other and wipe out opportunities for American businesses to be able to grow in this sector, China then seizes the market and we basically open the door for it to happen while they are 

dumping. So we have anti-competitive conduct happening with one 

of our major trading partners, and instead of focusing on that, 

which they are still trying to do, and I would urge my colleagues 

on this Committee we should spend some time looking at this. This 

is something we should be able to work together on. And if we are 

able to do that, then we might look at the question of the U.S. solar 

industry in a different light. 

Do they have troubles? Yes. Is it our responsibility to look at 

those troubles? Absolutely. I have never said that this Committee 

doesn’t have an obligation to look at the problems within the U.S. 

solar industry and the financing packages. We should do that. That 

is what we should do. 

But there is another issue going on here that needs to be addressed, because if we wreck the opportunity for entrepreneurs in 

the solar industry to be able to succeed, and ignore what China is 

doing with their dumping of subsidized solar panels in the U.S., we 

are going to wake up someday and ask, hey, what happened, how 

come America isn’t in this solar panel business and China has the 

whole game? 

So just a few thoughts for my friends today before we start this 

hearing. Thank you. 

Mr. JORDAN. I thank the gentleman. 

I will now yield to the gentleman of the full Committee, the gentleman from California, Mr. Issa. 

Mr. ISSA. Thank you, Mr. Chairman. 

My good friend from Ohio, Mr. Kucinich, points out that China 

cleaned our clock in the solar panel business. The question that 

this hearing is not on is why is anyone surprised. China wasn’t a 

new competitor. China effectively dominates fabrication of chips 

and other affordable semiconductors. You don’t get your toys or 

your clothing from Cleveland, my hometown, Mr. Kucinich’s hometown. 

So we could have a discussion, as this Committee has, on how 

Secretary Chu’s folly of believing that mandating a market and 

then funding a market of production in the U.S. somehow was 

going to stop the market forces that had done so well in so many 

other areas of the electronics industry from taking effect. We can 

have that discussion, but not as long as this Administration continues to have an attack on unsubsidized forms of energy, continues to attack every possible way in which we could compete 

against China with affordable energy. 

The fact is this hearing today is on freedom of information. This 

is on the Presidential Records Act. This is on every law that requires that the Executive Branch maintain records that are available to Congress, to the public, and to the Archives of the President. 

5 

Jonathan Silver is not the first, nor is he likely to be the only, 

person that we will discover decided that Gmail or Hotmail was a 

convenient way to keep out of the limelight, if you will, and the accountability their communication. Certainly today, as we look at 

some of the loan-related emails, Jonathan Silver and others were 

scheming to ensure that the right people got their loan guarantees 

and, in fact, many of the emails are clearly outside the element of 

pure merit and public accountability. 

Mr. Chairman, this loan guarantee scandal will go on and we 

will discover, as we already have, that Secretary Chu, Secretary 

Bryson, and others actively created a market and falsely allowed 

it to appear as though it would succeed, ultimately leading to the 

inevitable bankruptcies. 

But today the most important, thing, Mr. Chairman, that I want 

you to get out of this hearing, and that we all need to get out of 

this hearing, is the idea that Gmail or Hotmail is a great way to 

circumvent laws that make your communications in the Executive 

Branch public record can be abrogated simply by opening a free account. That is what I am concerned about here today. That is ultimately a scandal that did not begin on the watch of this President. 

There is no question that with Chairman Waxman there were 

questions about emails. I remember some about emails to the Republican National Committee and the Chairman, when he sat in 

your chair, Mr. Jordan, in fact, Chairman Waxman issuing subpoenas. 

But in this case we are not looking for some backdoor communications on politics with a political entity; we are looking at the 

day-to-day business of political and career individuals at key cabinet positions, key administration positions routinely circumventing 

the very laws that are in place to create accountability. 

Mr. Chairman, I appreciate the work you did in getting the compliance for today’s hearing. 

Quite frankly, Mr. Silver, I appreciate you and your attorney’s 

willingness to quickly act and produce documents directly to us. 

I will, once again, look at the Ranking Member of the Subcommittee and say when are you going to say shame on your Administration for trying to block our legitimate discovery? The Secretary and the Department of Energy specifically tried to prevent 

us from getting these documents, asking Mr. Silver’s attorney, ordering him, effectively, to deliver the documents to them so that 

they could limit and redact them, so they could decide what Congress was entitled to. 

The imperial presidency must end. The imperial presidency must 

end, and it will not end until my colleagues on the other side of 

the aisle recognize that it is not acceptable under this President, 

and if we don’t stop it under this Administration, we can count on 

administrations to come of either party simply ignoring Congress 

and the oversight, and running by executive fiat a government. 

That is not the America I grew up in; Mr. Kucinich, it is not the 

America you grew up in; Mr. Cummings, it is not the America you 

grew up in; and I don’t want it to be the one that our children grow 

up in. 

With that, I yield back. 

Mr. KUCINICH. I ask unanimous consent to respond to my friend. 

6 

Mr. JORDAN. I thank the gentleman. 

The gentleman from Ohio is recognized. 

Mr. KUCINICH. I think most members here know that I am not 

someone who reflexively defends the Administration. I mean, you 

are looking at one of the few Democrats who actually took this Administration to court on a constitutional issue. And I defend the 

right of this Committee to get information. We are in a partisan 

climate here that makes it a little bit testy and I understand that. 

So I am here with the intention of saying, on the bigger issue, 

not the Chair’s right to get information, not the Committee’s right 

to inquire; on a larger issue here. We have China wiping us out on 

the solar industry and I am just concerned that we be sensitive to 

American business interests. 

And there is one other thing that my friend mentioned to me, 

Mr. Jordan, and ceertainly not the topic of this hearing, but look 

at how bad this is. I mean, when you have China even supplying 

the uniforms for the U.S. Olympic team, it shows you we are missing out something here. Why couldn’t they have been made in 

America? 

So we want to make solar panels in America. How can we do it? 

I would say that given the business acumen of the Chair, and it 

is severely extraordinary, I am sure that you could provide some 

suggestions to the Administration on how they could run the program better. But as far as inquiring and providing documents, 

after a while I don’t know where this goes, but I am glad to be 

here. We have the right to ask questions and I am hopeful we will 

pursue this question about China. 

Thanks. 

Mr. JORDAN. I thank the gentleman. 

The gentleman from Maryland, the Ranking Member of the full 

Committee, is recognized. 

Mr. CUMMINGS. Thank you very much, Mr. Chairman. I thank 

you for calling this hearing and I am looking forward to the testimony of the witnesses. I have already heard the word falsely; I 

have heard the word scandal; even heard you, Mr. Chairman, say 

the President rewarded contracts to friends of the Administration 

at the expense of the American people. We have not heard one syllable yet from the witnesses, and I refuse to draw conclusions before I hear from them, and I think that is what this hearing is all 

about. 

I do say to all of the gentlemen who are seated that you have 

heard the words uttered here, and I hope that you will have a response to them. 

I want to emphasize one point, which is that one of the most significant struggles Abound faced involved the alleged dumping of 

Chinese solar panels into the market. While some may play that 

down, I think that is very significant. 

I want to highlight what this allegation actually means. It means 

that China is accused of selling solar panels into the United States 

at prices lower than their actual cost to make them. Why would 

they do that? They would do that to undermine United States businesses, you know, the job creators that we hear about so often. 

In my opinion, this is the main issue we should be focusing on 

today, instead of turning this into an election year campaign issue. 

7 

One argument used to attack the Department’s Loan Guarantee 

Program has been that it exposed taxpayers to excessive risk as a 

result of DOE’s bias towards approving loans without regard to 

warning signs. These conclusions are contrary to the facts. 

Today we will hear from an industry expert who will explain 

why, despite the failure of some projects like Abound, the risks of 

the Department’s Loan Guarantee Program are substantially lower 

than Congress expected when they created the program. Current 

and former employees will testify about the Department’s effort to 

minimize these risks both in the overall portfolio and in the individual transactions. 

The Department structured its program to protect the taxpayers. 

For example, Abound’s loan guarantee was structured to require 

the company to achieve certain milestones before it could draw 

down funds in allotted amounts. When it could not meet some of 

these milestones, it was prohibited from receiving additional payments. As a result, Abound’s draws were limited to about $70 million on a loan guarantee of $400 million. 

As indicated in the chart behind me, the total value of the loan 

program Congress created was about $16 billion. Recognizing that 

there were risks involved in the program, Congress set aside about 

$2.5 billion to cover any potential losses in the portfolio. To date, 

however, losses have been only a small fraction of that amount. 

Certainly, we wish that there were no losses. There have been $648 

million, or about one-quarter of the amount Congress anticipated. 

Contrary to the Majority’s repeated claims, the Committee has 

identified no evidence of political cronyism within the Department’s 

loan program. Abound’s project received support from the entire, 

and let me repeat that, the entire Indiana congressional delegation, 

that is, Republicans and Democrats; and the Majority has not involved Indiana Governor Mitch Daniels to testify today regarding 

his personal, personal support for Abound, including his offer to 

provide tax credits so Abound would house the manufacturing 

plant in his State. So when I hear words like, rewarded, President 

Obama rewarded contracts to his friends at the expense of the 

American people, well, I guess Mitch Daniels must be one of those 

friends. 

The failure of Abound is a disappointing reality, but a close look 

at the program reveals that applicants received wide bipartisan 

support, that very little taxpayer money has been lost, and that the 

program has resulted in some of the largest renewable energy 

projects in the world. 

I go back to what Mr. Kucinich said a few minutes ago. You 

know, when we talk about taxing the rich, what we constantly hear 

is we have to protect the job creators. You hear that over and over 

and over again as talking points. Well, you know, these businesses 

are job creators, and some businesses do not do as well as others, 

but I want us to keep in mind this Chinese issue; it is significant 

and hopefully the testimony today will shed more light on this so 

that we will be able to draw some conclusions based on facts, and 

not allegations. 

Thank you very much. 

Mr. JORDAN. I thank the gentleman. I would just say only in 

Washington would the loss of taxpayer money be viewed as a sucVerDate Aug 31 2005 10:42 Aug 28, 2012 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 C:\DOCS\75588.TXT APRIL
8 

cess when it wasn’t quite as much as we thought it might have 

been. 

Mr. CUMMINGS. Would the Chairman yield? 

Mr. JORDAN. I would be happy to yield. 

Mr. CUMMINGS. Mr. Chairman, nobody said that. I didn’t say 

that. 

Mr. JORDAN. You didn’t say that, but that is what the chart said. 

Mr. CUMMINGS. All right, fine. 

Mr. JORDAN. Said we lost money—— 

Mr. CUMMINGS. Let me—— 

Mr. JORDAN. I would just make one point: the program isn’t over 

yet. We just had the third—we may have a lot more coming, we 

don’t know. That is what we are trying to get at. 

Mr. CUMMINGS. Mr. Chairman, I understand that and I agree. 

The fact is what I was trying to say is that Congress apparently 

anticipated that there would be losses, and you are right, the program is not over. In business, and I have been in business, sometimes you do have to take risks; and unfortunately we had some 

factors in this situation that I think hurt this company. Certainly, 

all of us wish that there would be no losses, but in any business 

you are going to have some losses. 

If you are talking about a whole group of businesses you are 

going to have some losses at some point. I am not saying that it 

was great. Nobody wants to lose a dime. But Congress apparently 

anticipated losses, and all I am saying is that only a fraction of 

that has been used, that money set aside for the guarantee. 

Mr. JORDAN. I think the gentleman underscores the fundamental 

point: in business, when there are losses, the people who suffer the 

losses are the people in the private sector, not the American taxpayer; and that is a key distinction between this program and what 

happens in the marketplace. 

The gentleman from Pennsylvania wishes to make an opening 

statement and is recognized. 

Mr. KELLY. Thank you, Mr. Chairman, and thank you for holding 

this. I think the key to this is we are talking about protecting job 

creators, but basically it is protecting the American taxpayers. 

That is who has underwritten all these different loans. So when we 

talk about that, I think it is fascinating, and we will get a chance, 

maybe, later on to look at what their status was as they were being 

considered for these loans. In the real world, no bank, no lender 

would have given these monies out. 

So how do you navigate that territory? I think it is going to be 

fascinating, but we will take a look at it and take a look at how 

ratings actually are reflected and what an A status means, what 

a B status means, as you go down the line and see the number of 

these companies that, really, in the real world would not have been 

able to receive funding. 

Mr. Chairman, I appreciate you holding the hearing and it is 

about protecting taxpayers’ investments. 

Mr. JORDAN. I thank the gentleman. 

The gentlelady from New York, the Vice Chairman of the Subcommittee is recognized, Ms. Buerkle. 

Ms. BUERKLE. Thank you, Mr. Chairman. 

Good morning to our panelists this morning. 

9 

Just a couple of brief opening remarks. 

I want to just respond to the gentleman from Ohio and his comments. We are not here attacking our own businesses. That is not 

what this hearing is about. This hearing is the legitimate role of 

the Oversight Committee, and what we are doing here this morning is protecting the American taxpayers. We are in a climate right 

now where there is so much discussion about raising taxes on the 

American people, and if anyone can justify raising taxes on the 

American people, when we are throwing, at this point, $70 million 

out the window, it is inexcusable. It is just, we cannot raise taxes 

on the American people when this kind of waste is going on and 

we are abusing and misusing the American taxpayers’ dollars. 

I also want to make just one other comment, and that is why we 

want to emulate China. This is the United States of America. We 

believe in free enterprise. We believe that an individual can grow 

a dream and should be able to do that without the help of the Government, and it is that individual who will grow that dream. It is 

his hard work, it is his staying up at night, worrying about a bottom line. That is the essence of the United States of America. 

So it is not my desire to ever wish for, hope for, look at China 

and say that is what we want to look like. We are the United 

States of America, the greatest nation in the history of mankind. 

I yield back. Thank you, Mr. Chairman. 

Mr. JORDAN. I thank the gentlelady. 

Any other member wish to make a statement? 

[No response.] 

Mr. JORDAN. If not, we will get to our panel. Eight members of 

Congress, we got that done in half an hour. That is a pretty good 

clip, Mr. Ranking Member. 

We will start with Mr. Craig Witsoe is the former Chief Executive Officer of Abound Solar. We welcome you to the Committee 

today. 

Mr. Tom Tiller is former Chairman of the Board at Abound 

Solar. Thank you for being with us. 

Mr. Davis Frantz is the Acting Executive Director of the Loan 

Programs Office at the U.S. Department of Energy; and Mr. Jonathan Silver is the former Executive Director of the Loan Program 

at the Department of Energy. 

You guys know the deal. We have to swear you in per the rules 

of the Committee, so if you would please stand and raise your right 

hand. 

Do you solemnly swear or affirm that the testimony you are 

about to give will be the truth, the whole truth, and nothing but 

the truth? 

[Witnesses respond in the affirmative.] 

Mr. JORDAN. Let the record show everyone answered in the affirmative. 

We will go down the line, starting with Mr. Witsoe. You guys 

know you get five minutes, more or less, but keep it at five if you 

can, and then we will get to the Committee’s questions. 

So, Mr. Witsoe, you are recognized for your five minutes. 

10 

WITNESS STATEMENTS 

STATEMENT OF CRAIG WITSOE 

Mr. WITSOE. Thank you, Mr. Chairman. As you said, my name 

is Craig Witsoe. I served as the CEO of Abound Solar for the eight 

months prior to July 2nd, when the company, unfortunately, suspended operations under the Chapter 7 bankruptcy filing. 

First, I would like to say that we are very grateful for the dedication and the hard work of our talented employees; the support and 

the integrity of our investors and the board members; and, of 

course, for the support granted under the DOE Loan Guarantee 

Program. We do hope that today’s discussions will be beneficial to 

better understand how the U.S. can best compete in this important, 

but also very challenging, global solar panel market. 

Abound was formed as a startup company in 2007 based on advanced research started in the late 1980s at Colorado State University, in collaboration with the National Science Foundation, as well 

as the National Renewable Energy Lab. We had research and development, along with advanced manufacturing in Colorado, and 

had planned an additional manufacturing expansion in Indiana. 

Abound produced thin-film Cadmium Telluride, or Cad-Tel, solar 

panels, and this was important because many agree that, if produced in large quantities, at large scale, Cad-Tel panels can be 

made in America at lower cost per watt than the traditional crystalline-silicon modules produced by many Chinese companies today. 

At the time our DOE loan was originated, Abound and First 

Solar were the two companies in the world with significant CadTel production experience. In October of 2011, General Electric also 

announced that they would build the Country’s largest U.S. solar 

panel manufacturing plant, also based in Colorado, and that they 

would use Cad-Tel technology as well. In recent months, Abound 

was cooperating with the U.S. Photovoltaic Manufacturing Consortium and NREL to encourage industry collaboration which could 

further accelerate the U.S. advancement of Cad-Tel. 

Abound’s funding came from more than $300 million in private 

investment and the $70 million that we have mentioned today from 

the potential $400 million authorized under the 1705 DOE Loan 

Guarantee Program. Funds were used to complete and start up two 

production lines in Colorado, which enabled a nearly doubling of 

panel efficiency, from 45 watts per panel in 2009 to 85 watts per 

panel in 2012. 

Abound’s technology and business had made solid progress until 

about the second half of 2011, when the panel prices dropped by 

50 percent in a year due to very aggressive price cutting from Chinese competitors using the older crystalline-silicon technology. 

With a reported over $30 billion in government subsidies, Chinese 

panel makers were able to sell below cost and put Abound out of 

business before we were big enough to pose a real competitive 

threat to China’s rapidly growing market share. 

Given these challenging market conditions, the DOE didn’t release any further funds to Abound after August of 2011, including 

reimbursement for significant funds Abound had already spent to 

complete its second manufacturing line in Colorado. While we understood the increasing market risk driving this decision and unVerDate Aug 31 2005 10:42 Aug 28, 2012 Jkt 000000 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 C:\DOCS\75588.TXT APRIL
11 

derstood the technical justifications in the loan documents, we also 

knew that it put enormous financial strain on our small company. 

In February of 2012, Abound made the very difficult decision to 

cease production of its first generation of panels, conserve our cash, 

and focus our resources on accelerating development of a higher efficiency, next-generation module. This module had already been 

verified by NREL to produce a very competitive 85 watts per panel. 

We believed that this next-generation product, along with further 

private financing, could keep the company competitive and enable 

a restart of production in Colorado. Abound hired a reputable outside firm to lead a process of soliciting the needed private financing 

and, from a large pool of identified potential investors, made final 

management presentations and facility tours to interested parties 

in mid-May, as well as late June of this year. 

Unfortunately, in the end, the involved parties were unable to 

agree upon terms and negotiations were ended, and on June 28th 

we announced to our employees that Abound would have to suspend all operations. 

This very fast and severe decline in the market conditions for 

solar panels has affected many U.S. companies, ranging from 

startups like Abound to even the largest U.S. corporations. The 

same week that Abound announced its closure, GE, also citing market price declines due to Chinese competition, unfortunately announced that it would delay its own Cad-Tel solar panel production 

plans by at least 18 months while it worked on a next-generation, 

higher efficiency module. 

Around the world there are similar accounts of the impact of aggressive actions by China. While Abound was in agreement with 

the recent Commerce Department decisions to place U.S. import 

tariffs on Chinese modules, these actions were simply too late for 

our company. 

This isn’t the way that any of us wanted Abound’s story to end, 

certainly, but we hope that the technology we have developed can 

still, in some form, help the U.S. to better compete in the next generations of solar panel manufacturing. We are very appreciative of 

the investments of our investors, as well as the DOE. 

Our former employees should be proud of their technical innovations and their personal courage to pursue new technology for 

American manufacturing and not give up until all reasonable paths 

were exhausted. Abound believes that competitive solar energy can 

be important to the U.S. energy security and job creation, and that 

the longer-term consistent renewable energy policy can encourage 

further private investment. 

I hope that today’s discussion will be constructive and helpful to 

our common goal that the U.S. regain competitiveness in this sector and prevent the loss of technology leadership. 

Thank you. 

[Prepared statement of Mr. Witsoe follows:] 

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Mr. JORDAN. Thank you. 

Mr. Tiller? 

STATEMENT OF TOM TILLER 

Mr. TILLER. Good morning, Mr. Chairman, Ranking Member 

Kucinich, and members of the Committee. My name is Tom Tiller. 

From January 2010 until June 2012 I worked for Abound Solar, 

first as Chief Executive Officer and then as Chairman of the Board. 

Abound, as you know, filed for bankruptcy on July 2nd, 2012. On 

June 28th, 2012, when we suspended operations, I also resigned as 

Chairman. Declaring bankruptcy was extremely disappointing for 

all of us who cared deeply about Abound and who had invested our 

own time, our own money, and our own effort in trying to make 

this company a success. The Department of Energy was our partner in that effort, and I am personally disappointed that the company was not able to provide the DOE and the American taxpayers 

with a positive return on its investment. I appreciate the opportunity to appear this morning and speak to you about my time at 

Abound. 

I came to Abound after spending nearly 10 years as CEO of Pola- ris Industries, a $2.4 billion global leader in the power sports industry. During my time at Polaris, we successfully introduced more 

than 150 new products and tripled the value of the company. Prior 

to Polaris, I had worked at GE in a variety of engineering and senior leadership positions. All together, I have spent nearly 30 years 

running and supporting American manufacturing operations of 

technology-based companies. 

The opportunity to join Abound was unique and exciting. The 

company was involved in the cutting edge of solar energy innovation and had a proprietary manufacturing technology that has the 

potential to significantly reduce the cost of solar power. The culture 

of the company was also infectious. People were excited to do something that mattered for the Country. I believed in the technology 

and, more importantly, the outstanding people that the Company 

had at all levels, enough to make a professional commitment and 

a personal financial investment in the business. 

It is my view that for any company to be successful in the solar 

industry, it needs two things: winning technology and the scale 

necessary to drive down cost. At Abound, that meant the company 

needed to develop and execute an aggressive growth plan that 

would enable it to quickly develop its products at large scale. 

Most of the capital that Abound raised to fund this plan was equity financing raised from professional investors. Indeed, in addition to obtaining a loan from DOE, we raised approximately $300 

million of equity. I can assure you that with every round of equity 

financing, informed outsiders conducted their own independent 

analysis of the current state of the company in an effort to ensure 

they would receive a good return on their investment. Many times 

teams of investors and engineers met Abound’s people and went 

through the plant, the patents, the manufacturing process, and the 

financial plans. Ultimately, these seasonal professionals made the 

decision that investing in this company was a good bet. 

The DOE’s review of the Abound loan application was well underway when I joined the company in January of 2010. During my 

16 

time with the company, there were many inquiries, visits, data requests, and technical and financial evaluations from DOE. The 

company prepared and revised detailed financial models and answered hundreds of questions. 

In the end, it took nearly two years to complete the application 

and approval process for the Abound DOE loan, which closed in December 2010. Although the total DOE loan amount was for $400 

million, Abound only drew down about $70 million, which was used 

for the construction of manufacturing lines in Colorado. The company stopped drawing down DOE funds entirely in the third quarter of 2011. 

Any investment in a new business carries risk. Some may ask 

why Abound ultimately succumbed to that risk, even with approximately $300 million in private investment and $70 million from the 

DOE. In my view, the single most important reason was that there 

was an abrupt and major change in the market for solar panels 

which reduced the selling price of Abound’s products and made it 

extremely difficult for an early stage company like Abound to scale 

in these changed market conditions. 

Over the past 25 years or so, the solar market has grown rapidly 

and consistently, with a considerable acceleration in 2009 and 

2010. Things changed when the Chinese government reportedly 

provided approximately $35 billion in subsidies to the major Chinese solar producers. These investments resulted in substantially 

more production capacity than could possibly be absorbed by the 

market, so the price of solar panels fell dramatically, by more than 

50 percent in just one year. Such a severe market change made it 

difficult for Abound and others to survive. 

No one is more disappointed than I am that Abound was not successful. I am saddened by this result for the nearly 400 employees 

who made such a tremendous contribution to the company, the investors who invested hundreds of millions of dollars, the communities that supported and believed in Abound’s vision, the suppliers 

who partnered with the company at every stage, and the customers 

who trusted the company to provide a long-term energy solution. 

I appreciate the chance that the private investors and DOE took 

when they chose to support the company and its role in the future 

of American renewable energy technology. Unfortunately, we were 

not able to succeed. 

With that overview, I am happy to answer any questions that the 

members of the Subcommittee may have. 

[Prepared statement of Mr. Tiller follows:] 

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Mr. JORDAN. Thank you. 

Mr. Frantz? 

STATEMENT OF DAVID FRANTZ 

Mr. FRANTZ. Chairman Jordan, Ranking Member Kucinich, and 

members of the Committee, thank you very much for the opportunity to testify before you today. My name is David Frantz and 

I am the Acting Executive Director of the Department of Energy’s 

Loan Programs Office, the LPO. In the way of an introduction, I 

would emphasize the point that I am a career member of the Senior Executive Service of the U.S. Government; I am not a political 

appointee. 

I was the first employee of the LPO. Prior to joining the Department to stand up the program, I previously served over 10 years 

with the Overseas Private Investment Corporation as Senior Management Project Finance Position, underwriting and structuring 

major energy infrastructure projects around the world. Prior to this 

government service, my 40-year career has been entirely devoted to 

project finance in the private sector. Previously, I served as a U.S. 

Naval officer and I am a Vietnam combat veteran. 

Before highlighting the progress we have made over the past five 

years, I would also like to acknowledge and commend the LPO staff 

for their unswerving commitment and diligent work associated 

with accomplishments of the program. The staff is one of the finest 

project finance teams assembled in the world today, and its record 

over the past years unprecedented by world standards. 

I would hasten to add that the GAO, in its recent audit of the 

DOE Loan Guarantee, has acknowledged that commercial lenders 

interviewed by GAO stated that LPO’s underwriting and due diligence standards are as rigorous as or more rigorous than those in 

the private sector. 

As of today, the LPO has committed or closed $35 billion in direct loans or loan guarantees, which finance nearly three dozen 

projects, with total project costs greater than $55 billion. When the 

Section 1705 program ended, on September 30th, 2011, it included 

a portfolio of over $16 billion and 28 renewable projects. Collectively, the LPO projects are expected to support approximately 

60,000 jobs. 

Earlier this year, an independent consultant, Herb Allison, evaluated both the monitoring efforts of the Loan Programs Office and 

its portfolio. Mr. Allison’s report concluded that the estimated longterm cost of outstanding portfolio is $2.7 billion, roughly $200 million lower than the Department’s most recent estimate. 

As the global energy opportunity grows, so does the competition. 

Countries throughout Europe, Asia, and the Western Hemisphere 

have decided that energy technologies are critical to their national 

economic security in the 21st century. Many countries have established supportive policies and are making major investments in everything from renewables to electric vehicles to smart grids and the 

next generation of biofuels. In 2010 alone, China provided more 

than $30 billion in credit to the country’s largest solar manufacturing through the government controlled China Development 

Bank. 

22 

Through the Loan Program, the Department is working to answer the challenge from China and other countries by supporting 

a large number of solar projects. 

With respect to the Abound transaction specifically, in December 

2010, as you have heard, the Department issued a loan guarantee 

to Abound Solar Manufacturing to manufacture the next-generation solar panels. It was intended to partially finance construction 

of two solar panel production lines in the existing facility in Colorado and the acquisition and buildout of a second facility in Tipton, 

Indiana. 

Abound developed and demonstrated a process for producing 

thin-film solar panels at a cost that was expected to be substantially less than the traditional solar panels. When the cost of 

polysilicon was high, Abound’s technology offered the promise of a 

lower cost alternative that would be built here in the United 

States. As of December 2011, Abound had raised more than $300 

million, as the officers have indicated, in private equity from large 

and established investors and venture capital firms. 

By the time DOE offered Abound a conditional commitment in 

the summer of 2010, the price of polysilicon had begun to fall. However, prior to financial close, the Department’s independent market 

consultant for the transaction believed, as did the Department, 

that the price of polysilicon would continue to drop, but only by approximately 2 percent a year over the next 10 years. 

Instead, prices continued to fall much more than projected, including a 47 percent decline in 2011. So while the market experts 

concluded that the average selling price for PV cells would decrease 

approximately 20 percent, they actually decreased 47 percent last 

year alone. 

As Mr. Allison’s report noted, DOE has the ability to reduce or 

mitigate risk in a portfolio over time and has robust tools for protecting itself from elective risk. One of those tools is financial and 

technical milestones that must be met before additional funds are 

disbursed. When the price of the solar panels dropped, Abound’s 

product was no longer cost-competitive and the company was unable to meet some of those financial milestones. 

Accordingly, in August 2011, the Department halted disbursement on the loan and of the $400 million loan Abound was originally approved for, the Department disbursed approximately $68 

million. Because of the strong protections DOE put in place, the 

Department has already protected more than 80 percent of the 

original loan and expects to recover a portion of outstanding loan 

through the course of bankruptcy proceedings. 

Securing America’s economic leadership in the future requires 

that we support innovation and deployment today. The troubles of 

some segments in the solar manufacturing market should not overshadow the great work the Department’s loan programs have done 

to date, or the need to continue to find ways to support clean energy development in this Country. 

That said, developing a robust clean energy manufacturing sector 

in the United States is crucial to our long-term national interests 

and would help enable American companies work to attain tools 

needed to succeed in this competitive space. And one of the most 

23 

important tools, as our global competitors have learned, is financing on reasonable terms, wisely targeted and responsibly deployed. 

The question is whether we will take advantage of this or whether we will simply cede leadership in clean energy to other nations 

and watch as tens of thousands of jobs are created overseas. We 

were once the leaders in this field and we can be again, all the 

while with the interest of the U.S. taxpayer as its foremost concern. 

Thank you, Mr. Chairman, and I look forward to your questions. 

[Prepared statement of Mr. Frantz follows:] 

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Mr. JORDAN. Thank you. 

Mr. Silver. 

STATEMENT OF JONATHAN SILVER 

Mr. SILVER. Chairman Jordan, Ranking Member Kucinich, and 

members of the Subcommittee, my name is Jonathan Silver. I am 

the former Executive Director of the Loan Programs Office at the 

Department of Energy. Currently, I am a senior visiting fellow at 

Third Way, a centrist think tank where I work on energy policy 

and energy finance. I am also a senior advisor on energy investments for a leading private equity firm and sit on the board of several energy companies. 

My work on the Loan Program was based on more than 25 years 

of business experience as a management consultant at McKinsey & 

Company, an executive with experience in managing complex organizations, a managing director of one of the Country’s largest and 

most successful hedge funds, and as the cofounder of a successful 

venture capital firm. In addition, I have served in government before, as a senior policy advisor to both the Secretaries of Commerce 

and Interior, and have testified a number of times before Congress. 

Although I have not been with the program for close to a year, 

it is my privilege today to join Mr. Frantz in representing the efforts of the nearly 200 program professionals and the many private 

sector advisors who worked day and night over the past few years 

to successfully implement this congressionally mandated program. 

I remind the members that the Loan Program Office is an implementing agency, not a policy making group. Its work is driven by 

congressional legislation. 

We are proud of the program and, on the whole, the Loan Program has been a success. While acknowledging the inevitable and 

expected losses, we should remember that this program also provided financing for such projects as the world’s largest wind farm, 

the world’s largest PV solar plant, the world’s largest concentrated 

solar power facility, a new generation of electric vehicles, and the 

first nuclear power plant to be built in the U.S. in the last 30 

years. These projects will generate enough clean energy to power 

millions of homes and businesses, save hundreds of millions of gallons of gas a year, and generate tens of thousands of jobs. 

Even more important, the portfolio is actually in good shape. 

Nine solar projects and several wind farms are already generating 

power. To date, total losses on the portfolio are under 3 percent. 

This compares favorably to loss ratios in the private sector for far 

less innovative energy projects. The loss on the Abound project represents a fraction of 1 percent of the total 1705 financings. No 

losses are desirable, but the dialogue around the early outcomes is 

out of proportion to the actual results. 

Because I am no longer at the Department, I do not have access 

to the analysis done for the Abound project. As a result, I cannot 

comment in detail about the transaction. What I can do, however, 

is give you a flavor for what we tried to do on this and every 

project. 

Abound had a unique manufacturing process which, at scale, 

would significantly lower the cost of producing thin-film panels. 

The technology was analyzed multiple times, including by the Bush 

30 

Administration, which thought highly enough of it to award the 

company millions of dollars for development. The Abound loan 

team would have included finance, technical, scientific, legal, and 

environmental career professionals, supplemented by independent 

engineering, legal, financial, and accounting firms. 

The loan would have gone through multiple reviews independent 

of the Loan Programs Office, including detailed reviews by career 

credit professionals at DOE and career staff at OMB, Treasury, 

and the National Economic Council. The transaction structure, 

known as production line financing, was created to manage the risk 

in this transaction. 

Among many other requirements, applicants had to demonstrate 

sufficient financial backing from the private sector. Abound raised 

over $300 million in private equity before the Government issued 

its loan. The loan was designed with significant technical and financial milestones. When dramatic changes in the solar panel market made it impossible for the company to meet some of those, the 

remainder of the loan was frozen. 

Congress clearly understood that these projects would entail risk. That is why it initially set aside $10 billion to cover potential losses 

before a single loan was ever made. Three independent analyses of 

the portfolio have now been done, including reviews by the Congressional Research Service, Bloomberg Energy, and a comprehensive review of the portfolio by Herb Allison, a former Bush Administration Treasury official. All of them concluded that the transactions were well structured and that potential losses were likely 

to be meaningfully below the loss reserve established by Congress. 

Even though Congress planned for losses, losses hurt. These are 

taxpayer dollars and we worked hard to ensure that they were protected to the fullest extent possible. Applicants will tell you that 

our term sheets were tough and were designed to protect our Government. 

When a loan fails, we can, and should, seek to understand what 

happened, and oversight is an important tool in doing this. We 

should start with the facts. Industry dynamics change; other countries compete with us, sometimes unfairly; new technologies and 

new business models emerge. 

This loan, like all the loans underwritten by career professionals 

supported by us as specialists. It was reviewed by career professionals from multiple Executive Branch offices. It was not rushed; 

the review took place over several years. It was not given to 

friends. 

Indeed, no one in the loan program had any idea what individuals were involved in this or any other transaction, nor did we 

care. And, as has been reported, there were a large number of 

Democratic and Republican investors in these deals, which ultimately is not surprising. Investors care about returns, not politics, 

and after they did their own independent analyses, they committed 

billions of equity dollars to these projects. Our work followed and 

built on theirs. 

Investors care about profits, but all Americans care about ensuring that the Country remains strong and competitive in the 21st 

century. The next decade is about energy competition, and clean 

and renewable energy is the global market battleground. Other 

31 

countries understand this. China, Korea, Japan, India, the UK, 

Germany, Italy, and a host of others are moving rapidly to seek a 

piece of this vast new market. The winners will enjoy more and 

better jobs, lower energy prices, greater energy security, and better 

health and environmental outcomes. 

If the United States is to compete successfully in next-generation 

energy, we need to support it, just as we have traditional sources 

of energy in the past. Thank you. 

[Prepared statement of Mr. Silver follows:] 

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Mr. JORDAN. Thank you, Mr. Silver. Mr. Silver, let me start with 

you. We are going to start with when you first got the job at the 

Department of Energy. 

If I could have the staff put up the first email. 

[Slide.] 

Mr. JORDAN. It may be tough to see, but we can bring you a copy 

if we need to. This is the interview schedule, it says Interview 

Schedule for Jonathan Silver. This is back in 2009. You were going 

to interview on a Tuesday with Mr. Steve Isakowitz; Wednesday 

you had a couple interviews with Dan Poneman, Rod O’Connor; 

and then Friday with Matt Rogers. So this was when you were applying for the job, you were going to interview with these important 

folks at the Department of Energy. 

Let’s go next to the second email. 

[Slide.] 

Mr. JORDAN. So that was an email on Monday, September 28th. 

The next one is one that you sent to Mr. Isakowitz, where you say, 

at the risk of seeming presumptuous, I want to mention that my 

wife and I are holding a small event for Al Gore at our home this 

coming Thursday evening, October 1st. So you are applying for the 

job and yet you are inviting the very folks who are going to be 

interviewing you for the job to come to a party you are hosting with 

the former Vice President. Is that kind of a normal practice or do 

you think maybe someone might think that is a little unusual? 

Mr. SILVER. Congressman, I can’t answer the question as to 

whether or not it is unusual or not for others; it would be typical 

for my wife and I to host events and to invite people to them. 

Mr. JORDAN. But the people who are going to decide whether you 

get the job or not, or they already told you you had the job? 

Mr. SILVER. Well, I don’t know the date of this and I don’t know 

exactly when I was—— 

Mr. JORDAN. I will tell you the date. I will tell you the date. It 

is the day before you got the interview schedule. So you probably 

knew that you were applying for the job. This was September 27th 

you sent these guys who were going to be interviewing you. In fact, 

Mr. Isakowitz was going to be interviewing you two days later, and 

you sent him an email saying, hey, come on over to a party we are 

having, Mr. Gore is going to be there. 

Mr. SILVER. Just to clarify, obviously, I was talking to them 

about the job, but I didn’t actually apply for the job; they reached 

out to me. Having said that—— 

Mr. JORDAN. Wait, wait, wait. You wanted the job. You had an 

interview schedule that comes out two days after you were inviting 

them to a party. 

Mr. SILVER. Right. 

Mr. JORDAN. So obviously you knew Mr. Isakowitz for a time before this? Was he a friend of yours? 

Mr. SILVER. No, I had not—his name is Isakowitz. 

Mr. JORDAN. So he wasn’t even a friend. So that is why you said 

this seems presumptuous, because you didn’t know him. 

Mr. SILVER. Right. 

Mr. JORDAN. But you invited him to a big party you were having? 

40 

Mr. Frantz, when you applied for the job, did you invite the folks 

who were going to hire you? Did you have a party at your place 

and, I don’t know, did you have Derek Jeter or some—— 

Mr. FRANTZ. Mr. Chairman, the Department reached out to me 

based on my background already in government service with the 

Overseas Private Investment Corporation. 

Mr. JORDAN. Okay. And when they reached out to you, did you 

say, well, the guys who are reaching out to me, was there an interview process? 

Mr. FRANTZ. There certainly was, yes. 

Mr. JORDAN. Did you invite the folks who were interviewing you 

and decide whether you would get the job, did you invite them to 

a party before you got the job? 

Mr. FRANTZ. I did not. 

Mr. JORDAN. Okay. Okay. 

I want to follow up. Let’s go to the next one, where Mr. Isakowitz 

says thanks for the invite, but I need more details. In fact, our general counsel—which is good—would need to look at this before we 

decide to do this. And then you send him back a more lengthy 

email, you said it is a reception, not a fund-raiser. And then you 

say, in the second paragraph of the email you sent back to him on 

this correspondence, I expect there will be about 40 people or so, 

generally folks we know who are interested in this issue and have 

the capacity to write significant checks. 

So who were some of those folks at this party, if you don’t mind 

me asking? Was Mr. Tiller there? 

Mr. SILVER. No, Mr. Tiller wasn’t there. 

Mr. JORDAN. Was Mr. Witsoe there? 

Mr. SILVER. No, Mr. Witsoe wasn’t there either. To be candid, I 

don’t remember who was at this party. 

Mr. JORDAN. What about Ms. Pat Stryker, was she there? 

Mr. SILVER. I doubt it. I don’t know Pat Stryker. 

Mr. JORDAN. The head of Bohemian Industries, biggest investor 

in Abound Solar, bundler—— 

Mr. SILVER. We didn’t—— 

Mr. JORDAN. She was not there? 

Mr. SILVER. We didn’t actually create the invitation list. This 

was not a fund-raiser, and what I was trying to do with this email, 

as I recall, was to give Mr. Isakowitz some background information—— 

Mr. JORDAN. Was Joe Zimlich there, the CEO of Bohemian Industries? Was he at the party? 

Mr. SILVER. I don’t think so, but I don’t know him either. 

Mr. JORDAN. Okay. Okay. So the fact that Pat Stryker, who is 

the founder of this Bohemian Companies and a major donor and 

bundler for the Obama campaign, over $100,000, that did not influence your decision to give the loan to Abound Solar? 

Mr. SILVER. Not at all. I did not know who those people were 

then and I do not know who they are now; I have never met them. 

Mr. JORDAN. Did anyone at this party that you invited folks at 

the Department of Energy to while you were trying to get the job, 

did any of those folks lobby you, talk to you about the Abound 

Solar project? 

41 

Mr. SILVER. No, sir. I knew nothing about the Abound Solar 

project. 

Mr. JORDAN. Okay. Okay. Let me ask you this. While you were 

head of the loan program, how many times did you visit the White 

House? 

Mr. SILVER. I don’t know. I certainly went over on numerous occasion to attend staff meetings of various kinds with the staff at 

OMB and other agencies. 

Mr. JORDAN. And at any of these meetings at the White House, 

were you there when either Pat Stryker or Joe Zimlich, big investors in Abound Solar project, while they were at the White House? 

Mr. SILVER. Not to my knowledge. I don’t know those people, sir. 

Mr. JORDAN. Okay. I see I am out of time. I have a lot more, but 

I will yield to the—okay, let me do this. I will go to the gentleman 

and we will come back for the second round. I yield now to the gentleman from Ohio. 

Mr. KUCINICH. Thank you, Mr. Chairman. I think you established that Mr. Silver wanted the job. The real question here is 

whether he was qualified. 

So, Mr. Silver, it has been suggested that you were appointed to 

lead this DOE Loan Program solely as a result of political connections. The fact is that Mr. Silver had a wealth of experience that 

made him uniquely qualified for the role. Now, you were cofounder 

and managing director of Core Capital Partners, a successful early 

stage investor in alternative energy technologies, is that correct? 

Mr. SILVER. Yes, sir. 

Mr. KUCINICH. And you graduated from Harvard University with 

honors and did post-grad work in Paris and Geneva, as well as receiving both a Fulbright and Rotary Graduate Fellowships, is that 

right? 

Mr. SILVER. Yes, sir. 

Mr. KUCINICH. Did you have any leadership experience in large 

organizations? 

Mr. SILVER. Yes, sir. I was either the chief operating officer or 

the senior executive vice president, which is essentially the same 

job, two different companies with complex production operations. 

Mr. KUCINICH. You were with Tiger Management, is that right? 

Mr. SILVER. Yes, sir. 

Mr. KUCINICH. One of the Country’s largest and most successful 

hedge funds. And is it true that, while at Tiger, the assets grew 

from $400 million to over $8 billion, is that correct? 

Mr. SILVER. Yes, sir. 

Mr. KUCINICH. And you served as a policy advisor to several U.S. 

cabinet secretaries, is that correct? 

Mr. SILVER. Yes, sir. 

Mr. KUCINICH. And isn’t it true that, while at the Commerce Department, you helped negotiate the first clean car agreement with 

the Nation’s auto manufacturers? 

Mr. SILVER. Yes, sir. 

Mr. KUCINICH. Now, look, in this era of Citizens United, you 

know, and pay-to-play, what really is extraordinary is that we 

brought somebody in front of this Committee who is actually qualified for the job that he did. That is a story. Hold the presses. 

42 

Now, Mr. Silver, you were a highly successful investor and financier in the private sector before you started at the Department 

of Energy. You put those business skills to work in government to 

build up the renewable energy technology industry in the U.S., as 

Congress intended. Why do you believe government has a role to 

play in developing renewable energies like solar? And how important is that role in helping America gain energy independence? 

Mr. SILVER. The U.S. Government has a long and storied history 

of backing critical technologies of all kinds, including energy technologies, for hundreds of years; it has been instrumental in developing these industries. We have backed oil, gas, coal, and other 

kinds of industries for decades in order to bring them forward because they are so essential to the underlying economy. I don’t believe that clean and renewable energy is any different. 

Mr. KUCINICH. Well, here is my concern. I go back to what I was 

saying at the beginning. You know, we want trade with China, but 

we better look at the rules here. According to Brooking’s study, 

China now leads the world in clean energy investment, and in 

2010, when DOE awarded a loan guarantee to Abound, China put 

into place a staggering $54.4 billion in clean energy investments. 

In the first quarter of 2011, Chinese investments in clean energy were $10.9 billion, as compared to just $2 billion in the United 

States. Wake up. We are losing market share here from people who 

are subsidizing their exports and crushing our industries. 

Now, Mr. Silver, what impact will this investment disparity have 

on American industry and job growth if it continues? 

Mr. SILVER. Well, let me give you just one concrete example, 

Congressman. We invented the solar panel in the United States, 

we invented it here. Today, eight of the ten largest solar panel 

manufacturers in the United States are headquartered outside the 

United States. 

Mr. KUCINICH. So look at what we have here. China not only 

leads the U.S. in investment, but also has a policy of illegally 

dumping below-cost solar panels in the U.S., and the ITC found, in 

a preliminary decision, ‘‘reasonable indication’’ that the U.S. solar 

industry was materially injured by reason of imports from China 

that allegedly subsidized and sold in the United States at less than 

fair value. This is about fairness. Our solar industry is getting decimated. 

Now, Mr. Frantz, what impact are illegally dumped Chinese 

solar panels having on the U.S. solar manufacturing industry? 

Mr. FRANTZ. I can only further elaborate on Mr. Silver’s comment 

and add to the point which has not yet come before the Committee, 

that we just have learned that General Electric, one of the largest 

corporations in the United States, is in the process now of delaying 

their new production facility in Colorado as well. So this is epidemic, certainly, and it is having profound and lasting effects 

across the whole United States manufacturing capability. 

Mr. KUCINICH. Listen. Listen to this, members. You have a businessman here. You have somebody who understands the industry 

and he is telling us it is in trouble. 

Now, Mr. Witsoe, your company was impacted by those subsidized and illegally dumped Chinese imports, was it not? 

Mr. WITSOE. Yes. 

43 

Mr. KUCINICH. And you state in your testimony, ‘‘Abound’s technology in business made solid progress until the second half of 

2011, when solar prices dropped by 50 percent in a year due to aggressive price-cutting from Chinese competitors using older crystalline-silicon technology.’’ Is that true? 

Mr. WITSOE. That is correct. 

Mr. KUCINICH. And can you tell the Committee what role these 

events played in your company’s eventually bankruptcy? 

If he can answer, I would appreciate it. 

Mr. WITSOE. I think those were the key drivers of—— 

Mr. KUCINICH. What does that mean? 

Mr. WITSOE. Well, simply, they had dropped prices so far 

below—— 

Mr. KUCINICH. Who? Who is they? 

Mr. WITSOE. China had dropped prices below even their own cost 

that we were unable to compete in that environment, and we certainly never expected prices to fall that fast and that far. 

Mr. KUCINICH. Thank you, Mr. Chairman. 

Mr. JORDAN. I thank the gentleman. 

I just request from Mr. Silver if you are the smartest, most qualified guy, as Mr. Kucinich alleges, then why did you approve the 

loan guarantee? Why did the Department of Energy approve this 

loan guarantee to Abound Solar when Fitch’s two reports, which 

were both very negative? Fitch’s first report set a dismal B credit 

rating and warned the Department of Energy that the product had 

only a 45 percent chance of recovery. 

So Fitch, even before, you can talk about what happened in 

China, I get that, but Fitch told you guys, hey, this has got a less 

than 50 percent chance of making it, this is a bad risk. But you 

guys said, oh, it’s all right, we are using taxpayer money, we can 

do that. 

Mr. SILVER. Thank you for the question, Congressman, because 

I think it is an important one and it gets to the essence of what 

we are doing here today. I am going to give you my best recollections because, as you know, not being at the Department, I don’t 

have access to the underlying data, but what I can tell you—— 

Mr. JORDAN. No, no, no, no, no, this is when you were there. This 

is when you made the—— 

Mr. SILVER. But I don’t have access to it to refresh my memory. 

What I can say is that the program itself was intended to support 

clean energy technologies at commercial scale, and Abound fit that 

model. It was a major opportunity to reduce costs in solar manufacturing. The application met the program criteria and goals, and, as 

I recall the structuring, it was very aggressive in protecting the 

U.S. taxpayer. 

The solar panel prices at the time had fallen, but even then the 

project worked. It is the second year when the project—— 

Mr. JORDAN. No, no, no, no. Fitch gave you another report. 

Mr. SILVER. Right. 

Mr. JORDAN. The second report said Fitch stated that the cost of 

the project for taxpayers had become significantly more expensive, 

and yet the estimated efficiency of the panels—some of the first 

panels you put in didn’t even work. The estimated efficiency of the 

panels has decreased significantly. So the cost went up, the quality 

44 

went down in the second report, and you still said let’s give them 

taxpayer money. 

And here is the interesting thing: everything Fitch said came 

true. So if you are going to have a credit report come to you—we 

just heard that you are the smartest guy in the world in this area, 

so what I want to know is, if you are the smartest guy in the world, 

why didn’t you listen to Fitch, two reports, what they said, which 

absolutely beared out, became the fact; and you add in Beacon 

Power and Solyndra, which have both gone bankrupt, and my 

guess is there are more coming. 

What figures? You don’t pay attention to Fitch? We always come 

back to this point in these hearings. Did you give the loan guarantee because political connections persuaded you to do it, or did 

you give it based on the merit? And that is certainly not there. So 

it is either you did it for your buddies or you were incompetent and 

said we are not going to pay attention to what Fitch says, even 

though it all came true, and we are just going to give the money 

anyway? It has to be one or the other because there is no other conclusion you can reach. 

Mr. SILVER. Well, Congressman, I am not the smartest guy in 

the room, but I am also not incompetent, so I guess I will answer 

the question by saying that we did market analyses, we did financial analyses, we did technical analyses, we did legal analyses, we 

did regulatory analyses—— 

Mr. JORDAN. And Fitch didn’t do that? 

Mr. SILVER. Well, actually, we have more resources on this 

project, to be candid, than Fitch does, but nonetheless—— 

Mr. JORDAN. You have more resources, and they were right and 

you were wrong? 

Mr. SILVER. There is no right and wrong in an assessment of 

what out-year production prices for solar panels are going to look 

like. We worked with the data from—— 

Mr. JORDAN. When Fitch says costs are going up—I mean, this 

is before you give the final guarantee. 

Mr. SILVER. And it is also—— 

Mr. JORDAN. Costs were going up and the quality is going down. 

The first report we were skeptical; now we are telling you, hey, it 

is going to cost more and this is not as good as we thought, you 

might want to think about this. And you guys said, no, $400 guaranteed, $70 million out the door, loss to the taxpayers. 

Mr. SILVER. We obviously incorporated the data from Fitch into 

the analysis. I don’t have it in front of me and haven’t had a 

chance to review it, but—— 

Mr. KUCINICH. Would my friend yield? 

Mr. JORDAN. I would be happy to yield to the gentleman. 

Mr. KUCINICH. I think this is easily explained, because Fitch 

couldn’t predict China’s illegal dumping and the impact that it has. 

Mr. JORDAN. This report came out before all that was taking 

place, that is the point. 

Mr. KUCINICH. But it is a practice that is in process, and it is 

the aggregate effect of it. It is not just that it is happening one day; 

it is an aggregate effect that at some point makes it impossible for 

a business to go forward. Look, we knew, when these loan guarantees were passed, Congress built in a factor that some of them were 

45 

going to be in trouble, some of these businesses were going to have 

trouble surviving. But if you know that when there is a level playing field, imagine how difficult it is when somebody is essentially 

trying to break your legs when you are running in a track meet. 

Mr. JORDAN. I want to yield to Ms. Buerkle, but I would just say 

this. Fitch understood there was a level playing field and they still 

said this is a bad bet. 

Mr. SILVER. If I may—— 

Mr. JORDAN. I have to go to the gentlelady from New York, then 

the gentleman can respond if he would like. 

Ms. BUERKLE. Thank you, Mr. Chairman. Just a couple of issues. 

Mr. Silver, you mentioned that your role was to implement, not 

to establish policy, and we get that. But when you tell me that so 

many of these companies are now overseas and their corporate, I 

think that that is an opportunity for this Administration to understand the policies of this Country with regards to our corporate tax 

rate, the cost of regulations. There is a reason why companies go 

overseas; not because they don’t want to do business here, but because this Administration and its policies have created such a hostile environment for a company to do well. 

So I think that that is something we all need to understand, and 

this Committee has looked at, especially this Subcommittee, the 

regulatory scheme coming out of this Administration is stifling our 

businesses. The uncertainty, the question about what our tax rates 

are going to be in the corporate tax structure, that is why our companies are going overseas. 

I also want to just mention, because I have so many nuclear 

power plants in my district, that is a clean, safe energy source, and 

you mentioned it in your opening remarks. Has in fact that program, has that money been given to and the plan been implemented to that nuclear power plant that you mentioned? 

Mr. SILVER. Let me address those questions in order, and with 

your permission, Congresswoman, let me defer the answer to that 

to my colleague, Mr. Frantz, because I am no longer at the program and haven’t been there for close to a year. 

Ms. BUERKLE. Okay. 

Mr. SILVER. First, with respect to your comment, Mr. Chairman, 

about Fitch ratings, I just did want to take a moment to—— 

Ms. BUERKLE. I apologize, Mr. Silver, because I only have five 

minutes, and I am sure—— 

Mr. SILVER. Then let me say I certainly share, Congresswoman, 

your concern that we ensure that we have the most efficient and 

effective regulations possible to support business. The entire goal 

and intent of the loan program is to support American business. I 

would just point out what I said in my opening remarks, which is 

that the Loan Programs Office is not a policy-making shop; it is an 

implementing agency. 

Ms. BUERKLE. I understand that. Thank you. We have such a 

short period of time, I need to get on with my questions. 

The next series of questions is for Mr. Frantz. If I could ask the 

Committee to play a short video clip, please. 

[Video played.] 

Ms. BUERKLE. Mr. Frantz, this is a re-election ad that the President played and has used. It uses a map from the Department of 

46 

Energy’s Loan Program Office. Would you comment whether or not 

this map is disingenuous with regards to the jobs that were created 

from those energy initiatives? 

Mr. FRANTZ. Well, I can comment on precisely what we have 

done, and I did so in my oral testimony, Congresswoman. We have 

created over 60,000 jobs. The interesting thing is that, on the positive side of the ledger, all of our projects represent new construction, and that is a huge multiplier, a huge dynamic in the job creation picture. 

Ms. BUERKLE. Okay. Now that you brought that up, let’s just pull 

up the first slide here. 

[Slide.] 

Ms. BUERKLE. All of the dots in red on this map, Mr. Frantz, represent Project AMP project sites. Now, Prologis hasn’t drawn down 

on its loan and no construction has occurred at any of these sites. 

So there is a map out there and it is to show all the jobs it has 

created, but in fact, where you see the red dots, there is no construction going on, no jobs have been created yet, whether it is in 

the construction business, as your are mentioning, or with regards 

to the solar panels. 

Mr. FRANTZ. To the best of my knowledge, Congresswoman, the 

contrary is in fact true, and that is that Prologis has spent millions 

of dollars in what they call roof preparations, and that is legitimate 

commencement of construction under our program; and they are 

working based on equity, not our debt. We have not disbursed, you 

are correct in that. 

Ms. BUERKLE. Now, the DOE, they gave the money or where did 

that money came from? 

Mr. FRANTZ. No, it came from equity. 

Ms. BUERKLE. Okay. And are you confident in saying that every 

one of those red dots that the project has started and we have put 

people back to work? 

Mr. FRANTZ. I would have to look at the specific sites by specific 

address, but I can assure you that Prologis is working on roof preparations on a number of projects in the millions of dollar range. 

Ms. BUERKLE. I think the important point in showing the President’s ad and then we show this ad is that no DOE money has 

been given for these projects. So when DOE talks about we are creating jobs—and that map that the President used came off the 

DOE website, so it is disingenuous, because if that money didn’t 

come from DOE, then I don’t know how he can tout those job creations. 

Mr. FRANTZ. Well, I think, with all due respect to the Committee, 

often the equity is employed once a loan guarantee has been given; 

there is a quid pro quo. So I can’t comment; the senior management is not here, I have not talked with them, but clearly an incentive for them to begin construction on roof preparation was the fact 

that they were holding a loan guarantee. 

Ms. BUERKLE. But wouldn’t you agree it is a little disingenuous 

that the President is taking credit for that? 

Mr. FRANTZ. I wouldn’t comment; I don’t think it would be appropriate for me to do so. 

Ms. BUERKLE. I yield back, Mr. Chairman. 

Mr. JORDAN. I thank the gentlelady. 

47 

I recognize the Chairman of the full Committee, Mr. Issa. 

Mr. ISSA. Thank you, Mr. Chairman. 

Mr. Silver, as I said in my opening—— 

Mr. JORDAN. Mr. Chairman, I am sorry. I have to go to the minority. 

Mr. ISSA. Oh, Mr. Cummings, certainly. 

Mr. JORDAN. I apologize. 

We will go the Ranking Member, and then we will go to the full 

Chairman. 

Mr. CUMMINGS. Thank you very much, Mr. Chairman. 

Mr. Witsoe, is there anything Republican or Democratic about 

the solar energy industry? 

Mr. WITSOE. No. 

Mr. CUMMINGS. And you had some $300 million invested in this 

project, is that right? 

Mr. WITSOE. That is correct. 

Mr. CUMMINGS. By private industry. 

Mr. WITSOE. That is correct. 

Mr. CUMMINGS. So the private folks must have seen something in it. In other words, they invested $300 million; they saw something there. Earlier it was stated that perhaps you all should have 

foreseen this China situation. I take it that you did not foresee 

this, is that right? 

Mr. WITSOE. No, certainly not. 

Mr. CUMMINGS. You know, in my city there is a cleaners a few years ago that started charging $1 per garment, and they charged 

$1 per garment and got all this business; people were lined up. You 

go somewhere else, a pair of pants cost you $6. Here they were 

charging $1. And then, after a while, they upped the price, upped 

the price to what everybody else had been charging, but then they 

had all the business. Is that sort of what China is trying to do here, 

do you think? 

Mr. WITSOE. It feels like a similar strategy. 

Mr. CUMMINGS. Yes. 

So, Mr. Tiller, in 2007, during the Bush Administration, your 

company, Abound, which was then known as AVA Solar, received 

DOE funding for a different solar project, is that correct? 

Mr. TILLER. Yes, sir. 

Mr. CUMMINGS. Isn’t it a fact that many prominent investors in 

solar energy, even in your own company, were prominent funders 

of Republican candidates, is that correct? 

Mr. TILLER. I believe that is correct, sir. 

Mr. CUMMINGS. Investors in solar energy are Republicans and 

Democrats. It turns out members of Congress who supported these 

projects were also both Republicans and Democrats. In 2009, members of Congress from Indiana wrote a letter of support for the 

Abound project, touting the project’s important economic benefits to 

Tipton County, the State of Indiana, and, indeed, the Nation at 

this critical juncture. 

Mr. Witsoe, can you tell us, were those Indiana members of Congress who supported your DOE application, were they just Democrats or were they also Republicans? 

Mr. WITSOE. I wasn’t with the company at the time, but I believe 

they were also Republicans. 

48 

Mr. CUMMINGS. And, Mr. Silver, when you were at the Loan Programs Office at DOE, did you hear from both Republicans and 

Democrats in support of project applications? 

Mr. SILVER. Constantly. 

Mr. CUMMINGS. So it was not unusual to have bipartisan efforts 

in an effort to help these job creators, is that right? 

Mr. SILVER. It wasn’t unusual to have bipartisan support for 

them and it wasn’t unusual for individual Democrats and Republicans, members of Congress and State legislators, to call on individual projects. 

Mr. CUMMINGS. Now, did you meet with any members of Congress about DOE projects? 

Mr. SILVER. Yes, sir. 

Mr. CUMMINGS. Both parties? 

Mr. SILVER. Yes, regularly. 

Mr. CUMMINGS. So that was nothing unusual? 

Mr. SILVER. Not at all. 

Mr. CUMMINGS. Were the Republicans, as well as Democrats you 

met, what kind of conversations would you have with them? They 

just kind of let you know they were interested in the project? Was 

there any pressure or what? 

Mr. SILVER. Well, they were interested in knowing about the 

project; they were interested in updates; they were interested in 

letting us know that they were interested in the projects. These 

would be typical and regular interactions. 

Mr. CUMMINGS. Now, we have identified nearly 500 letters sent 

by both Republican and Democratic members, including our Chairman, Chairman Issa, seeking funds for clean energy projects in 

their districts. I am not saying there is anything wrong with that, 

but more recently Chairman Issa has been calling the Department 

of Energy’s entire Loan Guarantee Program a ‘‘broad scandal’’ that 

has been driven by political favoritism and accusations of pay-toplay relationships. 

Did you see any evidence of that during your tenure? 

Mr. SILVER. None whatsoever, sir. As I say, almost nobody, and 

certainly nobody that I am aware of in the loan program, even 

knew who the individuals were who had invested, either directly or 

indirectly, into these companies. 

Mr. CUMMINGS. Now, could you have predicted the extent of this 

China factor here? Is that the main issue, do you think, with regard to the problems that this company experienced? 

Mr. SILVER. It is certainly a key driver. China has devoted billions and billions and billions of dollars in not just solar, but every 

clean and renewable energy space to build out those industries. But 

it is also true that that work is continuing and growing aggressively all over the world. 

Mr. CUMMINGS. But you never anticipated it would be to this degree, where they were actually putting product out there and 

charging less than the product cost to produce the product? 

Mr. SILVER. No. One couldn’t, one would not imagine that because fundamentally what you are describing, Congressman, is 

predatory pricing. 

Mr. CUMMINGS. And that is illegal, is that correct? 

Mr. SILVER. I am not qualified to comment on that. 

49 

Mr. CUMMINGS. Very well. Thank you very much. 

Mr. JORDAN. I thank the gentleman. 

We now recognize the Chairman of the full Committee. 

Mr. ISSA. Thank you very much. This is in fact a vast scandal, 

Mr. Ranking Member. I don’t run away from those statements. The 

American people know it. I would hope that you would soon join 

us and realize that the amount of dollars lost, you cannot blame 

it all on China and you certainly cannot stand here, sit here and 

blame China as though you didn’t know that they would be a fierce 

competitor. 

I, for one, spent over 20 years in the electronics business. I think 

it was pretty well known by the time I came to Congress 12 years 

ago, that China would compete and would compete fiercely for this 

kind of business. 

Mr. Silver, when you were at a Department of Energy employee, 

did you have a BlackBerry? 

Mr. SILVER. Yes, sir. 

Mr. ISSA. Did you have a Government-issued BlackBerry? 

Mr. SILVER. Yes, sir. 

Mr. ISSA. Did you also have a private phone of your own expense? 

Mr. SILVER. Yes, sir. 

Mr. ISSA. Did you have a Government-paid for computer at your 

office? 

Mr. SILVER. Yes, sir. 

Mr. ISSA. Did you have a computer at home, either permanent 

or a laptop that was paid for by the Government? 

Mr. SILVER. No, sir. 

Mr. ISSA. Did you have any secure ID capability of logging in? 

Mr. SILVER. Yes, but the system is so antiquated and the technology, which you will appreciate given your background, sir, is so 

cumbersome that it is virtually impossible to work with documents 

and long form pieces in that fashion. 

Mr. ISSA. Okay. But they did give you a fob and tell you how you 

could get into the system remotely and securely, right? 

Mr. SILVER. Well, they didn’t give me a fob, but there is a mechanism for—— 

Mr. ISSA. Okay. Did you use it on occasions? 

Mr. SILVER. The fob—— 

Mr. ISSA. The mechanism. 

Mr. SILVER. Very rarely. 

Mr. ISSA. Okay. Did you receive training as to the Federal 

Records Act and your responsibility in communications? 

Mr. SILVER. I honestly don’t recall. If it is part of the normal protocol, then I would have, but I just don’t remember. 

Mr. ISSA. Okay. Now, you have kindly provided us with over 

2,000 records from your Gmail account, and I want to thank you. 

My question to you is, why is it clear from these emails that you 

were communicating often with other, to be honest, other employees? In other words, it was DOE employee to DOE employee regularly through Gmail; both of you were using Gmail rather than 

your official mail. 

50 

Mr. SILVER. Well, I want to try to put this in context. We were 

working 16-hour days, 7 days a week against the sunset dated legislation in order to move these projects through. 

Mr. ISSA. Okay. I understand that was part of it. But did you 

ever send a Gmail or did you ever access your Gmail account while 

you were at your desk at your office? 

Mr. SILVER. On occasion I would try, particularly because I was 

traveling as much as I was, I would prepare to take things I needed, and that was from time to time a mechanism. As you mentioned in the provision of the documents, the vast majority of the 

material that I delivered, as you can see, are industry reports, they 

are white papers on technologies, they are draft presentations for 

the loan program and the like. 

Mr. ISSA. Well, I don’t want to characterize them wrongly, but I 

am seeing things like a discussion between you about BrightSource 

concerning a PPT outlining consequences of sending a memo to the 

White House. Now, to me, this is something that should have been 

made available, clearly should have been—this is the March 8th. 

This is a government document that is concerned, concerned about 

the politics and the policy of it. Was this retained or delivered upon 

your termination, or prior to your termination, into the Government’s hands? 

Mr. SILVER. First of all, I apologize, Congressman, I can’t actually read that, so I can’t comment on what it says, but—— 

Mr. ISSA. Well, let me rephrase it. Did you deliver your Gmail 

account back and forth for ones like the one I just characterized, 

did you deliver them to the Department of Energy before departure? 

Mr. SILVER. We delivered—everything that has been requested—— 

Mr. ISSA. The reason I am asking and I think it is an important 

question is these were government documents. They were not produced in duplicate on your official side. You departed DOE. In 

realtime or at any time prior to your leaving DOE, did you deliver 

these for archival purposes to the Department of Energy? 

Mr. SILVER. I am not sure that I was aware that I needed to do 

that. But as soon as we received a request from the Department 

of Energy we complied. 

Mr. ISSA. And isn’t it true that request came only after we asked 

for those documents? They didn’t ask for them until we were already seeking them, is that correct? 

Mr. SILVER. I don’t know the timing of that, sir. 

Mr. ISSA. When did they ask for them? 

Mr. SILVER. In the fall. I am told it was in the November, December time frame. 

Mr. ISSA. Okay. Last quick question just for the record. You had 

a BlackBerry. Couldn’t you have BlackBerried official to official in 

the case of most of these? In other words—— 

Mr. SILVER. As I said to you, sir, the vast majority of that material are documents, so there is no easy way, when you are trying 

to work with documents in a short time frame, to make that happen. 

Mr. ISSA. Let me just make something for the record. 

Mr. SILVER. Yes. But let met just say—— 

51 

Mr. ISSA. Sure. Of course. Ask unanimous consent I be granted 

an additional minute. Thank you. 

Mr. SILVER. I certainly wish, in retrospect, that I had handled 

these documents somewhat differently, but there was certainly 

no—the documents that I have actually already exist, by and large, 

on the Government—because they are these reports. 

Mr. ISSA. Right. And to be honest, we are not terribly concerned 

about documents attached; we are looking mostly at the content of 

the email. 

Mr. SILVER. No, I understand. 

Mr. ISSA. But isn’t it true that you could have sent to Gmail 

these things before leaving your office and, in fact, using your 

BlackBerry, you could have simply, if you had the ability to Gmail, 

you could have Gmailed it, you could have still sent them from 

your government account? In other words, you chose, out of apparently convenience, as did your colleagues, to use Gmail and had no 

knowledge, no training that you remember that would have caused 

you to know that these not being maintained, at a minimum, violated the intent of the Federal Records Act, which is that these be 

retained by the agencies and available to the American people. 

Mr. SILVER. Well, first, I apologize, I don’t actually have a Gmail 

account. That is not what—but in any event—— 

Mr. ISSA. Oh, no, you actually have a special account. But everyone you communicated with were Gmail. 

Mr. SILVER. Right. But we certainly have made available all 

of—— 

Mr. ISSA. And I apologize. We blacked out deliberately so that 

what you do have in the way of a personal url is yours to deal with. 

Mr. SILVER. Thank you. 

Mr. ISSA. I want to thank the Chairman for his indulgence. Yield 

back. 

Mr. JORDAN. I thank the Chairman. 

Now recognize the gentleman from South Carolina, Mr. Gowdy. 

Mr. GOWDY. Thank you, Mr. Chairman. 

Mr. Silver, the email account that ends in .net, is that your personal email account? 

Mr. SILVER. I’m sorry, which? 

Mr. GOWDY. I am happy to give it. I thought we were making 

some concerted effort not to share with the rest—— 

Mr. ISSA. Please do not give it. 

Mr. GOWDY. Is it safe to say it ends in .net? 

Mr. SILVER. Yes. 

Mr. GOWDY. All right. Now, you just testified, I think this is a 

direct quote, you wish you had handled the documents somewhat 

differently. I would argue to you you did handle it somewhat differently. The fact that you forwarded what I am sure you will concede is a decidedly work-related email to your personal email account does strike some of us that are familiar with the Federal 

Records Act as being somewhat different. 

So you get an email at 2:50 a.m. in the morning on a Monday; 

you respond to that email from your personal email account at 

noon. Were you at home when you responded to it; were you at 

work when you responded to it? 

52 

Mr. SILVER. The answer is I don’t know, Congressman, because 

I don’t have access to my records from being—— 

Mr. GOWDY. But you would have had to have forwarded that 

email from your work account to be able to respond to it on your 

personal account. 

Mr. SILVER. That is true. What I don’t know is what I was doing 

that day and where I was headed. As I said, as a matter of preparation for trips—— 

Mr. GOWDY. Well, let me ask you. Help me with this. Why did 

you feel the need to respond to it from your personal account? 

Mr. SILVER. Well, that answer is easy, and that is because any 

document over the size of a short email is very hard to read and 

manipulate, as you well know, I am sure, in classic library fashion. 

Mr. GOWDY. Well, we are going to get to whether or not you used 

this practice with other emails. This one had no attachments, it 

was just an email. 

Mr. SILVER. Right. But it was requesting that I review it and 

look at it and comment on it. 

Mr. GOWDY. Did you make a practice of forwarding all emails 

that had attachments to your personal email account? 

Mr. SILVER. No, just ones that were long and complex. 

Mr. GOWDY. And how many would that be? 

Mr. SILVER. I don’t know. But as I said, we turned over virtually 

everything that we have available, and the vast majority of it are 

these documents. 

Mr. GOWDY. Would you have deleted any emails before you 

turned them over? 

Mr. SILVER. Certainly not intentionally, no. 

Mr. GOWDY. I am not asking. If you had done it intentionally, 

this would be a conversation you would be having with another 

member of the Federal Government; it would be with the U.S. Attorney’s Office, not with a congressman. 

Mr. SILVER. Right. But the reason I said that is I can’t answer 

that question because, as it turns out, I have no backup mechanism 

on this. 

Mr. GOWDY. How pervasive was this practice of forwarding 

emails to your home email account? 

Mr. SILVER. Not terribly. 

Mr. GOWDY. What does not terribly mean? 

Mr. SILVER. I don’t know how to quantify that. 

Mr. GOWDY. More than 100; less than 100? 

Mr. SILVER. Well, I received tens of thousands of emails while I 

was with the program. 

Mr. GOWDY. Then what percentage would you have forwarded to 

your personal email account to then answer from your personal 

email account? 

Mr. SILVER. I don’t know the answer to that, Congressman. Not 

an enormous number, but any that would require me, while I was 

traveling or working, to review documents and comment on them. 

Mr. GOWDY. Is it your testimony that you were traveling when 

you received this email from Mr. Willard? 

Mr. SILVER. I don’t remember if I was or not. 

53 

Mr. GOWDY. If you were not traveling, what would be the other 

explanation for why you would have forwarded it to your personal 

email account? 

Mr. SILVER. Well, I might well have been out of the office, but 

not traveling. 

Mr. GOWDY. What is the purpose of the Federal Records Act? 

Mr. SILVER. I am not qualified to—obviously, to retain records, 

but I am not qualified to give you—— 

Mr. GOWDY. And why would it be important to retain records? 

Mr. SILVER. It is certainly important to retain records for the 

purpose of ensuring that there is an archive of what happened, and 

the records, just to be clear, Congressman, if I forwarded something from my Department of Energy computer, it is on the Department of Energy computer database. 

Mr. GOWDY. Is your response on it? 

Mr. SILVER. It depends who it goes to. In many cases it is. 

Mr. GOWDY. Well, if your response was from your personal email 

account to someone who doesn’t work for government, then how are 

we ever going to get that, unless you give it to us? 

Mr. SILVER. Which is exactly what we—— 

Mr. GOWDY. That is wonderful, Mr. Silver. We are so grateful 

that you evidenced that civic duty of turning it over. What do we 

do with people who don’t evidence that? That is the reason we have 

a federal set of rules and regulations, agreed? 

Mr. SILVER. I am sure that is correct. 

Mr. GOWDY. Well, of course it is. I mean, it is for people who 

might have more nefarious motives than yours, because it strikes 

me that just like convenience may be an explanation for why people answer things on their personal account instead of their work 

account, would you also agree with me that concealment might also 

be a motive for folks who want to use their personal account and 

not their official account? 

Mr. SILVER. Well, it certainly was not my motive, sir. 

Mr. GOWDY. I wasn’t asking about you, Mr. Silver. I am asking 

in general. If everyone adopted this somewhat different process 

that you adopted, it would thwart both the letter and the spirit of 

the Federal Records Act, agreed? 

Mr. SILVER. I am not qualified to comment on that, Congressman. 

Mr. GOWDY. What qualification do you need to answer that question? If everyone used their personal email account, we wouldn’t be 

able to do our jobs in Congress because we wouldn’t know what 

documents we didn’t have. Agreed? 

Mr. SILVER. I would think it would make sense to keep as many 

documents as possible, yes, I agree. 

Mr. GOWDY. All of them. 

Mr. SILVER. All of them. 

Mr. GOWDY. I yield back to the Chairman. 

Mr. JORDAN. I thank the gentleman. 

We now recognize the gentleman from Pennsylvania. 

Mr. KELLY. I thank the Chairman. 

If we could, I would like to put up the slide that Ms. Buerkle had 

talked about. Mr. Silver and Mr. Frantz, you, of course, will recognize this. And, again, it is the President. And while we say we are 

54 

trying to make this political, this is what the President is using in 

his re-election campaign, and I think we would look at that and 

would agree there is a lot of jobs being created. Look all over the 

map, look at all those dots. Now, a lot of them are Prologis and I 

know that some of that is happening and some of it is not happening. 

I want to show you another slide, that maybe you are not familiar with, that also shows you where jobs are being created. Now, 

this is actually China. So we went from shovel-ready to Shanghai. 

I think it is kind of neat that we show one map that shows how 

good this policy is working, but we do leave out a very important 

part of job creation. I think it is just kind of fascinating to see that, 

so we will leave that up for a little bit. 

Mr. Frantz, Mr. Silver, the Department of Energy gave Sempra, which has a BB+, which is a high-risk rating, a $337 million loan 

guarantee for its Mesquite Solar Project, which is also a high-risk 

project, to build a solar plant in the Arizona desert. The plant uses 

solar panels manufactured by Suntech, a Chinese solar panel company. How many jobs do you think this loan guarantee created in 

China? Any idea? I mean, I know we say we created 60,000 in the 

States. How many do you think we created in China using taxpayer money? 

Mr. FRANTZ. Congressman, I don’t have information relative to 

the chain and supply chains. 

Mr. KELLY. Okay. Well, how about Suntech? How about Suntech? 

We are using their panels, right? That is whose panels we are 

using for this project? 

Mr. FRANTZ. I would have to take the question for the record, 

and I will certainly respond in the details of the supply chain to 

the specific project. I don’t have that right at the moment. 

Mr. KELLY. Well, because we have been talking about creating 

American jobs, we have been talking about made in America, and 

we have been talking about everything that we are going to invest 

money in should be invested here, so all those dollars that, by the 

way, came from taxpayers or are backed by taxpayers should be 

used the right way, and I think we would all agree with that. 

Mr. SILVER. Congressman, the only thing I would add to your 

earlier slide is that the initial map of the United States probably 

does not show other cites that it might show, for example, the supply chains that provided materials, for example, to Abound and 

others. 

Mr. KELLY. And I understand that. 

Mr. SILVER. And it also does not—— 

Mr. KELLY. Okay, reclaiming my time. Reclaiming my time. The 

Arizona facility that we are talking about, they don’t manufacture 

those panels here, do they, their assembly? Because what they are 

doing is they get stuff shipped in from China and they assemble 

them in the United States, so we kind of do an end run and we 

say, wait a minute, no, no, this is working in Arizona. 

So I just think we need to be completely honest with what is 

going on here, because the theme of this hearing today is about 

where are we investing taxpayer dollars for a great ROI. And I understand that private investors would have looked at this and said, 

you know what, that is a risk I will take, especially if it is backed 

55 

by DOE loans. I don’t know the timing of when they invested, but 

I would say that probably had something to do with it also. Let’s talk about Shepherds Flat, a $1.3 billion investment. American? It is a wind farm. Are you familiar with it? 

Mr. SILVER. Yes. 

Mr. KELLY. Either of you, Mr. Frantz or Mr. Silver. 

Mr. SILVER. It is the largest, it was at the time and it may still 

be the world’s largest wind farm. It is in Oregon. 

Mr. KELLY. And it is an American project. 

Mr. SILVER. Well, it has American investors, American components, American labor, American—— 

Mr. KELLY. The towers that the wind mills are put on? They 

come from China. They come from China. So we are talking about 

investing billions and billions of dollars, and yet we find out that 

the money we are investing isn’t really creating American jobs, it 

is creating jobs in China. 

We have them shipped here and we manufacturing them here 

and we say—and I understand renewables, I really do. I get that. 

Let’s just put up one last slide, if we could, on Project AMP, if 

we have it available, the list of the suppliers that are approved. Do 

we have that? The list of suppliers, the approved suppliers for 

Prologis. 

Okay, all right. Well, I think you will find out that quite a few 

of the suppliers are Chinese. 

Mr. SILVER. Again, Congressman, please, with your permission, 

I am no longer close enough to the details, but I can say this, and 

perhaps Mr. Frantz can respond for the record at a later date, 

there are undoubtedly Chinese suppliers on there, because most 

suppliers are Chinese. However, if you actually go into the terms 

of that particular transaction, you will find that we required them 

to preference American panel manufacturers deliberately as part of 

the negotiation. 

Mr. KELLY. And I understand that. I understand that. But I 

think it is a little bit disingenuous to say that the whole process, 

because this initiative was about creating American jobs, looking at 

green energy and being able to go to renewables, and then we 

make it impossible for the fossils to stay in business; we regulate 

them out of business and we say, well, by mandate, the electric has 

to be supplied from renewables. So I understand all that. 

The Department of Commerce right now is imposing tariffs, are 

they not, on the Chinese? 

Mr. SILVER. Yes, sir. 

Mr. KELLY. Okay. Don’t you think it is a little bit disingenuous 

for the Department of Commerce to go ahead now and impose tariffs on the same people that the Department of Energy is subsidizing to make these, and then turn around and say, well, this 

is the way we are going to handle it? It makes no sense to me. I 

am so tired of hearing about these pesky Chinese that buy a lot 

of our debt, that also profit from taxpayer dollars, U.S. taxpayer 

dollars, and then turning around, trying to make it something else 

than what it is. 

It really comes down to when we spend American dollars, these 

are hard-earned American taxpayer dollars, and we find out that 

a lot of these things are going overseas—listen, I would like to have 

56 

seen this money, instead of going to Shanghai, go to the Shenango 

Valley, when Tubiz, a company that is in the district that I represent. They are doing an awful lot. They have a lot of people working. And I am talking about red, white, and blue jobs right now in 

western Pennsylvania that are being held up and not being looked 

at the same way as some of these other projects. 

So I thank you all for appearing here today. I know sometimes 

it gets a little laborious for you, but at the end of the day, at the 

end of the day we have to make sure that every single taxpayer 

dollar that we spend is going for the right reasons and we are getting a good ROI on it. 

Mr. Chairman, I thank you. I yield back. 

Mr. JORDAN. I thank the gentleman. 

Before we get to Mr. DesJarlais, the Ranking Member is recognized. 

Mr. KUCINICH. I want to thank the gentleman for his indulgence. 

At what point do we get to the deliverables and a big scandal 

here? I mean, I don’t see it yet. I respect members on the other 

side; many of them are good friends of mine, but when we get to 

the point of where we are talking about a big scandal and we are 

down to talking about whether somebody used Gmail or a government account, come on. I mean, really. And bottom line, Mr. Silver 

turned over his Gmail accounts to the Committee, so we have that. 

So there is no concealment here. 

Now, again, we have identified about 500 letters from both Democrat and Republican members that are seeking funds for clean energy projects in their districts, which is what we should be doing. 

That is what we are supposed to do. But when we want to say, 

well, the Department of Energy’s entire loans program is a broad 

scandal, political favoritism, pay-to-play. We have our friends in 

the Majority party, many of them supported these projects before 

they opposed them, so what changed? 

The evidence hasn’t changed. I haven’t seen substantiation in 

evidence of the accusations that have been made. And I really 

think that this Committee, which is so important to the people of 

the United States, always functions best when we gather the information first, and then make the assessment, instead of making the 

assessment before we gather the information. 

So what has changed? Well, we are in an election year. And I understand that. Because at the beginning of this Administration, 

when the election was three years and more away, we had my 

friends in the Majority, many were supporting the solar industry. 

Election gets closer, we have something else happening. 

So stop the presses again; we have politics that are entering into 

this. That isn’t meant to demean the Committee’s responsibility to 

ask questions, because every one of these witnesses, and I also 

want to say including the Secretary—we have a right to ask questions. But we should have to know what we—the idea is that before 

you ask the question, when you are sitting on this side of the table, 

you already are supposed to know the answer. We are not operating in that way in this case. 

So I am not sure what this so-called investigation amounts to, 

and it is true, it is true that China is using illegal trade practices 

to cripple American businesses. Instead of investigating potential 

57 

solutions to the problems, we are attacking the companies that 

have been undermined by this. Doesn’t make any sense. If I know 

anything about the Republicans, Republicans are pro-business. 

How did you end up being switched here, where I am the one arguing in favor of a major industry and my friends on the other side 

of the aisle have basically taken the position that has been imputed 

to me in the past; how did this happen? 

So I thought I would clarify that, Mr. Chairman. Unfortunately, 

I have a meeting over at the Republican Club right now. 

Mr. JORDAN. Well, I thank the gentleman. I would just point out 

this before yielding to the gentleman from Tennessee. We have established today that Mr. Silver, when he first got the job, in the 

process of interviewing for the job, in that same time frame, has 

a party at his house where he invites the very people who are 

going to decide whether he gets the job to come to the party. He 

says in his email I expect there will be about 40 people, folks we 

know are interested in this issue and the capacity to write significant checks. 

We have a $16 billion program; 26 companies got tax dollars, 22 

of those companies had a credit rating from Fitch of BB-, junk status, three of them went bankrupt: Solyndra, Beacon Power, Abound 

Solar. Abound Solar, the one we are focused on today, had a B rating, even worse. We have two reports from Fitch which say this is 

a bad bet; second report went from a bad bet to even a worse bet. 

The quality went down, the cost went up. We have the guy who has 

run the program who consistently moves communication from his 

government account to his personal account, doesn’t turn over the 

emails until we respectfully ask for them. 

So I think it is entirely appropriate, as the gentleman said, that 

we ask questions about this, and, frankly, it is important that we 

get the Secretary back in front of this Committee, because there 

are certainly things that he said in March that we want to ask him 

about now that we have had several hearings on that I think are 

real important. So that is why we are doing this. And we are certainly all pro-business; we are just pro-business in the traditional 

sense of the word, not taking taxpayer money and giving it to people who have close connections with the White House. 

Mr. KUCINICH. If I may, Mr. Chairman, and I beg the indulgence 

of the Chair. I do have to leave, but I just want to comment. We 

absolutely have a right to ask questions, including of the Secretary. 

I support this Committee’s right to ask him questions and to get 

the answers. I just don’t see the scandal yet. And if I did, look, 

whether it is a Democrat or a Republican administration makes no 

difference to me. If there is something there, I am ready to go after 

it. I don’t see it yet. 

Thanks, Mr. Chairman. 

Mr. JORDAN. I thank the gentleman. 

Recognize the gentleman from Tennessee and appreciate the gentleman’s patience. 

Mr. DESJARLAIS. Yes, sir, Mr. Chairman. Thank you. 

And thank you all for attending today. 

We have, unfortunately, lost the confidence of the American people as a Congress. It doesn’t matter whether they are Republicans 

or they are Democrats. Only 7 percent approve of the job we are 

58 

doing. So we have an Oversight Committee to look at where we 

have succeeded and where we have failed, and I think that is why 

we are here today, is to reflect back on maybe what we could do 

better and what we can do better moving forward. 

Right now we are debating whether or not to raise taxes on all 

Americans, and if you are the taxpayer sitting out there, which we 

all are, you want to know whether or not we are making wise investments. So rather than blame people, let’s learn from our mistakes. And I think clearly there were some mistakes made on this 

program. 

So, Mr. Frantz, could you talk a little bit about the purpose and 

nature of the Portfolio Management Division’s watch list? 

Mr. FRANTZ. I would be happy to comment, Congressman. We 

were blessed, when we stood up this program, to obtain the director for the Portfolio Management Division from many years of experience with the EXIM Bank. She brought with her a wealth of 

experience and knowledge. The Division now is wholly stood up. 

She imported with her an electronic management system called 

Quick Silver, which is assisting what we call constant monitoring, 

very proactive monitoring. 

The monitoring on all these projects is done on an hourly, daily, 

weekly, monthly basis with full reporting and accountability and 

transparency. It involves our legal division, our technical or engineering division in constant consultation with her very senior investment officers who are staffing that Division. 

And I think I would commend to you, and I presume you have 

seen or are aware of the Allison report. Mr. Allison went to great 

lengths. In fact, the focus of that independent investigation was 

largely focused on our portfolio management division, and he gave 

many specifics as an independent assessment of how we stood that 

program up and how it is performing. 

Mr. DESJARLAIS. Okay, being as we are talking about Abound 

Solar, was it put on the Portfolio Management’s watch list? And if 

so, when? 

Mr. FRANTZ. I think I would prefer to call it an early warning 

system. We don’t really refer to a list, a specific list as a watch list, 

it is a document, it is a working document, but it is part of the 

early warning system. 

Mr. DESJARLAIS. When did you realize—— 

Mr. FRANTZ. Yes, Abound was, of course, brought to the attention—— 

Mr. DESJARLAIS. When did you realize that it was in trouble? 

Mr. FRANTZ. My recollection would be that it was in the, I guess, 

summer of last year when we—we had had discussions with them 

about the current marketing situation and we were in constant 

conversations with them on a weekly, daily basis, so I don’t have 

a precise date right at my fingertips. 

Mr. DESJARLAIS. Okay. Could you pledge to share with the Committee the list of companies that are on the DOE’s watch list? 

Mr. FRANTZ. I will take that for the record and will respond to 

you, sir. 

Mr. DESJARLAIS. All right. 

Mr. Silver, you seem to think that Solar is a good investment. 

Mr. SILVER. Well, not per se. Individual transactions maybe. 

59 

Mr. DESJARLAIS. Okay. If you were investing, would you invest 

in some of what you are selling here today? 

Mr. SILVER. I am not selling anything today, Congressman. 

Mr. DESJARLAIS. Well, I mean, you are selling a concept. 

Mr. SILVER. I do believe that the solar industry will be an important economic engine for future growth, yes. 

Mr. DESJARLAIS. Do you think it is worth gambling taxpayer 

money on? 

Mr. SILVER. I don’t think it is worth gambling on anything; I am 

not a gambler. 

Mr. DESJARLAIS. We gave money to a company that, as the 

Chairman noted, had a Fitch rating of abysmal, so to me that 

would be somewhat of a gamble. If it was my money, I would probably be very leery, but you did not seem to be reserved about 

spending all these folks’ money. 

Mr. SILVER. Well, sir, let me answer two ways. First of all, the 

Fitch rating is actually physically incorporated into the credit analysis that the loan program undertakes, so it is baked into the results. 

Mr. DESJARLAIS. Weren’t 22 of the 26 companies that were 

loaned money for solar rated as junk? 

Mr. SILVER. I don’t know the answer, but I will answer directly 

what I think you are asking, which is these are innovative companies by definition. In fact, the mandate is to ensure that companies 

with important potentially transformative technologies that cannot 

easily find financing in the private sector can be facilitated in doing 

that. 

And I would just leave you with one thought, which is that these 

are not grants, sir; these are loans. They are intended to be repaid. 

Unfortunately, and no one regrets it more than me, they cannot always happen. But they are structured as underwritings; they are 

loans intended to be repaid, by the way, with interest. 

Mr. DESJARLAIS. Okay, so you would agree, then, that this 

maybe is what the President was talking about this Saturday when 

he was saying companies and businesses don’t get there on their 

own; they need government to help them. Would this be a good example of government’s help? 

Mr. SILVER. I didn’t see the President’s comment, sir, I don’t 

know. 

Mr. DESJARLAIS. Okay. I am out of time. 

Thank you. 

Mr. JORDAN. I thank the gentleman. 

Mr. Frantz, when did you learn that Abound Solar was totally 

done, they were going to go bankrupt? 

Mr. FRANTZ. I can’t give you, Mr. Chairman, the precise date, 

but, as I mentioned, we had been in conversations, close conversations and discussions with them. 

Mr. JORDAN. When did you know it was over, they were going to 

close up the doors, they were going to lay off the people? 

Mr. FRANTZ. We had established, in fact, written a forbearance 

agreement that was crystallized, keeping us posted on precise developments, which included—— 

Mr. JORDAN. What date was that? 

60 

Mr. FRANTZ. I can’t give you a precise date, but we know that 

the determination was made just before their public announcement. So that was a decision that was taken with—— 

Mr. JORDAN. They announced on the 28th. How much lead time 

did you have before the 28th? 

Mr. FRANTZ. A matter of days, because we were aware that they 

were in discussions with a prospective investor for the transaction, 

so I can’t give you a precise date, but I was not involved in those 

discussions, so I can’t give you the precise date when it broke off 

and—— 

Mr. JORDAN. Who was involved? 

Mr. FRANTZ. Members of the staff, my staff. 

Mr. JORDAN. Okay. But you definitely knew before the 28th. 

Mr. FRANTZ. I think—— 

Mr. JORDAN. And how long did you know this company was in 

serious trouble? 

Mr. FRANTZ. We had been—— 

Mr. JORDAN. Here is the point. Mr. Witsoe was in front of this 

Committee just two months ago, and he didn’t tell us things were 

going south in a big way then, but did you know two months ago 

that things were in big trouble? 

Mr. FRANTZ. I didn’t personally—— 

Mr. JORDAN. No, no, no, did the Department of Energy? 

Mr. FRANTZ. We were monitoring it, as I say, Mr. Chairman, 

very, very closely on practically a daily to weekly basis, so I 

couldn’t—— 

Mr. JORDAN. Did you guys—— 

Well, Mr. Witsoe, why did you pick June 28th to announce that 

you guys were done? 

Mr. WITSOE. Because the day prior to that, the 27th, is when we 

got notice from that final prospective investor that they would 

not—— 

Mr. JORDAN. Was there any coordination with you and the Department of Energy when and how this announcement would be 

made? 

Mr. WITSOE. No. No. We showed them the press release just before it went out. 

Mr. JORDAN. So it is completely coincidental that this just happened to be the day of maybe the biggest news on Capitol Hill in 

the last year, when the Supreme Court announced its ObamaCare 

or the Affordable Care Act decision, when the House of Representatives was voting on a contempt resolution of the attorney general? 

No coincidence, it just happened that day? 

Mr. WITSOE. It is completely coincidental. 

Mr. JORDAN. Wow. Wow. This is amazing. Just amazing. 

Mr. WITSOE. As I said, we learned from the investor the prior 

day. 

Mr. JORDAN. Well, why didn’t you tell us anything about this two 

months ago when you were in front of us? 

Mr. WITSOE. Well, two months ago we discussed that the company, even with better technology, had severe risk in the market, 

and we had just, unfortunately, had to have a number of layoffs a 

couple months prior. So I think that we did inform that. We 

61 

thought at the time we certainly hoped that these financing efforts 

would be successful. 

Mr. JORDAN. Okay. All right. Appreciate it. 

Let’s put up this one email. 

[Slide.] 

Mr. JORDAN. We have had a lot of discussion about this email between you and Mr. Woolard. This deals with the BrightSource 

issue, which I just found this email to be unbelievable. 

Actually, I think we want the other one, guys, the one where you 

are asked to edit a letter that is going to be sent from the then 

chairman of the board of BrightSource, Mr. Bryson. 

[Slide.] 

Mr. JORDAN. So this is the March 7th, 2011, email from John 

Woolard to Jonathan Silver. So you were asked to edit a letter that 

Mr. Bryson, who was chairman of the board of BrightSource, was 

going to send to then White House Chief of Staff Bill Daley. Whatever happened to that, did you do the edits? 

Mr. SILVER. What happened to it, Congressman, is that that letter was never sent, is my understanding. 

Mr. JORDAN. But that was not my question. Did you edit, did you 

make additions, corrections, say it this way, don’t do that? 

Mr. SILVER. I did respond, in fact. If I may, with your permission, here are my first sentences. It says, Jon, as drafted, I must 

be honest and say I think it is off target. The ongoing work does 

not speak to a lack of urgency; it speaks to a need to ensure that 

there is limited risk to taxpayer exposure. Those are the very first 

sentences in that memo, sir. 

Mr. JORDAN. But my question was did you edit it and make corrections and suggestions, and did you send that back to him? 

Mr. SILVER. I did make some minor things. He had misspelled 

White House, as an example. I don’t remember, a couple of other 

things. 

Mr. JORDAN. Okay. 

Mr. SILVER. But they were actually relatively modest—— 

Mr. JORDAN. Did you send that to him from your government account or from your private account? 

Mr. SILVER. No, I am told now that it came from my private account, and that is why the question I can’t answer as to where I 

was, because I don’t know the details. 

Mr. JORDAN. Okay. But it turned out—who made the decision 

that—so you counseled them not to send the letter? 

Mr. SILVER. Well, I didn’t counsel to send or not to send; what 

I said was I think it—as I said, as drafted, I must be honest and 

say I think it is off target. I even went on to say, sir, that that said, 

there are two lawsuits, and while one does seem to be a nuisance 

suit, the other may or may not be. The project is tight enough that 

if a stay was issues, there could be issues around the covenants. 

The General Counsel’s Office in DOE is drafting a memo on this 

issue and OMB needs this input before determining an appropriate 

final credit subsidy score. 

Mr. JORDAN. Do you think it—is it unusual that—I guess I 

shouldn’t be surprised, knowing that you were inviting folks to a 

party who were going to decide whether you get the job prior to— 

let me just ask this. Do you think it is appropriate for this kind 

62 

of relationship to exist? Now it is the other way; you are the one 

in government, someone is trying to get approval of—$400 million 

tax and this BrightSource I think was over $1 billion—several million dollars of taxpayer money, and they are suggesting to you, hey, 

edit this letter that our chairman of the board, soon to be Commerce secretary, is going to send to the White House chief of staff? 

Do you think that is unusual? 

I have not been in the Federal Government that long, in my 

third term, but I have not seen this before. 

Mr. SILVER. Two quick things. First, I do want to respond to your 

question about the invitation to our home by pointing out that 

Steve Isakowitz, who I acknowledge I did not know before, was actually a Bush Administration appointee. 

Mr. JORDAN. That is not the point. The point was he was going 

to decide whether you got the job or not and you were inviting him 

to your house. 

Mr. SILVER. No, he was not the decision-maker, sir. But, in any 

event—— 

Mr. JORDAN. Well, why was he interviewing you, then? 

Mr. SILVER. I was interviewed by a dozen or so individuals at the 

Department of Energy. 

Mr. JORDAN. So you went to an interview with a guy who had 

no bearing on whether you get the job or not? That doesn’t make 

any sense. 

Mr. SILVER. The decision-maker, I assume, sir, although I don’t 

know definitively, would have been the Secretary of Energy, and he 

was not invited. 

Mr. JORDAN. But that is the point. Four people were interviewing 

you and they were going to talk to the secretary, and what they 

say is going to determine whether you were going to get the job or 

not, and you think it is appropriate, in the course of that process, 

to invite them to your home to hang out with Al Gore and other 

celebrities in this industry. 

Mr. SILVER. Let me respond, Congressman, if I may, to your 

question about—— 

Mr. JORDAN. No, no, no. That is what took place. You are the one 

who brought this up. You said you wanted to clarify what took 

place there. 

Mr. SILVER. Well, actually, because they appropriately went to 

clear it with general counsel, who said that was not something they 

could do, they didn’t come. 

Mr. JORDAN. Okay, back to the BrightSource. 

Mr. SILVER. I believe, Congressman, that the BrightSource story 

on this has been completely misunderstood. It is very important to 

understand that there is a two-part process in the loan guarantee 

program. The first is the issuance of what is called, I don’t mean 

to be technical, but a conditional commitment. That is an intent to 

give the loan, to close the loan, subject to whatever conditions may 

emerge. The final is the closing of the loan. 

When Mr. Woolard sent me this email, he already had a conditional commitment, which means that the terms had already been 

set and had been reviewed—— 

Mr. JORDAN. I understand. 

63 

Mr. SILVER.—and approved by multiple different agencies and 

the career professionals. 

Mr. JORDAN. Yes, it is just not moving as fast as they want and 

they want you to speed it up. That is why they are asking will the 

White House quarterback this, will the White House do this, can 

you edit the letter; we want to do this. John Bryson, who is going 

to be Commerce secretary in just a few short time, we have the 

White House log, is at the White House the very next day. 

Mr. SILVER. I will say that I do think it is in the purview of the 

Loan Programs Office, once a loan has been conditionally committed and reviewed objectively, to assist the applicant to move it 

expeditiously as possible. What was remaining was the final credit 

subsidy score. And the reason this mattered to me—— 

Mr. JORDAN. Wait, wait, wait a minute. So what you are saying 

is that it was a formality at that point? 

Mr. SILVER. It is not a formality, but as long as the—— 

Mr. JORDAN. So there was still a chance you could say no. 

Mr. SILVER. Of course. You don’t say yes until the close. But one 

of the things that BrightSource needed to do, and I know this 

sounds potentially amusing, is they actually had to move some tortoises on this particular site, and there is—I am no expert on 

this—there is a window in which you can move tortoises during the 

hatching season, and if you miss that window and it pushes it out 

six months, the project is at risk. 

Mr. JORDAN. Let me ask you this. So the letter wasn’t sent. Did 

you call the White House and talk to anyone in the White House 

about the BrightSource, the final loan guarantee? 

Mr. SILVER. I have no recollection whether I did or not, but—— 

Mr. JORDAN. I think I asked you this. How many times did you 

visit the White House? 

Mr. SILVER. Numerous times. 

Mr. JORDAN. What we have is, I think the White House log, we 

have around 70 times you visited the White House. At any of those 

meetings did you talk to Bill Daley, chief of staff, about the 

BrightSource project? 

Mr. SILVER. To the best of my knowledge, I did not, and I certainly—— 

Mr. JORDAN. Well, let me ask you this. Was Bill Daley in any of 

those meetings you had at the White House? 

Mr. SILVER. I don’t recall, but certainly—— 

Mr. JORDAN. Who did you meet with in the 70 times you went 

there? 

Mr. SILVER. The vast majority of those meetings, and they were 

regular and frequent, almost weekly meetings, were with the career staff at OMB, NEC, and Treasury; and they were to update 

those individuals and those agencies on where we were with these 

projects because there was an independent review process that 

they went through. 

Mr. JORDAN. So in those updating and review processes that you 

were doing at the White House 70 different times, did you say, you 

know what, we have already given the conditional loan approval to 

BrightSource. In the back of your mind you are thinking they decided not to send this letter that I edited for them. Did you bring 

64 

up BrightSource and say, you know what, we need to push this 

through and get this done? 

Mr. SILVER. Again, Congressman, I don’t recall, but if all the conditions of the—— 

Mr. JORDAN. You don’t recall whether you ever talked about 

BrightSource—— 

Mr. SILVER. I am not sure. 

Mr. JORDAN.—with the future Commerce secretary as the chairman of the board? You don’t recall if you ever talked about 

BrightSource at the White House? 

Mr. SILVER. Well, I know I didn’t talk about BrightSource with 

the future Commerce secretary. 

Mr. JORDAN. I am not saying that. I am putting it in context. 

Here is the guy who was—you just edited a letter that he was 

going to send to the White House chief of staff. It is common 

knowledge a month later he becomes Commerce secretary, and you 

did not ever bring up BrightSource in these 70 different meetings 

you had at the White House? 

Mr. SILVER. Again, I don’t know. Undoubtedly, BrightSource was 

brought up at meetings by staff. My 70 meetings were supplemented by hundreds and hundreds and hundreds of meetings by 

staff, all of whom were updating individuals at the Office of Management and Budget. 

Mr. JORDAN. At any of these meetings you were at the White 

House, was the secretary there with you, Secretary Chu? 

Mr. SILVER. From time to time, yes. 

Mr. JORDAN. And was he in any meetings with you and the 

White House Chief of Staff, Bill Daley? 

Mr. SILVER. There may have been a meeting in which we discussed some logistics. We were trying—this was a program that we 

were standing up from a standing start—— 

Mr. JORDAN. So there were meetings where you and Secretary 

Chu were talking with the White House chief of staff about the 

1705 Loan Guarantee Program? 

Mr. SILVER. There were meetings where we were trying to ensure—there were a couple where we were trying to ensure that the 

logistics of managing the review process was as streamlined as possible, but there were not meetings where we were talking about 

BrightSource, the deal; BrightSource, the terms of the deal; 

BrightSource—any other configuration than that. 

Mr. JORDAN. But certainly meetings where you discussed with 

the White House chief of staff the 1705 Loan Guarantee Program. 

Mr. SILVER. I have updated senior people in the Administration 

on the 1705 Program occasionally 

Mr. JORDAN. No, I want to be specific. 

Mr. SILVER. Congressman, I just don’t have my—I don’t know 

who was in these meetings or not. I don’t remember. 

Mr. JORDAN. I am asking you this question: Were there meetings 

at the White House where you and Secretary Chu talked to the 

White House Chief of Staff, Bill Daley, about the 1705 Program? 

Mr. SILVER. There were meetings at the White House where we 

tried to ensure, to make sure, to figure out the mechanisms by 

which the interagency process—— 

65 

Mr. JORDAN. Okay, let me ask this. Were there meetings, whatever you—— 

Mr. SILVER. I just don’t remember who were in the meetings, sir. 

I just don’t. 

Mr. JORDAN. You don’t remember if the White House chief of 

staff and the Secretary of the Department of Energy, who was your 

boss, you don’t remember if there were meetings where the three 

of you were in the same meeting? 

Mr. SILVER. I honestly don’t remember who was—— 

Mr. JORDAN. Really? 

Mr. SILVER. I really don’t. I cannot recall. Most of these meetings 

took place with, as I say again, and I don’t mean to be redundant, 

staff from the National Economic Council, the Office of Management and Budget, and the Treasury Department about these transactions, about the economics and the terms of the transactions, 

about the analysis of the transactions, and significantly about the 

logistics for managing those analyses. 

Mr. JORDAN. I want to get one thing. I just want to make sure. 

Earlier you said there were meetings at the White House, you went 

70 different times, there were meetings at the White House where 

you and the secretary were at those meetings. Then you seemed to 

indicate there were meetings where the White House chief of staff 

was also present. 

Were there any meetings where you, Secretary Chu, and Bill 

Daley, White House Chief of Staff, that took place at the White 

House, took place anywhere, were there any meetings where the 

three of you were in the same meeting? 

Mr. SILVER. I am sure there was a meeting where the three of 

us were in the same room. 

Mr. JORDAN. And in your role, obviously, is the 1705 Program, 

so if the three of you were in a meeting, obviously you were going 

to be talking about the 1705 Program. 

Mr. SILVER. I am saying to you that we were talking about the 

logistics and processes by which we would get these transactions 

accomplished. There were an enormous number of moving parts to 

get—— 

Mr. JORDAN. Well, here is why it is important, because when I 

questioned the secretary a couple months back, he said—let me 

just read this. I think this is important for Mr. Cummings and the 

Committee to know. Did the White House ever call you, every talk 

to you about any of these? Did you get someone from the White 

House Chief of Staff, someone from the White House to talk to you 

about their respective companies involving these individuals, involving the 17—and context earlier was involving the 1705 Program, and Mr. Chu said, no, we didn’t. 

Mr. SILVER. That—— 

Mr. JORDAN. Now you are telling me—— 

Mr. SILVER. No, Congressman, I am telling you exactly the same 

thing. We did not have these conversations about deals or deal 

terms; we had these conversations about logistics because it was so 

difficult to get these projects moved. 

Mr. JORDAN. So, again, so your testimony is you edited a letter 

that the chairman of the board from BrightSource was going to 

send to the White House chief of staff, but in subsequent visits to 

66 

the White House you don’t even bring that up. It was important 

enough for you to edit; they had already gotten the conditional loan 

guarantee; they are in the process of getting the final approval; and 

you don’t bring that up when you are in a letter, even though you 

edited a letter that was going to be sent from the chairman of the 

board to the very individual you were talking to? 

Mr. SILVER. I am not saying, to the best of my recollection, there 

were no meetings at all that I participated in around BrightSource 

inside the White House except at the staff level to talk about the 

transactions. 

Mr. JORDAN. You were at—— 

Mr. SILVER. I don’t—— 

Mr. JORDAN. No, no. You were at the White House 70 times. 

Mr. SILVER. Right. 

Mr. JORDAN. You have told me you were in meetings where the 

secretary, you, and the chief of staff were there. You edited an 

email, and yet you don’t even bring—maybe you were there to talk 

about the general context of this program, I get that, but you don’t 

bring it up? 

Mr. SILVER. Correct. 

Mr. JORDAN. Okay. I just wanted to be clear. 

I would be happy to—I guess is just down to the two of us. If 

the gentleman has a further round, he is welcome to take as much 

time as he would like. 

Mr. CUMMINGS. Thank you very much. 

I have sat here. I had not intended to attend this hearing; I was 

going to attend another hearing, but I am glad I did. This seems 

to be an alleged conspiracy in search of the facts, and I say that 

with great sadness. We have China dumping panels illegally, illegally in our market and basically destroying a company, one of the 

job creators that we always hear about, and here we are today not 

dealing with China and what they are doing to destroy our job creators, everybody wants jobs, but we are here talking about emails 

and who used the BlackBerry. It is interesting. People in my district, they want us to create jobs. 

And then we seem to be trying to say that this is some political, 

some favoritism has been going on here, and I just don’t believe it. 

Mr. Witsoe, the Republicans have mentioned several of Abound’s 

investors, and they are clearly trying to paint this project as politically motivated, so I would like to ask you about Abound’s biggest 

investor. The project’s single largest outside investor was an entity 

called Invus Group, is that right? 

Mr. WITSOE. That is correct. 

Mr. CUMMINGS. In fact, the Invus Group put in more than $100 

million in financing, is that right? 

Mr. WITSOE. That is correct. 

Mr. CUMMINGS. The CEO of Invus Group is Raymond Debbane, 

is that—— 

Mr. WITSOE. I didn’t—I never met him. 

Mr. CUMMINGS. Okay, you don’t know him? 

Mr. WITSOE. No. 

Mr. CUMMINGS. Boy, he put a lot of money in your company for 

you not to know who he is. According to documents from, well, I 

am telling you he is the CEO 

67 

Mr. WITSOE. I know him; I haven’t met him. 

Mr. CUMMINGS. Oh, I see. According to documents from the Federal Election Commission, Mr. Debbane has contributed tens of 

thousands of dollars to Republican candidates and pacts over the 

past two years. There is nothing wrong with that. 

Were you aware of that, Mr. Witsoe? 

Mr. WITSOE. No, I was not. 

Mr. CUMMINGS. Were you aware that he made donations to presidential candidate Mitt Romney? Were you aware of that? 

Mr. WITSOE. No. 

Mr. CUMMINGS. Were you aware that he made campaign donations to our own Chairman Issa? Were you aware of that? 

Mr. WITSOE. No, I am not aware of anything from our investors. 

Mr. CUMMINGS. All right. 

Now, Mr. Frantz, I understand that the entire Indiana congressional delegation, including Democrats and Republicans alike, supported the Abound project, is that right? 

Mr. FRANTZ. That is my understanding. 

Mr. CUMMINGS. Yet, today my colleagues in the Majority seem to 

be saying that all of those Indiana Republicans were wrong; that 

the Department should have rejected the Abound project. 

Mr. Frantz, I want to ask you this question because I have sat 

on this Committee for 16 years and I have seen people come before 

the Committee and so often they leave with their reputations not 

intact. It pains me because we only have one life to live. This is 

no dress rehearsal; this is the life. And our reputations are so very, 

very important. 

And I know that you know that you are under oath, but, Mr. 

Frantz, let me ask you this question. To your knowledge, did any 

political considerations on either side, on either side, Democrat or 

Republican, govern the Department’s decision to approve a loan 

guarantee to Abound? 

Mr. FRANTZ. Congressman, I can assert to the very best of my 

knowledge, and as I indicated in my prepared remarks, I have been 

with the program from its inception to today, that not a single 

project has been brought forward, gone through the due diligence 

process, closed, and been awarded a loan guarantee with other 

than the pure merits of the project itself. There has been no, to the 

best of my knowledge, political coercion on any one of the single 

projects. 

Mr. CUMMINGS. Mr. Silver, we on the Hill, we may not be subject 

to the same rules about BlackBerries and official records and all 

that, but we have a little problem here. We can only use a certain 

BlackBerry for campaign stuff and a certain BlackBerry for congressional stuff. A lot of us carry around two BlackBerries. 

So when you were being asked all these questions about your 

personal account, your BlackBerry, whether you were traveling and 

all this kind of stuff, the bottom line is were you in any way, and 

I remind you that you are under oath. The media is gathered here 

today, they are ready for the headline. Usually the headline, by the 

way, comes out before the hearing. It is a little different today; I 

don’t know what happened. 

But were you in any way trying to hide information or trying to 

hold back information by using one instrument as opposed to anVerDate Aug 31 2005 10:42 Aug 28, 2012 Jkt 000000 PO 00000 Frm 00071 Fmt 6633 Sfmt 6633 C:\DOCS\75588.TXT APRIL
68 

other, or one account as opposed to the other? Because I think, I 

think this is what this was supposed to be getting to. I notice the 

New York Times over there and all those other papers. I guess that 

is what they are trying to write about. So I am curious myself. 

Were you trying to do any of that kind of stuff? 

Mr. SILVER. No, unequivocally not, Congressman, and it is the 

reason I was able to and in a position to turn over several thousand pages of documents in one day, as we did yesterday. I had 

just come back in the Country from a business trip and we pulled 

this together as quickly as we absolutely could. So, no. I would 

even go further and say, in an effort to ensure that there were no 

issues to this regard, after I left the Loan Programs Office, I gave 

my computer to my attorney and have not had access to it since. 

Mr. CUMMINGS. Now, you know, Mr. Witsoe, Chairman Issa said 

something that I just found so interesting, when he was talking 

about, he still said that we should have anticipated, that we should 

know that China was going to do these kinds of things, and I am 

just wondering if you had known that China was going to illegally, 

and I emphasize that, illegally violate U.S. trade law by putting 

these panels on the market below what it cost them to produce, do 

you feel bad that you didn’t anticipate this like Chairman Issa is 

implying that you should have anticipated it? 

Mr. WITSOE. No. I have been part of many very competitive industries that have competed with China and I have never seen 

anything like this before. 

Mr. CUMMINGS. You just said something that I just want to get 

into a little bit. You said you have never seen anything like this 

before? 

Mr. WITSOE. I have never seen price competition happen this fast 

and this deep, even in very competitive industries that I have been 

part, electronics and others. 

Mr. CUMMINGS. So when you went into this, first of all, you have 

been in business for a while, is that right? 

Mr. WITSOE. No, eight months. 

Mr. CUMMINGS. You have only been in business eight months? 

Mr. WITSOE. I have only been in the business for eight months. 

Mr. CUMMINGS. Oh, okay. But I assume that when you go into 

a venture like this you don’t go into it to lose money, do you? 

Mr. WITSOE. No, certainly not. 

Mr. CUMMINGS. And you make assertions to your potential investors that this is a good deal for them to invest in, or they would 

not have put in the kind of money that they did, is that correct? 

Mr. WITSOE. That is correct. They put in $300 million. 

Mr. CUMMINGS. And someone on the Committee, I forget who 

said it, implied that all of this money, or a substantial amount of 

it, came after you got the DOE guarantee. I assume that some of 

it may have come before and some may have come after, is that 

a safe statement? 

Mr. WITSOE. I don’t have the exact numbers, but I believe about 

half of it came prior to. 

Mr. CUMMINGS. So you would guesstimate that before you got the 

DOE guarantee, about half of the $300 million they had invested, 

is that what you are saying? 

Mr. WITSOE. Approximately. 

69 

Mr. CUMMINGS. But when you went into it, you anticipated some 

shenanigans by China, did you not? 

Mr. WITSOE. No, we always would anticipate competition by 

China, but certainly not them selling below their own cost, in 

which they would be losing money. 

Mr. CUMMINGS. So you expected them to, you must have had 

some kind of calculation. You must have said, well, we are going 

to sell, hypothetically, we are going to sell this panel for $1,000. We 

know that China, it is costing them, say, whatever, $800 to produce 

them, and we anticipate that they will sell them for a certain 

amount. 

So can you help me with that? Because I don’t want the public 

walking away from here thinking that some folks acted irresponsibly. I am talking about the job creators acted irresponsibly going 

into a deal like this. It makes no sense. 

Mr. WITSOE. No. There was a lot of analysis done on what our 

costs would be, where the market costs would be, and that is why 

Abound was interesting, because we had a technology that we felt 

could get to the lowest possible cost. 

Mr. CUMMINGS. So, Mr. Frantz, much has been made of the Fitch 

report. You were aware of that report, were you not? 

Mr. FRANTZ. Yes, sir. The Fitch report and the other rating agencies are just one tool that we use, it is not the only component that 

we use in our evaluations. And, as a matter of fact, in the course 

of our identification of risks and risk mitigants that we employ, we 

even do a more extensive, it was alluded to earlier, even a more 

extensive ultimate evaluation than the individual rating agencies 

do. 

We have the expertise of the entire Department of Energy at our 

disposal, and we use them. And in this particular instance, as a 

matter of fact, we had a number of different parties, both within 

our expertise in the Department of Energy, as well as outside independent consultants, who corroborated the fact that Abound was 

exhibiting a technology that could withstand enormous price compression in the marketplace and was clearly prospectively a technology that would be a lowest cost producer here in the United 

States, and that is precisely why we supported it. 

Mr. CUMMINGS. Now, you heard my analogy about the cleaners 

in my district, did you not? 

Mr. FRANTZ. Yes, sir. 

Mr. CUMMINGS. How they charged $1 per garment, get all the 

business, and then up the price, but then they got all the clients, 

the customers. You talked about price compression and everything 

that was calculated. I am trying to figure out is China just going 

off the cliff with this kind of deal? In other words, Mr. Witsoe made 

it sound as if they didn’t anticipate it. You, being an expert in this 

area, apparently you had all of this data and the data didn’t pan 

out. 

Tell me, looking at it in retrospect, and I know it is easy for people to be the Monday morning quarterback to look at a deal like 

this, but the question becomes if we were to do this deal again, try 

to do a deal like this again, what lessons have we learned from this 

and what would we do differently than what we did? It sounds like 

you had all the resources for data. 

70 

I am sure you had the best minds, the best analysis and all that, 

but apparently China has done something that threw the whole 

damned thing, all the measurements for probability of success, by 

what they are doing, they have thrown all that out the window. 

Unless they are doing something that you all have not mentioned 

to us so far. 

Mr. FRANTZ. No. Congressman, I can say this about that in terms 

of your assertions. As I mentioned in my prepared testimony, I 

have literally worked all over the world and, in fact, I have worked 

in China on projects, and I can tell you that from years of experience doing that, that there is no way you can ultimately predict the 

behavior of a specific government anyplace. 

In this case, with respect to China, it is clear that China has 

made a decision and has enormously, very heavily subsidized this 

specific industry way below the cost of the manufacturing of their 

projects, and I mentioned that in my testimony as well. Also, as 

you indicate, hindsight is always worth much more than foresight. 

As hard as we work to try to predict the future, we are not perfectly clairvoyant at all, and this, as Mr. Witsoe just indicated, was 

a phenomena that none of us, nobody, including our internationally 

oriented consultants, predicted. It has been a precipitous price compression that the experts, not only here in the United States, but 

all over the world, could not have foreseen. 

Mr. CUMMINGS. This is my last question. So do we then say that 

we are not going to get into this area? I mean, do we just say, all 

right, we invented it. Someone on the other side implied that, well, 

since China is doing what they are doing, let them have it. I take 

it that you don’t agree with that. 

Mr. FRANTZ. Well, I think, as all four of us have indicated to you 

this morning, and all four of us, in our own individual, respective 

ways, are deeply committed, profoundly committed professionally to 

see the success of this program, the program was, of course, a bipartisan way established here in the U.S. Congress to fulfill a need 

for support of our industries in a very high-risk segment. That is 

deployment of new and innovative and transformative technologies 

in which the private sector and private markets, by the way, even 

today will not readily support. 

That is precisely why we are here and why, certainly, as the officers from Abound have attested, that they made a calculated investment, a calculated risk to bring a new and transformative technology to the marketplace, which I have just indicated would be, 

if not the only, one of the lowest cost producers in the world. That 

is precisely the value of this program, it is precisely the value of 

public support in this domain, and it is why we all are deeply and 

profoundly committed to assist the private markets, which are still, 

even to this day, not totally responsive to these types of investments. 

Mr. CUMMINGS. Thank you, Mr. Chairman. 

Mr. JORDAN. I told you guys we would get out of here by about 

12:30, so I am going to be close to that. 

One last thing. Mr. Silver, back to this email from Mr. Woolard 

to you regarding BrightSource and editing the letter, it was clear 

from emails and basically what you said earlier, that you both 

71 

wanted this to go through. You wanted BrightSource, that had already gotten the conditional guarantee, you wanted this to happen. 

You switched to your personal account. You tell him, I will make 

the edits, but I advise you probably not to send this letter. 

What took place between there, to your knowledge? Did anyone 

from the White House call you guys? Did anyone from the Department of Energy contact the White House? What took place in the 

time, because a this is a March 7th email exchange, 2011, and then 

on April 11th, so just a little more than a month later BrightSource 

got the thumbs up and got the final loan guarantee approval. So 

what took place in that month? Did anything happen? 

Mr. SILVER. Well, a number of things probably happened. Again, 

I will have to go from recollection. But principally what happens 

in that last month is the legal documentation around the previously agreed upon terms for the loan, in addition to the Office of 

Management and Budget assigning a final credit subsidy score for 

the project. Those would be the two sort of major milestones or 

things that would have to happen. 

Mr. JORDAN. In this month-long time, did you personally have 

any contact with Mr. Bryson? 

Mr. SILVER. With Mr. Bryson? No. 

Mr. JORDAN. April 11th is the day it was approved, the same 

day, obviously, Mr. Bryson was going to the White House some because he was looking to be Commerce secretary, I understand that, 

but the very day he visits the White House, April 11th, is the very 

day the loan gets approved. Do you think there is any connection 

to that? 

Mr. SILVER. None. But I do want to say for the record that I have 

known John Bryson for many years; there is no secret about that. 

Mr. JORDAN. Okay, so you have known him for a long time? 

Mr. SILVER. I have. 

Mr. JORDAN. And you had no communication with him in this 

one-month interval that was a critical time for the company that 

he was chairman of the board of? 

Mr. SILVER. No. 

Mr. JORDAN. No contact? No email, personal or government? 

Mr. SILVER. Not to the best of my recollection. 

Mr. JORDAN. No phone calls? 

Mr. SILVER. Not to the best of my recollection, no. 

Mr. JORDAN. When he was at the White House, you didn’t visit 

with him? 

Mr. SILVER. The only time I—— 

Mr. JORDAN. None of his visits corresponded with any of your 70 

visits? 

Mr. SILVER. I was at the White House for his swearing in. 

Mr. JORDAN. Okay. Okay. 

I want to thank you all for being here today. I know it was long. 

Mr. Tiller, you got to really participate, didn’t you? 

[Laughter.] 

Mr. JORDAN. We thank you for being here nonetheless. This first 

panel is dismissed. We will get ready for our second panel. 

[Recess.] 

Mr. JORDAN. The Committee will be back in order. 

72 

You know how we have to do it, we have to swear you in. Mr. 

Kats, we are getting your nameplate. So if you guys would please 

stand up, we will do that. Again, I apologize. I knew the first panel 

was going to take a while. 

Do you solemnly swear to tell the truth, the whole truth, and 

nothing but the truth? 

[Witnesses respond in the affirmative.] 

Mr. JORDAN. Let the record show that both witnesses answered 

in the affirmative. 

We still start with Doctor, it is good to have you with us again. 

You have been in front of this Committee and several committees. 

We appreciate your expertise. 

And you as well, Mr. Kats. 

So you are just stuck with me, I apologize. But, Doctor, you are 

recognized. 

WITNESS STATEMENTS 

STATEMENT OF VERONIQUE DE RUGY 

Ms. DE RUGY. Chairman Jordan, it is an honor to appear before 

you today to talk about the Department of Energy Loan Guarantee. 

My name is Veronique de Rugy. I am a Senior Research Fellow at 

the Mercatus Center at George Mason University, where I study 

tax and budget issues. 

Advocates for renewable energy are right to be outraged by subsidies going to fossil fuels. Yet, they are wrong to think that in 

order to address subsidies they don’t like, they should demand 

large amount of subsidies for energy they like. 

The Department of Energy’s 1705 Loan Guarantee Program is a 

cornerstone of the U.S. renewable energy policy. The policy is often 

justified on two grounds: first, advocates argue that renewable energy companies do not have access to sufficient credit to support 

new projects. In addition, the DOE argues that encouraging investment in green energy would create up to 5 million jobs. So now 

let’s look at how these claims stand up to scrutiny. 

So looking at the flow of 1705 loans, we find that, first, some of 

the loans have gone to companies that would have not been able 

to get funded in the open market without the loan guarantees because they were deemed too risky. Not all of them were horrible 

bests, but many of them were. So far three companies have gone 

under, and at great cost to taxpayers. So let’s take the Abound 

company that this hearing is about. In the end, after the company 

has sold its assets, the price tag for taxpayers will be roughly $50 

million to $60 million, paid by the American people at a time when 

they are hurting a lot. 

It is possible that many of these companies that went under may 

not necessarily be representative of the entire portfolio, and that is 

another problem. That is my second point. Nearly 90 percent of the 

1705 loan went to subsidized projects backed by large companies 

that very likely would have had access to capital if their project 

was indeed viable. 

Third, under the 1705 loan program, 16 million loans were guaranteed and, according to DOE, 2,388 permanent jobs were created, 

and that means that taxpayer exposure for each alleged permanent 

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job created is 6.7 million jobs. So it speaks very poorly to the quality of this loan program as a jobs program. But understand that 

this is actually not even really representative of what has happened because when the company goes under, you have that exposure and you are left with zero jobs. 

So the data speaks for itself, but the real problem is actually way 

worse than this. In fact, failures like Solyndra, Abound, 

BeaconPower are only symptoms of problems much more fundamental with loan guarantee programs, and in particular this program, so they suffer from three particular failure problems. Every 

loan guarantee transfers risk from lender to taxpayer, which creates a moral hazard. Because the loan amount is guaranteed, 

banks don’t really have an incentive to do proper scrutiny and 

proper diligence. What these loans do is they privatize gains and 

they socialize risk. In other words, the taxpayers bear the risk, but 

the profits, if there are profits, are borne by the product company 

and the banks that lent the money. 

Second, every loan guarantee gives an incentive to lenders to 

shift to subsidized projects and away from non-subsidized ones 

independently of the merits of the project, and this has a cascading 

effect. For instance, when the government subsidizes a project, it 

is perceived as safe. That means that venture capitalists, who are 

actually in the business of providing money to high-risk customers, 

actually will leave that market. 

But another thing happens which is much more counterintuitive: 

other private investors will actually divert resources from other 

non-subsidized projects towards subsidized projects, again, independently of their merits. So, for instance, in the previous panel we 

heard that Abound Solar got some $150 million, I guess, after getting that guarantee. Some of this may have come independently, 

but it is very likely, in this example, that some of that money came 

only because of the government guarantee, and that meant basically taking money away from other maybe green companies that 

would have actually succeeded. 

Third, at their worst, every loan guarantee introduces political 

incentives into business decisions, creating the condition for businesses to seek financial reward by pleasing political interests rather than customers. This is called cronyism and it is a bipartisan 

problem and it entails real economic costs. 

So whatever the intention that motivated the program, the evidence is clear; it just doesn’t work. The 1705 loan program does expose taxpayers to Solyndra, Abound, Beacon Power-like waste, but 

more of a concern are the systematic distortions it introduces into 

the market and the unintended consequences those can have. 

Thank you. 

[Prepared statement of Ms. de Rugy follows:] 

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Mr. JORDAN. Thank you, Doctor. Appreciate your testimony. 

Mr. Kats, you are recognized. 

STATEMENT OF GREGORY KATS 

Mr. KATS. Thank you. Thanks for the opportunity to speak with 

you today. I serve on the board of directors of four U.S. clean energy companies and just served on the board of the National Academy of Sciences study recommending to Congress ways to strengthen U.S. competitiveness. 

Abound Solar attracted broad support, including from Indiana 

Republican Governor Mitch Daniels, for its $400 million loan guarantee. Abound raised about $300 million from private investors, including from British Petroleum. The DOE structured its loan guarantees to Abound in tranches in order to reduce its risk, so only 

$70 million of the $400 million is at risk, and as noted by the Wall 

Street Journal, DOE could receive about $30 million of that back, 

leaving a Federal loss of about $40 million, or one-tenth of the loan 

loss guarantee. This reflects prudent DOE lending risk management practices. 

Overall, the DOE Loan Guarantee Program has had a 4 percent 

default rate, which is just one-fourth of the losses projected for and 

budgeted for. A 4 percent default rate means a 96 percent rate. In 

the real world, where facts matter, a 96 percent success rates get 

you an A. 

The loan program has done exactly what it was intended to do, 

help create over $35 billion in investments in renewable energy, 

where the private sector lending was not available. Congress set 

aside a credit subsidy because it knew there would be job losses because the program supports innovation, and these losses are proving far less than projected for and budgeted for. In the real world, 

where U.S. companies are invested in to build jobs and strengthen 

America’s competitive position in global markets, the DOE Loan 

Guarantee Program is a big success. 

U.S. success in clean energy matters a lot to the U.S. military. 

Department of Defense is the largest energy consumer in the 

world. Secretary of the Navy, Ray Mabus, put it this way: Why the 

interest in alternative energy? The answer is pretty straightforward: we buy too much fossil fuel from potentially or actually 

volatile places on earth. Every time the cost of a barrel of oil goes 

up $1, it costs the United States Navy $31 million in extra fuel 

costs. 

But it is costly in more ways than just money. For every 50 convoys of gasoline we bring in, we lose a Marine, we lose a Marine 

killed or wounded. That is too high a price to pay for fuel. 

In the words of then Chairman of the U.S. Joint Chiefs of Staff, 

Admiral Mullen, energy is about not just defense, but security; not 

just survival, but prosperity. Our national defense infrastructure 

and systems hold the potential to help stem the tide of strategic 

security issues related to climate change. 

The U.S. military, U.S. scientists, and the National Academy of 

Sciences are unambiguous in their acceptance of the reality and 

threat of climate change. So why is this Congress undermining 

U.S. clean energy industry solutions to climate change? Our major 

86 

competitors, including China and Germany, have invested heavily 

in expanding their domestic wind and PV corporations. 

Today, of the top 10 global wind and PV manufacturers, only one 

of each is located in the United States. We should be deeply concerned about the security implications of the U.S. losing its global 

competitive leadership position in these critical industries, that 

were largely invented here in the United States in a multi-decade 

collaboration between U.S. corporations, U.S. DOE, the U.S. military, and U.S. universities. 

Abdication of U.S. congressional support for U.S. renewable energy industries that were largely created here in America is a disaster for U.S. companies, for U.S. competitiveness, and for U.S. security, but it is a big win for China. 

Other governments support, rather than undermine, their domestic clean energy industries. So why are members of this Congress distorting and denying what is clearly a successful American 

program? If the U.S. military is forced to import the technology it 

needs to achieve its mission of shifting to clean energy, U.S. security will be weakened. For financial employment and security reasons, the U.S. DOE should use the unused loan guarantee funds 

to support another $30 billion to $40 billion in U.S. clean energy 

companies and programs. 

If this Congress is willing to support America’s innovative corporations, the U.S. can regain its global leadership in clean energy 

and address climate change in a way that builds on U.S. ingenuity 

and creates American, rather than Chinese, jobs. 

Most Americans know that climate change is happening. Most 

Americans are in favor of renewable energy because it is clean, 

U.S. grown, and getting cheaper. Most Americans understand that 

the Government gives even larger subsidies to other forms of energy. Most Americans understand that in supporting innovative 

things, you are not going to bat 100 percent, but that 96 percent 

is obviously a success. And most Americans want this Congress to 

use its common sense. 

Thank you. 

[Prepared statement of Mr. Kats follows:] 

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Mr. JORDAN. If this was so good, Mr. Kats, why do you need the 

taxpayer dollars? You talk about a 96 percent success rate. Why do 

you need taxpayer money put at risk? Dr. de Rugy talked about 

how most of these companies got private investment dollars. If it 

was such a great thing, if it is so wonderful, why do we need the 

taxpayers to put up millions of dollars and, as we unfortunately 

know, lose several hundred millions of dollars, as three of these 

companies went bankrupt? 

Mr. KATS. The reason the U.S. provides subsidies for energy 

across the board, and has done so for five or six decades, is to promote American production of energy. A relatively small proportion 

of that support has gone to renewables. The reason it has gone to 

renewables: it is U.S. produced, it is cleaner, it makes the U.S. 

competitiveness stronger, it creates employment. The success of the 

program is illustrated by the 96 percent success rate. That is a terrific success. 

Mr. JORDAN. How much of that 96 percent—I think it is actually 

less than that. Out of 26 companies, three of them went bankrupt. 

But of that 96 percent, how many do you think would have made 

it on their own? 

Mr. KATS. So the 96 percent represents 96 percent of the dollars 

that were spent are coming back. So from an investment perspective it is a 4 percent default rate or less. That is a big success. 

Mr. JORDAN. It would have been lower than that. I think the last 

time you were here, a couple months ago, you stated that the LPO 

needed to move faster and be more aggressive. You said this while 

sitting next to Mr. Witsoe, with Abound Solar, whose company has 

since gone bankrupt. So, obviously, if we had moved faster relative 

to Abound, the taxpayers would have lost a lot more money, maybe 

all of that $400 million. 

Mr. KATS. A 96 percent success rate is really terrific by any 

measure. It is much more successful than other programs supporting energy. Sir, you asked a question about employment impact, and I want to speak to that. 

Mr. JORDAN. Go ahead. 

Mr. KATS. The U.S. nonpartisan Congressional Budget Office, in 

its May 2011 report entitled Estimated Impact of American Recovery and Reinvestment Act on Employment and Economics Output 

found that these investments, including the DOE guarantee program, raised gross domestic product between 1.1 and 3.1 percent, 

and increased the number of full-time jobs between $1.6 million 

and $4.6 million with what would have happened otherwise. Again, 

that is the U.S. Congressional Budget Office. 

So the job creation impact has been large, and if this Congress 

supports—— 

Mr. JORDAN. But the question always remains, as Dr. de Rugy 

pointed out, would it have happened anyway? How much can be directly attributable to the fact that the taxpayers put up money? 

And the only thing we know for certain—you can talk about the 

success rate, but we know for—success rate would mean for the 

taxpayers that every dollar that went out came back. That is success. Right now we know that is not the case. Three companies 

went bankrupt and we have lost hundreds of millions of dollars of 

taxpayer money. 

100 

So how much of that would have happened anyway? 

Mr. KATS. So—— 

Mr. JORDAN. The point is you don’t know, and no one knows. 

Mr. KATS. The answer is—— 

Mr. JORDAN. And how many companies that maybe were better 

than these bigger companies, as Dr. de Rugy pointed out, who got 

taxpayer dollars, how many of those companies out there would 

have probably gotten investment from private equity, private dollars, but for the fact they said, you know, what we are going to put 

the money where it is a little safer, where the Government has 

backed it up? 

There is a company out there, I would bet, and no one can prove, 

but you just know there is a company out there that may have 

some technology that really could help our Country; really could 

help Admiral Mabus, as you referenced; really could help our national security; really could be beneficial. But they are not getting 

financing because of this program. 

Mr. KATS. That is not true—capital investor. And when we look 

at companies, we look at their ability to scale and compete internationally. I was actually on the board of a couple companies that 

applied for funding. The process to get federal funding is very rigorous. They would not have received private funding had they not 

received it. Again, the three companies that have had financial 

problems, there is only partial exposure. We are talking today 

about Abound. Of that $400 million loan, only $40 million will end 

up not being repaid back. Overall, in this program—— 

Mr. JORDAN. Only $40 million. 

Mr. KATS.—there is a 96 percent—— 

Mr. JORDAN. It is easy say, Mr. Kats, when it is not your money. 

You said you were on the board of four different companies. Any 

of those four companies, did they apply for dollars in the 1705 program? 

Mr. KATS. None of them did. 

Mr. JORDAN. Your company is Capital E, right? 

Mr. KATS. Correct. 

Mr. JORDAN. I am looking at one of the things from your company, marketing enabling measures. I assume this is from your or 

something that is put out by your company. You talk about government or private parties can provide full or partial loan guarantees 

under default. You talk about things that you do. So have you ever 

worked on behalf of any of the companies that received taxpayer 

dollars? 

Mr. KATS. I served on the board of a company that applied for 

a DOE loan guarantee. After two years it ended up not getting it. 

That company was then purchased by Saint-Gobain France. It illustrates why, if all the other—their companies, the United States 

needs—— 

Mr. JORDAN. Have you ever consulted—— 

Mr. KATS. We should not cede the race on clean energy. 

Mr. JORDAN. Have you ever consulted, done consulting work for 

companies who have applied for an received taxpayer dollars in the 

1705 program? 

Mr. KATS. No, sir, I have not. 

Mr. JORDAN. Okay. 

101 

Dr. de Rugy, I want your thoughts on this idea that this is a 96 

percent success. 

Ms. DE RUGY. Well, first, we are just at the beginning. Let’s see 

where it ends. 

Mr. JORDAN. But are you like me? I don’t accept that as the definition of success. 

Ms. DE RUGY. No. I don’t—— 

Mr. JORDAN. Taxpayers only lost hundreds of millions, they 

didn’t lose billions, so that is a successful program. 

Ms. DE RUGY. I agree. And, by the way, some of that cost is totally underestimated. Certainly, that is the cost for this given program, but let’s not forget that this loan guarantee opens the door 

to a lot of other government subsidies. So, for instance, NRG, who 

got $3.8 billion in subsidies over several projects, is also eligible for 

a $430 million grant from Treasury. 

Mr. JORDAN. And some of these were eligible for export-import 

dollars too. 

Ms. DE RUGY. Exactly. And there is a gigantic amount of doubledipping. The Export-Import Bank then goes and subsidizes foreign 

companies in order to—and then local and State governments that 

give taxpayers—so, I mean, I think the cost to taxpayers is actually 

way bigger than what it looks. And we don’t know how big the failure will be in the end but, more importantly, so many of these companies are actually backed by very large companies that would 

have had access to capital, very likely, maybe not at the price that 

they would have liked. 

More importantly, I actually think is this process actually tends 

to do a lot of the things that got us in the financial mess, which 

is the private sector usually requires some 40 percent of equity for 

60 percent debt, and because of the loan guarantee, then companies 

now can get 80 percent debt and only 20 percent in equity, and I 

think this is fairly irresponsible. 

Mr. JORDAN. I just want to point out that we are going to have 

a hearing in a couple weeks on the Export-Import Bank and its relationship to this as well, so you made me think of that in your answer. 

One last question for both of you. I will start with Mr. Kats. Do 

you think Dr. de Rugy made this point in her opening statement, 

that there is the potential for political influence, cronyism, whatever term you want to use. There is the potential for that when you 

have this amount of money being available for private companies 

to get hold of. You have sat through some of these hearings, Mr. 

Kats. You have been here. I don’t know if you were here for the 

first couple hours of this hearing, but do you think there is any political connections, cronyism had anything to do with this program? 

Mr. KATS. You know, there are hundreds of billions of dollars 

and subsidies have gone to energy, fossil fuels, nuclear—— 

Mr. JORDAN. I am talking specifically about 1705. 

Mr. KATS. Yes, 1705 is a relatively small amount compared to 

that. I think there is potential. My impression is DOE has done a 

very rigorous job in making sure that doesn’t happen. I know that 

the screening and due diligence process is extremely rigorous; arguably too rigorous and arguably too slow. 

Mr. JORDAN. Doctor? 

102 

Ms. DE RUGY. There is political connection. The existence of government itself, I mean, the availability of government money, 

whether it is in the form of a grant, means that actually these companies are going to be seeking this government’s favor. 

Mr. JORDAN. In both your experience in watching government 

and seeing this kind of stuff, these kind of programs, have you ever 

seen what we have talked about this hearing, ever seen where an 

email comes from the company who is trying to get the loan, asking 

the person who is going to decide whether they get the loan to edit 

a letter that is going to be sent to the White House chief of staff? 

Have you ever seen that kind of stuff? You referenced other forms 

of energy that get some kind of help. Have you ever seen that take 

place with those other forms? 

Mr. KATS. I don’t think that letter was actually sent. 

Mr. JORDAN. That isn’t my point. Have you ever seen that kind 

of coziness between the private sector and the person who is deciding whether they get taxpayer money? 

Mr. KATS. Yes. I think both Republicans and Democrat congressmen weigh in—— 

Mr. JORDAN. Specifically have you ever seen that? That is the 

question. 

Mr. KATS. Have I ever seen direct—— 

Mr. JORDAN. That kind of coziness, where the person deciding 

whether they are going to get billions of dollars in the BrightSource 

example, where they are asked to edit a letter, they actually do 

edit the letter that is going to be sent to the White House chief of 

staff when they are trying to get $1 billion in taxpayer dollars? 

Have you ever seen that in any other energy area? 

Mr. KATS. I don’t think that letter was sent, sir. 

Mr. JORDAN. That is not the question. Have you ever seen the 

person who is deciding whether the loan guarantee is going to get 

approved, have you ever seen them actually edit a letter that the 

company is looking to send to the White House chief of staff? Have 

you ever seen them edit a letter? Have you ever seen that kind of 

behavior in any other area other than this 1705 program? 

Mr. KATS. I don’t think it was appropriate. I haven’t seen a letter 

like that that was actually ever sent. 

Mr. JORDAN. Have you ever seen that before? 

Ms. DE RUGY. I haven’t, but obviously I am not an expert. I can 

just say that this is not, for instance, Mercatus does fund-raising 

and we don’t do this, we don’t ask the people we are asking for 

money, hey, can you please edit this. 

Mr. JORDAN. In your view, fine, because that is the public sector. 

But this is the private sector asking the government, trying to get 

taxpayer money. Seems kind of unusual? 

Ms. DE RUGY. It seems unusual. 

Mr. JORDAN. Very unusual? 

Ms. DE RUGY. But, I mean, the economic literature is actually 

full of evidence that this is what you get when you have the government doling out money. 

Mr. JORDAN. You have just not seen it up close. Mr. Kats hasn’t 

seen it before. 

Mr. KATS. I actually worked at DOE on the level of engagement 

on both sides of the aisle, and from CEOs, who I assume were both 

103 

Republican and Democrat; we never asked. In terms of trying to 

find out information, make the case for the plant being built in 

their district, that happens all the time; it is standard business. 

Mr. JORDAN. It is standard business for the government employee to tell the private sector, hey, if you are going to send a letter to the White House, here I show you should write it? That is 

standard business? 

Mr. KATS. Again, I don’t think that letter was sent, so you are 

asking a hypothetical. I am just saying—— 

Mr. JORDAN. No, I am not. 

Mr. KATS. I am just saying that what happens—— 

Mr. JORDAN. The letter was edited; it was going to be sent to the 

White House. They chose not to after the fact. What I am asking 

is—you are saying this is common practice. I am saying, really, you 

have seen this before? 

Mr. KATS. I have never seen a letter that was actually sent that 

was—actually, I was unable to read the text; I don’t know what the 

letter said, but I would say it is very normal—— 

Mr. JORDAN. Forget about what the letter said. Let’s ask this 

point. Have you ever, in your experience at the Department of Energy, when you were there, did you know of anyone at the Department of Energy who, when they were approving some kind of loan 

for a private company and they are asked to edit something that 

is going to be sent to the White House, have you ever seen them 

actually edit that and advise them how to do it? 

Mr. KATS. The level of involvement in the form of letters, visits, 

and emails from corporate CEOs, from governors, both Republican 

and Democrat, and from members on projects in which businesses 

in their jurisdiction were being considered for funding, that is a 

constant and unending stream; it takes up an enormous amount of 

time at DOE to deal with that. That is standard practice, yes. 

Mr. JORDAN. Okay. 

Doctor, I will give you the last word, if you want. Where does 

this all end, Doctor? Where are we headed if we keep going down 

this road? 

Ms. DE RUGY. Well, I mean, it is hard to know where it is ending, 

but I guess there are going to be more government guarantees, 

probably some failures, more subsidies down the road. But, more 

importantly, with respect to the—I actually think that the fact that 

private industry needs the support of the government is never a 

good sign. 

And then where does it end? I mean, then you have competition 

from abroad. Then what do we do? I mean, if price falls, what is 

the next step the industry—what is the next demand from the industry? Are they going to demand that the government guarantee 

certain level of prices? It is likely where we are heading, and we 

know what was done in other industries such, as sugar and steel, 

and this is not good for the American people. 

Mr. JORDAN. Well, thank both of you for taking the time out. I 

apologize for your having to wait, but I appreciate your patience 

and your expert testimony. Take care. 

Mr. KATS. Thank you. 

Ms. DE RUGY. Thank you. 

Mr. JORDAN. We are adjourned. 

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[Whereupon, at 1:03 p.m., the subcommittee was adjourned.] 

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