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CONTINUING DEVELOPMENTS REGARDING THE 

SOLYNDRA LOAN GUARANTEE 

HEARING 

BEFORE THE

SUBCOMMITTEE ON OVERSIGHT AND 

INVESTIGATIONS 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

OCTOBER 14, 2011 

Serial No. 112–98 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

JOE BARTON, Texas 

Chairman Emeritus 

CLIFF STEARNS, Florida 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO MACK, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

Vice Chairman 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

BRIAN P. BILBRAY, California 

CHARLES F. BASS, New Hampshire 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BILL CASSIDY, Louisiana 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

HENRY A. WAXMAN, California 

Ranking Member 

JOHN D. DINGELL, Michigan 

Chairman Emeritus 

EDWARD J. MARKEY, Massachusetts 

EDOLPHUS TOWNS, New York 

FRANK PALLONE, JR., New Jersey 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

CLIFF STEARNS, Florida 

Chairman 

LEE TERRY, Nebraska 

SUE WILKINS MYRICK, North Carolina 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

BRIAN P. BILBRAY, California 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

CORY GARDNER, Colorado 

H. MORGAN GRIFFITH, Virginia 

JOE BARTON, Texas 

FRED UPTON, Michigan (ex officio) 

DIANA DEGETTE, Colorado 

Ranking Member 

JANICE D. SCHAKOWSKY, Illinois 

MIKE ROSS, Arkansas 

KATHY CASTOR, Florida 

EDWARD J. MARKEY, Massachusetts 

GENE GREEN, Texas 

DONNA M. CHRISTENSEN, Virgin Islands 

JOHN D. DINGELL, Michigan 

HENRY A. WAXMAN, California (ex officio) 

(II) 

(III) 

C O N T E N T S 

Page 

Hon. Cliff Stearns, a Representative in Congress from the State of Florida, 

opening statement ................................................................................................ 1 

Prepared statement .......................................................................................... 4 

Hon. Diana DeGette, a Representative in Congress from the State of Colorado, opening statement ...................................................................................... 9 

Hon. Fred Upton, a Representative in Congress from the State of Michigan, 

opening statement ................................................................................................ 10 

Prepared statement .......................................................................................... 13 

Hon. Henry A. Waxman, a Representative in Congress from the State of 

California, opening statement ............................................................................. 15 

WITNESSES

Gary Grippo, Deputy Assistant Secretary for Government Financial Policy, 

Department of the Treasury ................................................................................ 18 

Prepared statement .......................................................................................... 19 

Answers to submitted questions ...................................................................... 121 

Gary Burner, Chief Financial Officer, Federal Financing Bank, Department 

of the Treasury 1 ...................................................................................................

SUBMITTED MATERIAL

Draft Memorandum for the Secretary, dated January 19, 2011, from Susan 

S. Richardson, Chief Counsel, Loan Programs Office, submitted by Ms. 

DeGette ................................................................................................................. 42 

Memorandum for the General Counsel, dated February 15, 2011, from Susan 

S. Richardson, Chief Counsel, Loan Programs Office, submitted by Ms. 

DeGette ................................................................................................................. 48 

Subcommittee exhibit binder .................................................................................. 77 

Emails, dated December 15, 2010, Subject: Solyndra, submitted by Mr. 

Stearns .................................................................................................................. 107 

Memorandum, dated October 17, 2011, from Clinton T. Brass, Analyst in 

Government Organization and Management, Congressional Research Service, to Mr. Griffith, submitted by Mr. Stearns ................................................... 109 

Emails, dated August 19, 2009, Re: OMB, submitted by Ms. DeGette ............... 113 

Emails, dated August 31 through September 2, 2009, Subject: Solyndra/FFB 

Docs, submitted by Ms. DeGette ......................................................................... 114 

Emails, dated January 11, 2011, Re: Solyndra, submitted by Ms. DeGette ....... 119 

1Mr. Burner did not offer a statement for the record. 

(1) 

CONTINUING DEVELOPMENTS REGARDING 

THE SOLYNDRA LOAN GUARANTEE 

FRIDAY, OCTOBER 14, 2011 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, COMMITTEE ON ENERGY AND COMMERCE, Washington, DC. 

The subcommittee met, pursuant to call, at 9:35 a.m., in room 

2123, Rayburn House Office Building, Hon. Cliff Stearns (chairman 

of the subcommittee) presiding. 

Members present: Representatives Stearns, Terry, Sullivan, Murphy, Burgess, Blackburn, Bilbray, Gingrey, Scalise, Gardner, Griffith, Barton, Upton (ex officio), DeGette, Schakowsky, Markey, 

Green, Dingell, and Waxman (ex officio). 

Also present: Representatives Pompeo and Kinzinger. 

Staff present: Jim Barnette, General Counsel; Karen Christian, 

Counsel, Oversight; Todd Harrison, Chief Counsel, Oversight and 

Investigations; Alan Slobodin, Deputy Chief Counsel, Oversight; 

Carl Anderson, Counsel, Oversight; Krista Rosenthall, Counsel to 

Chairman Emeritus; John Stone, Associate Counsel; James Thomas, Coordinator, Oversight and Investigations; Andrew Powaleny, 

Press Assistant; Sean Bonyun, Deputy Communications Director; 

Anita Bradley, Senior Policy Advisor to Chairman Emeritus; Katie 

Novaria, Legislative Clerk; Carly McWilliams, Legislative Clerk; 

Phil Barnett, Minority Staff Director; Stacia Cardille, Minority 

Counsel; Matt Siegler, Minority Counsel; Kristin Amerling, Minority Chief Counsel and Oversight Staff Director; Karen Lightfoot, 

Minority Communications Director, and Senior Policy Advisor; Elizabeth Letter, Minority Assistant Press Secretary; and Alvin Banks, 

Minority Assistant Clerk. 

Mr. STEARNS. Good morning everybody. And we convene the Subcommittee on Oversight and Investigations. And I will open with 

my opening statement. 

OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA 

We convene this hearing of the Subcommittee on Oversight and 

Investigations to simply gain a better understanding about the Department of Treasury’s role in reviewing the Solyndra loan guarantee, particularly with regard to the Department of Energy’s decision to restructure the loan guarantee and subordinate taxpayers 

to private investors. While President Obama may claim that hindsight is 20/20, but the facts tell a much different story. Recent 

emails produced by the White House and OMB, as well as a long 

2 

chain of others, clearly show that numerous members of the Obama 

administration from the most senior levels in the West Wing down 

to the career professionals at OMB and DOE knew that Solyndra 

was a bad bet that was destined to fail. And while the Obama administration may not have had a crystal ball, they did have financial models in August 2009 for telling that Solyndra would run out 

of money in September 2011, which they choose to ignore. 

In late 2010 Solyndra informed DOE that the situation was dire. 

DOE began negotiations to restructure the terms of the loan to 

keep Solyndra above water. Under the new arrangement, two primary investors, Argonaut, Madrone and Madrone Capital, were 

given priority over the government with respect to the first $75 

million recovered in the event of liquidation. I and other members 

of the subcommittee have continuously questioned the legal basis 

for this unprecedented decision. Section 1702–3 of the Energy Policy Act of 2005 clearly states in plain language that when DOE 

makes a loan, ‘‘the obligation shall be subject to the condition that 

the obligation is not subordinated to other financing.’’ 

Previous communications produced to the committee reveal that 

there were numerous concerns within the administration regarding 

the financial and political impact of the restructuring. What the 

latest round of emails show is that senior officials within the 

Obama administration had significant concerns about its legal 

basis and those concerns were simply ignored. In August 2011, as 

discussions about a second restructuring were underway, Assistant 

Secretary of Treasury, Mary Miller emailed the director of OMB 

Jeffrey Zients stating that, ‘‘Since July of 2010, Treasury has asked 

DOE for briefings on Solyndra’s financial condition and any restructuring of terms. 

The only information we have received about this has been 

through OMB as DOE has not responded to any request for information about Solyndra.’’ 

She goes on to note that Treasury’s legal counsel believes that 

the statute and the DOE regulations both require that the guaranteed loan should not, should not be subordinated to any loan or 

other debt obligations, and that in February, Treasury requested in 

writing that DOE seek the Department of Justice’s approval of any 

proposed restructuring, and that to her knowledge, that has never 

happened. 

In a closing, Assistant Secretary Miller seemed almost resigned 

to DOE’s course of action in stating that while she expects that 

DOE has a view about why loan subordination can occur without 

DOJ approval or Treasury’s consultation, I wanted to correct any 

impressions that we have acquiesced in the steps to date, that is 

her quote. 

Unfortunately, Assistant Secretary Miller is unable to join us 

today to discuss her correspondence with DOE or her Department’s 

role in the Solyndra review. Hopefully, my colleagues or witnesses 

here today can shed some light on the decision-making process that 

occurred around the time of this restructuring. In fact, one of our 

witnesses, Gary Burner, Chief Financial Officer at the Treasury 

Department’s Federal Financing Bank also emailed key DOE officials involved in the Solyndra restructuring after hearing about the 

proposed terms of the new agreement from OMB. He noted on FebVerDate Aug 31 2005 09:32 Jul 17, 2013 Jkt 037690 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 F:\112-09~2\112-98~1 WAYNE
3 

ruary 10th that he understood, ‘‘these adjustments may include 

subordination of Solyndra’s 535 million reimbursement obligations 

to DOE, and possibly the forgiveness of interest.’’ Accordingly, he 

raised a prospect of seeking the Department of Justice’s approval 

which never ultimately occurred. Judging from these emails it is 

clear that senior officials at the Department of Treasury were not 

sufficiently consulted about the restructuring, and when they offered their opinions and warning signs, they were ignored like so 

many of the others along the way. 

It should be noted, however, that the final rule issued by DOE 

implementing Title 17 of the Energy Policy Act specifically requires 

DOE to consult with the Secretary of Treasury before ‘‘DOE grants 

a deviation that would constitute a substantial change in the financial terms of the loan guarantee agreement.’’ There is no exception 

allowing DOE to ignore those who disagree with its course of action. 

I look forward to better understanding why the Department of 

Treasury felt so strongly about being consulted prior to the restructuring of a loan guarantee and whether they believe DOE violated 

the Energy Policy Act of 2005. 

[The prepared statement of Mr. Stearns follows:] 

4 


81415.001

Opening Statement of the Honorable Cliff Stearns 

Chairman, Subcommittee on Oversight and Investigations 

"Continuing Developments Regarding the Solyndra Loan 

Guarantee" 

October 14, 2011 

774 words 

We convene this hearing of the Subcommittee on Oversight and 

Investigations to gain a better understanding about the Department of 

Treasury's role in reviewing the Solyndra loan guarantee, particularly 

with regard to the Department of Energy's decision to restructure the 

loan guarantee and subordinate taxpayers to private investors. 

While President Obama may claim that hindsight is 20/20 but the 

facts tell a much different story. Recent emails produced by the White 

House and OMB, as well as a long chain of others, clearly show that 

numerous members of the Obama Administration-from the most senior 

levels in the West Wing down to career professionals at OMB and 

DOE-knew that Solyndra was a bad bet destined to fail. And while the 

Obama Administration may not have had a crystal ball, they did have 

Page 1 of 5 
5 


81415.002

financial models in August 2009 foretelling that Solyndra would run out 

of money in September 2011, which they chose to ignore. 

In late 2010, Solyndra informed DOE that their situation was dire. 

DOE began negotiations to restructure the terms of the loan to keep 

Solyndra above water. Under the new arrangement, two primary 

investors in Solyndra, Argonaut and Madrone Capital, were given 

priority over the government with respect to the first $75 million 

recovered in the event ofliquidation. I and other members of this 

Subcommittee have continuously questioned the legal basis for this 

unprecedented decision. Section 1702(3) ofthe Energy Policy Act of 

2005 clearly states in plain language that when DOE makes a loan, "the 

obligation shall be subject to the condition that the obligation is not 

subordinate to other financing." 

Previous communications produced to the Committee revealed that 

there were numerous concerns within the Administration regarding the 

financial and political impact ofthe restructuring. What the latest round 

of emails show is that senior officials within the Obama Administration 

Page 2 of 5 
6 


81415.003

had significant concerns about its legal basis, and that those concerns 

were simply ignored. 

In August 2011, as discussions about a second restructuring were 

underway, Assistant Secretary of Treasury, Mary Miller, emailed the 

Deputy Director of OMB, Jeffrey Zeints, stating that: 

"since July of201O, Treasury has asked DOE for briefings on 

Solyndra's financial condition and any restructuring of terms. The 

only information we have received about this has been through 

OMB, as DOE has not responded to any requests for information 

about Solyndra." 

She goes on to note that "[Treasury's] legal counsel believes that 

the statute and the DOE regulations both require that the guaranteed loan 

should not be subordinate to any loan or other debt obligation" and that 

"in February, [Treasury] requested in writing that DOE seek the 

Department of Justice's approval of any proposed restructuring" and that 

to her knowledge "that has never happened." In her closing, Assistant 

Secretary Miller seems almost resigned to DOE's course of action in 

Page 3 of 5 
7 


81415.004

stating that while she "expect[s] that DOE has a view about why loan 

subordination can occur without DOJ approval or Treasury consultation, 

I wanted to correct any impression that we have acquiesced in the steps 

to date." 

Unfortunately, Assistant Secretary Miller is unable to join us today 

to discuss her correspondence with DOE or her Department's role in the 

Solyndra review. Hopefully, however, our witnesses can shed some 

light on the decision-making process that occurred around the time of 

the restructuring. In fact, one of our witnesses, Gary Burner, Chief 

Financial Officer at the Treasury Department's Federal Financing Bank, 

also emailed key DOE officials involved in the Solyndra restructuring 

after hearing about the proposed terms of the new agreement from 

OMB. He noted on February lOth that he understood "these adjustments 

may include subordination ofSolyndra's $535 million reimbursement 

obligation to DOE and possibly the forgiveness of interest." 

Accordingly, he raised the prospect of seeking DOJ approval, which 

never ultimately occurred. 

Page 4 of 5 
8 


81415.005

Judging from these emails.itis clear that senior officials at the 

Department of Treasury were not sufficiently consulted about the 

restructuring and when they offered their opinions and warning signs, 

they were ignored like so many of the others along the way. It should 

be noted, however, that the final rule issued by DOE implementing Title 

17 of the Energy Policy Act specifically requires DOE to consult with 

the Secretary of Treasury before "DOE grants a deviation that would 

constitute a substantial change in the financial terms of the Loan 

Guarantee Agreement." There is no exception allowing DOE to ignore 

those who disagree with its course of action. 

I look forward to better understanding why the Department of 

Treasury felt so strongly about being consulted prior to the restructuring 

of the loan guarantee and whether they believe DOE violated the Energy 

Policy Act of2005. 

Page 5 of 5 
9 

With that, I recognize my distinguished colleague Ms. DeGette. 

OPENING STATEMENT OF HON. DIANA DEGETTE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF COLORADO 

Ms. DEGETTE. Thank you, Mr. Chairman. So if we want to know 

the legal basis for the subordination of this loan by DOE wouldn’t 

it be nice to have DOE here? The majority has focused on an email 

from August 2011 in which a Treasury official raises questions 

about whether subordination of the guaranteed loan to Solyndra 

was appropriate. And the Treasury official expresses a view that 

DOE’s restructuring of the loan may require Department of Justice 

approval. 

Now, I think it’s appropriate for this subcommittee to conduct 

fact-gathering relating to these documents to advance the committee’s understanding of decisions relating to the Solyndra loan guarantee. But if we really wanted to have a fact-finding hearing 

wouldn’t we also bring DOE in to see what they thought when 

Treasury told them that they thought that the Department of Justice needed to approve this loan? 

The Treasury comments regarding subordination raised definite 

questions about the application of the Energy Policy Act provisions 

to the Department of Energy loan guarantee program, and it’s the 

Department of Energy that implements these provisions. And so 

the Treasury email thus makes DOE’s legal rationale for restructuring decisions a central issue of this hearing. I don’t really see 

how you can have this hearing just bringing in one side in without 

the other side to respond. And as I have said repeatedly, Mr. 

Chairman, I think we need to have a full and fair gathering of the 

facts of what happened with the Solyndra loan and the restructuring so we can decide how we proceed further with solar energy 

and other types of alternative energy, loan guarantees and other 

types of supports. But despite this, the majority has refused the 

minority’s request to invite the Department of Energywitnesses to 

this hearing. And astonishingly the majority has even objected to 

the minority’s request to release the February 15, 2011 memorandum by counsel for the DOE loan program that was produced 

to the committee. 

In that memo, the DOE counsel provides a detailed analysis of 

their view of the subordination issue, the statutory authorities in 

question, and DOE’s position. And by the way, since February of 

this year, the Department of Energy has also given this committee 

an additional 65,000 pages of documents to go through. 

Now, look, it should go without saying that the DOE’s legal analysis of restructuring should be a component of today’s discussion. 

But without the DOE legal memo, with sort of having our hands 

tied behind our back, let me just talk for a minute about this 

memo. In an August 17, 2011, email to the OMB deputy director, 

an assistant secretary at Treasury expressed a view that, ‘‘The 

statute and the DOE regulations both require that the guaranteed 

loan should not be subordinate to any loan or any other debt obligation.’’ 

She further notes that ‘‘DOE regulations state that DOE shall 

consult with OMB and Treasury before any deviation is granted 

10 

from the financial terms of the loan agreement.’’ The statute and 

regulation she appears to be referring to contain the Title 17 Loan 

Guarantee Program which the Department of Energy interprets 

through implementing regulation. The Department has indeed interpreted the subordination language of the statute and regulations 

in the February 2011 memo I referenced. And the Department also 

interprets what constitutes a deviation from the title 17 rules. 

I’m looking forward to hearing more from the Treasury today regarding what the Treasury official meant by her August 17th 

email. But if we really want a full understanding of the legal arguments for subordination and whether the restructuring constituted 

a deviation as defined under Department of Energy regulations, we 

also need to review the Department of Energy memo, and have the 

opportunity to ask DOE officials questions about their rationale. 

The August email further notes that Treasury had suggested in 

February that the DOE consult with the Department of Justice regarding the restructuring based on a statutory provision that requires DOJ approval where there is a compromise of a claim. Communications provided to the committee show that a conversation 

between Treasury and DOE officials occurred on this issue in February 2011. To more fully understand what happened on both sides 

of this issue, the committee needs to hear from DOE as well as 

Treasury. Now, look, the majority may argue that the subcommittee will provide an opportunity to question DOE about its 

views on a later date. Mr. Chairman, I’m sure you intend to do 

that. But that approach only serves to ensure that half the story 

is told today. It makes this hearing appear to me to be more about 

generating headlines than engaging us in thorough fact-finding. 

And I hate to say that, and I say it with all due respect. But let’s 

not do this investigation piecemeal, let’s do a whole investigation, 

let’s get all the facts out there and then let’s figure out what to do. 

Mr. STEARNS. I thank the ranking member. And I think it’s selfevident that we’re going to have the DOE folks up here. We agree 

with you completely, so we intend to have them up here, as well 

as the people who signed the document, so we can assure that we 

will have this happen. With that, I recognize the chairman of the 

full committee, my distinguished colleague from Michigan, Mr. 

Upton. 

OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN 

Mr. UPTON. Well, thank you, Mr. Chairman. Eight months ago, 

we asked Secretary Chu to turn over all documents containing communications between the Department of Energy and the Department of Treasury related to Solyndra. We had to ask again in September and DOE is only now beginning to respond to our request. 

The administration claimed our request was too burdensome for a 

timely response, but it is now apparent that that was not the case. 

We recently asked the Treasury Department to turn over similar 

documents and they responded immediately, thank you, beginning 

to turn over the requested documents in less than a week. 

What we’ve seen so far suggested DOE essentially ignored Treas- ury after signing off on a $535 million loan guarantee. The documents also reveal the Department of Energy fervently steering 

11 

more taxpayer cash to Solyndra with complete disregard to the 

alarm bells that were coming from Treasury and others within the 

Obama administration. 

DOE apparently stonewalled Treasury failing or refusing to turn 

over information related to Solyndra’s restructuring. In one exchange with OMB in August of 2011 Assistant Secretary Mary Miller noted that, ‘‘Since July of 2010, Treasury has asked DOE for 

briefings on Solyndra’s financial condition and any restructuring of 

terms. The only information we have received about this has been 

through OMB as DOE has not responded to any request for information about Solyndra.’’ This seems to be a clear violation of the 

Energy Policy Act of 2005 which says DOE shall consult with OMB 

and the Secretary of Treasury before granting any deviation in that 

loan. Putting the taxpayers at the back of the line behind private 

investors in the event of liquidation for bankruptcy is not only a 

deviation, it’s apparently unprecedented. 

So what happened? Why did DOE keep Treasury in the dark? 

Solyndra was burning through cash and the alarm bells were certainly ringing. In February of 2011, DOE restructured the terms of 

the agreement and gave two private investment firms priority over 

the Federal Government in the likely event that Solyndra declared 

bankruptcy. DOE postponed Solyndra’s initial interest payments 

and pushed back the repayment of the loan. DOE waived several 

requirements that Solyndra was obligated to meet before receiving 

further funding, including Solyndra’s consistent failure to comply 

with the Davis-Bacon Act and their inability to contribute to an 

agreed upon reserve fund. While all that was happening DOE continued to push millions of additional dollars out the door in a futile 

attempt to save it, save Solyndra. Six months later, as predicted 

by DOE’s only financial model back in 2009, Solyndra went belly 

up. 

Today’s witnesses hopefully are going to help us understand 

Treasury’s involvement at various points of life of the Solyndra 

loan guarantee. Does Treasury believe DOE should have consulted 

with DOJ about restructuring? You have to wonder, given Treasury’s expertise in commercial lending and project finance, if DOE 

had responded to Treasury’s request for information would something have been different, could some of the taxpayers’ money been 

saved? The Department of Energy has a lot of explaining to do and 

we will hear from them again soon, I assure you. Unfortunately, we 

also have to ask how many more Solyndras are there? Were there 

other warning flags that were ignored, risky gambles made with 

the taxpayers’ hard-earned money? Today we focus on the startling 

development of one cabinet level agency concerned that another’s 

actions were in violation of the law. 

This investigation will continue until taxpayers get the answers 

that they deserve regardless of how high in this administration the 

facts take us. And I would just like to say that in regard to the 

minority’s request for a DOE witness, it was received less than 2 

days ago before the hearing. Today’s hearing was precipitated in 

part because of the large and coordinated document done by the 

White House, OMB and DOE last Friday afternoon just prior to the 

start of the three-day federal holiday weekend. We do intend to 

12 

hold further hearings on this topic. DOE officials will be included 

in the testimony. And I look forward to that day. 

[The prepared statement of Mr. Upton follows:] 

13 


81415.006

Opening Statement of the Honorable Fred Upton 

Chairman, Committee on Energy and Commerce 

"Continuing Developments Regarding the Solyndra Loan Guarantee" 

October 14,2011 

Eight months ago, we asked Secretary Chu to tum over all documents containing 

communications between the Department of Energy and the Department of Treasury 

related to Solyndra. We had to ask again in September, and DOE is only now beginning 

to respond to our request. The administration claimed our request was too burdensome 

for a timely response, but it is now apparent that was not the case. We recently asked 

the Treasury Department to tum over similar documents, and they responded 

immediately, beginning to tum over the requested documents in less than a week. 

What we have seen so far suggests that DOE essentially ignored Treasury after 

signing off on the $535 million loan guarantee. The documents also reveal a 

Department of Energy fervently steering more taxpayer cash to Solyndra with complete 

disregard to the alarm bells coming from Treasury and others within the Obama 

administration. DOE apparently stonewalled Treasury, failing or refusing to tum over 

information related to Solyndra's restructuring. In one exchange with OMB in August 

2011, Assistant Secretary Mary Miller noted that "since July of2010, Treasury has 

asked DOE for briefings on Solyndra's financial condition and any restructuring of 

terms. The only information we have received about this has been through OMB, as 

DOE has not responded to any requests for information about Solyndra." This seems to 

me a clear violation of the Energy Policy Act of2005, which says DOE shall consult 

with OMB and the Secretary of the Treasury before granting any deviation in the loan. 

Putting the taxpayers at the back ofthe line behind private investors in the event of 

liquidation is not only a deviation, it is apparently unprecedented. 
14 


81415.007

So what happened? Why did DOE keep Treasury in the dark? Solyndra was 

burning through cash and the alarm bells were ringing. In February 2011, DOE 

restructured the terms of the agreement and gave two private investment firms priority 

over the federal government in the likely event that Solyndra declared bankruptcy; DOE 

postponed Solyndra's initial interest payments and pushed back the repayment of the 

loan; DOE waived several requirements Solyndra was obligated to meet before 

receiving further funding, including Solyndra's consistent failure to comply with the 

Davis-Bacon Act and their inability to contribute to an agreed-upon reserve fund. 

While all this was happening, DOE continued to push millions of additional dollars out 

the door in a futile attempt to save Solyndra. Six months later, as predicted by DOE's 

own financial models back in 2009, Solyndra went belly up. 

Hopefully today's witnesses will help us understand Treasury's involvement at 

various points in the life ofSolyndra's loan guarantee. Does Treasury believe DOE 

should have consulted with DOl about the restructuring? You have to wonder, given 

Treasury's expertise in commercial lending and project finance, if DOE had responded 

to Treasury's requests for information, would something have been different? Could 

some of the taxpayers' money been saved? 

The Department of Energy has a lot more explaining to do, and we will hear from 

them again soon. Unfortunately, we also have to ask: how many more Solyndras are 

there? Were other warning flags ignored, and risky gambles made with the taxpayers' 

hard-earned money? Today, we focus on the startling development of one cabinet level 

agency concerned that another's actions were in violation of the law. This investigation 

will continue until taxpayers get the answers they deserve, regardless of how high in this 

administration the facts take us. 
15 

Mr. GINGREY. Will the gentleman yield? 

Mr. UPTON. And I yield to the gentleman. 

Mr. STEARNS. The gentleman yields his time. 

Mr. GINGREY. I thank the gentleman for yielding. I want to point 

out the fact that the Department of Energy’s witness, the very first 

witness we had, was Jonathan Silver and we asked him this very 

question. So we’ll be glad to have other witnesses from the Department of Energy, but that was the first witness, and of course now 

he has resigned, as we all know. 

Mr. STEARNS. I thank the gentleman. I think our time has expired here, so we’re going to go to the minority and recognize Mr. 

Waxman. 

Ms. DEGETTE. Before you recognize Mr. Waxman, I would just 

like to say for the record this hearing was noticed last Friday, Mr. 

Chairman, and then it was a 3-day weekend because of the Federal 

holiday. The majority did not tell us until Tuesday of this week 

who the witnesses would be for this hearing, and at that point we 

asked for our witness. So I just want to clear that with the chairman. And we can yield now to Mr. Waxman. 

Mr. STEARNS. I thank the gentlelady. All these huge documents 

precipitated this hearing that jumped last Friday. 

Ms. DEGETTE. The chairman insinuated that we only asked for 

the witness 2 days ago, and that’s because we only found out about 

these witnesses 3 days ago. 

Mr. STEARNS. Well, let me recognize Mr. Waxman for 5 minutes. 

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. WAXMAN. Thank you, Mr. Chairman. After the subcommittee’s last hearing on Solyndra, Ranking Member DeGette and I 

wrote to Chairman Upton to request that the committee hold hearings on the effectiveness of U.S. policies in promoting clean energy. 

We asked the committee to examine what steps our Nation needs 

to take to make sure that we do not cede the clean energy market 

to China and other countries. Well, no such hearing has been 

scheduled. In fact, the subcommittee chairman told the media last 

week that the United States, ‘‘can’t compete with China to make 

solar panels and wind turbines.’’ 

I cannot disagree more strongly with the chairman’s statement. 

The clean energy economy will be the growth industry of this century. We will lose millions of jobs if we give up the industry to 

China. We can out-compete China, but to do so we have to reject 

the defeatist antiscience, antiprogress, antijobs views of those who 

impose investments in clean energy. Instead of helping America 

lead the world in clean energy, the Republican-controlled House is 

doing everything possible to maintain our addiction to fossil fuels 

and cripple renewable energy companies. Republicans voted 

against putting a price on carbon, which would have created market opportunities for clean energy. Republicans voted to slash funding for research and development into new clean energy technologies. 

And now Republicans are opposing government investments in 

solar, wind and other clean energy companies. Well, this agenda 

16 

may be good for the oil companies, it may be good for the coal companies, but it is terrible for the American people and our economy. 

This hearing is supposed to be about whether the Department of 

Energy had legal authority to subordinate the government’s loans 

to Solyndra when the loan was restructured earlier this year. But 

this is a rigged process. The chairman has invited witnesses from 

the Treasury Department who raised questions about DOE’s legal 

authority. That’s appropriate. Members should have a chance to 

hear from the Treasury witnesses and why they had concerns. But 

we should also have a chance to hear from DOE. 

The Energy Department disagreed with—the Energy Department 

disagreed with Treasury, but they are not being allowed to testify. 

We’re going to get only one side of the story, and that’s no way to 

run an investigation. But it gets worse. The committee has received 

a 6-page document from the Department of Energy that explains 

in the Department’s legal rationale for subordination. 

We asked last week if the majority would object if we released 

this document so the public could understand DOE’s rationale. The 

majority objected. They did not want the public to see DOE’s explanation, and they’re not going to have a witness who can talk about 

their explanation. On Wednesday, the Democratic staff asked the 

Republican staff if there would be any objection if we included a 

discussion of the DOE legal memorandum in the background 

memorandum we provide to Democratic members. 

Again the Republicans objected. They asked us to withhold this 

critical information, DOE’s legal rationale for its actions from our 

own members. And yesterday, the Republicans said they don’t believe this memo should be made public at this time. This investigation is beginning to resemble a kangaroo court. At our last hearing, 

witnesses who asserted their lawful constitutional rights were publicly humiliated, and now the Republican majority is withholding 

exculpatory information from the public while they cast innuendo. 

Mr. BARTON. Will the gentleman yield? 

Mr. WAXMAN. No. 

Mr. BARTON. I would sure like to know what information you 

have that we don’t have. 

Mr. WAXMAN. Mr. Chairman, can I get order? 

Mr. STEARNS. Regular order, regular order. The gentleman is entitled to be heard and he still has time. 

Mr. WAXMAN. I would like the clock stopped from that interruption. 

Mr. STEARNS. You have another 10 seconds. 

Mr. WAXMAN. And now the Republican majority is withholding 

exculpatory information from the public. Now, I don’t object to an 

investigation into Solyndra, and based on the record to date, I don’t 

see evidence of wrongdoing by government officials, just a bad investment decision. I don’t want to minimize it, but this was a bad 

decision, as far as we know, made on the merits. 

Mr. BARTON. The gentleman’s time is expired, Mr. Chairman. 

Mr. WAXMAN. But I have repeatedly said I support a fair and 

thorough investigation. If mistakes were made with taxpayers’ 

money we should understand them and take steps to prevent them 

in the future, but our investigation needs to be fair. Preventing the 

Department of Energy from testifying is not fair, suppressing exVerDate Aug 31 2005 09:32 Jul 17, 2013 Jkt 037690 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 F:\112-09~2\112-98~1 WAYNE
17 

culpatory evidence is not fair. Mr. Chairman, I believe you are a 

fair man, but you are not conducting this investigation fairly and 

impartially, and I hope you will reconsider. 

Mr. STEARNS. The gentleman’s time is expired. I would say to 

him, in all deference to him, we think we are. And both you and 

the President have cited me talking about China and competition, 

it was taken out of context. And I simply pointed out the fact that 

China, which subsidized their solar manufacturing at $30 billion a 

year, have fewer regulations, lower labor costs, access to raw materials, a lack of environmental safety regulations, I think the United 

States should focus where we have a competitive, financial advantage. 

Mr. WAXMAN. Mr. Chairman, since you have spoken out of turn 

I would like you to yield to me for one minute. 

Mr. BARTON. Well, I sure would like to be yielded at some point 

in time, Mr. Chairman. 

Mr. STEARNS. Well, I think the chairman has certain prerogatives. You’ve been a chair, you understand this. 

Mr. WAXMAN. Well, I don’t agree with that. Now you want to 

suppress statements by members. 

Mr. STEARNS. Regular order. We are now going to welcome our 

two witnesses. And let me say to both of you—— 

Mr. BARTON. Mr. Chairman, are we through with opening statements? 

Mr. STEARNS. We are through with opening statements. You’ll 

certainly have an opportunity to ask questions and to extrapolate 

on your feelings during your questions. 

Mr. BARTON. So we are going to let what the ranking member 

said go un—— 

Mr. STEARNS. Well, I think in a democracy, you let both sides 

have their opinion, and Mr. Waxman and Ms. DeGette certainly 

have an opportunity to make any outrageous, outrageous claims. 

Mr. BARTON. I don’t have a problem with Ms. DeGette’s opening 

statement. 

Mr. STEARNS. Well, I think both of us don’t agree, so I’m asking 

a question in regular order. Let’s return to our witnesses. And let 

me say to both of you, first of all, you’re aware that the committee 

is holding an investigative hearing, and when doing so has had the 

practice of taking testimony under oath. Do you have any objection 

to testifying under oath? 

Mr. GRIPPO. No, sir. 

Mr. BURNER. No, sir. 

Mr. STEARNS. OK. The chair then advises you that under the 

rules of the House and the rules of the committee, you are entitled 

to be advised by counsel. Do you desire to be advised by counsel 

during your testimony today? 

Mr. BURNER. No, sir. 

Mr. GRIPPO. No. 

Mr. STEARNS. Is that case will you please rise and raise your 

right hand. I’ll swear you in. 

[Witnesses sworn.] 

Mr. STEARNS. You are now under oath and subject to the penalties set forth in Title 18, section 1001 of the United States Code. 

18 

You may now give a 5-minute summary of your written statement. 

Please begin. And we will start with Mr. Grippo. 

STATEMENT OF GARY GRIPPO, DEPUTY ASSISTANT SECRETARY FOR GOVERNMENT FINANCIAL POLICY, DEPARTMENT OF TREASURY 

Mr. GRIPPO. Well, Chairman Stearns and Ranking Member 

DeGette and other members of the committee, thank you for inviting us here today to talk about the Treasury’s role in the Department of Energy loan guarantee program. My name is Gary Grippo. 

I’m the Deputy Assistant Secretary for Government Financial Policy at the Treasury. I’m joined here by Gary Burner. He is the CFO 

of the Federal Financing Bank. He reports to me in the Treasury. 

I submitted a written statement for the record. I’m not going to 

read a lengthy opening statement here. In the way of introduction 

I would just say that the Treasury has two roles, two very distinct 

roles, in the Department of Energy loan guarantee program, as a 

consultant and also as a lender. 

As I think you know, that as a consultant the statute requires 

the Secretary of Energy to consult with the Department of Treasury on the terms and conditions of loan guarantees and we provide 

input on that basis. And as a lender, when the Department of Energy decides to make a 100 percent federally guaranteed loan as 

opposed to a partially guaranteed loan, whenever they make a 100 

percent guaranteed loan, then it is the Federal Financing Bank 

that actually issues the loan to the private sector entity. So we 

have a role as a consultant, we have a role in lending, which is 

largely operational. Mr. Burner and I would be pleased to answer 

any questions. We thank you again for inviting us here. 

[The prepared statement of Mr. Grippo follows:] 

19 


81415.008

Statement of Gary Grippo 

Deputy Assistant Secretary for Government Financial Policy 

U.S. Department of the Treasury 

Before the 

Subcommittee on Oversight and Investigations 

Committee on Energy and Commerce 

United States House of Representatives 

October 14, 2011 

Chairman Stearns, Ranking Member DeGette, Members of the Subcommittee, 

Thank you for inviting me to testify today regarding the Treasury Department's role in the 

implementation of the Department of Energy's (DOE) Title XVII loan guarantee program. 

My name is Gary Grippo, and I am the Deputy Assistant Secretary for Government Financial 

Policy at the Treasury. In this role, I have two primary responsibilities. First, I oversee a policy 

staff that conducts analysis and develops recommendations for senior Treasury officials on all 

Government borrowing, lending, and investment, including Federal agency programs that offer 

loans and loan guarantees to the public. Second, I oversee the Federal Financing Bank (FFB). 

The FFB is a government corporation, under the general supervision of the Treasury, created by 

Congress to provide for coordinated, less costly, and more efficient financing of Federal and 

federally assisted borrowings. I am joined today by Gary Burner, the Chief Financial Officer of 

the FFB. 

The Treasury is involved in the DOE loan guarantee program in two very distinct ways: as a 

lender and as a consultant. Both roles fall under my portfolio at the Treasury. 

As a lender, in accordance with long-standing Federal credit policy, the FFB makes loans to 

private sector borrowers in cases where a federal agency, such as DOE, provides a 100% 

guarantee of all principal and interest on the loan. From a public policy perspective, it is 

typically preferable to have the FFB, rather than a commercial bank, issue the loan in such cases 

because a 100% Federal guarantee represents a credit risk to the lender that is the equivalent of a 

Treasury security and obligates the general taxpayer to assume the entire risk of the underlying 

guaranteed loan in the event of default. If a commercial bank were to make the loan, it would 

assume no default risk but would still be able to charge a relatively high rate of interestproviding the bank excess returns, while exposing the taxpayer to higher losses in the event of 

default. Financing these instruments through the FFB avoids these inefficiencies. The FFB sets 

the interest rate on these loans at a rate that is based on Treasury's rate of interest, which is 

commensurate with the actual default risk of the guaranteed loan to a lender, and thereby reduces 

costs to taxpayers if the loan defaults. Additionally, any amount charged by FFB over the 

Treasury's rate of interest is captured for the benefit of the taxpayer, rather than accruing to the 

benefit of commercial lenders. 

The Treasury's other role in the DOE loan guarantee program, the consultative role, derives from 

Section 1702 of the Energy Policy Act of2005, which states that "the Secretary [of Energy 1 shall 
20 


81415.009

make guarantees under this or any other Act for projects on such terms and conditions as the 

Secretary determines, after consultation with the Secretary of the Treasury .... "1 This is codified 

in DOE regulations for the loan guarantee program. For example, 10 CFR Section 609.7(a) 

states that: "Concurrent with its review process [of completed loan guarantee applications], 

DOE will consult with the Secretary of the Treasury regarding the terms and conditions of the 

potential loan guarantee.,,2 In addition, Section 609.9(d) states that, "Prior to, or on, the closing 

date [of a loan guarantee agreement], DOE will ensure that: ... (4) The Department of the 

Treasury has been consulted as to the terms and conditions of the Loan Guarantee 

Agreement .... ,,3 

The Treasury's consultative role falls within a particular window of a larger process - a process 

that ultimately leads to the issuance of a DOE loan guarantee, which DOE has described in 

previous testimony. Prior to engaging the Treasury on a specific transaction, DOE receives and 

reviews applications, carries out an initial due diligence, conducts a credit analysis and review, 

and negotiates an initial term sheet. 

DOE consults with the Treasury after DOE has prepared a draft term sheet, but before DOE 

finalizes that term sheet and enters into a conditional commitment with the borrower. DOE 

briefs the Treasury on the transaction and provides certain documents, such as a paper 

summarizing the transaction and the proposed term sheet. 

After consulting with Treasury, DOE completes its deal approval process, which culminates with 

the issuance of a conditional commitment. DOE then follows with additional due diligence, final 

contractual negotiations, and closing of the loan guarantee agreement. Leading up to closing, 

DOE may consult with Treasury if substantive changes are made to a guarantee's terms or 

conditions following conditional commitment. 

Thus, the Treasury's limited role of consulting with DOE on the terms and conditions of 

guarantees falls within the context of a broader undertaking by DOE. [n addition, as you are 

aware, DOE also interfaces with the Office and Management and Budget (OMB) on elements of 

this process. 

Recognizing this broader context, the Treasury's interaction with DOE supplements, rather than 

duplicates, DOE's efforts, and aims to provide independent insight and input for DOE to 

consider as it executes its responsibilities under the loan guarantee program. In particular, given 

Treasury's expertise, we have focused on providing input that may help DOE further align the 

terms and conditions ofa guarantee with the broad objectives of Federal credit policies, which 

are common to all Federal credit programs and are reflected in OMB Circular A-129: "Policies 

for Federal Credit Programs and Non-Tax Receivables.,,4 

While I have alluded to this above, it is worth clarifying that there are several aspects of the 

implementation of the loan guarantee program on which the Treasury does not consult. For 

I Energy Policy Act 0[2005 (Public Law 109-58). 

2 10 CFR § 609.7 (2009). 

J 10 CFR § 609.9 (2009). 

4 Available at: http://www.whitehouse.gov/omb/circulars_aI29rev/. 
21 


81415.010

example, the statute and underlying regulations require that, before issuing a guarantee, DOE 

must determine that there is a reasonable prospect of repayment, which involves detailed credit 

analysis to which DOE devotes substantial effort. DOE must also estimate the credit subsidy 

cost of the guarantee, which OMB must review and approve. The Treasury is not involved in, 

and does not consult on, these DOE activities. 

Likewise, among a broad pool of applicants, DOE must select those that will receive loan 

guarantees, consistent with its programmatic objectives. Treasury is not expert with respect to 

the energy technologies that are the subject of the guaranteed transactions. Treasury's 

involvement is limited to consulting on the terms and conditions of guarantees after DOE has 

selected which applicants it will consider for a conditional commitment. 

In closing, Treasury's consultative role reflects Treasury's experience with federal credit policies 

and with providing advice on aligning terms and conditions of guarantees with those policies. 

Mr. Chairman and Members of the Subcommittee, thank you for inviting me to testify today to 

share with you Treasury's limited role in the much larger DOE loan guarantee program. Gary 

Burner and I would be pleased to answer any questions that you may have. 
22 

Mr. STEARNS. And I understand Mr. Burner does not have an 

opening statement, is that correct? 

Mr. BURNER. I do not, sir. 

Mr. STEARNS. OK. With that then, I will start my series of questions. The first question I have for you I would like to establish 

early on. We keep hearing loan guarantee, but I think this is a 

misnomer. As I understand it, when the DOE gives a loan guarantee to Solyndra, what happens is the Department of Treasury 

prints the money, gives it to DOE and DOE gives it to Solyndra, 

there is no private bank involved, there’s no other commercial enterprise, except it goes from Treasury printing the money, giving 

it to DOE and DOE giving it to Solyndra. Is that a fair estimation 

of what happens? 

Mr. GRIPPO. Let me explain what happens when—— 

Mr. STEARNS. No, just answer my question. Is that approximately what happens? There’s no bank involved? 

Mr. GRIPPO. There is no commercial bank involved. 

Mr. STEARNS. Right. So Solyndra is not going to a bank and saying, to Bank of America or any other bank, saying, would you loan 

me $535 million because DOE will guarantee? They never did that, 

they just came to DOE and got a check, is that correct? 

Mr. GRIPPO. That is correct. 

Mr. STEARNS. OK. I think the American people, a lot of people, 

when you hear loan guarantee, it means that the government is 

standing behind a bank, but in this case, the Treasury is printing 

the money. The other question is, I just want to get this clear, in 

your estimation, can taxpayers’ money be subordinated ever, yes or 

no? 

Mr. GRIPPO. I really could not give you a yes-or-no answer. 

Mr. STEARNS. So you legally can’t tell me? 

Mr. GRIPPO. I cannot. 

Mr. STEARNS. In your opinion, and Mr. Burner, has there ever 

in the history of the United States, Government taxpayers’ loan 

guarantee or money given to investment in private companies like 

this, ever been subordinated to the private sector, in your experience, your answer is yes or no? 

Mr. GRIPPO. I have personally not been involved in any. 

Mr. STEARNS. So you can’t from experience? 

Mr. GRIPPO. I cannot. 

Mr. STEARNS. In your limited experience, have you ever seen taxpayers’ money be subordinated? 

Mr. GRIPPO. I have not personally not been involved in any. 

Mr. STEARNS. OK. Mr. Burner, you’re the chief financial officer, 

is that correct? 

Mr. BURNER. That’s correct, sir. 

Mr. STEARNS. So in your experience—how long have you been in 

the office? 

Mr. BURNER. I’ve been holding this position for 5 years. 

Mr. STEARNS. OK. And what was your experience before that? 

Mr. BURNER. I’ve been with the Treasury Department for 28 

years. 

Mr. STEARNS. How many years? 

Mr. BURNER. 28, sir. 

23 

Mr. STEARNS. 28. So in your experience of 28 years, plus being 

the chief financial officer, can and have you ever heard of taxpayers’ money being subordinate to outside commercial firms? 

Mr. BURNER. No, sir, I have not. 

Mr. STEARNS. Never in your entire—that’s 28 plus 5, so that 

would be 33 years? 

Mr. BURNER. I’m involved in a limited supply, but, yes, sir. 

Mr. STEARNS. So 33 years experience. 

Mr. BURNER. It’s 28 total, not 33. 

Mr. STEARNS. 28 total. In 28 years total you have never seen taxpayers’ money subordinated? 

Mr. BURNER. No, sir. 

Mr. STEARNS. And has your experience been if they do, it’s 

against the law? 

Mr. BURNER. I’m not aware of—I can’t give you a legal interpretation on that, sir. 

Mr. STEARNS. Mr. Grippo, do you think it’s against the law for 

them to subordinate based upon the Energy Policy Act? 

Mr. GRIPPO. I’m not in a position to offer a legal interpretation. 

I’m not a lawyer. 

Mr. STEARNS. Now, Mr. Grippo, the Energy Policy Act in 2005 in 

its regulations require the Secretary of Energy to consult with the 

Secretary of Treasury regarding the terms of and conditions of a 

loan guarantee, is that correct? 

Mr. GRIPPO. Yes. 

Mr. STEARNS. What must DOE do to satisfy this consulting requirement? 

Mr. GRIPPO. The Department of Energy must come to the Treasury at a minimum with the terms and conditions in a term sheet 

prior to issuing a conditional commitment to offer a loan guarantee. 

Mr. STEARNS. So basically, DOE must seek approval to go 

through with a loan guarantee, is that fair to say? 

Mr. GRIPPO. That would not be fair to say. We are not approving 

or rejecting the terms and conditions. 

Mr. STEARNS. So it’s merely they may need to inform you, that’s 

all they have to do? 

Mr. GRIPPO. Yes. They must consult. 

Mr. STEARNS. Does Treasury have the ability to approve or reject 

a loan guarantee under the statute if they find there’s problems? 

Mr. GRIPPO. We do not have the authority to approve or reject. 

Mr. STEARNS. OK. What if Treasury believes the terms and conditions of the guarantee do not protect the government’s interest, 

what do you do then? 

Mr. GRIPPO. We raise the questions, we provide suggested 

changes. 

Mr. STEARNS. But there’s nothing legally you can do beyond that? 

Mr. GRIPPO. No. 

Mr. STEARNS. Mr. Grippo, if you will go to tab 18 in your binder, 

there’s an email between OMB staff on March 10, 2009 that states, 

‘‘Treasury was apparently not very pleased to have Solyndra 

sprung on them that day and let Matt Rogers who is DOE’s stimulus advisor know about it in no uncertain terms.’’ Is this an accurate description of DOE’s consultation with Treasury? 

24 

Mr. GRIPPO. We were not aware they were going to come to us 

with a term sheet for the Solyndra loan at that time. 

Mr. STEARNS. Was Treasury—— 

Mr. GRIPPO. It was the first loan in the process and we had not 

worked out a routine for conducting the consultation. 

Mr. STEARNS. Was Treasury rushed to provide its consultation on 

Solyndra? 

Mr. GRIPPO. We asked for additional time and were given additional time and provided consultation in due course. 

Mr. STEARNS. My last question, Mr. Grippo, when did Treasury 

first learn of DOE’s intention to award a conditional commitment 

to Solyndra, and how did Treasury learn of this and who at the 

DOE informed Treasury? 

Mr. GRIPPO. Well, it would have been around this time of March 

10th when we were provided information on the terms and conditions of the loan. I’m not specifically sure what individual transmitted the documents to us, but it would have been here in early 

March of ’09. 

Mr. STEARNS. Thank you. My time is expired. I recognize my colleague, Ms. DeGette from Colorado. 

Ms. DEGETTE. Thank you, Mr. Chairman. Mr. Grippo, the chairman asked you if Treasury was rushed in its decision and you said 

you were given additional time. So I guess your answer would be 

no, you weren’t rushed? 

Mr. GRIPPO. We were not rushed. 

Ms. DEGETTE. OK. Now, the majority has highlighted these comments by Mary Miller, who is the Assistant Secretary for Financial 

Markets, or was, in an August 17th email to OMB Deputy Director 

Jeffrey Zients regarding restructuring of the Solyndra loan. So if 

you can take a look at tab 12 in your notebook and look at that 

email. In the email, Ms. Miller writes, ‘‘Our legal counsel believes 

that the statute and the DOE regulations both require that the 

loan should not be subordinate to any other loan or debt obligation.’’ 

Mr. Grippo, do you know whether the Treasury Department rendered a legal opinion regarding whether subordination of government interests in the Solyndra loan is consistent with the statutory 

requirements regarding the DOE loan guarantee program. 

Mr. GRIPPO. We did not render such a legal opinion. 

Ms. DEGETTE. You didn’t give a legal opinion, right? I mean, 

your department. You’re not a lawyer so you wouldn’t have. 

Mr. GRIPPO. The Treasury did not. 

Ms. DEGETTE. Right. Does the responsibility reside with the Department of Treasury for interpreting and implementing Title 17 as 

it relates to the Department of Energy’s authority to subordinate 

loans authorized under statute? 

Mr. GRIPPO. It is not the Treasury’s responsibility to interpret an 

Energy statute. 

Ms. DEGETTE. In fact, it’s the Department of Energy that’s 

charged with implementing the statute that authorizes the DOE 

loan guarantee program, correct? 

Mr. GRIPPO. Correct. 

Ms. DEGETTE. And in fact, counsel for DOE’s loan program office 

authored a 6-page memorandum dated February 15, 2011 that proVerDate Aug 31 2005 09:32 Jul 17, 2013 Jkt 037690 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 F:\112-09~2\112-98~1 WAYNE
25 

vided a detailed discussion of the legal basis for the subordination 

during the restructuring of Solyndra’s loan guarantee. That’s the 

legal document I referred to in my opening statement. So, Mr. 

Chairman, today we’re talking about why there was subordination 

and what the legal basis was, and so I want to ask unanimous consent that this February 15, 2011 DOE legal memo regarding subordination be entered in the record. I will tell you, I read it, I’m a 

lawyer and I found it to have no privileged information or anything 

like that. I think it would be helpful to have that for today and for 

future hearings talking about this issue. 

Mr. STEARNS. I thank the gentlelady. We will look at it and we 

will get back to you. 

Ms. DEGETTE. Thank you. 

Mr. DINGELL. I have a question of the chair. 

Ms. DEGETTE. I will yield to the chairman emeritus. 

Mr. DINGELL. I ask that the unanimous consent is not going to 

be considered, it’s going to be honored? 

Mr. STEARNS. No, Mr. Dingell. What we do is the procedure has 

been with the ranking member and I that if she submits something 

and I haven’t seen it, then I have the staff and my counsel look 

at it. Likewise, when I want to put a unanimous consent, I let her 

and her counsel look at it before we make the decision. And that 

has been our regular procedure. And I think even you did that 

when you were chair of this committee. 

Mr. DINGELL. It’s always been my understanding that these 

records should be as clean as possible. 

Mr. STEARNS. I agree. 

Mr. DINGELL. And that everybody ought to know what all the 

events are that we’re dealing with, and that when a member thinks 

that this is important that it ought to be in the record, it ought to 

be in the record. 

Mr. STEARNS. I think, though, that both sides should have an opportunity to review it. 

Ms. DEGETTE. Reclaiming my time, Mr. Dingell, what Chairman 

Stearns and I have been doing, I’ve been doing—— 

Mr. DINGELL. I’m wasting your time. 

Ms. DEGETTE. That’s oK. I’ve been doing it with his documents 

too, is just give him a chance to review it for a minute and then 

I will renew my motion. 

Mr. WAXMAN. Will the gentlelady yield to me? 

Ms. DEGETTE. Yes, certainly. 

Mr. WAXMAN. This isn’t a document they have time to review, 

this is a document they’ve had since the very first day of our hearings on Solyndra, it’s a document that was discussed whether we 

could release it. They’re familiar with the document. And if you ask 

unanimous consent, they ought to be able to say yes or no. 

Ms. DEGETTE. OK. Well, let’s give them 1 minute and if they 

won’t do it then I’m going to make a motion. Well, let me just finish my questioning. Mr. Grippo, have you seen that document? 

Mr. GRIPPO. I have not. 

Ms. DEGETTE. That memo? 

Mr. GRIPPO. No. 

Ms. DEGETTE. Mr. Burner, have you seen that memo? 

Mr. BURNER. I have not. 

26 

Ms. DEGETTE. OK. Are you aware of any of the legal opinions 

that the Department of Energy expressed in that memo after doing 

the legal research? 

Mr. GRIPPO. I am not personally aware of their legal conclusions. 

Ms. DEGETTE. OK. And can you speak to what DOE’s views are 

regarding a legal basis for subordination in a restructuring under 

the DOE loan guarantee program? 

Mr. GRIPPO. I would not feel comfortable speaking to their views 

and state of mind, no. 

Ms. DEGETTE. Because that’s a different agency, right? 

Mr. GRIPPO. Yes. 

Ms. DEGETTE. Mr. Burner, what about you, can you speak to 

what DOE’s views are regarding the legal basis for subordination 

in a restructuring under the DOE loan guarantee program? 

Mr. BURNER. No, ma’am, I cannot. 

Ms. DEGETTE. And why is that? 

Mr. BURNER. I am not familiar with their authorities. 

Ms. DEGETTE. Once again, Mr. Chairman, it would be really 

helpful to have DOE here. And Mr. Chairman, I renew my request 

for unanimous consent to put that memo in the record. 

Mr. STEARNS. While we’re looking at it, and I think there are 

several other staff to take a look at it first—— 

Ms. DEGETTE. OK. Well, the staff has seen it, and our staffs have 

been talking about it, and your staff told my staff they were going 

to object. 

Mr. BARTON. Well, Mr. Chairman, if you want somebody to object, I’ll be happy to object. 

Mr. STEARNS. The gentleman objects. 

Mr. BARTON. I’m reserving the right to object. 

Mr. STEARNS. And let me recognize Mr. Barton, the emeritus of 

the full committee, for his 5 minutes of questioning. 

Ms. DEGETTE. Well, wait a minute. 

Mr. BARTON. Why don’t you and Ms. DeGette finish your business. 

Mr. STEARNS. I think you finished your time. 

Ms. DEGETTE. I finished my questions, but I have a request for 

unanimous consent and now Mr. Barton—— 

Mr. BARTON. I’m reserving the right to object. 

Ms. DEGETTE. Well, in that case, what’s the basis because—— 

Mr. WAXMAN. Well, do it or don’t. 

Mr. BARTON. I haven’t seen the memo. I don’t know what you’re 

talking about. 

Ms. DEGETTE. Well, your staff has seen the memo. 

Mr. BARTON. Well, I haven’t seen it. 

Mr. STEARNS. Well, in all fairness, let Mr. Barton, he’s the emeritus of this full committee, if he wants to see the document I think 

he deserves to see it. 

Ms. DEGETTE. Great. OK. Let’s give him a copy. 

Mr. STEARNS. Well, I think at the same time, we’re going to have 

votes right now, and I think we want to continue our questioning. 

He has the opportunity to ask his questions. Presumably after he 

asked his questions, he can read it and we can have a decision. 

27 

Ms. DEGETTE. In that case, Mr. Chairman, I would ask unanimous consent that we recess for the votes and when we return 

from the votes we can—— 

Mr. BARTON. I do object to recess right now. 

Mr. STEARNS. Object. And at this point, Mr. Barton is recognized 

for 5 minutes. 

Mr. BARTON. Thank you, Mr. Chairman. Let me make one brief 

comment on Ranking Member Waxman’s opening statement. I 

know when you’re in the minority and the President is of your own 

party, you have an obligation to defend that President to some extent. I would also point out that we’ve been trying to get the facts 

on Solyndra for about 6 months and it took a subpoena request to 

finally get some documents and every member of the minority 

voted against that subpoena request. 

Now, last weekend we got a fairly extensive document done up 

right at 5 or 6:00. And to the minority’s credit, their staff spent all 

weekend apparently going through the documents, found some documents that the minority felt were worthy of being released, and 

they exercised their right to do that. And I tip my hat off to them 

for that. They worked harder and maybe they were tipped off, who 

knows, but they at least, they took advantage of a situation and 

did a thing that they thought made sense. 

Ms. DeGette said in her opening statement that she wants to get 

the facts on the table. That’s what we’re trying to do. There’s going 

to be no lack of witnesses called before this subcommittee from the 

Department of Energy and other departments. 

But today, we’re here to talk to the Treasury Department because they’re the Department that actually financed the loan, it’s 

not really a loan guarantee, and apparently they’re the Department 

that raised a lot of red flags about it that nobody at DOE or the 

White House paid any attention to. Now, with that, I want to ask 

my first question. How did the Treasury Department first find out 

about the Solyndra loan? 

Mr. GRIPPO. About the loan itself? 

Mr. BARTON. About the fact that the Department of Energy 

under President Obama had decided to go forward with it. Were 

you officially notified, or did you hear about it in the press? What 

was the first inking that they were thinking about giving this company $500 million? 

Mr. GRIPPO. I think the best answer was that it was in March 

of 2009 when we were submitted documents to provide consultative 

input. 

Mr. BARTON. So you did get an official transmittal from the Department of Energy? 

Mr. GRIPPO. Yes. 

Mr. BARTON. Is that a part of the record that we can look at, if 

not, could we see those documents? 

Mr. GRIPPO. There certainly would be emails or other documents 

that delivered the term sheet and other related documents. 

Mr. BARTON. Chairman Stearns, in his questions, made the point 

that in the law we authorized the loan guarantee, which means the 

private sector makes the loan and the Federal Government agrees 

to pay if there’s a default. But in this case, this was not a loan 

guarantee, the Treasury Department actually granted a loan. Is 

28 

there a decision document that goes through that process and 

makes that change on the record? 

Mr. GRIPPO. There is a, there are a number of longstanding written Federal policies, including Office of Management and Budget 

circulars and other documents, which state that it is the Federal 

Government’s policy to have the Federal Financing Bank issue a 

loan when another agency is making a 100 percent guarantee. And 

if I could, I’ll explain why that has been a longstanding policy. 

Mr. BARTON. So even though the law stipulates a loan guarantee 

because there was a decision to do 100 percent financing, existing 

regulations convert that guarantee to a loan as opposed to a loan 

guarantee? 

Mr. GRIPPO. Well, there’s still a guarantee that is issued by the 

Department of Energy, it’s just that in this case, it is issued to a 

government corporation, the Federal Financing Bank, which is 

under the supervision of the Treasury, rather than to a commercial 

bank. 

Mr. BARTON. But in layman’s terms, the Department of Energy 

guarantees that one part of the Treasury will pay the other part 

of the Treasury if the loan is not repaid, that’s what it amounts to? 

Mr. GRIPPO. The Department of Energy is issuing a loan guarantee to the Federal Financing Bank. 

Mr. BARTON. So the Treasury will send $500 million to the Department of Energy who will turn around and send it to the Federal Financing Bank, which is a part of the Department of Treasury, isn’t that correct? 

Mr. GRIPPO. That is correct. And there are good public policy reasons for doing it that way, because it is the cheapest way to finance 

that loan for the taxpayer. 

Mr. BARTON. Now, there are emails, and I may, I think I’m right 

on this, that the minority has put into the record, or at least released to the public, that shows that many Treasury officials had 

grave concerns about this loan. Was the Treasury Department ever 

in a position to just reject the loan? 

Mr. GRIPPO. No. The Treasury Department—neither the Treasury Department nor the Federal Financing Bank would have legal 

authority to reject the loan. 

Mr. BARTON. If asked on the record, or if the President had asked 

would the Treasury Department approve of this loan being given 

or would they have objected to it? 

Mr. GRIPPO. I’m sorry, could you repeat that question. 

Mr. BARTON. Well, my time has expired. If you had been given 

an opportunity, if the Treasury Department had had the authority 

to say yes or no on the Solyndra loan at the time it was granted, 

would the Treasury Department have approved it or disapproved 

it? 

Mr. GRIPPO. One, the Treasury did not have that authority. And 

two, we did not have all of the due diligence and background information that the Department of Energy had. It’s not our job in the 

process to make a credit decision or a risk decision. 

Mr. BARTON. Is it fair to say that based on objections raised before the loan was granted, after the loan was granted, that the 

Treasury had grave concerns about this loan, is that a fair statement? 

29 

Mr. GRIPPO. That’s probably not how I would characterize it. 

Mr. BARTON. Characterize it correctly, then. 

Mr. GRIPPO. We provided consultative input on the originally 

terms and conditions, we made suggestions, some of those were accepted. Beyond that, throughout 2010 and in 2011, we were certainly aware of issues, we were offering advice and input, we were 

letting the Department of Energy know that we had expertise in 

finance, in structured finance and in Federal credit policy, and we 

were trying to make that available to the Department of Energy, 

but we did not have specific information about the loan or—— 

Mr. BARTON. I’m trying to help you out. 

Mr. STEARNS. The gentleman’s time has expired. We have a vote 

on the floor. The 10-minute bell just rang, so we’re going to allow 

Mr. Waxman to do his 5 minutes, but I tell all members to come 

back here and we will have a decision on the unanimous consent 

of the ranking member, but we will let Mr. Waxman, who has to 

be on the floor, offer his 5-minute questioning. 

Mr. WAXMAN. Thank you, Mr. Chairman. I will have to be on the 

floor after these series of votes, so I wanted to take my opportunity 

now to ask you questions. Who has the legal authority to make the 

decision on the issue of subordination, is it the Treasury Department or the Department of Energy? 

Mr. GRIPPO. It is certainly not the Treasury Department. 

Mr. WAXMAN. And do you know if it’s the Department of Energy? 

Mr. GRIPPO. In these instances, I’m not sure if it is the Department of Energy or the Department of Justice or exactly where the 

authority lies. 

Mr. WAXMAN. Well, the Department of Energy runs the program 

and they heard from you, your department, that there were concerns about the subordination issue, isn’t that correct? 

Mr. GRIPPO. I think we raised the issue of whether they could 

compromise a claim owed to government, not specifically whether 

there was subordination, to be clear about the concern we raised. 

Mr. WAXMAN. There was no legal decision or memorandum, you 

just raised a concern to them, by the way, look at what? 

Mr. GRIPPO. No. We did not have a legal conclusion or render a 

legal judgment. We were flagging an issue for them to consider. 

Mr. WAXMAN. OK. You flagged an issue for them to consider, 

they heard what you had to say, and then their lawyer issued a 

legal opinion. And a legal opinion is a legal opinion, it’s not statement of facts, it’s a statement of what they think the law is. And 

that’s the document we’re trying to make public. This is a document that the Republicans have had for months. In fact, at the 

very first hearing we had on Solyndra, Congressman Gingrey read 

a portion from this legal memo and asked you a question. And the 

issue before us at this moment in the committee is whether we are 

going to make this part of the record, whether we are going to 

make a legal opinion public. 

And the chairman is like one of those serials, when we were kids 

going to the movie, we are not going to get the result until you 

come back the next time. It suggested that we will know about the 

unanimous consent decision when we come back from these votes 

on the floor. 

30 

Well, I’m not going to be able to be here, but if they don’t give 

us unanimous consent, I think we ought to have a motion to put 

it in the record. I don’t understand why this shouldn’t be part of 

the record. It’s a key document in our investigation, it explains the 

Department of Energy’s legal explanation for the subordination of 

taxpayer debt, it was produced to our committee, and on September 

14th, it was used by Mr. Gingrey. The Republicans may allege that 

the release of this document could taint fact witnesses in the investigation. 

Well, the entry of a relevant document does not pollute an investigation, rather, it creates a more fulsome record so we know what 

DOE was thinking. We don’t have DOE here. We should have DOE 

here. I don’t know exactly what this testimony we’re hearing from 

you has to do with it all, unless we get it in perspective. You 

flagged an issue for DOE. Now we should say, oK, representative 

from DOE, the issue was flagged, what was your view of that 

issue? All we know is that the issue was flagged and their legal 

counsel wrote an opinion. 

Now, the Republicans have released a dozen documents to the 

press on this investigation, they leaked many more to the national 

media. The release of this specific document does not take the investigation any more than the release of all these other documents. 

And the majority wants to enter documents in the record whether 

it supports their theory of the case and keep documents out that 

may contradict it. So we’ll see what happens in this fight when we 

come back. And I know that Ranking Member DeGette will do an 

able job in pointing out why this ought to be part of the record in 

addition to my comments. But let me ask you—— 

Mr. BARTON. Would the gentleman issue—— 

Mr. WAXMAN. No, I will not. It’s my time. 

Mr. BARTON. I’ll ask for additional time, if you will just let me 

ask—— 

Mr. STEARNS. Regular order, regular order. We do have a vote 

and Mr. Waxman can take his time. He has the floor. 

Mr. WAXMAN. Thank you, Mr. Chairman. Mr. Grippo or Mr. 

Burner, I would like to ask about any interactions you’ve had with 

Mr. Kaiser on this question of the loan. Did any of you hear from 

Mr. Kaiser? 

Mr. GRIPPO. I did not. 

Mr. BURNER. I did not. 

Mr. WAXMAN. And when the Treasury conducted its review of 

Solyndra’s term sheet and other information in 2009, did you instruct anyone to give specific advice to DOE on the terms and conditions because of the Mr. Kaiser’s donation to the President? 

Mr. GRIPPO. No, sir. 

Mr. BURNER. Certainly not. 

Mr. WAXMAN. Do any of you have reason to believe that anyone 

at Treasury gave specific advise to DOE on the terms and conditions of Solyndra’s loan because of Mr. Kaiser’s donation to the 

President? 

Mr. GRIPPO. No. 

Mr. BURNER. No, sir. 

Mr. WAXMAN. When Treasury determined the interest rate for 

the loan to Solyndra, did you instruct anyone to take any specific 

31 

action regarding this rate because of Mr. Kaiser’s donation to the 

President? 

Mr. GRIPPO. No. 

Mr. BURNER. No. 

Mr. WAXMAN. Are you aware of anything that would suggest that 

Mr. Kaiser’s donation to the President that was a factor in DOE’s 

determination whether to grant or restructure the Solyndra’s loan 

guarantee? 

Mr. GRIPPO. No, sir. 

Mr. GRIPPO. No, sir. 

Mr. WAXMAN. Well, I thank you for your answers and for being 

here today, and for the limited value it may be. I yield back my 

time. 

Mr. STEARNS. The gentleman yields back. And we are going to 

temporarily recess the committee and we will come back, and we 

ask the forbearance of the witnesses. 

[Recess.] 

Mr. STEARNS. The subcommittee will reconvene. And as we mentioned before the break, we will take up the unanimous consent requests by the ranking member to put in a document dealing with 

Susan Richardson, the chief counsel of the loan program from DOE 

dated February 15, 2011. We have had a chance to review it. And 

I think before I make my final decision, I will recognize the gentleman from Texas, emeritus of the full committee, on his reservation. And Mr. Barton is recognized for 5 minutes. 

Mr. BARTON. Thank you, Mr. Chairman. I do reserve the right 

to object. And I do want to tell the gentlelady from Colorado, if we 

have a productive discussion, about my reservation, I am very willing to withdraw the reservation because I am not at all interested 

in hiding any relevant information from the American public. And 

the way to get it in the public domain is to obviously put it into 

the record. 

I will start out by saying, after consulting with the majority 

counsel, it is clear to me that this is a key memo. It is also clear 

to me that the majority counsel had every intention to probably 

have—in fact, I would say it would definitely have a hearing specifically on this memo and that the minority counsel was made 

aware of that at least 2 to 3 weeks ago. 

There are apparently at least two memos that are identical in 

terms of content, with the exception of who they’re addressed to. 

One memo is addressed to Secretary Chu from the general counsel 

and the other memo—and I think the memo that the gentlelady 

from Colorado wanted to put into the record is a memo to the general counsel from a lady named Susan Richardson, who is the chief 

counsel of the loans programs office. The content—at least from 

what I can tell in trying to read both memos very quickly—is identical, but the salutation and the address are different. That, to me, 

is somewhat puzzling. 

So at the appropriate time, I would hope we would put both 

memos into the record, if we’re going to put one of them: The one 

addressed to the Secretary of Energy and the one also addressed 

to the general counsel. 

The key part of the facts in the memo is on page 3 and it’s got— 

the paragraph headline is ‘‘issue.’’ And here’s what—I am going to 

32 

read it because I think it’s important. ‘‘The issue is whether the 

proposed subordination of certain of the borrower’s reimbursement 

obligations to the DOE is consistent with subsection 1702(d)3 of 

Title 17.’’ This is of the Energy Policy Act of 2005 of which I was 

a conference chairman and the committee chairman that supported 

this provision, and also supported the law. 

Subsection 1702(d)(3) provides that the guaranteed obligation 

shall be subject to the condition that the obligation is not subordinate to other financing.’’ I want to repeat that, Mr. Chairman. 

‘‘Subsection 1702 d, subsection three provides that the guaranteed 

obligation shall be subject to the conditions that the obligation is 

not subordinate to other financing,’’ not subordinate to other financing. That, to me, is explicitly clear. 

Now, here’s the answer that—either Susan Richardson or the 

general counsel, depending on which memo you decide to put into 

the record—here’s the short answer to that question. The proposed 

subordination is permitted under Title 17. The subordination condition contained in subsection 1702(d)(3) is, by its terms, applicable 

only as a condition precedent to the issue of the loan guarantee. 

Well, the question I would have for the author of the memo, Mr. 

Chairman, where does that come from? Under what fairytale do 

they decide after reading that the obligation is not subordinate just 

out of the blue make the statement, is applicable only as a condition precedent to the issuance. 

Now, as it turns out, Mr. Chairman, the reason that they answered that is that this memo was issued after Solyndra had already received some of its loan proceeds and was in default. This 

is an opinion on my part. I am not saying it’s a fact, but I think 

it’s an informed opinion. 

The Department of Energy is looking for a reason to continue the 

loan and to restructure it but they have a problem in that they 

can’t subordinate it. And the only way to restructure it is if they 

can. So the rest of this memo, Mr. Chairman, goes through a convoluted explanation of why they think they can subordinate. 

And finally, on the bottom of page 6 in a footnote number two, 

they basically say, we think we can subordinate it because the Secretary of Energy has broad authority to do whatever he wants to 

do. That’s not a real reasoned legal opinion, Mr. Chairman. So I 

would hope that we will find out how many of these memos are 

floating around, who actually authored them, have the staffs on 

both sides depose the authors, probably have a hearing specifically 

on this topic, and let’s get to the bottom of it, because it is clear 

to me that the Department of Energy violated the law when they 

agreed to subordinate the taxpayers’ money to private investors, 

some of whom appeared to have been heavy contributors to President Obama’s campaign. 

And I want to thank the gentlelady for wanting to put the memo 

in the record. It is one of the key—if not the key documents, but 

we need to get all the facts on the table, not just this one document. 

Mr. STEARNS. All right. I thank the gentleman. I think what 

we’re going to do here is have a—by unanimous consent—— 

Ms. DEGETTE. I’d ask unanimous consent to respond to the gentleman. 

33 

Mr. STEARNS. OK. I certainly was going to do that. I thought we 

might have a discussion that you might want to have more time 

on that. I think other members would like to do that. I think we 

will limit this to 3 or 4 members, maybe perhaps 15, 20 minutes 

on this discussion if it goes that long. You are recognized for 5 minutes. 

Ms. DEGETTE. I just want to respond on the reservation of rights. 

I want to thank the chairman emeritus for restoring this debate to 

some sanity. We won’t object to the other—if Mr. Barton will—apparently it’s the same memo, and it has different addressees. 

Mr. BARTON. That is correct. 

Ms. DEGETTE. But it has the same text in the memo. 

Mr. BARTON. That’s my quick reading. 

Ms. DEGETTE. I don’t object to that coming in either. And I think 

the chairman emeritus is understanding the point that I have been 

making all along which is, we need to have a full investigation. We 

need to have all of the evidence in the record. We need to figure 

out what happened because just to have Treasury come in and say, 

‘‘Well, we said it should go to DOJ’’ without having DOE in to say, 

‘‘Well, here’s what we thought about what Treasury said, and 

here’s why we did this,’’ and to have the actual author of this 

memo in, we can’t know what happened. 

And that’s really the purpose of the Oversight and Investigations 

Subcommittee, is to figure out what happened. And so, you know, 

I think that the chairman emeritus’ questions about this legal 

memo are good questions. I just only wish that Susan Richardson, 

or somebody else who drafted this memo, was here to answer those 

questions. So anyway, I am glad we’re going to put this memo and 

the other memo in the record. I think it helps, and I would also 

ask the chairman after the recess next week, let’s have another 

hearing, let’s bring these folks in. I think we really need to know 

what they’re doing. 

Mr. STEARNS. As the gentlelady heard me earlier, we intend to 

bring Secretary Chu in and to bring the Department of Energy in, 

and I am glad that you support that. 

Ms. DEGETTE. Mr. Chairman, with all due respect, I do support 

bringing Secretary Chu in. And I think it’s important to bring him 

in, but I also think we should bring in the individuals in DOE who 

actually wrote these memos and who had these communications 

and who gave these legal opinions. Otherwise, I fear that he might 

not know the legal basis for this. We need to know it from him but 

we need to—— 

Mr. STEARNS. All right. And I would say to the ranking member, 

my staff has told your staff that we are going to do that. 

Ms. DEGETTE. Excellent. 

Mr. STEARNS. So I think excellent is a good word to use. 

Mr. TERRY. Mr. Chairman? 

Mr. STEARNS. The gentleman from Nebraska is recognized for 5 

minutes. 

Mr. TERRY. Strike the last word. 

Mr. STEARNS. Do you request to strike the requisite number of 

words? 

Mr. TERRY. I do. 

Mr. STEARNS. You are recognized for 5 minutes. 

34 

Mr. TERRY. Thank you, Mr. Chairman. 

And I agree with the gentlelady from Colorado and our friend the 

chairman emeritus from Texas. I am glad these two documents are 

being submitted to the record. I think that’s important. 

I do have some concerns. Usually before the documents are submitted, we have some level of understanding about them. And some 

of the concerns that I have that now we’re discussing them, we’re 

discussing them in theory because interviews haven’t been done 

with these parties. Traditionally what happens is, when we get documents that are conflicting, or we have questions about—there are 

interviews done by staff so that we’re better informed. That has not 

been able to be done, and the staff’s point here of not releasing 

these—of course, Mr. Chairman, as we have been briefed, the minority has had these documents for at least a week, if not more; 

is that true, Mr. Chairman? 

Mr. STEARNS. That’s my understanding. 

Ms. DEGETTE. If the gentleman will yield. Many of the emails 

that have been put in the record, interviews have not been conducted with the authors of those emails either. 

Mr. TERRY. Let me ask you this: You want to have a hearing 

next week? I love that. Well, maybe not—well, I would if you 

would. But I’m not sure our colleagues would agree to having one 

next week. But the week after. So in the meantime, would you be 

helpful, gentlelady, the ranking chair, of providing, encouraging 

Susan Richardson to have an interview, any of the associates with 

her that wrote this memorandum? I think it’s important that even 

Dr. Chu’s staff be involved because the first one was ostensibly 

written to him, which raises a lot of questions, why was a subsequent one—they felt it was necessary to erase his name out there 

and to try to hide the original January memo. I think those are important questions to ask because it looks like there’s a cover-up to 

protect Dr. Chu in this. 

Ms. DEGETTE. Will the gentleman yield? 

Mr. TERRY. Sure. 

Ms. DEGETTE. I think that’s a pretty incendiary statement, and 

I don’t think we know. They might have had two memos; one with 

his name, one with Susan Richardson’s name. I think that these 

allegations flying around about cover-ups are exactly the problem 

with this investigation. And what I would say is—— 

Mr. TERRY. You not allowing us to go through regular order to 

address the issue here raises those questions. 

Ms. DEGETTE. The gentleman asked would I be willing to encourage the administration to provide Dr. Chu and the other witnesses. 

I would be happy to do that, recognizing that the administration 

doesn’t always do exactly what I tell them to do, sadly enough. 

Mr. TERRY. Well, it would be helpful—reclaiming my time. It 

would be helpful because, frankly, from my perspective—and the 

rhetoric from at least the two top people on this committee has 

been obstruction and diversion. So I appreciate the gentlelady’s— 

what I believe is a sincere gesture of helping give those. 

The point was, we hadn’t had time to do those interviews. But 

I will tell you what, when things change from one version to another, it is a legitimate question to say, why was it changed? Why 

was Dr. Chu’s name removed there? That’s a valid question, and 

35 

it looks like it was to protect him. Why were discussions occurring 

on subordination in October? So 3 months—3 full months before 

the January memo was written. And then the February supposed 

official one made, it looks like—and I want to know this during 

your interviews, the bipartisan interviews that will occur. It appears that perhaps there may have been another order, maybe 

verbal, that they were—the legal department was to design a 

memorandum supporting, supporting subordination as opposed to 

an unbiased legal analysis that the Department of Justice could 

have given. So I would appreciate those questions in the interview, 

and I will yield back. 

Mr. STEARNS. OK. The gentleman from Texas, Mr. Burgess, is 

recognized for 5 minutes. 

Mr. BURGESS. Thank you. And striking the requisite number of 

words on the reservation. 

I think it is important here to—when Secretary Zients, former 

Secretary Zients from the Department of Energy was here, one of 

the very last things we asked him was, would you make available 

members of your staff, to our staff, to be able to talk about these 

issues? And our staff on both sides, I think was doing that due diligence and proceeding. And this has all been difficult because, there 

was an obstruction at first. We couldn’t get the very simplest of 

documents out of the Department of Energy and Office of Management and Budget until a subpoena was issued in July. And a subpoena was issued along party lines. Every Democrat voted against 

it. So to say today the Republicans have held exculpatory evidence 

for months, I am sorry to be incendiary, but that’s a lie. That is 

a lie, and it should not be allowed to stand. 

We got the draft memo only as a result of the subpoena. And we 

got the sanitized memo—if I can use that incendiary language—we 

got the sanitized memo only because we asked—since this is a 

draft, do you have a final? That is the issue before us here today. 

And to say that the Republican staff hid things is, again, I will 

stand up for them. That’s a lie. It’s not right. Correct the record. 

They have done their due diligence, both the staff on both the 

Democratic and the Republican sides. They did what we asked 

them to do. We said, Secretary Zients, can we have access to your 

staff, can we talk to them? 

Now again, the word ‘‘sanitize’’ may be incendiary but I have got 

to tell you, when you look at the so-called draft, attached a legal 

memorandum respecting the permissibility of the subordination of 

the context of the proposed restructuring and it’s addressed to the 

Secretary through the general counsel’s office. I mean, what are we 

to think when we see that, even though it says ‘‘draft’’ on this? And 

the only reason we got this was a subpoena. 

Look, the administration needs to hear something today, and it 

needs to hear that when we ask questions, they need to respond. 

We ask for documents, they produce. We call a hearing, they show 

up. If not, we’re left to our own imaginations. And, as many of you 

know, I have a very vivid imagination. So you show me this, and 

I think, someone’s sanitizing something; someone’s hiding something. We have members of the press in the room. They’re asking 

me questions when I walked out the door to go vote. What is the 

deal? Was one memo different from the other? Why was one 

36 

cleaned up? I don’t know the answer to the question. I would like 

to know the answer to the question. I would like us to call the relevant people here to this committee and get that straightened out. 

And I will yield back the balance of my time. 

Mr. STEARNS. I recognize Ms. Schakowsky. 

Ms. SCHAKOWSKY. I move to strike the requisite number of 

words. 

Mr. STEARNS. The gentlewoman from Illinois is recognized for 5 

minutes. 

Ms. SCHAKOWSKY. I would like to yield to my colleague, Congresswoman DeGette. 

Ms. DEGETTE. Mr. Chairman, I think we should cut this debate 

off because Mr. Burgess really didn’t want to say what he just said. 

The documents from the Department of Energy were not produced under subpoena. The only subpoena was for the documents 

from OMB, not for DOE. All of the documents from the Department of Energy were produced to this committee—65,000 pages— 

were produced to this committee voluntarily. And this particular 

memo—and in addition, the other memo which says ‘‘draft’’ on it 

and Secretary Chu’s—oh, the Chu one was the OMB production. 

But this one was produced many, many months ago. And so, you 

know, if we want to try to cater to the press and make a scandal 

where there is none, we can do that, if we want to have a full and 

thorough investigation. I would suggest we put these memos in, 

and we bring the DOE people in. We talk to them about why there 

was one draft and another one and so on instead of making these 

allegations completely unsupported by any evidence. 

And I will also say, Mr. Chairman, that the DOE wasn’t even invited to this committee. Mr. Waxman and I wrote a letter to you 

asking that the DOE be invited to this committee. So to somehow 

say that the DOE is now trying to hide something about these 

memos is again inaccurate. I think that emotions are running high. 

I am glad we’re putting both of these memos into the record. Let’s 

bring the DOE in to talk to them about it instead of making these 

allegations that are completely unsupported by any evidence. And 

I yield back. 

Ms. SCHAKOWSKY. I yield back. 

Mr. STEARNS. The gentlelady from Tennessee is recognized for 5 

minutes. 

Mrs. BLACKBURN. Thank you, Mr. Chairman. And in response to 

what Ms. DeGette said regarding Mr. Burgess’ comments, I just 

want to make certain that we all understand that it was the subpoena from OMB under which this draft memo became available. 

And it is because of this draft memo that was made available 

under the subpoenaed documents that we then were able to get the 

final version of this memo after they went back to DOE for that 

request. 

So just for a correction for the record, it was because of that subpoena—and that is exactly what Dr. Burgess was saying in his 

comments. I think this is such a very serious issue. As we look at 

not only Solyndra and the situation there, as we look at this loan 

program in its totality, as we look at the other loan guarantee programs that are with other departments and how they are working, 

this is the type of issue we need to drill down on. We do need to 

37 

have the time for the staff to do their due diligence and for the 

members to do their due diligence. And I do hope that we will subpoena other members that were involved in this process of writing 

this email and the attached document that go from January 21, 

2011, which is the email that came under the OMB subpoena and 

then into the final document that goes through detailing the subordination that is the February 15 document. And I would encourage 

the chairman to continue with moving forward with that hearing. 

At this time, would any of my colleagues like the balance of my 

time? 

Mr. TERRY. May I have 30 seconds? 

Mrs. BLACKBURN. I yield to Mr. Terry. 

Mr. TERRY. Thank you. 

Just referencing part of the gentlelady from Colorado’s statement 

about cutting off the discussion here, I mean, let the record reflect 

that they initiated this discussion about a memo, made specific accusations against the majority of hiding those from them. So it is 

completely appropriate now that we have the venue to A, defend 

ourselves against those accusations, and to be able to have a valid 

discussion about what—the fact that there’s two memos with two 

different headings—and we don’t know what else the differences 

are at this point—are completely appropriate. As a former reformed 

lawyer that did a lot of trial work, the judge would say, ‘‘Madam, 

you opened the door.’’ 

Mrs. BLACKBURN. Reclaiming my time, I yield to Dr. Gingrey. 

Mr. GINGREY. I thank the gentlelady from Tennessee for yielding. 

It just seems to me that this issue has been brought up by the 

minority’s request for unanimous consent to submit this memo for 

the record. The minority knows that in consultation with the majority that a commitment was made by the majority to have a subsequent hearing and to have Secretary Chu come and testify about 

this memo and who gave directions in regard to—essentially who 

knew what and when did they know it? And the minority, at this 

hearing today, has sort of preempted that process after seemingly 

agreement was made between majority staff and minority staff 

that this would be done in a timely manner under regular order 

so the dots could be properly connected. And all of a sudden, you 

know, we get this put on us this morning, unanimous consent to 

release a memo, a draft, essentially, that’s incomplete. And we 

can’t connect these dots. 

So I am glad that the gentleman—the chairman emeritus Mr. 

Barton from Texas is in all probability going to withdraw his objection. But let’s get this done and move forward to that hearing that 

the chairman of the subcommittee, Mr. Stearns, has committed to 

the minority that we will have. So I think that should end the discussion quite honestly, and let’s go on with going back to this issue 

of subordination of the loan. 

Mrs. BLACKBURN. Reclaiming my time and I yield to Mr. Griffith. 

Mr. STEARNS. The gentlelady’s time has expired. I will recognize 

Mr. Griffith as the last speaker for us. And I am prepared to rule 

with Mr. Barton. Mr. Griffith, would you perhaps, give to Mr. 

Scalise a little bit of time so we can wrap this up? We have two 

witnesses here and I would like to keep moving because I think the 

witnesses are showing great forbearance. 

38 

Mr. Griffith. 

Mr. GRIFFITH. I will do my best, Mr. Chairman. I am actually 

glad that the memos have come in. I do agree with some of the 

comments that have been made previously, that the staff was trying to get this thing in the right order so that you didn’t have speculation and so forth going on. 

But I am glad it’s in because I want the press and the lawyers 

of the United States of America to take a look at this memo. When 

I read this memo several weeks ago, I made a comment on it then 

that it looked like a law school project. I even texted my staff and 

asked them if they could find out when Susan Richardson was admitted to the bar, because I believed it must have been only about 

3 months before the memo was written. It turns out she was admitted in 1983, but that was a surprise to me because of the quality of work. There is no reference to court cases in this thing. It 

references one previous code section. It doesn’t give you any court 

cases on that code section that it says that there is a distinction 

with. And then you get to the part where it says in here, Once such 

a condition precedent—that being you can’t subordinate—has been 

satisfied, paren, or waived—and there’s nothing in the Code that 

says ‘‘waived’’—it has no continuing legal effect. In other words, as 

I said at the hearing when Mr. Silver admitted that he had not— 

sitting in the chair you are sitting in, Mr. Grippo—he had not even 

read the memo before putting the taxpayers of the United States 

in the back seat to the tune of $75 million, it was astounding to 

me that this memo was relied upon. 

I think it’s great that the Department of Treasury at least threw 

up a warning signal in there somewhere and said, y’all better have 

Justice look at this, because I, frankly, would like to see not only 

her asked to be here, but I would like to see Susan Richardson subpoenaed to be here because I want to find out exactly why she was 

putting a memo together like this. Was she told to come up with 

this? That’s what I believed the very first time I read it. 

And what is interesting is, on page 1 it says, ‘‘default.’’ And this 

is what leads you to suspicion and speculation because these are 

the series of things—you have already heard about footnotes from 

some of the others. Default on page 1. Well, the Code also requires 

that if there’s a default, the Attorney General be notified. Did that 

happen? Their own rules require in 609.18, if there’s a deviation, 

Secretary of Treasury is supposed to consult with or notify—I mean 

the DOE is supposed to notify the Secretary of the Treasury. I’d 

like to know if that actually happened because this clearly was a 

deviation after a default. 

So they didn’t follow their own rules. I don’t know if they had 

notified the Attorney General. It appears from the memos and the 

emails that we’ve got they didn’t notify Treasury of what was going 

on. And you know, it just seems like this entire memo—in fact, one 

of my original notes says, it’s inconvenient, boo-hoo. And I think 

what happened here was, Treasury—excuse me—Department of 

Energy made a bad loan. They realized they had made a bad loan. 

They were trying to figure a way to cover up the fact—not that 

they had done anything illegal but cover up the fact that they had 

made a bad loan. And they went and broke the law. And with that, 

I will yield to my colleague. 

39 

Mr. STEARNS. The balance of the time is recognized to Mr. 

Scalise from Louisiana. 

Mr. SCALISE. I thank my colleague for yielding. 

Mr. Chairman, I thank you for continuing to help us shine light 

on what is a major scandal that we have been trying to get to the 

bottom of on this side. And unfortunately, our colleagues on the 

other side have blocked us and stonewalled us on every front, going 

back to predating the subpoena. But we had to get a subpoena to 

get this information and everybody on the minority side voted 

against that subpoena, voted against going forward with that so we 

can finally uncover some of the things that we have uncovered. 

And there is a lot that we have uncovered, and there’s even more 

to come that we are trying to find out. And we continue to get 

stonewalled on every front. And they keep saying, Why in the Department of Energy here? Well, the Department of Energy’s loan 

program head was here a few weeks ago; and in fact, I asked the 

head of the Department of Energy’s loan program who made the 

decision to subordinate? And he refused to answer that question 

under oath. 

Finally he acknowledged under oath that he would get me the 

names of everyone involved in the subordination, everyone involved. He admitted that under oath and then he resigned. And of 

course I am going to have to question the legal counsel later, Mr. 

Chairman, if he is still compelled to get us that information. Because just because he resigned, he said under oath he would get 

us that information. Who made the decision to put the taxpayers 

in the back of the line? This isn’t about the press or you know Republicans and Democrats. There’s $535 million of taxpayer money 

at stake. And when we said we want to get the information, we 

weren’t able to get it until we subpoenaed. And in fact this document wasn’t even originally given to us by the Department of Energy. It came through OMB. And then we went back to the Department of Energy and they said, Oh, yes, we forgot to give you this. 

We forgot to give you this? How could they forget this document? 

This is the document—and it’s a legal counsel opinion that basically says you can ignore the law. Well, you can’t ignore the law. 

The law is very clear. This is the law on subordination. One sentence. It says you can’t do it. And yet they went and got a legal 

opinion anyway? I want to know who else was involved in the decision to subordinate. 

Was it just Susan Richardson? Or was she directed by somebody 

else to come up with this opinion because they wanted to give the 

loan anyway? We have got memos from the White House saying, 

Get this thing done. We want the Vice President to be involved in 

the ribbon cutting. They were concerned about a photo-op so in 

order to do that they allowed $535 million of taxpayer money to be 

put in the back of the line of some private venture capital firm 

based on a phony legal memo from their in-house counsel, and we 

couldn’t even get this information until we forced a subpoena that 

everybody on the minority side voted against. Those are the facts, 

and we’re trying to get more facts. And we need all of this to come 

out and we need more hearings because we haven’t gotten all of the 

facts from the people that were involved in this. And thank you. 

40 

Mr. GRIFFITH. I thank the gentleman and the chair, and I yield 

back. 

Mr. STEARNS. The chair is prepared to rule. If the gentleman 

from Texas no longer has a reservation—— 

Mr. BARTON. Mr. Chairman, I am going to reserve my reservation. I do have a question, though. If I understand Ms. DeGette 

quickly, she is agreeable to putting both memos in the record? 

Mr. STEARNS. She is. She has told me both memos. 

Mr. BARTON. On the second memo, there is an addendum to it 

that has a number of tabular information regarding proposed finances of Solyndra. Does she wish that to go in the record? Is there 

any objections? 

Ms. DEGETTE. I don’t know what those tabular items are. If I can 

see those, I just want to make sure it’s not proprietary information 

or something. But I would assume we wouldn’t object. 

Mr. BARTON. I would be agreeable to whatever the chair and the 

ranking member—— 

Mr. STEARNS. Well, I am going to take the position that both documents, by unanimous consent, will be a part of the record. 

Ms. DEGETTE. I reserve objection on the table, on the second one 

until I can see it. Show it to me. 

Mr. BARTON. That’s why I am asking the question. 

Mr. STEARNS. Here is the tabular. 

Mr. BARTON. It is a financial projection for Solyndra for about 5 

years into the future. And I am not saying you should. I am just 

saying it was attached to the memo. 

Ms. DEGETTE. Mr. Chairman, I don’t object to the addendum. I 

would ask that the majority and minority staff just review that to 

make sure there’s not proprietary information. It looks like profit 

and loss statements and it is stamped confidential. 

Mr. STEARNS. Without objection, both documents are part of the 

record, including the tabular. And with that, we are—— 

Mr. TERRY. I have a question though because what the 

gentlelady from Colorado said is not what you said. 

Mr. STEARNS. Well, I am making the tabular part—by unanimous consent, she can object. But she is not objecting. So the tabular is part of the record. 

Mr. TERRY. Regardless of whether it’s proprietary? 

Ms. DEGETTE. What I am saying is that subject to the agreement 

of the staff to redaction of any confidential business information. 

Here’s what the problem is: We agreed to these two memos and 

then the chairman emeritus came in with this—— 

Mr. STEARNS. Can I say to the ranking, the tabular is such fine 

print, I don’t think either side is going to look at this. I think we 

should move on, instead of having another discussion about the 

tabular. I think your decision is—— 

Ms. DEGETTE. You know, you brought—— 

Mr. STEARNS. Are you objecting to—— 

Ms. DEGETTE. I am objecting to the tabular thing until we can 

review it and decide. The memo itself I do not object. 

Mr. STEARNS. Well, then, if you object to that, then I think our 

side is going to object to putting the original memos in. 

Ms. DEGETTE. Fine. Whatever you want to do. 

41 

Mr. BARTON. I think we have agreement to put—to put both documents in. 

Mr. STEARNS. We do have agreement. 

Mr. BARTON. And the gentlelady has made a point that she 

wants to make sure there is no proprietary—— 

Mr. STEARNS. OK. Here is the way we are going to put it. We 

are going to put the two documents in by unanimous consent, part 

of the record, we are going to put the tabular in subject to the review by the staff for redaction. So ordered. 

Ms. DEGETTE. Thank you. 

[The information follows:] 

42 


81415.011

176 

DRAFT lf19Jll 

MEMORANDUM FOR THE SEauITARY 

THROUGH: 

FROM:'· 

SUBJECT: 

SCOTT BLAKE HARRIS 

GENERAL COUNSEL 

OFFICE OF GENERAL COUNSEL 

SUSAN S. RICHARDSON 

CHIEF COUNSEL 

LOAN PROGRAMS OFFICE 

The Del' a guarantee (the "Guarantee") of 

')ofa$5"3Y-~ 

"Quaranteed Loan") made by the Federal Financirig Bank. The proceeds of the 

Guaranteed Loan are being used to finance the construction of a, solar photovoltaic 

("lYj panel fabrication facility located in Fremont California (the "Project"). 

Construction of the P~oject is. e led arm June ~O, 2011. 

The Guarantee and related ~eschedu1ed payments of 

principal and interest on th r fails to' make those 

payments. DOE and the Bo n Agreement (the "Loan 

Guarantee Agreement") that s pursuant to which DOE 

issued the Guarantee and . a) e BOrrOwefs contractual 

obligation to reimburse DO guarantee paym made by DOE, Which obligation is 

secured by a first lien on the Borrower's assets and (b) customary remedies for default on 

the Borrower's obligations under the Loan Guarantee Agrtement. These rights are in 

addition to DOE's rights of subrogation under applicable law. 

A default relating to a financial requirement has occurred under the Loan Guarantee 

Agreement. When that default occurred, on December I, 2010, $95 million of the 

Guaranteed Loan Commitment remained to be advanced. DOE has considered the 

circumstances leading to the Borrower's default and all reasonable responses to the 

default, including foreclosure on its collateral. Based on the analysis set forth in Exhibit 

A hereto, DOE has determined that a restructuring of the Borrower's obligations under 

the Loan Guarantee Agreement (the "Restructuring'') will yield the highest probable net 

benefit to the Federal Goverrunent by minimizing the Federal Government's potential 

loss on the Guaranteed Loan. In light of the fmancial analysis,· and the parties' 

agreement to negotiate in good faith the definitive Restructuring documentation, DOE 
43 


81415.012

177 

has continued to pennit advances- under the Guaranteed Loan, enlibling Project 

construction to continue pending closing of the Restructuring. Absent continued funding 

of the Guaranteed Loan, the Bouower has indicated thatlt would file for reorganization 

under Chapter 11 of the Bankruptcy Code or liquidation under Chapter 7 of the 

Bankrupcty Code, impeding or preventing Project completion. Given the Borrower's 

limited operations in the PV sPace, a Chapter 11 filing would likely lead to a liquidation. 

The Restructuring contains the following elements: 

(a) DOE's collateral package will be enhanced, as all assets of the Borrower's 

parent and its affiliates will be transferred to the Borrower and thereafter secure the 

Borrower's obligations to DOE and Third Party Lenders (defined below); -

di . nal funding under a $75 million note 

will issue a $175 million note ("Tranche 

ftmded that amount to the Borrower's 

the "Third-Party-Lenders"); 

iI .! reimbursement obligation to DOE 

ursement obligation ("Trl1llche B")an(L 

anc (\I");-

(d) The Bouower will have the right to borrow an. additional $75 million 

("Tranche C") from the Third-Party Lenders on specified terms and conditions; 

(e) Tranches A. 

secured facilities on a- pari 

first 2 years after closing 0 

have payment priority fio 

securing the Borrower's ])a 

s"), will constitute senior 

nority, except that, for the 

new $75 millioJ;l loan) will 

(if any) on the collateral 

(f) Tianches D (the "SUbordinate Facilities") will constitute 

subordinate secured facilities, secured on a pari passu basis, but with DOE's Tranohe D 

having payment priority; and ' 

(g) The Senior Facilities will have certain lien and, payment priority over the 

Subordinate Facilities. 

Therefore, under the Restructuring (i) for the first two years following closing of the 

Restructuring, the Borrower's reimbursement obligations to DOE for Tranches B and D 

($535 million principal amount, in aggregate) will be subordinate in payment priority to 

the Bouower's obligations to the Third-Party Lenders for Tranche A ($75 million 

principal amount)- jn a liquidation only, and (ii) the Borrower's reimbursement 

obligations to DOE for Tranche D ($385 million principal amount) will be subordinate in 

2 
44 


81415.013

178 

lien and payment priority to the Borrower'S' obligations to the Third-Party Lenders for 

Tranches A and C ($150 million principal amount in new loans) until repayment in full. 

Whether the proposed subordination of certain of the Borrower's reimbursement 

obligations to DOE is consistent with Subsection 1702(dX3) of Title XVII. Subsection 

1702(d)(3) provides that "[tJhe [guaranteed) obligation sball be subject to the condition 

that the obligation is not subordinate to other financing".· 

SHORT ANSWER: 

The proposed subordination is permitted under Title XVII. The subordination condition 

contained in . .. tenn3, applicable only as a condition 

precedent to . It is not a continuing obligation or 

restriction 0 d subordination in the context of the 

proposed R, aMory intent that the Secretary seek to 

maximize r rr~ers' obligations (as well as the 

technology a d j I). 

Title XVII 

Titie xvn of the Energy PolicY Act of 2005, as amended, (42 U.S.C. 16511-16514) 

("Title XVIf') authorizes· . r specified categories of 

energy'projects in accordanc onditions). As set forth in 

the Preamble to the original • one ofthe principal goals 

of the guarantee progn\lll au XVII is to encourage the 

commercial use in the Uni improved energy-related 

technologies. (See "Su goals of the American R~investment arid Recovery 2,.1': 11 , ch ded Section 1705 to Title 

XVII, is to preserve and create jobs and promote economic recovery. (Section 3(a)(1).) 

The Guarantee qualified under both Sections 1705 and 1703. It was issued under 

Section 1705, but the Borrower was required, as a matter of policy and by contract, to 

comply with Seclion 1703 and the Final Rule. The policies of both 1703 and 1705 are 

furthered by the Guarantee transaction and the proposed Restructuring .. 

Section ]702 

In sening out the terms and conditions for loan guarantees, Section 1702 is organized to 

reflect the tife cycle of loan guarantees, from origination to default to foreclosure on 

collateral. More particularly, Section 1702 is subdivided roughly as follows: 

• Subsections 1702(b) - (f) set forth threshold requirements for the issuance of Joan 

guarantees; 

3 
45 


81415.014

179 

• Subsection 1702(8) sets forth the rights and obligations of DOE and the holders of a 

guaranteed loan in the event of default; and 

• Subsections 1702(h) and (i) relate to DOE's ongoing administration of the Joan 

guarantee program. 

Section 1702$) - (f) - Loan Origination Provisions 

Subsections 1702(b)-(f) relate to the issuance of loan guarantees. While only Section 

1702(d){3) is directly at issue, it is worth iloting that each of Sections 1702{b) (Spec~c 

Appropriation or Contribution),.(c) (Amount), (e) (Interest Rate) and (f) (Terln) describe 

either predicates to the issuance of a loan guarantee' or characteristics of the debt that 

must, expressly or implicitly, be satisfied at the time of issuance. 

, inclUding subpart (3). Read together, 

o ssuance of a loan guarantee, that there is 

that the aggregate available funding is 

thl the guaranteed obligation is not 

~. -'~ 

loans be structured at the outset to maxlmize the probabi~ity that the project will reach 

completion and the debt will be repaid in accordance with its terms (as well as ensuring 

the funding of adequate reserves against default). 

Section 1702 -Ri hts 0 D 

Subsection 1702(g) addresse occur after issuance of a 

loan gtlarantee, setting out OE and the holder upon a 

default of the guaranteed I ns express an intention to 

afford to the Secretary, in a 'ty to take action that will 

protect and inaximize the it' e S . t authority ranges -from 

agreement to forbearance for the benefit of the borrower (Section 1702(g)(1)(C) to the. 

authority, after payment under the loan guarantee, to elect either to take control of the 

project or to permit the borrower to continue to pursue the purposes of the project if that 

is in the public interest (Section 1702(g)(2)(A») .. 

The Subordination Restriction in Section J702(d}(J) Is a Condition Precedent to the . 

Issuance of a Logn Guarantee and Not a Continuing Obligation Restrlcting 

Restructuring OplioM, . 

. Subsection J 702( d){3) provides that"[t]he [guaranteed] obligation shall be subject to the 

condition that the obligation is not subordinate to other financing." 

Both by reason of its placement within the statutory scheme, and the plain meaning of the 

words, we read Section 1702(d)(3) as a condition precedent to the isSUance of the loan 

guarantee. We do not believe it can reasonably be read either as a requirement that the 

4 
46 


81415.015

180 

gUaranteed loan inay never be subordinated, or as a restriction on the authority of the 

Secretary following the issuance of a loan guarantee. Commercial loans routinely are 

subject to conditions precedent that must be satisfied prior to the advance of funds by the 

lender. Once such a condition precedent has been satisfied (or waived), it has no 

continuing legal effect. By its plain meaning, and in the context of customary 

commercial practice, the word "condition" in Subsection 1702( d)(3) can logically be read 

as slich a condition precedent to issuance of a guaranteed loan. This reading of the 

provision is reinforced by the use of the word "is," which we view as confirming the 

intent that the condition be satisfied at a single point:in time. I 

In addition to the plain meaning of the words, and their placement in the statute, we 

be1i.cve our reading is consistent with the policies embodied in the statute. Beyond the 

relatively few explicit terms and conditions that must be satisfied in connection With the 

issuance of Secretary broad authority to determine 

the terms an It also provides for rights and powers that 

are designe 'or legal authority in the case of a 

distressed I of Secretarial discretion, Subsection 

1702(g)(2)( p a~emCnt "shall contain such detailed 

terms and co d~ , rpriate to protect the United States 

in a default." 

A continuing prohibition on subordination would, in our view, be :inconsistent with the 

statuto!), scheme as it would preclude the use of a common restructuring strategy for a 

financially distressed borrower. Investors are unlikely to. make an equity investment in a 

distressed company on co t' gly,.a loan restructuring 

is the typical means of 0 t a distressed company. A 

fundamental principle of r payment and lien prior:ity 

over -existing loans - witho nders would be willing ·to 

extend a loan in distressed c' ituation where a fmancially 

troubled borrower needs fres senior creditor typically is 

• It is worth noting that Section 19 of the Federal Nonnuclear Energy Research and Development 

Act of 1974 (42 USC 5919). which created a predecessor DOE loan guarantee program entitled 

"Loan Guarantees for Alternative Fuel Demonstration Facilities· contained Similar, but not 

identical, subordination language. Section 19(0)(4) of that act provides that "(c) [tlhe 

Administmtor ... shall guarantee or make a commitment to guarantee any obligation ... only If .... (4) . 

the obligation is subject to the condition that it not be subordinated to any other financing." In 

context (including the use oftne word condition), we read the predecessor language to have the 

same effect as tbe Title XVII provision. However, the words ~not be subordinated" arguably 

could be more susceptible to an interpretation that they have continuing effect. While not 

dispositive, the ohange to "is not subordinate" suggests an intent to clariJ)t tbe language in a 

manner that reinforces our reading. 

5 
47 


81415.016

181 

faced with a choice of providing an additional loan itself. subordinating to a lender that 

provides the needed capital and proceeding either to foreclosure or a bankruptcy filing. 

CONCLUSION; 

On the current facts, the Loan Programs Office has determined that the proposed 

restructuring offers the best prospect of eventual repayment in full of the Borrower's 

obligations under the "Loan Guarantee Agreement, and is demenstrablypreferabJe to a 

liquidation of the Borrower. The supporting financial analysis is set forth in Exhibit A to 

this memorandum. In light of that determination, we conclude that the proposed 

subordination of the Borrower's obligations to DOE is consistent with both the text and 

the purposes of Title XVII. Indeed, a refusal to amend the Loan Guarantee Agreement to 

effect the proposed Restructuring, which likely would lead to a Chapter 11 filing by the 

Borrower an b considered inconsistent with both the 

specific man elude in the guarantee agreement tenus 

and conditio S' s of the United States in the case of 

default) and e . ch gives the Secretary the authority and 

tools necess 'tetStates and to maximize the prospect 

of repaym I by maximizing the prospect that the 

Borrower wi "as a going concern," the proposed 

ReStructutinl!~fui't1lers the-statUtory "poliCies of promotirig the commercIalIzation of 

innovative energy technologies and preserving jobs. 2 

2 A question has been raised as to where the line should be drawn between origination and 

financial default in determining whether subordination may be agreed to under under Title XVTI. 

We do not believe it is necessary (or appropriate) to draw sucb a line in this memorandum. We 

do believe, however, that it is consistent with the statutoI)' scheme to conclude that the Secretary 

has the authority to make such a determination in connection with specific loan guarantee 

transactions, consistent with the statutozY purposes offostering the commercialization of 

innovative energy technologies and preservingjobs, while protecting tho interests" of the United 

States and seeking to maXimize the pro,spects of repayment of guaranteed obligations. 

6 
48 


81415.017

MEMORANDUM FOR THE GENERAL COUNSEL 

FROM: 

SUBJECT: 

DATE: 

FACTS: 

SUSAN S. RICHARDSON 

CHIEF COUNSEL 

LOAN PROGRAMS OFFICE 

SOL YNDRA RESTRUCTURING 

FEBRUARY 15,2011 

The Department of Energy ("DOE") has issued a guarantee (the "Guarantee") of 

repayment by Solyndra Fab 2, LLC (the "Borrower") of a $535 "million loan (the 

"Guaranteed Loan") made by the Federal Financing Bank. The proceeds of the 

Guaranteed Loan are being used to finance the construction of a solar photovoltaic 

("PV") panel fabrication facility located in. Fremont California (the "Project''). 

eOnStrucfioifOf~olectls sctIedutearolJeClim-ptele-Dn-ot'-aoout JuUe30;-20iT --_. 

The Guarantee and related documents obligate DOE to make scheduled payments of 

principal and interest on the Guaranteed Loan if the Borrower fails to make those 

payments. DOE and the Borrower have entered into a Common Agreement (the "Loan 

Guarantee Agreement") that contains the terms and conditions pursuant to which DOE 

issued the Guarantee and includes, among other things (a) the Borrower's contractual 

obligation to reimburse DOE for guarantee payments made by DOE, which obligation is 

secured by a first lien on the Borrower's assets and (b) customary remedies for default on 

the Borrower's obligations under the Loan Guarantee Agreement. These rights are in 

addition to DOE's rights of subrogation under applicable law. 

A default relating to a financial requirement has occurred under the Loan Guarantee 

Agreement. When that default occurred, on December 1, 2010, $95 million of the 

Guaranteed Loan Commitment remained to be advanced. DOE has considered the 

circumstances leading to the Borrower's default and all reasonable responses to the 

default, including foreclosure on its collateral. Based on the analysis of the Director, 

Portfolio Management Division of the Loan Programs Office ("Director, PMD"), DOE 

has determined that a restructuring of the Borrower's obligations under the Loan 

Guarantee Agreement (the "Restructuring") will yield the highest probable net benefit to 

the Federal Government by minimizing the Federal Government's potential loss on the 

Guaranteed Loan. In light of the financial analysis, and the parties' agreement to 

negotiate in good faith the definitive Restructuring documentation, DOE has continued to 

permit advances under the Guaranteed Loan, enabling Project construction to continue 

pending closing of the Restructuring. Absent continued funding of the Guaranteed Loan, 
49 


81415.018

the Borrower has indicated that it would file for reorganization under Chapter 11 of the 

Bankruptcy Code or liquidation under Chapter 7 of the Bankrupcty Code, impeding or 

preventing Project completion. Given the Borrower's limited operations in the PV space, 

the Director, PMD believes that a Chapter 11 filing would likely lead to a liquidation. 

The Restructuring contains the following elements: 

(a) DOE's collateral package will be enhanced, as all assets of the Borrower's 

parent and its affiliates will be transferred to the Borrower and thereafter secure the 

Borrower's obligations to DOE and Third Party Lenders (defined below); 

(b) The Borrower will obtain additional funding under a $75 million note 

("Tranche A") issued to third party lenders, and will issue a $175 million note ("Tranche 

E") to certain third-party lenders that previously funded that amount to the Borrower's 

parent (collectively with the holders of Tranche A, the "Third-Party Lenders"); 

(c) The Borrower's existing $535 million reimbursement obligation to DOE 

will be amended to comprise a $150 million reimbursement obligation ("Tranche B") and 

a $385 million reimbursement obligation ("Tranche D"); 

(d) The Borrower will have the right to borrow an additional $75 million 

("irancne'CjrromtKeThlrd-Parry Lenders on specIfied terms and conditions; 

(e) Tranches A, B and C (the "Senior Facilities"), will constitute senior 

secured facilities on a pari passu basis in lien and payment priority, except that, for the 

first 2 years after closing of the restructuring, Tranche A (a new $75 million loan) will 

have payment priority from the proceeds of a foreclosure (if any) on the collateral 

securing the Borrower's payment obligations; 

(f) Tranches D and E (the "Subordinate Facilities") will constitute 

subordinate secured facilities, secured on a pari passu basis, but with DOE's Tranche D 

having payment priority; 

(g) The Senior Facilities will have certain lien and payment priority over the 

Subordinate Facilities; and 

(h) Interest on each of the Senior and Subordinate Facilities will be 

capitalized for limited periods. 

Therefore, under the Restructuring (i) for the first two years following closing of the 

Restructuring, the Borrower's reimbursement obligations to DOE for Tranches B and D 

($535 million principal amount, in aggregate) will be subordinate in payment priority to 

the Borrower's obligations to the Third-Party Lenders for Tranche A ($75 million 

principal amount) in a liquidatIon only. and (ii). the Borrower's reimbursement 

obligations to DOE for Tranche D ($385 million principal amount) will be subordinate in 

2 
50 


81415.019

lien and payment priority to the Borrower's obligations to the Third-Party Lenders for 

Tranches A and C ($150 million principal amount in new loans) until repayment in full. 

~: 

Whether the proposed subordination of certain of the Borrower's reimbursement 

obligations to DOE is consistent with Subsection 1702( d)(3) of Title XVII. Subsection 

1702(d)(3) provides that "[t]he [guaranteed] obligation shall be subject to the condition 

that the obligation is not subordinate to other financing". 

SHORT ANSWER: 

The proposed subordination is permitted under Title XVII. The subordination condition 

contained in Subsection 1702(d)(3) is, by its terms, applicable only as a. condition 

precedent to the issuance of a loan guarantee. It is not a continuing obligation or 

restriction on the authority of the Secretary; and subordination in the context of the 

proposed Restructuring will further the express statutory intent that the Secretary seek to 

maximize the prospects of repayment of borrowers' obligations (as well as the 

technology and job preservation goals of Title XVII). 

ANALYSIS: 

Title XVII 

Title XVII of the Energy Policy Act of 2005, as amended, (42 U.S.C. 16511-16514) 

("Title XVII") authorizes DOE to make loan guarantees for specified categories of 

energy projects in accordance with Section 1702 (Terms and Conditions). As set forth in 

the Preamble to the original Final Rule issued under Title XVII, one of the principal goals 

of the guarantee program authorized by Section 1703 of Title XVII is to encourage the 

commercial use in the United States of new or significantly improved energy-related 

technologies. (See "Summary".) One of the principal goals of the American 

Reinvestment and Recovery Act of 2009, P.L. 111-5, which added Section 1705 to Title 

XVII, is to preserve and create jobs and promote economic recovery. (Section 3(a)(l).) 

The Guarantee qualified under both Sections 1705 and 1703. It was issued under 

Section 1705, but the Borrower was required, as a matter of policy and by contract, to 

comply with Section 1703 and the Final Rule. The policies of both 1703 and 1705 are 

furthered by the Guarantee transaction and the proposed Restructuring. 

Section 1702 

In setting out the terms and conditions for loan guarantees, Section 1702 is organized to 

reflect the life cycle of loan guarantees, from origination to default to foreclosure on 

collateral. More particularly, Section 1702 is subdivided roughly as follows: 

•. Subsections 1702(b) - (f) set forth threshold requirements for the issuance of loan 

guarantees; 

3 
51 


81415.020

• Subsection 1702(g) sets forth the rights and obligations of DOE and the holders of a 

guaranteed loan in the event of default; and 

• Subsections 1702(h) and (i) relate to DOE's ongoing administration of the loan 

guarantee program. 

Section 1702(b) - (f)-Loan Origination Provisions 

Subsections 1702(b)-(f) relate to the issuance of loan guarantees. While only Section 

1702( d)(3) is directly at issue, it is worth noting that each of Sections 1702(b) (Specific 

Appropriation or Contribution), (c) (Amount), (e) (Interest Rate) and (f) (Term) describe 

either predicates to the issuance of a loan guarantee or characteristics of the debt that 

must, expressly or implicitly, be satisfied at the time of issuance. 

Section 1702(d) (Repayment) has three subparts, including subpart (3). Read together, 

they require the Secretary to determine, prior to issuance of a loan guarantee, that there is 

a reasonable prospect of repayment of the loan; that the aggregate available funding is 

sufficient to achieve project completion; and that the guaranteed obligation is not 

subordinate to other financing. 

The requirements of these subsections reflect a Congressional intent that guaranteed 

}OMS be struerured at the outseHo maximize the pWbability tlran1IeplOject wiUreacil 

completion and the debt will be repaid in accordance with its terms (as well as ensuring 

the funding of adequate reserves against default). 

Section 1702rgJ - Rights orDOE and the Holder ora Loan Guarantee After a Default 

Subsection l702(g) addresses events and circumstances that may occur after issuance of a 

loan guarantee, setting out the authority and obligations of DOE and the holder upon a 

default of the guaranteed loan. Read together, the provisions express an intention to 

afford to the Secretary, in a distressed situation, broad authority to take action that will 

protect and maximize the interests of the United States. That authority ranges from 

agreement to forbearance for the benefit of the borrower (Section 1702(g)(l)(C) to the 

authority, after payment under the loan guarantee, to elect either to take control of the 

project or to permit the borrower to continue to pursue the purposes of the project if that 

is in the public interest(Section 1702(g)(2)(A». 

The Subordination Restriction in Section 1702(d)(3) Is a Condition Precedent to the 

Issuance of a Loan Guarantee and Not a Continuing Obligation Restricting 

Restructuring Options 

Subsection 1702(d)(3) providesthat"[t]he [guaranteed] obligation shall be subject to the 

condition that the obligation is not subordinate to other financing." 

Both by reason of its placement within the statutory scheme, and the plain meaning of the 

words, we read Section 1702(d)(3) as a condition precedent to the issuance of the loan 

guarantee. We do not believe it can reasonably be read either as a requirement that the 

4 
52 


81415.021

guaranteed loan may never be subordinated, or as a restriction on the authority of the 

Secretary following the issuance of a loan guarantee. Commercial loans routinely are 

subject to con~itions precedent that must be satisfied prior to the advance of funds by the 

lender. Once such a condition precedent has been satisfied ,(or waived), it has no 

continuing legal effect. By its plain meaning, and in the context of customary 

commercial practice, the 'word "condition" in Subsection 1702( d)(3) can logically be read 

as such a condition precedent to issuance of a guaranteed loan. This reading of the 

provision is reinforced by the use of the word "is," which we view as confirming the 

intent that the condition be satisfied at a single point in time. I 

In addition to the plain meaning of the words, and their placement in the statute, we 

believe our reading is consistent with the policies embodied in the statute. Beyond the 

relatively few explicit terms and conditions that must be satisfied in connection with the 

issuance of a guarantee, Section 1702 gives the Secretary broad authority to determine 

the terms and conditions of loan guarantees. It also provides for rights and powers that 

are designed to ensure both flexibility and superior legal authority in the case of a 

distressed loan. Emphasizing the importance of Secretarial discretion, Subsection 

1702(g)(2)(C) provides that the loan guarantee agreement "shall contain such detailed 

terms and conditions as the Secretary determines appropriate to protect the United States 

in a default." (Emphasis added.) 

-A continuing plohibitiOIl 011 SubOIdinatioll would,ill aUI' view;-be inconsistent witlr't1re 

statutory scheme as it would preclude the use of a common restructuring strategy for a 

financially distressed·borrower. Investors are unlikely to make an equity investment in a 

distressed company on commercially acceptable terms. Accordingly, a loan restructuring 

is the typical means of obtaining additional funding for a distressed company. A 

fundamental principle of restructuring is that new loans have payment and lien priority 

over existing loans - without such priority, few, if any, lenders would be willing to 

extend a loan in distressed circumstances. Accordingly, in a situation where a financially 

troubled borrower needs fresh capital to ensure its survival, a senior creditor typically is 

1 It is worth noting that Section 19 of the Federal Nonnuclear Energy Research and Development 

Act of 1974 (42 USC 5919), which created a predecessor DOE loan guarantee program entitled 

"Loan Guarantees for Alternative Fuel Demonstration Facilities" contained similar, but not 

identical, subordination language. Section 19(c)(4) of that act provides that "(c) [t]he 

Administrator ... shall guarantee or make a commitment to guarantee any obligation .. ,only if .... (4) 

the obligation is subject to the condition that it not be subordinated to any other fmancing." In 

context (including the use of the word condition), we read the predecessor language as having the 

same effect as the Title XVII provision. However, the words "not be subordinated" arguably 

could be more susceptible to an interpretation that they have continuing effect. While not 

dispositive, the change to "is not subordinate" suggests an intent to clarify the language in a 

manner that reinforces our reading. 

5 
53 


81415.022

faced with a choice of providing an additional loan itself; subordinating to a lender that 

provides the needed capital and proceeding either to foreclosure or a bankruptcy filing. 

CONCLUSION: 

On the current facts, the Loan PrograJlls Office has determined that the proposed 

restructuring offers the best prospect of eventual repayment in full of the Borrower's 

obligations under the Loan Guarantee Agreement, and is demonstrably preferable to a 

liquidation of the Borrower. In light of that determination, we conclude that the proposed 

subordination of the Borrower's obligations to DOE is consistent with both the text and 

the purposes of Title XVII. Indeed, a refusal to amend the Loan Guarantee Agreement to 

effect the proposed Restructuring, which likely would lead to a Chapter 11 filing by the 

Borrower and possible liquidation, could· be considered inconsistent with both the 

specific mandate of Section 1702(g)(2)(C) (to include in the guarantee agreement terms 

and conditions appropriate to protect the interests of the United States in the case of 

default) and the overall scheme of Title XVII, which gives the Secretary the authority and 

tools necessary to protect the interests ofthe United States and to maximize the prospect 

of repayment. of guaranteed loans. Moreover, by maximizing the prospect that the 

Borrower will complete the Project and continue as a going concern, the proposed 

Restructuring furthers the statutory policies of promoting the commercialization of 

innovative energy technologies and preserving jobs. Z 

2 A question has been raised as to where the line should be drawn between origination and 

financial default in detennining whether subordination may be agreed to under under Title XVII. 

We do not believe it is necessary (or appropriate) to draw such a line in this memorandum. We 

do believe, however, that it is consistent with the statutory scheme to conclude that the Secretary 

has the authority.to make such a determination in connection with specific loan guarantee 

transactions, consistent with the statutory purposes of fostering the commercialization of 

innovative energy technologies and preserving jobs, while protecting the interests of the United 

States and seeking to maximize the prospects of repayment of guaranteed obligations. 

6 
54 

Mr. STEARNS. Now we will move on to our witnesses who have 

been kind enough to stay with us. And at this point, I think our 

side is recognized next and that would be Mr. Terry. 

Mr. TERRY. All right. Gentlemen, thank you for your patience. I 

have some rather bland questions. But first I want to make a point 

about whether or not—I think it was Mr. Grippo, did you say that 

you didn’t feel that you were rushed to provide your information 

or after the consultation, your feedback? 

Mr. GRIPPO. Let me be clear about what happened. We were provided with a term sheet for this deal. We were asked for a very 

quick turnaround for our consultation. We felt we needed more 

time. We asked for that. 

Mr. TERRY. But you didn’t feel rushed? 

Mr. GRIPPO. Well, we felt that we needed more time. We asked 

for it. They agreed that we should have more time and in due 

course, gave our consultation. 

Mr. TERRY. Well, are these dates correct then that I just have in 

some notes, March 10, 2009, DOE asks Treasury for the consultation. Then March 17, 2009, DOE approves and commits to the loan. 

March 19, Treasury submits their consultation and questions. It 

seems to me that your consultation was fairly irrelevant to DOE. 

Mr. GRIPPO. I am not aware of that sequence of events myself on 

those particular things. 

Mr. TERRY. All right. We will submit those. They’re in the documents, but I am going to get to, in my 3 minutes left, another set 

of questions here. 

Mr. Burner, in tab 2 of your binder is a memorandum that is 

March 16, 2010 titled Treasury/FFB consultation with the Department of Energy on the Solyndra fab two LLC project or entitled the 

project. Have you seen this memo before? 

Mr. BURNER. Yes, sir I have. 

Mr. TERRY. All right. Do you know who drafted the memo? 

Mr. BURNER. A member of my staff. 

Mr. TERRY. Under your instruction? 

Mr. BURNER. Yes. 

Mr. TERRY. OK. Why was the memorandum to file drafted almost 

1 year after a call with DOE? And I am referring to the first paragraph of the memorandum that seems to be documenting a call a 

year early. 

Mr. BURNER. The staff member was directed to put it in final but 

did not. I found out about that about a year later and asked that 

it be put in final at that time. This is the same memo. It has not 

been changed since it was originally drafted. 

Mr. TERRY. All right. So your aide or assistant drafted the memo 

a year earlier? 

Mr. BURNER. Yes.g 

Mr. TERRY. But did not submit it or something? 

Mr. BURNER. Just didn’t get put into final. I felt I would rather 

explain this to you than explaining that we might have backdated 

a memo. 

Mr. TERRY. Good. I appreciate that. I have had things similar in 

my office where I had to accept staff members’ goof-ups as my own. 

So I feel for you. 

55 

Mr. Burner, again, I would like to address a few points made in 

the FFB memorandum to file of that date relating to the Treasury’s 

call—— 

I have got time. 

Mr. STEARNS. I am sorry. You’ve got time. 

Mr. TERRY. The memo that the FFB staff made two conclusions 

about the Solyndra project that the equity Solyndra had in the 

project was 27 percent as opposed to what appears to be a standard 

of 35 percent. 

I can’t find where 35 percent is referenced. Is that one of the conditions precedents in a rule that I don’t know about? Where does 

that 35 percent come from? 

Mr. BURNER. In discussions before that, we were under the impression that there would be 35 percent loan equity put in the 

deals as a standard. 

Mr. TERRY. So this is a Solyndra-specific issue, that you were 

under the impression that Solyndra had said there would be 35 

percent equity by the ownership? 

Mr. BURNER. It was in going forward and reviewing deals, we 

had expected to see 35 percent equity put into the deals, and that 

was not what happened. 

Mr. TERRY. So it is not Solyndra-specific but deals, plural? 

Mr. BURNER. Yes. Yes, sir, you are correct. 

Mr. TERRY. OK. And in that regard, where can I find the reference to the standard of 35 percent? And then after that, why is 

that important that they have 35 percent equity? 

Mr. BURNER. The equity—the number actually comes from—if 

this was a partially guaranteed loan, it would be 80 percent of 80 

percent, which would be 36 percent equity. So, oK, we rounded it 

to 35 percent as sort of a standard. 80 percent is sort of a guarantee. It’s sort of a Federal credit policy that things be partially 

guaranteed rather than fully guaranteed as preference. 

So this would have put the government on an equal basis in 

terms of risk, if there was 35 percent equity as opposed to—and 35 

percent equity on a fully guaranteed deal as opposed to having a 

20 percent equity and having the loan be 80 percent guaranteed. 

Mr. TERRY. And the risk then means having unbalanced risk, 

what are the potential consequences to the government? 

Mr. BURNER. It was felt that it was a better risk for the government if there was more equity in the deal. 

Mr. STEARNS. The gentleman’s time has expired. 

I recognize the chairman emeritus on the ranking side, Mr. Dingell, the distinguished gentleman from Michigan. 

Mr. DINGELL. Mr. Chairman, I thank you. And I express to you 

the deep sympathy over the difficulties we are having this morning. 

I have never seen such a big fuss over such a small matter in this 

committee. 

I have a couple questions for our witnesses. 

Gentlemen, the issue here of subordination of the Federal guarantee and guaranteed loan did not occur when the initial transaction took place. It occurred later after Solyndra began to get close 

to failure, yes or no? 

Mr. GRIPPO. That is correct, yes. 

56 

Mr. DINGELL. OK. And the United States has, from time to time 

over history, submitted itself to a subordination and to a lower 

treatment of its rights in order to carry out some public policy, is 

that not right? 

Mr. GRIPPO. I am not personally aware of those transactions, but 

it could be well the case that that’s permitted. 

Mr. DINGELL. Well, these two documents that we are hearing 

about, these are essentially work papers which are defining what 

the government should do, is that right? 

Mr. GRIPPO. I am sorry. Which documents are you referring to? 

Mr. DINGELL. The two of which we have had such a splendid 

fuss. 

Mr. GRIPPO. Forgive us, but I don’t think we have been privy to 

those memos. 

Mr. DINGELL. Now, I would note that the memorandum for the 

general counsel has some very interesting remarks. It says here, 

‘‘Based on the analysis of the directorate portfolio, management division of the loan program’s office, (Director PMD) DOE has determined that a restructuring of the borrower’s obligations under the 

loan guarantee will yield the highest probable net benefit to the 

Federal Government by minimizing the Federal Government’s potential loss on the guaranteed loan.’’ Is that right? Yes or no? 

Mr. GRIPPO. I have not seen the memo. 

Mr. DINGELL. All right. But that’s in there. 

Now when the government confronted this problem, they looked 

to see how they were going to save this loan and how they were 

going to save the businesses, Solyndra. Is that right? And so they 

felt that the approach which was taken was the best, is that right? 

Mr. GRIPPO. I believe that was the Department’s view. 

Mr. DINGELL. Now what was the policy impact of the Treasury 

on this? Did you superintended or second-guess or come up with 

any corrections to the Department of Energy? Or did you just approve the release of the money? Which was the course that you 

took? 

Mr. GRIPPO. It was not our statutory decision to make. We rendered no legal judgment. 

Mr. DINGELL. You just saw to it that the money was properly released, is that correct? 

Mr. GRIPPO. I’m sorry? 

Mr. DINGELL. You just saw to it that the money was correctly 

and properly released according to the rules and regulations—— 

Mr. GRIPPO. Yes. 

Mr. DINGELL [continuing]. Of the Treasury Department? That 

was all you did? 

Mr. GRIPPO. The Department of Energy certified to us that the 

money should be released. 

Mr. DINGELL. I think, Mr. Chairman, if we are going to have a 

proper discussions of this, we ought to bring DOE in and let DOE 

tell us about why it was they came to the conclusions about which 

we are in this great befuddlement today. 

And I simply would make a couple of observations here. We have 

developed the technology for new batteries and all kinds of things 

like that that are being made in China, in Korea, in Germany, and 

in all kinds of other places. The result of that is that other people 

57 

are making batteries that essentially were designed over here. And 

when the Chevy Volt drove out of the factory brand-new, it was an 

American car, drove out of an American factory with Korean batteries which were designed in this country. And what we’re trying 

to do is to get back control of the battery industry because our people in the auto industry—and I do have some familiarity with that 

endeavor—have come to the conclusion that if the United States 

doesn’t control this kind of technology, that it is going to see the 

entire manufacturing industry of automobiles move overseas. That 

doesn’t seem to me to be very good sense. 

So we’re trying to develop an industry that will enable us to compete on the production of batteries. And the Congress came to this 

policy when we passed the legislation that we are discussing today. 

And it was our decision that we wanted to have these kinds of subsidies so we can compete with the Germans. Now the Germans 

have as much sunshine over there as does Alaska. No more. And 

yet they’re big in this whole business and they’re controlling this 

industry. They and the Japanese and the Koreans and the Chinese. 

And the United States is little by little being frozen out. And we 

want to be in this new technology. But we are not seeing ourselves 

in it because they subsidize and finance the efforts of their industry and we do not. So we started out. 

So it’s pretty clear we made some mistakes on the matter. And 

they were big mistakes and they cost us a lot of money. But the 

hard fact of the matter is, losing control of this technology is going 

to cost us a heck of a lot of more money and it’s going to cost this 

industry and jobs, not just of the new technology, which is where 

our hope is as a manufacturing nation, but also unfortunately in 

preserving existing industry. 

So Mr. Chairman, I thank you for your courtesy. And I hope that 

this committee will look at this as something where we had a mistake or a bunch of mistakes and set out to try and correct those 

mistakes but understand two things, first of all there’s no criminal 

or serious misbehavior here. There just was some dumbness. And 

unfortunately, we find ourselves in the awkward position where we 

have got to go forward and try to save these kinds of industries for 

the benefit of future generations of Americans and quite frankly for 

the health of this one. Thank you, Mr. Chairman. 

Mr. STEARNS. The gentleman’s time has expired. I recognize the 

gentleman from Pennsylvania, Mr. Murphy, for 5 minutes. 

Mr. MURPHY. I thank Mr. Chairman. I thank you gentlemen for 

being here. We appreciate your candor. I also want to make sure 

it is very clear, Republicans support clean energy. As a matter of 

fact, we would love to follow through on the President’s constant 

promises we ought to be cleaning up coal. We are, however—primarily the purpose of these hearings, protect taxpayers for potential or actual corruption, incompetence, violations of law, or ignoring the law, and that’s why we’re having this hearing. 

But Mr. Burner, again, thanks for being here. On February 10, 

2011, you sent an email to the loans programs office general counsel and director of the Department of Energy loan monitoring program, am I correct on that? 

Mr. BURNER. You are, sir. 

58 

Mr. MURPHY. That email is on tab 8 of your minder binder. You 

are probably familiar with that. In the email you have learned that 

DOE is ‘‘close to implementing a set of adjustments to the Solyndra 

guarantee including subordination of DOE ’s interests,’’ is that correct? 

Mr. BURNER. That is correct. 

Mr. MURPHY. In this email, what did you recommend that the 

Department of Energy do? 

Mr. BURNER. Absent other authorities, we recommended the Department of Energy go seek and consult with the Department of 

Justice. 

Mr. MURPHY. Can you describe the context of this email that led 

you to ask for a Department of Justice consultation? 

Mr. BURNER. In my experience with our client agencies, when 

there is a workout situation potentially developing that the Department of Justice is consulted with, they have statutory authority 

over such matters. I do need to say though that some agencies have 

their own authority so, it’s not a 100 percent call every time. 

Mr. MURPHY. But that’s out of your agency. In your area, that’s 

one that you push for to make sure things are done correctly and 

follow the law. Am I correct in assuming that? 

Mr. BURNER. I am sorry? 

Mr. MURPHY. Out of the Treasury, that is something that you 

practiced to make sure that other departments are following the 

law as—— 

Mr. BURNER. This was advice to a couple of colleagues on an area 

of law that they may—I was not sure they were aware of. 

Mr. MURPHY. Thank you. Were other Treasury officials involved 

in the drafting of this email you sent to DOE? 

Mr. BURNER. Yes, sir. I am part of a team. And this was a group 

effort and then I was the person who transmitted the email. 

Mr. MURPHY. So given this, why did Treasury think it was important to write Department of Energy and ask it to seek Department of Justice approval of the Solyndra restructuring? What specifically was it that was your concern there. 

Mr. BURNER. The concern is that the authority to compromise a 

claim against the government is Department of Justice’s unless 

they have their own authority. We do not know what their actual 

authorities are. And that’s why we wrote the email to them, was 

to warn them. 

Mr. MURPHY. But you were not legally required to contact Department of Justice in this? 

Mr. BURNER. No, sir. 

Mr. MURPHY. Are you aware of the following Federal statute, 31 

USC 3711(b) which says, ‘‘Unless otherwise provided by law, when 

a principal balance of a debt exclusive of interest penalties of administrative costs exceeds $100,000 or any higher amount authorized by the Attorney General, the authority to accept the compromise rests with the Department of Justice.’’ Are you aware of 

that? 

Mr. BURNER. I am aware of the authority lies with Department 

of Justice. I am not a lawyer so I am not familiar with the statutes 

themselves. 

59 

Mr. MURPHY. Certainly this seems to fit in with the issue that this exceeds $100,000 in interest penalties and administrative 

costs. I just wanted to get this on the record. 

Mr. Burner, also, DOE responded to your email of February 10, 

2011, asking Department of Justice to seek approval of the 

Solyndra restructuring. They did respond to you, am I correct? 

Mr. BURNER. Yes, they did. 

Mr. MURPHY. And in fact, DOE staff debated, and I quote, that 

there is ‘‘gross misunderstanding of the outcome of the restructuring of the Solyndra obligation.’’ Now you talked to DOE about 

your email, am I correct? 

Mr. BURNER. That is correct. 

Mr. MURPHY. What was the substance of that conversation? 

Mr. BURNER. The primary purpose of the conversation was to 

make sure that DOE was aware that they may have an obligation 

to consult with the Department of Justice. 

Mr. MURPHY. And why didn’t they believe it was necessary to 

talk with Department of Justice? 

Mr. BURNER. They believed that the results of the deal, the reorganization, restructuring did not compromise the claim so that it 

had not reached a point where they needed to take it to the Department of Justice. 

Mr. MURPHY. Did they convince you it wasn’t necessary to go to 

the Department of Justice? Was their discussion convincing, in 

your mind? 

Mr. BURNER. They were in a workout situation. I thought it 

would have been wise for them to go to the Department of Justice. 

Mr. MURPHY. Now given all of the information you have seen at 

that time and since then, to your knowledge, do you believe today 

that the Department of Energy should have sought Department of 

Justice approval? 

Mr. BURNER. Yes. I have said that I believe that they—that it 

would have been wise for them to seek Department of Justice approval. 

Mr. MURPHY. And given the problems with Solyndra, have you 

raised concerns about potential default for any other loans approved by the Department of Energy or paid out by the Federal Financing Board? 

Mr. BURNER. At this time, I have not been made aware of any 

other deals that are in a workout situation. 

Mr. MURPHY. Thank you. And Mr. Chairman, I just want to 

make sure we’re aware that Solyndra told Department of Energy 

it needed to restructure the loan in October of 2010. And the memo 

that was the subject of so much debate here wasn’t written until 

January. And at no point did Department of Energy’s legal counsel 

ask Department of Justice if this was legal, even though both OMB 

and Treasury staffers thought Energy needed to do that. So I just 

want to make sure we are clear on that. 

Mr. STEARNS. I thank the gentleman from Pennsylvania. I think 

your point as well as the distinguished gentleman from Michigan, 

we need the Department of Energy up here. We are going to have 

a hearing. The senior loan officer, Jonathan Silver, of course has 

resigned. But DOE will be here. I know the Secretary of Energy 

Mr. Chu had indicated that the senior loan officer, Jonathan Silver, 

60 

was an outstanding loan officer. So that in mind I think a lot of 

us are very concerned. So we will have this hearing. And with that, 

I recognize the gentleman from Massachusetts, Mr. Markey, for 5 

minutes. 

Mr. MARKEY. Thank you, Mr. Chairman. 

Mr. Grippo, I would like to ask you a few straightforward business questions. Let’s just say you are considering a loan guarantee 

for a company and the price of the product that this company sells 

has declined by 63 percent over the last several years, including by 

more than 20 percent since February. Without knowing anything 

else about this company, does that sound like a relatively high risk 

or low risk project? 

Mr. GRIPPO. I am sorry. Could you just restate that? I want to 

make sure I am understanding the question. 

Mr. MARKEY. A product that sells drops 63 percent over the last 

several years and 20 percent since February. Is that a high risk or 

a low risk? 

Mr. GRIPPO. If the price of their product is falling? 

Mr. MARKEY. Yes. 

Mr. GRIPPO. Assuming that the costs of the company are not 

commensurately falling, then that would have risk to it. 

Mr. MARKEY. What if the same company’s business model was 

predicated on demand for its product expanding dramatically, but 

due to fundamental changes in the market, people just were not 

buying this product like everyone thought they would? Would that 

further increase or reduce the financial risk of the company? 

Mr. GRIPPO. Again, let me just ask you to repeat that so I make 

sure I am understanding the assumptions in the hypothetical. 

Mr. MARKEY. If it was predicated on demand for its product increasing, but instead because of fundamental changes in the market it was decreasing, would that increase or decrease the financial 

risk of that company? 

Mr. GRIPPO. If a creditor was making an assumption or had 

knowledge that demand would increase, that would tend to reduce 

the risk. 

Mr. MARKEY. Yes. Now what if it also turns out that there were 

better financed competitors, including one that already had a very 

large government-backed loan guarantee? And what if that company’s technology had so many problems that the technical experts 

at the Department of Energy assigned to your loan guarantee application actually asked the company to withdraw it at one point 

because they didn’t think it could be commercially viable? Would 

that increase or decrease the risk of our hypothetical company defaulting on its loan? 

Mr. GRIPPO, If I understood what you have laid out, it sounds 

like that would increase the risk. 

Mr. MARKEY. That would increase the risk. Thank you. 

So I am not talking about Solyndra. I am talking about the 

United States Enrichment Corporation which has asked DOE for 

a $2 billion loan guarantee to make fuel for nuclear reactors, almost four times as much as Solyndra. 

Now, Members of Congress have continued to insist that DOE 

approve it, even as the price for uranium has dropped 22 percent 

since Fukushima melted down, even as utility after utility has 

61 

abandoned their plans to build new nuclear reactors, and even 

after DOE awarded another loan guarantee to another company to 

do the exact same thing. 

And 2 years ago, DOE did, in fact, ask USEC to withdraw its application because of the grave concerns that DOE had with the 

technology. Based on the circumstances that I have described, a 

shrinking customer base, declining prices, intense competition, and 

problematic technology, do you agree that DOE should exercise 

particular caution before we risk billions in taxpayer dollars? 

Mr. GRIPPO. I can certainly say that the Department of the 

Treasury’s input and view would be that extreme care should be 

taken in putting the taxpayer at risk or offering any exposure to 

the taxpayer. 

Mr. MARKEY. Well, 13 House Republicans, including one on this 

committee, wrote the Energy Secretary in February, urging him to 

quickly approve this uranium enrichment product. Last week, 

Speaker Boehner stated that a denial of this loan guarantee was 

tantamount to the Obama administration betraying southern Ohio. 

Not giving a loan guarantee to a company that has these kinds of 

obvious financial problems, it seems to me, is not a betrayal of the 

taxpayers. Do you agree with that? 

Mr. GRIPPO. I would prefer not to offer an opinion on that, sir. 

Mr. MARKEY. So in my opinion, what the betrayal is is in the Republican budgets that cut investments in clean energy by 70 percent next year and 90 percent over the next 3 years. That’s solar 

and wind. That’s what they’re talking about. Not coal, not nuclear. 

Wind and solar, the competitors to those incumbent industries. 

That’s what this is all about. Kill the competition that Peabody 

Coal or the nuclear industry has feared for years is finally arriving 

in wind and solar. That’s what the hearings are all about. Keep the 

loan guarantees for those old industries. And that’s what is happening out on the House floor right now. That’s what continues to 

happen in this committee, attacks on the Clean Air Act, attacks on 

wind and solar, attacks on the future. And this is really a debate 

about the past versus the future. And we can see that in the insistence that Republicans have that loan guarantees be given to a corporation, which obviously has a business model which is failing. 

So I thank you, Mr. Chairman. I yield back the balance of my 

time. 

Mr. TERRY [presiding.] Thank you, Mr. Markey. And now the 

gentleman from Texas, Dr. Burgess, is recognized. 

Mr. BURGESS. Thank you, Mr. Chairman. I listened with some interest to what Mr. Markey was saying and certainly might be willing to work with him on that concept if he would be willing. And 

I think that’s an important part of our discussion, and certainly is 

something that the members of this committee should look at. Let 

me also just say that I favor renewables. I’ve got a solar manufacturing company in my district. I’m not aware that they’ve gotten 

any loan guarantees. I might be wrong. I know I’ve got a big wind 

turbine manufacturer in my district. I know they haven’t gotten 

any loan guarantees. They do a great job, they sell a good product, 

they’re a strong competitor in the market, they do compete against 

imports of foreign manufactured blades, but just remind people 

that cheap Brazilian blades will not stand up against the harsh 

62 

Texas winds like good old Texas blades that are made in Gainesville, Texas. I always encourage people to buy locally when they’re 

buying long wind turbine blades. 

You answered—Mr. Burner, you answered Dr. Murphy’s question, he asked if there were any other loan guarantee deals out 

there that were of concern, and your answer was you’re not aware 

of any deals that are in a workout situation. Did I hear that correctly? 

Mr. BURNER. That’s correct. 

Mr. BURGESS. Did Solyndra come to your attention only when it 

was in a workout situation? Was there any point along the line 

when you were concerned about what was happening with 

Solyndra before it got to the point where it was in a workout situation? 

Mr. BURNER. Only through the news, sir. 

Mr. BURGESS. Well, oK. Let me phrase this in a different way. 

I mean, a lot of us are concerned because Solyndra seemed to create some of its own problems by accelerating the—or actually the 

Office of Management and Budget and the Department of Energy 

created some of the problems because Solyndra was pushing because they that a photo-op coming up in September of 2009, I believe, with the Secretary and Vice President Biden was going to be 

brought in on a telecommunications device. 

So you worry when there are time pressures on these loans if everything is done correctly. And just last week, or two weeks ago, 

at the end of the fiscal year there was a big push to get, I think 

it was almost a third of the total renewable energy budget in the 

stimulus bill, there was a push to get that out the door relatively 

quickly. And I, for one, worried about that. I wanted this committee to scrutinize that, but apparently there wasn’t time to do so. 

Are there any of those deals now that are now made and the 

money has gone out the door but they went through rapidly, are 

there any out there that give you heartburn, not necessarily because they’re in a workout situation, but just because the business 

model itself reminds you of something that might not work? 

Mr. BURNER. I’m not exactly sure how to answer that question, 

sir. I didn’t review every single project that came through. 

Mr. BURGESS. Are there any of those projects that keep you up 

at night now? 

Mr. BURNER. No, sir, not this minute, because we don’t make the 

credit decisions on these programs. When we reviewed those we reviewed the term sheets and things of that nature, so I don’t really 

have the kind of knowledge. 

Mr. BURGESS. But the review of the term sheets, you’re absolutely at peace with all of the ones that have gone through your 

office? 

Mr. GRIPPO. Let me offer an answer. We did review all of the 

conditional commitments offered and indeed loan guarantees 

issued. We did offer, we had time to and did offer comment to the 

Department of Energy on all of them. If I could just take a step 

back and say this. In all of these deals, the Treasury is looking to 

do two things, and we did these in all the deals over the last 6 

weeks or last month. We’re looking to make sure that the subsidy 

that is offered is needed to get the project done, in other words, 

63 

could this occur through the commercial markets without a government subsidy, and if subsidy is needed, is it minimized so that the 

taxpayer isn’t exposed to more risk than it needs to be. 

Mr. BURGESS. I’m going to interrupt you there for just a minute 

because if there is a change in the environment, as Mr. Markey 

was talking about, is that something that crosses the threshold 

that gets your attention? 

Mr. GRIPPO. I’m sorry? 

Mr. BURGESS. If there’s something in the market that changes, 

you know, the prices, competitors that enter the market, does any 

of that enter into your decision? 

Mr. GRIPPO. We focus on the terms and conditions of the actual 

loan guarantee, but we certainly would look at general market conditions, and if we see something, we would offer advice. 

Mr. BURGESS. Well, something that concerns me about a lot of 

these, and it’s not part of this investigation or even this discussion, 

but the Waxman-Markey bill that was debated and passed through 

this committee and then passed through the floor of the House in 

June of 2009 contained in it a provision for providing credits, payments to companies that would sell carbon offsets to other companies that weren’t as green or clean, that never materialized. And 

I worry that some of these projects were developed in an environment where the Secretary thought that, or someone thought that 

these credits would be there, these sales would be there to other 

companies, and that did not materialize because the legislation 

never got through the Senate and never got signed into law. Did 

you all take that into account at any level? 

Mr. GRIPPO. If we are aware of it, we would definitely take that 

into account, and if we could analyze it, would provide input to Energy on it. 

Mr. BURGESS. Can I just ask you one follow-up thing? You have 

an inspector general at Treasury, correct? 

Mr. GRIPPO. Indeed. 

Mr. BURGESS. Has that individual been involved in looking into 

any of this activity? 

Mr. GRIPPO. The inspector general is looking at our activities. 

Mr. BURGESS. Mr. Chairman, can I ask that that report be made 

available to this committee when it is completed? 

Mr. TERRY. Yes, you can ask that. 

Mr. BURGESS. Thank you. You’ve been most generous with your 

time, and I appreciate the lightness of the gavel that you’ve had 

today. 

Mr. TERRY. At this time we recognize Mrs. Blackburn for 5 minutes. 

Mrs. BLACKBURN. Thank you, Mr. Chairman. And I want to 

thank both of you for your time and your attention and your patience today. This is an issue that the taxpayers continue to come 

to us with. They’re concerned about what took place with the 

Solyndra process and they are concerned that this is being repeated, the lack of attention to detail for the loan guarantees are 

being repeated in other programs. I do have a couple of questions 

that I want to ask, and I know we want to finish with you all before we head for votes again. 

64 

Mr. Burner, you have been with Treasury for 28 years, is that 

correct? 

Mr. BURNER. That’s correct. 

Mrs. BLACKBURN. How often does a loan workout situation come 

before you? And in reading the documents for the hearing today 

and looking at your email chain that you had with DOE and with 

your staffers, you know, the workout language was repeated regularly in a couple of those emails. So how often does this come before you? 

Mr. BURNER. We don’t see workouts very often because they’re 

handled usually by the guaranteeing agencies, for example, and we 

may not even know that a workout has taken place, because under 

the guarantee, the agency may pay us directly and leave the original documents in place. 

Mrs. BLACKBURN. So basically, your part of the due diligence is 

to provide the guidance that is given in the February 10th email 

that you had to Frances and Susan, I guess that would be correct, 

stating that if there are to be adjustments that may include subordination of Solyndra’s loan, then this would need to be a referral 

to DOJ for the authority? 

Mr. BURNER. In this case, I was just attempting to offer some experience and advice to a couple of colleagues on something they 

may or may not have been aware of. 

Mrs. BLACKBURN. All right. Then let me take you on through, 

let’s see, there is another email that I have, on August 12, 2011, 

an email at 11:51 a.m., where you are asking Frances, ‘‘Can we get 

an update on the status of Solyndra today, if so please call Pearl.’’ 

Would you like to comment on that? Why was Solyndra still on 

your plate? 

Looking at Solyndra, if you were there to offer the guidance and 

then to help them with how to go then why would you have reentered that process in August and sought an update? 

Mr. BURNER. In this case, the request for getting an update came 

from my supervisor, and I think people were hearing, starting to 

hear that there were problems with Solyndra. 

Mrs. BLACKBURN. OK. And the supervisor? 

Mr. BURNER. Was Mary Miller. 

Mrs. BLACKBURN. Mary Miller. And is she a Treasury employee? 

Mr. BURNER. She’s the Assistant Secretary. 

Mrs. BLACKBURN. Assistant Secretary. And she had expressed to 

you? 

Mr. BURNER. I heard it indirectly through someone else, but 

there was a request that we see if we can get a briefing on 

Solyndra. 

Mrs. BLACKBURN. All right. That is great. And I see that—I have 

an L.A. Times article that I had looked at, a September 26, 2011 

article, that references a White House meeting in late October, 

Lawrence H. Summers, then-director of the National Economic 

Council, and Tim Geithner the Treasury Secretary, expressed concerns that the selection process for federal loan guarantees wasn’t 

rigorous enough and raised the risk that funds could be going to 

the wrong companies, including ones that didn’t need the help. 

65 

So is it fair to say that the problems with this process, with loan 

guarantees such as Solyndra, had risen to the level of the Assistant 

Secretary Mary Miller and to the Secretary himself? 

Mr. GRIPPO. Why don’t I answer that. There were principles and 

deputies at all these agencies, the Department of Energy, the 

Treasury Department, the Office of Management and Budget, going 

up the line to the Deputy Secretary and Secretary, who would periodically review the status of this program. And as I think that 

memo you’ve quoted alludes, one of the issues that was discussed 

was the amount of subsidy that may be needed in order to carry 

out some of these projects, which is what I was talking about a little earlier. 

Mrs. BLACKBURN. OK. Let me ask you this: When we look at repayment to the American taxpayers, will FFB structure how we’re 

repaid or will Treasury restructure how that will be repaid, has 

there been a discussion on that issue? 

Mr. GRIPPO. In the case of Solyndra are you asking? 

Mrs. BLACKBURN. Yes. 

Mr. GRIPPO. No. That would be an issue for the Department of 

Energy, and it would not be the Treasury. 

Mrs. BLACKBURN. And you all would not be involved in that at 

all. Thank you. I yield back. 

Mr. TERRY. The gentlelady yields back. The gentlelady from Colorado. 

Ms. DEGETTE. Thank you. Mr. Chairman, I just want to clarify 

once and for all the unanimous consent that we have on these documents. We have unanimous consent that the February 15, 2011 

legal memo and the draft January 19, 2011 legal memo on subordination will be entered into the record with no redactions. In terms 

of the financial information that is the addendum, our staffs have 

agreed that they will work together to make sure that there’s no 

confidential information, proprietary or other sensitive information, 

they’ll work together to redact whatever they can and then they’ll 

put that in the record as well. 

Mr. TERRY. That is my recollection, but I will refer to counsel to 

agree that I agree. 

Mr. BILBRAY. Mr. Chairman. 

Mr. TERRY. So counsel and I agree with your verbiage. But Mr. 

Bilbray. 

Mr. BILBRAY. Just to clarify, I think the ranking member meant 

that they would redact what was necessary, not what they can. 

Ms. DEGETTE. Yes, correct. 

Mr. TERRY. Only what would be determined in a bipartisan way 

to be proprietary or sensitive business information. 

Mr. BILBRAY. Thank you, Mr. Chairman. 

Mr. TERRY. All right. So we’re clear? 

Ms. DEGETTE. Yes. 

Mr. TERRY. All right. Mr. Bilbray, you are recognized for 5 minutes. 

Mr. BILBRAY. Thank you, Mr. Chairman. Mr. Chairman, seeing 

there’s a lot of statements about agendas here, I just want to make 

it quite clear that this member does not have an ax to grind with 

the Secretary of Energy. I just want it on the record that I think 

that finally we have a Secretary of Energy who is a scientist, a 

66 

physicist, not a political operative. And so this member’s intentions 

is to get to the facts and find out how this could have happened. 

Especially when you have somebody like Secretary Chu running a 

Department and seeing what appears to have happened indicates 

to me that the biggest problem here was that it appears that politics and prejudice and bad policy created a situation that could 

have very possibly crossed the line later into a legal item that we 

will clarify obviously in the coming weeks. But just for the record, 

I just don’t want anybody to think that this member has an ax to 

grind against the Secretary. 

I hope to God that this does not cause him to have to do what 

Silver did, and that is basically step aside and step out because of 

this problem. So just so everybody understands where this member 

comes from, in fact, I think this Secretary has the possibility of finally fulfilling the goals of the Energy Department by creating energy opportunity rather than continuing to allow it to dwindle. 

Mr. Grippo, I got some questions specifically about the DOE loan 

guarantees that were just given out under the stimulus deadline on 

the 30th. In fact, on the day of the deadline, it’s closing, $4.7 billion 

of loans were given right on the last day. Was the Treasury consulted about each of these deals before the close? 

Mr. GRIPPO. Yes, we were. In some cases well before the closing. 

Mr. BILBRAY. OK. Do you believe the Treasury had adequate 

time to consult on all these items? 

Mr. GRIPPO. Yes. 

Mr. BILBRAY. All these deals? Your review—in your review, do 

you believe the financial model for these deals were ripe, do you 

think they were sound? 

Mr. GRIPPO. Let me be very clear about how I answer that. Because we do not do all the due diligence that the Department of 

Energy does. We’re not privy to all of the background information. 

Mr. BILBRAY. Well, obviously they don’t do all the due diligence 

that the taxpayers would like either. But go ahead, I’m sorry. 

Mr. GRIPPO. So we are not making a credit decision, right. We 

are not determining whether this is an appropriate risk and whether a loan should go forward. We are commenting on the terms and 

conditions of the loan guarantee. What should the interest rate be, 

what should the duration of the loan be. So we did not have insider 

provide comment on the details of the actual financial model. 

Mr. BILBRAY. OK. Let’s look at it from the holistic point of view. 

What do you think about the overall health of the DOE’s loan guarantee portfolio at this time? 

Mr. GRIPPO. It’s difficult for us to judge without all the information, but I think the best answer I could give is that it is too early 

to tell how the overall portfolio will perform and it may take some 

time. There are 30 some odd transactions in the portfolio. We’ve obviously been talking about one of 30. We’re not aware that others 

are having problems. And so it will take time to watch the portfolio 

perform. 

Mr. BILBRAY. Wow. I mean, if you were my stockbroker and telling me that—gave me that I would not be really enthusiastic about 

putting more investment into it until I see how this thing shakes 

out. Is that a fair perception from an investor’s point of view? 

67 

Mr. GRIPPO. It would not be. I am not implying that we perceive 

that there are problems, other problems. 

Mr. BILBRAY. It’s just that it hasn’t, but you still stated that we 

need to see how this works out? 

Mr. GRIPPO. As you indicated, many of these deals just closed a 

few weeks ago, and obviously we have to wait to see them perform. 

Mr. BILBRAY. OK. The memorandum about the conditions in 

2009, the Treasury expressed concerns about there wasn’t enough 

equity in the deal, basically that there are concerns there wasn’t 

enough skin in the game for some of these guys. Under the 1705 

portfolio do you think that there was enough skin in the game in 

this instance with Solyndra? 

Mr. GRIPPO. I do not actually recall the details myself of that 

analysis, but it would not be uncommon for us to comment on the 

amount of skin in the game and to argue for other equity investors 

to have more skin in the game to protect the taxpayer. 

Mr. BILBRAY. Thank you very much. And you’re basically—everything that was done last week basically we don’t know how much 

of a risk it is, we’ve got to wait and see how it evolves? 

Mr. GRIPPO. I think that’s fair to say. 

Mr. BILBRAY. Thank you. I yield back. 

Mr. TERRY. Thank you, Mr. Bilbray. Dr. Gingrey, you’re recognized. 

Mr. GINGREY. Mr. Chairman, thank you. Mr. Grippo and Mr. 

Burner, thank you for testifying from the Department of Treasury, 

and thank you for your patience. Some of these questions that I’m 

going to ask may have already been asked. I had to miss some of 

this to go do an interview. But first of all, Mr. Burner, in your experience as chief financial officer of this Federal Financing Bank, 

which actually made the loan, provided the funds, have you been 

involved in restructuring of loan guarantees before either in or out 

of government? 

Mr. BURNER. Only peripherally. 

Mr. GINGREY. Let me ask you then, maybe it’s a bit hypothetical, 

but in cases where the terms of a loan guarantee were changed or 

restructured by other agencies have those agencies sought the approval of the Department of Justice to your knowledge? 

Mr. BURNER. If they don’t have their own authority then they 

would seek approval of Department of Justice, if they have their 

own authority they would not. 

Mr. GINGREY. Then let me ask Mr. Grippo, because what you just 

said I think is the crux of this matter. Is that the reason, Mr. 

Grippo, in your opinion, that the Department of Treasury said to 

the Department of Energy, look, there’s a tab here, there’s a red 

flag, and it is our strong advice that you consult the Department 

of Justice before going ahead with this restructuring? 

Mr. GRIPPO. We did not know what all of the Department of Energy’s authorities were. We did not even know the details of the restructuring. We had heard that there would be a restructuring and 

it seemed like good advice in our consultative role to tell them to 

seek, to go to the Department of Justice which is customary. 

Mr. GINGREY. And I commend you for that. I think you’re absolutely correct in doing that. Either one of you, why do you think 

that the DOE then was so hesitant to seek DOJ approval to get, 

68 

you know, a little bit more security, cover their back, you know, 

to—why do you think they didn’t do that? 

Mr. GRIPPO. I don’t have an answer for you. 

Mr. GINGREY. Mr. Burner, do you have any opinion on that? 

Mr. BURNER. I’m sure they had their reasons. I’m not really sure. 

They had a legal theory on this, I’m sure. 

Mr. GINGREY. Yes, yes. Well, if DOE, the Department of Energy, 

was so confident in their legal analysis that the subordination was 

permitted, why not go to the DOJ, the Department of Justice, just 

to cover yourbase, just to get a little back-up, you know, CYA rather than CYB? Other agencies typically seek the Department of Justice’s approval of loan guaranteeing restructuring. And I asked you 

that question and you said you’re not really sure of that. Is that 

your answer, that you don’t know—Mr. Grippo, I didn’t ask you 

that specifically. Other agencies, do they typically seek the Department of Justice approval of loan guarantee restructuring? 

Mr. GRIPPO. Well, I don’t have specific knowledge about other 

loan guarantees, but I’m generally familiar with what the statute 

says. And unless an agency has its own authorities, the procedure 

is to talk to the Department of Justice. And that’s what we were 

doing. We were making a procedural call and saying we can’t make 

a judgment on what’s going on here, we’re not making a legal opinion or drawing a legal conclusion. 

Mr. GINGREY. Well, I’m not putting words in your mouth. I don’t 

want to do that. But it sounds like to me that you were strongly 

suggesting to them since they did not have the statutory authority—I mean, I will refer back to the Energy Policy Act of 2005 

under title 17 incentives for innovative technology section 1702 

terms and conditions, paragraph D, subparagraph 3, subordination. 

And you have heard this several times from members on our side 

of the aisle. The obligation, that is the loan, shall be subject to the 

condition that the obligation, the loan, is not subordinate to other 

financing. So that was your concern, was it not? 

Mr. GRIPPO. We were not interpreting that statute, we were recognizing it and offered the advice. 

Mr. GINGREY. Well, it doesn’t require—I think my first grade 

grandson could pretty much read and interpret that. It doesn’t take 

a rocket scientist. That’s as plain as the nose on your face. And 

they literally ignored the warnings and went ahead with this. And 

the result, of course, is the taxpayer is in a subordinate position 

to $75 million worth of additional investment. 

And when Mr. Silver was here we asked him these questions, 

and we have it on video and audio, I mean it’s clear what he said 

to us, look, we were thinking, in our mind, that the taxpayer would 

come out better if we found a way to circumvent and break the law, 

and that’s what it’s all about. Mr. Chairman, I yield back. 

Mr. TERRY. Thank you, Mr. Gingrey. At this time, we will recognize the gentleman from Louisiana, Mr. Scalise. 

Mr. SCALISE. Thank you, Mr. Chairman. Again, I appreciate the 

witnesses being here to answer questions as it relates to the Department of Treasury’s role in the Solyndra scandal. As I look 

through the emails, starting with the February 10th email of 2011, 

Mr. Burner, that was when you had sent an email over to the Department of Energy expressing your concern about the restrucVerDate Aug 31 2005 09:32 Jul 17, 2013 Jkt 037690 PO 00000 Frm 00072 Fmt 6633 Sfmt 6633 F:\112-09~2\112-98~1 WAYNE
69 

turing. You were later sent an email back. I think your original 

email was on February 10th. And on February—later that day you 

got the email that said could you give me a call to discuss. This 

was the email from the Department of Energy’s legal counsel 

where they asked you to discuss this. There’s no email chain here. 

Who were all of the people involved in discussions that you had 

about this concern that you were raising, was it just the legal counsel staff over at the Department of Energy? Because now we’re off 

of emails, we’re just on phone calls or conversations off line. Who 

were all the people involved that you—— 

Mr. BURNER. Do you mean on the phone call itself or? 

Mr. SCALISE. Well, just in general. As you were raising concerns 

and maybe others around Treasury, I think you were getting your 

information from the Office of Management and Budget that there 

was possibly a subordination coming down, and by, I guess, your 

legal counsel’s review they felt that that was illegal, it was in violation of the statute, you cited in your February 10th email. 

So obviously you were having other conversations at Treasury, 

but then you were also having conversations with people outside of 

Treasury, whether it was the Department of Energy, was it the 

White House as well. Who were the other people that were involved in conversations that aren’t included in the email documents 

we have? 

Mr. BURNER. Members of my staff, as we say in the email, we 

heard from some OMB staff that this was going to be an issue, 

other people at the Treasury Department and staff lawyers at the 

Office of the General Counsel at Treasury. 

Mr. SCALISE. OK. And then when you get outside of Treasury, 

clearly as you were emailing with the Department of Energy about 

the concerns that you expressed on February 10th, and you actually cited a number of statutes that I’m sure your legal counsel had 

given you the statutes to cite, but you specifically cited some statutes and then went further to discuss your concerns that a subordination putting the taxpayers in the back of the line didn’t meet 

legal muster. That’s when you said you should go consult the Department of Justice. 

Mr. BURNER. We weren’t making a judgment on what they were 

doing because we didn’t really know what they were doing. 

Mr. SCALISE. Right. But if you were hearing—because you were 

hearing this from OMB, you were hearing they may be subordinating the taxpayer, and then you cited some statute and said, you 

can’t do it basically, you don’t have the legal authority, that’s why 

you need to consult the Department of Justice. Because I think in 

your email, reading from your February 10th email, unless other 

authorities exist, the statute rests with DOJ and the authority to 

accept the compromise of a claim of the U.S. Government in those 

instances where the principal balance of a debt exceeds $100,000. 

So you specifically said you can’t subordinate the taxpayer unless 

you got some approval from the Department of Justice. 

Mr. BURNER. We were specific on the fact that they should go to 

the Department of Justice, but we were not commenting on what 

they were saying. 

Mr. SCALISE. The next email you got back was could you call me, 

could you give me a call to discuss, thanks. And that’s from the DeVerDate Aug 31 2005 09:32 Jul 17, 2013 Jkt 037690 PO 00000 Frm 00073 Fmt 6633 Sfmt 6633 F:\112-09~2\112-98~1 WAYNE
70 

partment of Energy’s legal counsel. So again, now we’re going off 

the emails. Who all were involved in those discussions? Not emails, 

but actual discussions. Was it just the Department of Energy? Was 

anyone from the White House involved in those discussions? 

Mr. BURNER. I had no calls from the White House, sir, no. 

Mr. SCALISE. All right. Who else at the Department of Energy? 

Mr. BURNER. There were four of us on the phone call that had 

the discussion. 

Mr. SCALISE. You and who were the other three? 

Mr. BURNER. A member of my staff, the director of portfolio management and Susan Richardson from the Department. 

Mr. SCALISE. OK. Then there was a gap from the February 11th 

email. And the next email we have here is August 12th. So there’s 

a pretty substantive gap. And then in those emails, we’ve got the 

folks over at DOE and some other people at Department of Treasury get involved in this. And in fact, we’ve got, I guess, your superior at the Department of Treasury, Mary Miller. You said she’s the 

Assistant Secretary? 

Mr. BURNER. Actually, Mr. Grippo here is my superior. 

Mr. SCALISE. Because Mary Miller is involved in an email where 

she says, I may be on a call tomorrow morning about the Solyndra 

loan restructuring. What does the statute say about putting the 

government in a subordinate position? We told DOE that they need 

to consult with Department of Justice. Again, this is Mary Miller 

above you expressing concerns. At any point, and she even refers 

to, in a later email, a July 2010 concern that the Department of 

Treasury raised with the Department of Energy. At any step of the 

way, was there a feeling that they’re not going to comply with the 

law, because you all say this in your emails, they’re not following 

what we’re saying about getting Justice involved. Why didn’t you 

all get Justice involved? We’re talking about $535 million here. 

There’s another $4.7 billion that went out the door just a few 

weeks ago. 

Mr. GRIPPO. Congressman, why don’t I answer that because this 

refers to a variety of emails here, and obviously that’s an important 

question and an important question for the committee. It is not our 

role to interpret the Department of Energy’s statutes and authorities. And in no case were we ever doing that. We were never rendering a legal judgment as to whether they were complying with 

the law or not. 

Mr. SCALISE. You were telling them they should consult with the 

Department of Justice. 

Mr. GRIPPO. We were identifying an issue and asking a question. 

We weren’t answering it or drawing any legal conclusions. And in 

fact—— 

Mr. SCALISE. You’re citing specific statutes. 

Mr. GRIPPO. We are citing statutes, but we are not—— 

Mr. SCALISE. I mean, if you’re concerned that somebody—please 

don’t comply with the law, and then you don’t hear back from 

them, at some point, if you keep hearing they’re not going to comply with the law, don’t you feel compelled to then go and alert the 

Department of Justice who you’re telling them to alert, but they’re 

ignoring it? 

71 

Mr. GRIPPO. It is really not the role of the Department of the 

Treasury to manage—— 

Mr. SCALISE. You are all cutting the checks, you are cutting the 

taxpayer checks. 

Mr. GRIPPO. These are all Department of Energy authorities, and 

it would be highly unusual for us to insert ourselves in that way 

in management of another agency’s program. 

Mr. TERRY. Thank you. 

Mr. SCALISE. Mr. Chairman, I do have a point of information, because I did ask, and I got an answer from the head of the loan program at our last hearing under oath. He said he would get this 

whole committee the names of all the people involved in the chain 

to subordinate the taxpayer from the White House on down. I 

asked him under oath and he said he would get me that information under oath. And I know he’s resigned now. But I have a question to legal counsel or somebody on staff, are we still going to be 

able to get that information? 

Mr. TERRY. Yes. 

Mr. SCALISE. Because that is critical information. 

Mr. TERRY. It will be added to the questions for the record. 

Mr. SCALISE. Thank you. I yield back. 

Mr. TERRY. The gentleman from Colorado, Mr. Gardner is recognized. 

Mr. GARDNER. Thank you, Mr. Chairman. And thank you as well 

to the witnesses for spending the time with us today. A couple of 

questions and to follow up with what Mr. Scalise had said. You 

identified that your roles at the Treasury Department are two-fold, 

both as lender and as consultant. As a lender don’t you have a responsibility to refer this to DOJ? 

Mr. GRIPPO. We actually do not. If you look at the statutes which 

govern the Federal Financing Act—— 

Mr. GARDNER. But you consider yourself a lender. 

Mr. GRIPPO. It is processing a loan, but the Department of Energy is making the credit decision. 

Mr. GARDNER. Then why do you call yourself a lender, because 

as a lender, you’re the Federal finance bank, don’t you have an obligation, a fiduciary obligation as a lender to the people of this 

country? 

Mr. GRIPPO. We certainly, in our consultative role, have a responsibility to raise these issues and questions, which is what we 

were trying to do. 

Mr. GARDNER. And your consultative role includes going to the 

Department of Justice and saying, hey, we are afraid. And I think 

at one point you made the statement, you had said that—on things 

that raise issues of compromising a claim of the Federal Government. 

Mr. GRIPPO. Well, in that instance, our advice was to refer the 

matter to the Department of Justice. 

Mr. GARDNER. And so why wouldn’t you go to the Department of 

Justice? 

Mr. GRIPPO. The Treasury Department? 

Mr. GARDNER. Yes. 

Mr. GRIPPO. Because it’s not our statute, we did not have all the 

facts, we did not have the details. 

72 

Mr. GARDNER. Why didn’t you have all the facts? 

Mr. GRIPPO. Because it’s not our program. To be clear about our 

role in the restructuring. 

Mr. GARDNER. But you’re the lender, I mean, you call yourself a 

lender? 

Mr. GRIPPO. The Federal Financing Bank did issue the loan. But 

to be very clear about the responsibilities, it’s the guarantor agency, in this case, the Department of Energy which is assuming 100 

percent guarantee of the loan, is deciding whether to make it, 

they’re responsible for monitoring it, they’re responsible for all of 

the financial aspects of that credit risk. 

It is not the Treasury’s responsibility to monitor that, and indeed 

we would not have the information to do so. 

Mr. GARDNER. I guess when you call yourself a lender, as the 

Federal finance bank, and in this particular instance because you 

gave 100 percent of the money, there was no bank as an intermediary, and I would like a list of all other loan guarantees that 

you’re actually not just guaranteeing a loan, you’re actually paying 

100 percent of the money, cutting out the bank itself, if I could get 

the information on other instances where you’ve given the money 

just directly, I would appreciate that for the record, if we could. 

But if you’re the lender, I don’t understand why you wouldn’t ask 

these questions. 

I do have some other questions that I want to get to. And Mr. 

Grippo, I would refer to tab 3 in your binder. There’s an email 

dated July 26, 2010 between Treasury, OMB and DOE staff. The 

email references a conversation between the agencies on Solyndra 

and DOE’s monitoring plan. Did this—why did this conversation 

happen in the first place? 

Mr. GRIPPO. I was not a party to this email. This took place in 

July of 2010. And the most complete answer I can give you is that 

the various agencies, predominantly OMB and the Department of 

Energy, were having weekly discussions on the status of the loan 

program and the efforts to monitor the portfolio. 

Mr. GARDNER. Were you concerned about DOE’s monitoring of 

Solyndra? 

Mr. GRIPPO. We do not have any specific information from the 

Department of Energy, and certainly didn’t have any direct contact 

with Solyndra, that would inform our judgments. 

Mr. GARDNER. You were not concerned about DOE’s monitoring 

of Solyndra? 

Mr. GRIPPO. As a general matter, we felt that the portfolio should 

be properly monitored, but we did not have any specific information 

about Solyndra. 

Mr. GARDNER. Now, this email exchange actually took place 

shortly after Solyndra had pulled back their IPO, is that correct? 

Mr. GRIPPO. Yes, I believe that’s correct. 

Mr. GARDNER. And 3 months after its auditors had doubted 

Solyndra’s ability to continue is a going concern, is that correct? 

Mr. GRIPPO. That is correct. 

Mr. GARDNER. So in this email, it appears that OMB and Treasury, since you are both on this email, are asking for a number of 

pieces of information from Solyndra that would indicate its financial health, is that correct? 

73 

Mr. GRIPPO. Yes. 

Mr. GARDNER. Financial statements, financial model, current 

market prices, cost data. Why were you asking about this? 

Mr. GRIPPO. Our role is, as the consultant to the Department of 

Energy under the statute, is to be helpful wherever we can. We felt 

we had experience with federal credit policy and with corporate finance that could be of use. This is an email from the Office of Management and Budget to the Department of Energy. We contributed 

to this because we felt we had something to add and can help. 

Mr. GARDNER. So were you concerned then with this loan or the 

monitoring? 

Mr. GRIPPO. We—— 

Mr. GARDNER. You asked for a lot of information here. I mean, 

current financial statements, financial model, latest IE report, tare 

sheet summary, actual performance numbers, monthly variance reports, market price, monthly production, credit committee papers, 

it goes on and on. Were you concerned about the loan? 

Mr. GRIPPO. Again, this is an email from the Office of Management and Budget to the Department of Energy. 

Mr. GARDNER. And Treasury is on the email. 

Mr. GRIPPO. We did contribute to it. But we were not responsible 

for the sending of this or for the monitoring of the portfolio. 

Mr. GARDNER. Are you concerned that there are others out there 

like Solyndra? 

Mr. GRIPPO. No, I’m not at this time. I don’t have any information that would lead me to have additional concerns one way or the 

other. 

Mr. GARDNER. Mr. Chairman, I have additional questions. I’d ask 

if I could submit those for the record. 

Mr. TERRY. Yes, you may submit those for the record. The gentleman from Virginia, Mr. Griffith, is now recognized. 

Mr. GRIFFITH. Thank you, Mr. Chairman. Mr. Burner, you sent 

an email to Frances and Susan, and I believe that’s Susan Richardson and Frances, and I apologize, I can’t pronounce her last name, 

is that correct? 

Mr. BURNER. That’s correct, sir. 

Mr. GRIFFITH. Can you pronounce her last name for me so I can 

get it right? If you can’t it’s oK, I understand. 

Mr. BURNER. I could try, but I will apologize to Frances formally, 

but Nwachuku. 

Mr. GRIFFITH. Nwachuku. All right. And you wrote that to both 

of them on February 10th. You got a message back from Frances 

on that same day that says there’s been a gross misunderstanding, 

is that correct? 

Mr. BURNER. That’s correct, sir. 

Mr. GRIFFITH. And then on February 11th, you got an OMB circular from Frances. Susan does not appear to be on this, is that 

correct? Which says, and I don’t know where we are, it’s somewhere, I don’t know where, I can’t keep track. I don’t have tabs, 

so I have to try to figure it out by counting. 

Mr. BURNER. There’s an excerpt from an OMB circular that 

Susan sent. 

Mr. GRIFFITH. And that says workouts—do you have a copy of 

that in front of you? 

74 

Mr. BURNER. Yes, sir, I do. 

Mr. GRIFFITH. OK. And that says, does it not, that workouts 

mean plans that offer options short of default? That’s the first 

phrase, is it not? 

Mr. BURNER. Yes, sir. 

Mr. GRIFFITH. And then it goes on to explain that that’s not 

modifications, that that’s not a modification at the very end, is that 

correct? 

Mr. BURNER. That’s correct, sir. 

Mr. GRIFFITH. At the time that you received that you were not 

aware of the legal memorandum that DOE had that Susan Richardson was in draft form, and then later on February 15th became 

a formal form, or at least according to what we have today, you 

were not aware of that legal memorandum, isn’t that correct? 

Mr. BURNER. That’s correct, sir. 

Mr. GRIFFITH. And notwithstanding the fact that you were getting data, or a copy of an OMB circular from Frances that said 

that, let me quote that again, that said workouts mean plans that 

offer options short of default. And what she was basically saying 

to you was we don’t think that we’re modifying this loan or we’re 

doing something that would create the necessity to consult with 

you all, isn’t that correct? That was the purpose of these emails 

and conversations, we don’t believe that we’re making a change 

that puts—that compromises the taxpayers’ position, isn’t that correct? 

Mr. BURNER. As I recall, that’s what they were saying. 

Mr. GRIFFITH. That was the general demeanor. And yet they’re 

sending this to you on February 11th, but these memos that we 

had the big fight about today are dated January 19th, and as I 

pointed out in my comments earlier, first line of the third paragraph, and I know that you don’t know anything about this, but 

I’m just pointing it out to you, a default relating to a financial requirement has occurred under the loan guarantee agreement in relationship to Solyndra. 

Is there any way in your mind that Frances wouldn’t have 

known that the legal opinion was already rendered that said that 

there had been, in fact, a default but now we’re going to try to fix 

it when she’s trying to tell you that workout means plans that offer 

options short of default? 

Mr. BURNER. I can’t comment on what Frances knew. 

Mr. GRIFFITH. And further it is, in fact—do you know Peter B– 

I-E–G-E–R? 

Mr. BURNER. Mr. Bieger, yes. 

Mr. GRIFFITH. And Mr. Bieger is an attorney, is he not? 

Mr. BURNER. He is a staff attorney at the Treasury Department. 

Mr. GRIFFITH. So he works with you all? 

Mr. BURNER. Yes, sir. 

Mr. GRIFFITH. And subsequent to that, are you aware that he 

stated in a memo that claim compromises include loan workouts, 

are you aware of that? Again, I can’t tell you what tab that is. I’m 

back here on Mr. Bieger’s, Wednesday, October—excuse me, August 17, 2011, memorandum, authority to compromise—it’s titled 

‘‘Authority to Compromise claims owed to the government.’’ 

75 

Mr. BURNER. It’s the first time I have seen this memo, sir, but 

it does say that. 

Mr. GRIFFITH. It does say that, does it not? 

Mr. BURNER. Yes, sir. 

Mr. GRIFFITH. Yes, it does. And so I would have to say to you, 

based on the evidence that you now know that there was a subordination of $75 million, that it appears that in the restructuring, 

they may have agreed to forebear payments totaling $30 million for 

3 years, wouldn’t you agree that those terms sound like a substantial change under the regulations regarding this loan guarantee 

program? 

Mr. BURNER. A substantial change? It was certainly a change, 

sir. Whether it was substantial is a—— 

Mr. GRIFFITH. But it would be your opinion, would it not, and I’m 

asking you for your opinion—— 

Mr. GRIPPO. That’s really something that the Department of Energy would have to answer, ‘‘it’’ being their statute and indeed, 

their program and Treasury would not have offered, and even in 

these emails, is not offering any legal interpretation. It is citing 

statutes only. 

Mr. GRIFFITH. So if they had agreed just to completely forebear 

the entire loan, it wouldn’t matter they didn’t discuss it with you 

if they decided it wasn’t a substantial change, is that what you’re 

saying? 

Mr. GRIPPO. I’m saying that I personally am not a lawyer, could 

render that judgment, and it’s not the Treasury’s role institutionally to render that judgment for DOE. 

Mr. GRIFFITH. So what’s the purpose of having you in the loop 

if you have no authority? Thank you. I yield back. 

Mr. TERRY. Thank you. I ask unanimous consent for Mr. Pompeo 

to be able to ask questions since he’s not a member of this subcommittee. Hearing none, Mr. Pompeo, you are recognized. 

Mr. POMPEO. Thank you, Mr. Chairman. Thank for granting 

unanimous consent for me to ask a couple of questions. I will try 

and be brief. I appreciate you gentlemen being here today. This is 

the third time we’ve had folks come and we still can’t get anybody 

to take responsibility. We had an OMB official, now a former DOE 

official, we had two senior Solyndra executives who took the fifth, 

and today we hear lots of that’s not my job, that’s not my role. 

And so I hope you can appreciate the frustration that we’re having as we try to get folks to answer questions about these very important matters. Mr. Grippo, let me start with you. I want to go 

back to almost the very beginning. There was an email to tab 1. 

It’s March 19th. And the Treasury review board at this point had 

approved a conditional commitment on March 19th—excuse me, on 

March 17th, and you all expressed concerns on March 19th. That 

seems backwards to me. So you talk about your role consultatively, 

are you with me? If you look in tab 1, there was an email expressing about 15 or 16 concerns the Treasury Department had. 

Mr. GRIPPO. I’m looking at that tab, yes. 

Mr. POMPEO. Right. And the conditional commitment by the credit review board had happened two days earlier on March 17th. 

Mr. GRIPPO. I have to say I’m not aware when the conditional 

commitment was. 

76 

Mr. POMPEO. If it was on March 17th, would you find that odd 

that your consultation, your comments, were still being worked 

after the date that the conditional review had been made? 

Mr. GRIPPO. I really can’t say. I’m not sure. 

Mr. POMPEO. So you think it would be oK? Assume the fact that 

March 17th was the date that the conditional review had been approved. Would you find it odd that you were still making comments 

after that? 

Mr. GRIPPO. Again, I don’t know when the conditional commitment was offered. 

Mr. POMPEO. That’s not what I asked. 

Mr. GRIPPO. I understand. I don’t know when the conditional 

equipment was offered. We had the opportunity to provide this 

input, is my understanding. 

Mr. POMPEO. Got you. Very good. 

Mr. Burner, let me turn to you. Let me turn sort of more towards 

the end. Tell me what your role is today now that this business is 

in bankruptcy as the lender trying to collect this money on behalf 

of the taxpayer. 

Mr. BURNER. We have no role in the collection to the taxpayer. 

We have the guarantee. So DOE is paying us when as due. And 

it’s my understanding that they are in bankruptcy court at this 

point. 

Mr. POMPEO. So has DOE paid you? 

Mr. BURNER. DOE has paid us, has and will pay us when as due 

according to the guarantee. 

Mr. POMPEO. And so when would that be? 

Mr. BURNER. We receive regular payments, and then at some 

point, I assume the loan will be extinguished by full payment. 

Mr. POMPEO. And so when is the next payment due from DOE? 

Mr. BURNER. I don’t have that on the top of my head, sir. It’s a 

semi-annual loan. 

Mr. POMPEO. And DOE has not missed a single payment to the 

FFB to date? 

Mr. BURNER. No, sir. 

Mr. POMPEO. It made all those payments. Thank you, Mr. Chairman. I yield back the balance of my time. 

Mr. TERRY. The gentleman yields back. And there’s no other 

members wishing to ask questions, so I want to thank—so I ask 

unanimous consent that the contents of the document and binder 

be introduced into the record and to authorize the staff to make appropriate redactions. No objection. 

So without objection the document will be entered into the record 

with any redactions that the staff deem appropriate. 

[The information appears at the conclusion of the hearing:] 

Mr. TERRY. So at this time we thank you. The ranking member 

and I thank you for your patience, for your dedication and your testimony here today. The committee rules provide that members 

have 10 days to submit additional questions for the record to the 

witnesses. And there’s already been one member that has suggested there will be additional questions submitted to you, so we 

do appreciate your time. And we are adjourned. 

[Whereupon, at 12:55 p.m., the subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

77 


81415.023

TAB 

I 

2 

3 

4 

5 

6 

7 

8 

9 

10 

II 

12 

13 

14 

15 

16 

17 

DESCRIPTION 

Committee on Ener~' y and Commerce 

Subcommittee on Overs'ght and Investigations 

Continuing Developments Regardi g the Solyndra Loan Guarantee 

October 1~. 2011 

Treasury Staff Email to Treasury Staff 

Subject: Re: Could you type up in short bullets your q~estions/concerns so I can quickly turn 

out the list of Treasury concerns for Karthic and Ken this PM (000021.000022) 

Treasury Memorandum 

Subject: TreasurylFFB Consultation with the Department of Energy on the Solyndra Fab 2 

LLC Pro'ect (000035.000036) i 

OMB Staff Email to DOE Staff 

Sub'ect: Solvndra Follow UD (000081·000083) 

Treasury Staff Email to DOE Staff 

Sub'oct: Solvndra (0000S7) 

Treasury Staff Email to DOJ Staff 

Subiect: may I call you about A.G.'s "comnromise of claim" authority? (000066) 

Treasury Staff Email to DOJ Staff 

Subject: RE: may I call you about the A.G.'s "compr0lnise of claim" authority? 

(000067.000068) 

Treasury Staff Email to DOE Staff 

Subject: Solyndra (0000051 

DOE Staff Email to Treasury Staff 

Subiect: RE: Solvndra (000006) 

DOE Staff Email to Treasury Staff 

Subject: RE: Solvndra (000013·000015) 

Treasury Staff Email to DOE Staff 

Subiect: RE: Solvndra (000090·000092) 

Treasury Staff Email to Treasury Staff 

Subject: RE: DOE Loan Guarantees (000017) 

OMB SlaffEmail to Treasury Staff 

Subject: RE: Solyndra (000002) 

Treasury Staff Email to Treasury Staff 

Sub'ect: RE: Materials for tomorrow's 9:30 briefine 1000037·00003S) 

Treasury Staff Email to Treasury Staff 

Subject: authority to compromise claims owed to the gbvemment (OOOOIS·OOOO I 9) 

Treasury Staff Email to OMB Staff 

Sub' ect: Solvndra (000050·000051) 

OMB Staff Email to Treasury Staff 

Subject: Fw: update on solvndra (000003) 

Treasury Staff Email to Treasury Staff 

Subject: Re: Solvndra (000060·000061) 

DATE 

03.19.09 

2:25 PM 

03.16.10 

07.26.10 

5:13 PM 

11.03.10 

8:58PM 

01.07.11 

4:17 PM 

01.07.11 

4:22PM 

02.10.11 

2:05 PM 

02.10.11 

4:44 PM 

02.1 l.l I 

10:55 AM 

OS.l2.11 

11:51AM 

OS.16.11 

9:52 PM 

OS.17.11 

8:57 AM 

08.17.11 

9:13 AM 

OS.17.11 

1:01 PM 

OS.17.11 

3:25 PM 

08.17.11 

5:52 PM 

OS.28.11 

4:40PM 
78 


81415.024

From: 

Sent: 

T: 

SubJect: _~I_!'!~!!!!!!!~!!!!thenst 

Great Questions - all of them!! Thanks 

!s:ubj;'e1c:t:1.'Rf':'. ~~!~'IM!!!~!!!!!~SO!!J can quickly turn out the list of Treasury 

concerns for 

Whells phese 2', economic Impact on phase 1? 

Does it Impact repayment potential? 

Is phese 2 constructed concurrent or sequential to phaae 1 'I 

Shared facllitlaa: does phesa 2 reimburse phese 1 for economic depreciation II causa. of Ihe loan collateral? 

What is the difference between budgeted 'contingency funds (Included In base costs) and overrun project coats? 

If conllngency funds are removed do we need to bump up the overrun equity commitment? 

Whers the inillal base equity commitment? 

Who determines the Interest rate (FFB or DoE)? 

Par or Market Prepayment? 

Whet IS the collateral requirement I % of loan backed by coIlaierail when Is collateral valued ... 

Can sponsor remove equity as Ihey repay I prepay loan (as I~ as they maintain 27% eqUity)? 

Pricing mechanism for sales of output of the project (arms le"llth)? 

Independent auditor? 

Who owns projects Improvements to spensor's Inlellectual prqperty? 

Whet are customary excaptlOns to subordination to fun repayn!lent of guaranteed loan? 

Valuation of afternallve asset for Debt Service Raaerve Account? 

Who IS the insurer end how did they prove they were financla~y sound. 

Is the 90 percent stripping threshold standard (S88 SeA)? 

What I. 90% of uselullife of the project? 

How Is a significant equity Investment determined? 

I!II!!!!! 

Office of Deb I Management 

Department of Treasury 
79 


81415.025

E.mail:~ 

Phone:.-

out the flst of TIlIiISII/Y 

000022 
80 


81415.026

DEPARTMENT OF\THE TREASURY 

WASHINGTON. I).C. 20220 

March 116,2010 

Memorandum To flies 

From: FFB Loan Administration Staff 

Subject: TreasurylFFB Consultation with!\te Depamnent of Energy (DOE) on the 

Solyndra Fab 2 LLC Project (''theIProject'') 

Treasury and FFB Staft' convened a conrerenceall with members of DOE's Loan Guarantee 

Program OfficII (LOPO) on March 19, 2009 to d' US! a potcntialloan guarantee to be iss\led 

under Title xvn of the Energy Policy Act oe2 . A guaranteed loan totaling $535 million is 

requested by the applicant to finance its Fab 2 ufacturing facility for thin-film onmi-facial 

solar modules targeting the conunercial rooftop ~arkct. . 

Attendees from DOE included David Frantz, LG.O, and Bill Miller, LGPO. 

Attendees from FFB were Gary Burner, Whitney Culbertson, Leona Cosby, and Pearl 

Buenvenida. Attendees from Treasury's Office lPOliCY and Legislative Review were Paula 

Farrell, Preston Atkin., Karen Weber, Colleen M Loughlin, and Ed Garnett. Nathan Struemph 

and Mike Dai from the Office of Debt Managem t also attended. 

Key points made by DOE in their briefing materi.ls include: 

• Innovative technology of cylindrical tube phOtovoltaic panels that are lighter weight, 

provide a lower. wind profile, and are less j:xpensive to install than other solar panels 

available. 

• Solyndra is in the ramp-up and OPtimiut'fPhasc of its initial production line (Fab I); 

experience lleveloped from Fab 1 will be the benefit of the Fab 2 project 

• Experienced management team has adem nstrated ability to raise capital ($750 million 

to date) to support the project. 

FFB staff conclusions based on the presentstion ~ written materials provided are: 

contributions when the Title xvn progr was first designed. The borrower claims that 

• Equity contribution is merely 27% of the flroject costs, which is low for a start-up 

company. We also note that lhis is bel~Ohe original expectstion 005% equity 

it cannot raise additional capital in this et. 

• Deal is structured to protect the sponsor's terest in the first production line (Pab I) such 

that the government cannot grab this asset "long with the intellectual property (IP) in the 

event oC defauh. 

000035 
81 


81415.027

• Christian Gronet, Founder and CEO OfS[YIldra. maintains a sizeable share orlhe 

company's equity. He is its single large shareholder (12.6%). 

• Substitution effects with other solar pane manufacturers remain a challenge 10 meeting 

the product' s expected market pc::netratio . 

2 

000036 
82 


81415.028

Thanks lIaln for the conversation last week teprdln. the ~tus of Solyndra and DOE's monltorln. plan. Given tile 

crllice/importance of monitortna end recent aCcounts of tile 50lyndra project, we appreciate 'VOur time In provIdlna In 

overview of the steps DOE Is tatdna on tills front and an u ate on Solyndra speclflcally. Given Information recently 

reported In the media, rm sure you can understand our Inte est In underslJlndlna the current status of tII/s project and 

associated taxpayer risk. We look forward to foIlowlna up ~ the new director of monitorlna now that she Is onbOilrd 

to let • better underslJlndln. of tile o,pnlZatlon, svstems.iprocesses, etc. DOE wiD use In monltorlna and .na!yzlna 

loans lolna forward. ' 

Per our conversation, we have pulled toaether tile Items n!qUf!sted July 16, items DOE indicated they pllnned to provide 

an Wednesdav,"s call, and foNow up Items frotrI our dlSCUSSlonlso that we have • common list of Items. Please let me 

know If'VOu have any questions. 

Thanks. 

SUmmarY of follow Up !tems 

1. Fallow-up items perthe,July 16 emaH, Includlna updated !!arent financial statements and financial model for the ' 

. project and parent, IS wei as the Iitest IE report. 

2. Please provide the latest tear sheet summary for the projl/ct. 

3. Actual performance apinst the loan covenants, Includlna pro forma Impact {if anvIlS a result ofthe recenuale of 

the $175mm of secured convertible promissory notes 

4. Montllly variance reports: AS we dIScussed thls may serve U a prall'{ for the type of Information we are looldna for 

untd DOE d_lops. mora standard and systematic way ~~ collectlnK and reportlna key data. For the Sponsor: 

Variance analysis splnst Sponsor's 2010 plan. For the Bot,owar: Variance analysis per the construction schedule 

(timlnal and bud.et (cost). 

S. CUrrent market price, production, productivity (e.a., wattsl panel), and cost dl,lJI V$. the pro forma projections It 

doslria. this may Include: 

a. Monthly production and sales figures since financll/ dose In 2009. 

b. An update to the chart on page 22 of the Credit Ojmmittee Paper (March 2009) reprdlna tile cumulative 

yield for Fabl. Also a ... updated analysIS of the Inc;"". In colWers/on efficlenc:y per panel (175 watts per 

module In Man:h 20091. 

c. Please provlde additional information around:E' mment that tile manufacturlna "cost" was 

approximately $1.50 Iissumlna this means per WI ). How hIS this performance compared to the base case 

prolectlon5lnd why? Please describe how tills res to 5olyndra's December 2009 501 fllfna which 

000061 
83 


81415.029

ladlcated 17.2MW sold and $108.321K In ,:ost of revenue (or an ImpUed cost per watt of $6.30) for the 9 

_nths ended October 31. 

d. Updates to SoIyndra's sales (ontrlm: 

I. Pile 12 of the Credit Committee Paper (~rch 20091 1M! pridllland volume detaUs for Solyndra's 

exlstln& contracts. Please provlda a cumr\t update to that teb/ .. (Includllll additional contrlCU 

slFedJ and any marfcet color that eJCpIain. why averace seUllII price Is now only $2.5O/WItt. Please 

describe how this compares to Solyndra's P-mber 2001 5-1 fllIlII which Indicated 17.2MW sold 

and $58.114K In """,nue (or an lmpllt!d $~.41 averase prlce/wattl forthe 9 months ended October 

31. 

6. Please provide a breakdown of the cost data by sourte (I:, manufacturllll overhead -lncludlna depredation, 

materials, labor, etc.) and a crosswalk to cost data for at,r solar manuRcturers as was provldl!d In support of the 

Abound request, Indudlng estimated balance of pllnt cost$. 

7. Summary oUerms of $175mm secured convertlbkt proml$lry notes. and descrIption of how Solyndra's business 

plan and creditworthiness has been Impacted by th .. decision to raise funds In this manner,lnstead of accesslnc the I 

public equity markets (Indudlnl any Impact that the secul1tV Interest hiS on the parent company's ability to meet Its 

ob/lI·tlons). 

I. CItation for the accountllll standards lovernlni IOlnl co"*-m statements and any written response by SO/yndra to 

the auditor'S statement with specIIIc flnandallnformatlon itupportlng their position. 

9. Addlttonal detail on the nature of the transattlon beIn. co~mpl.ted by the ",fe",n .. to the SIIe of '1!JlCA!5S 

production capacity' In tIM! July 2010 Quarterly Portfolio ~port. 

10. What challles has 5o/yndra requested (per the July 16 emt

,? Ple_ provide a summary of each request and any 

ImplicatiOns of th_ changllS. PIe_ also deKribe what t ese chances would mean In terms ottupayer risk. 

Please also describe how tile sub-lease and sale of '_ pacltv' would be booked by the parent and project. 

Please describe the chan&es to the Common Alreement tliat Solyndrll has requested (per JUne 2010 Quartl!rly 

Portfolio Report). 

11. Please describe the 'changes to the construction line items( and any Implications of these changes. 

12. Prior to closing, OMS requested the foUowl,.: 0111 DOE ~ the mulls of alllndtlpenthnt test which vetif/l$ 

SoIyndrrz's claim regarding higher ~ctrir:Ity pnetrlt/on ~ rooftop and lower bolonce of system costs? 1IIDt Is, hIwe 

they p10llldH resuIU for any tm:s which compare the ~ 0/ iw,; s/mJlor rooftops - one WIth SoIyndra and the other 

. with CDlWentlonol polll1l11 thIIt thmlltls_ rile gtf/fItlfr p~ and th" Io_r /!OS1s? Could DOE provide this 

Information !lased on the current data available? 

Also, as we discussed, we should think about • syStematic \\I8Y to trllck the loan auarantees after they have dosed. 

Particularly, it would be helpful to have advance notlflcatlo~f Iny ISSUBS that arise so that folies Ire not surprised by 

reportS In the media. This would also help In collettllllinfo atlon we will ultimately need In the re .. stlmate Pltlcess. 

We look forward to worldng with DOE to develop some way t trllck this Information. We have made IOOd prlll""s on 

slmO.r "'ports for trod"", the pipeline of deals on the front e!wJ of the process. Now that we haw some de.ls that are 

doslne. we should think about sIm'ar reports for that stale as Iotall. 

000082 
84 


81415.030

Please lat me know If you have any·questlons. 

Thanks. 

We can make this work but let', plea'. plan on a tel.conferenpe. It Is much more efficient as we can't afford the time 

away from the offlce. Just send us. number for dial in for 3;30. 

Many thanks, 

Dave 

David G. Fntntz 

US Department of Energy 

Otrlc&. CP·1.3 

Davea~ 

In foll_ up to our discussion earlier reprlllni Solyndra. any tllne Wednesday afternoon from 3:30 on works for us. Let 

me know what time works for you. !fyou send claarane.lnformatlon to me or_by Wednesday mornln& that 

would be great. 

Thanks. 

·000083 
85 


81415.031

'!1111~--~=---- ;~ ;;;;::'W:fOwt68PM Cc: __ 

SUbj,ct: SoIyndnI 

Fnmces: 

I hope this finds you doing well. and I work on ",halfor Auistant SecRtaly Muy Miller to cc:iOntin~ 

T~asury's consultative role in the DOE Loan Guarantee P/O~. Dive Frantz suggested that I ~~ch out 10 you 

regardin& I request we have about cumn! DOE work on Solyridra. 

I understand that your group met with OMB in ~ days, ud Is doinS some additional analysis before circlin& back 

with OMB in a week or tWo. When you do circle back w=th 0 , we would greatly appreciate It if)'ou could loop us in to those discussions, so that we,can keep abreast of your nt of tha siw.don, and the courses of action you are 

considering. If you'd like to touch base in the meantime, feel ee to give me a rins. 

We'll look forward to meeting you sometime soon. 

000087 
86 


81415.032

Sent: 

T: 

SubJect: may I call you about the A.G. 's 'cj>mpromlee of claim" authority? 

-

I just want to be sure I'm up-to-date when I say to another apy: "You need to talk to OOJ before you stort going down 

that road." 

If you prefer, you can refer me to someone else .in your office 

• 

000066 
87 


81415.033

-~~~------­ ~run7, 20114:22 PM From: 

Sent: 

To: . 

Subject: _ about theA.G.~ "compromise of claim" authority? 

I'll call .on Monday. 

Thanks I 

• 

call you about the A.G,' 5 "c\>mprom1se of claim" authority? 

••••• 1S. our resident expert 

talk today but may be less facile with the 

subject. ;-) 

She's out today but back on Monday. I can 

~~.".~d~o~.t~r~e~a~s~,g~o~v,~r~,a~1~1~t~o~:IIIIIIII~e~d~o~.t~r~e~a~s~.8~o~v11 "erl\.i.-I:.I:.Io 87, 2811 4:17 PM 

'comprOmise of claim" 

-

I just want to be sure I', up-to-date when I say to another asency: 'You need to talk to CO) before you start going down that road.' 

If you prefer, you can refer me to someone else 11n your office, 

• 

000067 
88 


81415.034

Deputy Assistant General Counsel 

(Bank!ng and Finance) 

D partment of the Trea~ury 

Room 2020, Main Treasury Building 

1500 Pennsylvania Avenue NW 

Washington, DC 28229 

Tel: 

Fax: 

Email: 

000068 
89 


81415.035

From: 

Sent: 

T: 

Subject: 

Dear Frances and Susan, 

Bumer. Gary 

Thursday. Fe~ '9 rea 1 ?,P!S PM 

·susan.richardsooni .1 ••• • ,·Frence •. Nwachukv.@@ •••• Solyndrs 

Treasury staffhas learned from the Office ofManageme:trt and Budget that the Department of Energy is close to 

implementing a set of adjustments to the Sol)'lldra Loan· arantec Agreement in response to Solyndrs's 

financial condition. We understand that these adjustmen may include subordination of Solyndra's $535 

million reimbursement obligation to DOE and possibly e forgiveness of interest. Unless DOE has other 

Iluthorities, these adjustments may require approval of Department of Justice pursuant to 31 USC 3711 and 

31 CPR Part 902. Unless other authorities exist, this sta e rests with DOJ the authority to accept the 

compromise of a claim of the U.S. Government in those where the principal balance ofa debt exceeds 

$100,000. Let me know if you need the name of a cont at DOJ. 

Will you be refcrrlog the contemplated adjustment to DO! or are there other authorities that DOE is using to 

compromise this debt? 

Please let us know if the FFB can be of any assistance as! you move furward. If you need to modify any FFB 

agreements, please let me know. 

Sincerely, 

Gary 

000005 
90 


81415.036

~~~~;~;;da;~~F;:~~~~~i(oi,Qii11i4i:iiigdjiiiiiiiii------------------ To: Bumer, Gary; Richardson, Susarj 

Subject: RE: SoIyndra 

Hi Gary, 

I believe there 1s a gross misunderstanding of ithe outcome of the negotiated restructuring of 

the Solyndra obligation to DOE. Could you giv~ me a call to discuss. Thanks. 

Frances 

Frances I. Hwachuku 

Director, 

Portfolio Kanagement Division 

Loan Progrilllls Office 

US Department of Energy ieee Independence Avenue SW 

Washington, PC 28585 

From: Gary.Byrnei rHUto sent: Thursday, February 18, 2811 2:85 PPI 

To: Richardson, Susan; NWachuku, frances 

Subject: Solyndra 

Dear Frances and Susan, 

Treasury staff has learned frOil the Office of ~agement and Budlet that the Departlllellt of 

Energy is close to iIIplementing a set of adjus nts to the Solyndra loan Guarantee Agreement 

in response to Solyndra's finanCial condition. We understand that these adjustments may 

include subordination of solyndra' s $535 mill1 reillbursetlent obligation to DOE and possibly 

the forgiveness of interest. Unless DOE has ot er authorities, these adjustments may require 

approval of the Department of Justice pursuant 0 31 USC 3711 and 31 CFR part 982. Unless 

other authorities exist, this statute rests wit DOJ the authority to accept the compromise of a claim of the u.s. Govern.ent in those lnst, ",es where the pr1nc1pal balance of a debt exceeds $188,009. let me know if you need the ~...., of a contact at DOl. . I 

Will you be referr1ng the contemplated adjustme~t to DOJ or are there other author1ties that DOE is USing to comprontlse this debt? 

Please let U5 know if the FFB can be of any assistance as you move forward. U' you need to modify any FFB agreements, please let me know. 

Sincerely, 

Gary 

000006 
91 


81415.037

From: 

Sent: 

T: 

Cc: 

Subject: 

Gary, 

Nwachuku, Frances 

FridaV, February 11. 

Below is the language. 

DHB Circular A-ll 185.3 (ab): 

·Work-outs llean plans that offer options short ~f default or foreclosure for resolving 

troubled loans or loans in imminent default, su~h as deferring or forgiving principal or interest, reductng the borrower's 1nterest rate~ extending the loan maturity, or postponing 

collection action. Work-outs are expected to 1J1~1m1ze the cost to the Government of resolving troubled, loans or loans 1n illllinent default. Th y should only be ut1lized if it is likely 

that the borrower will be able to repay under t e terms of the workout and if the cost of the 

work-out is less than the cost of default or fo closure. For post-1991 direct loans and 1 an guarantees, the expected effects of work-outs 0 cuh flow are included in the original 

estimate of the subsidy cost. Therefore, to the: extent that the effects of work-outs on cash 

flow are the same as originally estimated. they: do not alter the subsidy cost. If the effects on cash flow are more or less than the origtnalj estimate, the differences are included in 

reestimates of the subsidy and are not a IIOdif1~ation.· 

Frances 

Frances I. Nwachuku 

Director, 

Portfolio Managellent Division L an PrograllS Office 

US Department of Energy lee8 Independence Avenue SW 

Washington, DC 28S85 

-----Original Messafe-----

From: Glry.Burneo,@ • [mailto 

Sent: Friday, February 11, 2811 9 :87 AM 

To: Nwachuku, Frances 

Subject: Re: Solyndra 

l1AM is fine. 

----- Original Message iii •••••••••• From: Nwachuku, Frances 

To: Burner, Gary 

Sent: Thu Feb 18 22:58:57 2811 

Subject: Re: Solyndra 

000013 
92 


81415.038

I have a 18all, but can talk at l1am. 

FranCeS 

From: 

To: 

Sent: Thu 18 17:54:22 2811 

Subject: RE:. Solyndra 

Frances, 

Thanks for your quick response. Do you have sOme til1l! tomorrow around 18:08AMl 

Gary 

-----origina! Message---;--~~~'I ••••••••• Froll: Nwachuku, Frances J.J 

Sent: Thursday, February 

To : Burner, Gary; Richardson, Susan 

Subject: RE: Solyndra 

Hi Gary, 

I believe there is a gross lIisunderstanding ofJhe outcoille of the negotiated restructurins of 

the Solyndra obligation to DOE. Could you giv me a call to discuss. Thanks. 

Frances 

Frances I. Nwachuku 

Director, 

P rtfol1o Management 01 vision L an Programs Office 

US Department of Ener8Y 

1eee Independence Avenue SW 

Washlngton, DC 28585 

From: 

Sent: ~~~=:-!: 

To: Richardson, Susan; 

Subject: Solyndra 

Dear Frances and Susan, 

Treasury staff has learned from the Office of ~~agetllent and Budget that the Department of 

Energy 1s close to implementing a set of adjus~nt5 to the Solyndra loan Guarantee Agreelllent 

in response to Solyndra's financial condition.' We understand that these adjustments may 

include subordination of Solyndra' s $535 ml11ioR reimbursement obligation to DOE and possibly 

000014 
93 


81415.039

the f rgiveness of interest. Unless. DOE has other auth ritles, these adjustllents may require 

approval of the Department of Justice pursuant Ito 31 usc 3711 and 31 CFR Part 982. Unless 

other authorities exist, this statute rests w1<t;h DOl the authority to accept the compromise 

of a claim of the U.S. Government 1n those insiances where the principal balance of a debt 

exceeds $188,906. Let me know lf you need th"ln;me of a contact at DOl. 

Will you be referring the contemplated adjustllltlnt to DOlor are there other authorities that 

DOE 1s usinfl to compromise this debt? 

Please let us know if the FFB can be of any aSSistance as you IIOve forward. If you need t 

modify any FFB aflreellents, please let me know. 

Sincerely, 

Gary 

3 

000015 
94 


81415.040

From: 

Sent: 

Burner. Gary 

Friday. August 12. 201111:51 ~ 

T: 

Co: 

Subject: 

rtf:: trT 

RE: SoIyndra 

Frances, 

11I51'2 • .,.' ...... '1? update on the status of. Solyndra \todayl If so, please call_on .11 •• I. and she can conference me in. I·;Im offsite today. 

Gary 

RE: solyndra 

Gary, 

Below is the language. 

OMB Circular A-II 185.3 Cab): 

·WOrk-outs lIMIan plans that offer options short r: default or foreclosure for resolvini 

troubled loans or lOins in 1nn1nent default, su h as deferring or forgiving principal Dr 

interest, reducing the borrower's interest rate extending the loan maturity, or postponin& 

collection action. WOrk-outs are expected to m1 1IIIlze. the cost to the Government of resolving 

troubled loans or loans 1n iIIIft1nent default. Th!Y should only be utilized if it is likely that the borrower will be able to repay under t e tertls of the workout and if the cost of the 

work-out is less than the cost of default or fo eclosure. For pOlt-1991 direct loans and 1 an guarantees, the expected effects of work-outs 0 cash flow are included in the original 

estillate of the subsidy cost. Therefore, to the !extent that the effects of work-outs on cash 

flow are the same as orlainally estimated, they ida not alter the subsidy cost. If the effects on cash flow are IIOre or less than the ori&inal\est1lllate, the differences are included in 

reestimates of the subsidy and are not. a modific!ation.· 

Frances 

Frances 1. Nwachuku 

Director, 

Portfolio Management Division 

loan Programs Office 

US Department of Energy lt180 Independence Avenue SW 

washington, DC Z0S85 

000090 
95 


81415.041

From: ----OI~r~ll~i~n~S~l~~ ~ .. ii~ .. ~! .. ~ ... ~1I1I1I1I1I1I1I1I1I Sent: 

To: Nwachuku, Frances 

Subject: Re: Solyndra 

11AM is fine. 

From: ----- Orlg1nal Nwachuku. Hessale Frances -.-.-i--•.......... 

To: Burner, Gary 

Sent: Thu Feb 10 22: S8: 57 2011 

Subject: Re: Solyndra 

I have a 18am. but can talk at 118m. 

Frances 

---- - Orilinal 

From: """'-L!"""''-''''= To: 

Sent: Thu Feb 18 17:54:22 2811 

Subject: RE: S01yndra 

frances, 

Thanks for your quick response. 00 you have some time tomorrow around 10:8ClAM? 

Gary 

-----Orig1na1 Messase---:-~-~~ ••• I ••••• frolll: Nwachuku, Frances lo"S 1 0 

Sent; Thursday, February 10, 28 

To: Burner. Gary; Richardson, Susan 

Subject: RE: S01yndra 

H~ Gary, 

I believe there is a lross lIisunderstan~inl of the outcOIIe of the nelotiated restructuring of 

the Solyndra obligation to OOE. Could you sivelme a call to discuss. Thanks. 

Frances 

Frances I. Nwachuku 

Director, 

Portfolio Manas_nt Division 

Loan Prolrams Office 

US Department of EnerlY 

lee8 Independence Avenue SW 

Washington, DC 28585 

Direct: 

Mobile: 

2 000091 
96 


81415.042

From: 

S.nt: 

To: 

Cc: 

Subject: 

Sure. I will be there. 

Tuesday, August 16, 2011 9:52 PM 

Miller, Mary 

Grippo, Gary 

RE: DOE Loan Guarantees 

The Title XVII statute and the DOE regulations both ~uirei1hat the guaranteed loan shall not be subordinate to any loan 

or other debt obligation. 

The DOE regulations state that DOE shaU cODSult with oMlj and Treasury betore DOE grants any "deviation" from the 

~uirements of the regulations (to the extent such requiremelnt is not specified by the statute) that would constitute a 

substantial change in the fmancial terms of tbe Loan Guarantee Agreement. 

BlIt I will be! a quarter that the DOE lawyers have some lcin4 of theory on how whale""r restructurin'g they have'done and 

whatever they are conSidering doing does not violate these r<i<luiremenls. Can't wait to hear it. 

• 

From: MIHer, Mary 

Sentiii:~TuesdIii~a~Y'IiAugust 16, 2011 7:41 PM TOIl!! _ 

Cc: Grippo, Gary 

$ubject: DOE Loan Guarantees 

__ I may be on a call tomorrow morning about the SoIy~dra loan restructuring. I need to know from you what 

Treasury's role should be in this. What does the statute say ~bout puttinS the sovernmen! in a subordinate position to 

new loans? We told ODE that they needed to consult DOJ alut changing the terms of the loan. Apparently they did not 

consult DOJ. Should we press for that now as they consider not her restructuring? There Is a small amount of funds left 

at the FFB that ha. not been drawn down. Should we rele. that? I have a number of questions. It might be good for 

you to listen in on the call tomorrow. I think It will be In the ~:30 to lOAM range. Are you available? 

MaryJ. Miller 

Financial Markets 

000017 
97 


81415.043

Thanks Mary. 

JZ 

From: MiHY.MIIItr 

Sent: Wednesday, August 17, 2011 8:24 AM 

To: ZIentsCZl O. 

Cc:Ngal.Wo 

Subject: Soly ra 

Jeff - prior to our call today I wanted to clarify an Important Point. SInce July of 2010 Treasury has asked OOE for 

briefings on Solyndra's financial condition and any restruct~g of terms. Thl! only Information we hove received about 

this has been through OMS, as DOE has not responded to a requests for Information about Solyndra. Our legal 

counsel believes that the statute and the 00£ regulations h require that the guaranteed loan sl\Duld not be 

subordinate to any loan or other debt obligation. The DOE ulatlons also state that DOE shall consult with OMB and 

,Treasury before any "deviation" Is granted from the financial arms of the Loan Guarantee Acreement. In February we 

requested in writing that DOE seek the Department of Justi s approval of any proposed restructuring. To our 

knowledge that has never happened. 

While I expect that DOE ha. a view about why loan subordlnaitlon can occur without DOl approval or Treasury 

consultation, I wanted to correct any Impression that we hay. acquiesced In the steps to dat e. We are studyln. the 

materlaf. for the call later todav. Thanks for your assistance. 

Mary J. Miller 

Assistant Secretary for Financial Markets 

000002 
98 


81415.044

From: 

Sent: 

To: . SubjtoCI: 

lIere are IIY initial thouahts In case we don't let a chance to talk IllUch before the call: 

- I think we need sOlIe additIonal pieces of infdrmation to evaluate the proposed 

restructuring, including: 

- What do we think the liquidation value elf Solyndra is rilht now, considerInl all 

tangible and intanaible assets in which DOE has :securIty? 

- What consideratIon was sillen to takinl (ontrol of the company a.nd sellins to a 

strate&ic investor? 

- What are reasonable prOjections of the~OII!pany.s cash marsins if one excludes 

consideration of sunk costs/eKisting debt (that 5, the value.if we were to sell the company-

-I found the historical financials sOll!ewhat con sing .iven the widenins sap between 

operatins mrg!ns and EBITDA over tillie, but I be reading sOllething w!"'nl) 1 

- We should also set clarity an the aSSJions behind the revenue and cost projections 

with respect to anulled product pridna, sales lUlles, and costs? We're in this place 

because they have hi storie ally been overly opti stie. Are they now sufficiently 

conservaUve? . 

- We should also ask for a break-even ana.I\Vsis of the financial projections at which 

liquidatina the company or sellins to a stratesii: investor beeo ... s more attractive than the 

proposed restructurin.. ' 

Finally, the proposed restructuring is clearly f'vorabll to the other investors (DOE would 

presullably say this is necessary to entice new c sh infusions), In sh9rt, the other 

investors SO froa havina $618 Million above thei subordinated debt/equity to havina $325 

lII111ion above their equity with 68 cents on eYe \kIllar that soes to equity. Further, the 

additional money that they are proposing to put n the project would be riskless '5 lonl as th·"y are confident that S's liquidation value: ld be at least $258 IIl11ion. 

FrOII! the USG's perspective, w" would SO frOll havln. $75 million above us to havins $175 

million ·above all but $75 milllon of our capital and only 48 cent recovery an every dollar 

golnS to eqUity. This 15 why I think the above reek-even analyses are critical. 

-----oriSinal Messa'e-----

From: Miller, Mary 

Sent; Wednesday, AUlust 17, 2811 8: 82 AM 

000037 
99 


81415.045

To: Grippo, Gary; Burner, Gary; 

Subject: FW: Materials for 

A call was scheduled for 9:38 this IIOrnlnl. but~now lIay be pushed back. I would 11ke your 

quick analysis of the attached document. t real ZI this is short notice (and that Gary Grippo 

Is travel1nl), but t want to have the best unde standinl of this that I can from any of you 

that can access and read this. I will let you k ow when the call is rescheduled. Please do 

not forward on this docUlllent. Thanks 

All - per your request, attached please find Lalard/DOE' s preparatory materials for the 

Solynd,.a discussion tOllOrrow morninl, Includinl historical financials, current status, a ,co!llp8rison of the orl1ina1 deal terms to the cu rent restructured deal tel'lls, projected 

financials, and a draft restructuring proposal. 

An invitation with dial-in information will fol~ow. If you have any questions, please don't 

hesitate to contact lie at your convenience. 

Best, 

Morlan 

000038 
100 


81415.046

Unless DOE has other authorities, compromises of cJai~ require approval of the Department of Justice 

pursuant to 31 USC 371 t and 31 CFR Part 902. Unless other authorities exist, this statute rests with 001 the 

authority to accept the compromise of a claim of the U.~. Govormnent in those instances where the principal 

, balance of a debt exceeds $100,000. Claim compromisils include loan work-outs. 

31 U.S.C:. 13711. CollectIon Ilnd compromise 

Ca) The head of an'executlve, judicial, or legislative ag~ncv-- , 

(1) shall try to coiled a dalm of the United statas Government for money or property artslng out of the 

activities of, or referred to,the agency; , 

(2) may compromise a dalm of the Governmen~of not more than $100,000 (exdudlng Intarest) Dr such 

higher amount as the Attomey General may fro time to time prescribe that has not been referred to another eKecutlve or legislative agency for furth r collection action, eKcept that only the Comptroller 

General may compromise a claim ar1slng out of n eKCeptlon the Comptroller General makes In the 

account of an accountable offidal; and 

(3) may suspend or end collection action on a ~m referred to In dause (2) of this subsection when It 

appears that no person liable on the claim has t e present or prospective ability to pay a sIgnificant 

amo,unt of the dalm or the cost of collecting the aim Is likely to be more than the amDunt recDvered. 

(b)(ll The head of an eKecutlve, judldal, or legIslatIve goney may not act under subsectIOn (a)(2) or (3) of 

this section on a dalm that appears to be fraudulent, fal!le, or mIsrepresented by a party with an Interest In the 

dalm, or that Is based on conduct In VIolation of the antitrust laws. , 

(2) The Secretary of Transportation may not corj1promlse for less than $500 a penalty under &!lI:Illm 21302 of title 49 for a violation of chapter 203, 205, or 201 of title 49 or a regulation Dr requirement 

prescribed or order Issued under any of those Ch~' pters. 

(c) A compromIse under this section Is nnlll and conclus ve unless gotten by fraud, mISrepresentation, 

presentfng a false claim, Dr mutual mIstake of fact. An a untable offiCial Is not liable for an amount paid or for 

the value of property lost or damaged If the amount or alue Is not recovered because of a compromise under 

this section. 

(d) The head Df an executive, judicial, or legislative age~ey acts under--

[ll regulatlDns prescribed bV the head of the ag*"ey; and 

(2) standards that the Attorney General, the Sedretary of the Treasury, may prescr1be. IEWJ 

31 C.F.R. Ii 1102.1 Scopa and application. 

(a) The standards set forth In this part apply to the comfrromlse of debts pursuant to 31 V.S,C 3711. An 

agency may eKardse such compromise authority for deb ar1S1ng out of activIties of, or referred or transferred 

for collection services to, that agency when the amount f the debt then due, exduslve of Interest, penalties, 

and administrative costs, does not exceed $100,000 or ~nv higher amount authorIzed by the Attomey General. 

Agency heads may designate officials withIn their respedive agendas to exercise the authorities In this sectlon. 

(b) Unless otherwise provided by law, when the pr1ndpal balance of a debt, exclusive of Interest, penalties, and 

administrative costs, exceeds $100,000 or any higher a~unt author1zed by the A~mey General, the authority 

to accept the compromIse rests with the Department of stice. The agency should evaluate the compromise 

offer, using the factors set forth In this part. If an offer t compromIse any debt In excess of $100,000 Is 

acceptable to the agency, the agency shall refer the de to the Civil Division or other appropriate litigating 

division In the Department of Justice using a Claims Coli IOn LitigatIon Report (CCLR). Agendes may obtain 

the CCLR from the Department of Justice's National cen 81 Intake Facility. The referral shallindude' appropriate 

flnandallnformatlDn and a recommendation for the acce tance of the compromise offer. Justice Department 

approval Is not required If the agency rejects a compromIse offer. 

000018 
101 


81415.047

The office within the Justice Department that routioe\y bandies compromises of clairos. including "work-outs" 

of debts owed to the government, is The Commercial LItigation Branch in the Civil Division. 

000019 
102 


81415.048

From: 

Sent: 17.20113:25 PM 

To: 

Cc: 

Subjtc:t: 

Jeft', 

Followinlthis momlftl's c:a1I, we had a few thoughts Ihat ma; help inform DOE and Lazard's review of Solyndra 

options. Since we im .. inc that OMS will have follow-up que\stlons for DO£, we thouBht it would be best to shate these 

thoughts with you, and you should fecI fteo to Incorporate them in anyth;nl you send to DOE. While this should no! 

impede option evaluation, we should preface these thoughts "t reiterating our CUrtent undersbmding that the authority to 

approve a potential ",structuring ""ides with the Deplltment of JU5lk:e. 

• Goldman Sachs' pn:sentatlon to, and analysis of. potential. strategic buyen may otTer a useful assessment of 

Solyndra's finn valuo, and the value ofa stratcgjc sale under a restructuring. 

• It may be useful to see • table of potential usa and iriv:pr ",coverle! under. range of assumprions ahout pre- IJId 

post-restructuring firm value under BOTH current and capital_lUreS. DOE's deck filcused only on USG 

""ovenes under the proposed structure. This lab!e would 

- Allow evaluation of whll must he assumed about co""nt finn value and post-mtructurill8 value accRtion to conclude that the proposed mlrUclUring I. pRferable to the existing structun:. . 

- Indicate alianment of usa and investor incentives for:t/te proposed RSlrUcturing. 

• Along these lines. quick back-of-tJte..envelope c:a1culationslsuacst that. 

- Making $75 million deb! pari pII5S~ wilh Tranche A is only valuable if firm value without 

restructuring is less Presumably thilS is unlikely if invest~ would consider investln, more 

money In the flntl. 

- If firm value today Is bc,!wecm ~ •• I!I. 

recovery if It increases firm value 

amount of new TrlJlche C Investor 

the current firm value is ahc,vclllll!l ••• lhe n 

It may be helpfbllo get more details on .. hal must be usur\led aboul future product pricing. sales .olume .. c:osts. and 

.amings multiple. to conclude thai the restructuring will inl:rcase usa recover)'. 

• DOE's deck only provided an income stalemcnllprojectlonj Option evaluation could be imprc)\'ed if the company". 

balance sheer~nd cash Row statement/projections were available. 

• II may he usefbl to clari~' whether Tl1Inche E cn:diton cou!<J still fon:e the company inlO bankruptcy at III) point 

under the proposed restructuring. as dlis would affect OpIi~ etalualioR. 

000050 
103 


81415.049

Office of Environment and EnerlY 

u.s. of the 

Phone: 

Fax: 

Entail: 

000051 
104 


81415.050

-~ From: ZIIm.'!~~~ O. __ k iiiiiiii~--- Sent: To: Miller, Wednesday~.20ii1i1 Ma is:i'iiPM ••••••••• lYo__ _ Wolin, Neal;_ 

SubJect: Fw: update on 80lyndra 

~ Sent: Wed Aug 17 17:47:35 ............. 2011 -

SUbJect: update on sotyndra 

~Iled to let me know that In the Initial corwersatlO~ today with Solvndra's Investors, they were not Interested 

In the straw proposal. DOE will be trvlng to have an addltlo al conversation tonight, but they're not expecting a 

different outcome, as DOE has learned that the company ha begun shut down planning. It's unclear whit that means In 

terms of how many people are Involved at Solyndra, but we' now In a place where this could break at any time. DOE 

communications wfll be reach Ina out to WH camms shortly coordinate. 

000003 
105 


81415.051

---~~==~------ ::: sukey. 4st 28. 201 1 4:40 Pal 

To: Miller. Maly, Grippo. Gary 

Subject: Re: Soiyndra 

. Here are a few qukk thouBhts based. on my read Of the lIaterial: 

- Why are the investors offering to put up another ll1MM given the forecasted recovery levels 

and the USG' s senior posl tilln? 

- I think DOE should be thinking through whether the proposed deal is just 11vtn, the 

investors more tille to extract IIDre value from the tim before bankruptcy (and hence reduce 

USG collateral), 1n which case it's clearly 1n the invl!stors' Interest reBardless of the 

fll'111's prospects. 

- For example, 15 there discountinri In the fa~toring of ARs such that investors are Bettini more than one dollar of ARs per dollar invested I 1n which case the USG loses IIOre than 1 

dollar in collateral for each dollar the invest,:,rs put in, 

- It would also be &DOd to let clarity on wheth.r we could still sell the cDllPany as a 101nl concern (rather than be forced to liquldilte ass,tsl after a tC!llpOrary shutdown (Ie 1f no more funding were provided at this tillH!). If so, ev.n if a temporary shutdown would reduce the 

value to a stratel!c investor relative to if th,re were no shutdown, this makes the c.se for 

continued fundinll we.ker. 

- To date. DOE has been sUllestinll that it n~ar-ter1ll shutdown takes selling the coepany 

(rather tllan the individual piece!S of equiplllent~ off the table. But it's not. clear why. 

----- Orillinal MesSlige .,--- From: Miller. Mary 

Sent: Sunday. Aulust 28. 2811 63: 27 PM 

To: • Subjec:t: Fw: Solyndra 

This is the Spill call which I will join a few minutes late, It's intended to have Lazard 

update their numbers betore the 5:38 call. I exPect we 10111 rehash tllis then. 

All000060 
106 


81415.052

We are confirmed 

call-in number: 

-

Re: 50lyndra 

at 5pm. We can use the followin, 

Great. Let us know when its set up and ~f you n~ed a conference 11ne. 

If we have power, that works for me. 

Our team was already plann!n, a call sunday. COUld we ask them to do brlefin, at 5pm on Sun? 

If weekend isn't an optIon, 8:38 fo1on. 

Subject: Solyndra 

Per our telcon yesterday, I would 11ke to ask "~o organize a conf call at the earliest 

opportunity for lazard to brief the options they see for solyndra under current circumstances. Impending whether counsels for t y. I am available any time after noon. If people would reply 101 availabilities, LPO w111i take it from there. Many thanks. DP 

000061 
107 


81415.053

'i' ISS 

~~~~--~------- Sent: ~. Oeceinber lS, 2010 9:57AM 

To: 

Co: 

SubJlcl: . 0 n 18 

There are some Ql!est.1ons at the staff level·about how DOE 15.goin8 about the restructuring 

for Solynclra. At least one involves the legal question of what 1783(d) (1) Mans for their 

plan to .. ake so .. e of the debt 'junior" to the new debt. (see below) I think they have 

stretched this definition beyond its lblih. 

(3) SUBORDINATION.-The obligation shall be subject to thO! condition that the obligation 1s not subordinate to other financ1ng. 

Re: Solyndra 

I agree with your questions, a d 

parent than recovering for doe 

analysis of what happens absen 

over the phone. 

question on pricing future deals as 

r ally giving more to the e up of the tel'lls and 

..... ' H,,1d Ilt!ime following the details 

for a workout., we n~ed to dt!tet.lliil:it-~lIiIreI;-fJ~hJrl1r1""ttlI!Ct-tr<lllH.5-iA-l_1ne1lt default (sounds close here); a d 

A workout sOlletilles will have d1ffe ent term titan tit s tute holds for the original loan 

but I think your questions would add color to 112 above. Is it really a better deal than 

nothing? If the answer is still yes, then WI! would need to price into future deals recovery 

rate that DOE 01111 accept lower than optimal recoveries. 

-~--- Ori inal Message ----- F • 

To": . sent: Wed Dec 15 07:22:54 2819 

sub1ect: solyridra 

On solyndra, do you have thoughts on whether the proposed changes constitute a re'estillate vs 

a mod1fication? Also, I am looking at whether the junior debt is consistent with the statute. More broadly, if the debt is discounted, I'm curious if thetis consistent with a reasonable 
108 


81415.054

prospect of repayment. If a lIIO<Iificat1on (vs workout), this seems problematic to .... Do you 

have thoughts? 

I 

726 
109 


81415.055

• 

~ Congressional 

=;;;:: ::::::!. Research . *' Service--------------------

MEMORANDUM October 17,201 J 

To: 

From: 

Subject: 

Honorable H. Morgan Griffith 

Member, House Committee on Energy and Commerce, Subcommittee on Oversight and 

Investigations 

Clinton T. Brass, Analyst in Govemment Organization and Management, 7-4536 

Post-Hearing Response to Question About Obama Administration Proposals to Change 

the Federal Budget Process 

This memorandum responds to one of your questions from an October 5, 2011, hearing that was held by 

the Subcommittee on Oversight and Investigations of the House Committee on Energy and Commerce. 

The hearing was titled "Administration Efforts on Line-by-Line Budget Review." At the hearing, you 

requested that CRS get back to you with information about recommendations from the Barack Obama 

Administration to make the federal budget process more transparent for the public, or "smoother or 

easier," where you said that moving to a biennial budget would be an example of the latter kind of 

proposal. 

In recent years, many presidential proposals to change the budget process have been included in the 

Analytical Perspectives volume of the President's annual budget proposal. This memorandum briefly 

identifies some of the Obama Administration's proposals that have been included in this annually 

submitted volume. Next, the memorandum discusses testimony from the Obama Administration about 

biennial budgeting. Finally, the memorandum describes some transparency-related provisions of the 

American Recovery and Reinvestment Act of 2009, which the Administration supported and may have 

helped to formulate. To place these topics and proposals in context, the memorandum begins by 

describing three major phases of the federal budget process. 

Background 

Changes to the federal budget process, including changes that may result in increased transparency, might 

occur in any of the process's major phases. Three phases may be highlighted, insofar as the budget 

process pertains to executive branch agencies. First, in the "executive branch budget formulation 

process," most agencies, the Office of Management and Budget (OMB), and the President work to 

formulate the President's budget proposals. By law, the President annually submits these proposals to 

Congress. I In the second phase, Congress may consider these proposals during action on appropriations or 

I With enactment of the Budget and Accounting Act of 1921 (42 Stat. 20), now codified in part at 31 U.S.C. § 1105, Congress 

required the President to annually submit a consolidated budget proposal to Congress. OMB closely manages and monitors the 

budget fonnulation process on behalfofthe President to, among other things, prevent so~callcd "pre-decisional" infonnation 

from leaving the executive branch. 

COIcgn'ssiollai Research Senlie!! 7-5700 WU'H'.crS.gOi' 
110 


81415.056

Congressional Research Service 

authorizing legislation, or may disregard the proposals.' Statutes and rules of the House of 

Representatives and Senate provide a framework for this "congressional budget process." In the third 

phase, "budget execution" occurs. During each federal fiscal year, agencies implement federal laws, 

obligating and expending funds along the way as directed by relevant statutes. 

2 

These three phases sometimes may overlap with one another. In addition, Congress may be involved in 

any of these three phases through lawmaking or oversight. For example, Congress may statutorily change 

the processes of budget formulation or budget execution for one or more agencies. 

Budget Process Reform Proposals in Analytical Perspectives Volume of 

President's Budgets for FY2010, FY2011, and FY2012 

In recent years, Presidents have included proposals for changes to the federal budget process in the 

Analytical Perspectives volume of the President's budget. As of the time of this writing, the Obama 

Administration has submitted annual budget proposals to Congress for FY201 0, FY2011 , and FY2012. 

Many of the Obama Administration's budget process proposals have focused on changing the 

congressional budget process or the President's role in the congressional budget process, as opposed to 

formulation of the President's budget. The following items provide an illustration of proposals and plans 

that were included in the FY201O, FY20 II, and FY2012 Analytical Perspectives volumes. 3 

Statutory Pay-As-You-Go (PA YGO): a statutory budget enforcement mechanism 

generally requiring that direct spending and revenue legislation enacted into law not 

increase the budget deficit.' A version of this sort of mechanism was enacted in 2010.' 

Expedited procedures for presidential rescission proposals: a statutory mechanism that 

attempts to generally require Congress to consider and vote on presidential proposals for 

rescissions.6 These kinds of expedited procedures have not been enacted into law.' 

• OMB controls on agency entitlement programs: a non-statutory mechanism requiring 

agencies to seek OMB approval before they take actions allowed by law that would result 

in mandatory spending higher than what OMB assumed in its most recent projection of 

spending.' These procedures have been implemented by OMB since 2005: 

2 For discussion, see CRS Report 98-721, Introduction to the Federal Budget Process. coordinated by Bill Heniff Jr. 

J U.S. Executive Office of the President, Office of Management and Budget (hereafter OMB), Budget a/the U.S. Government, 

FY20 I 0, Analytical Perspectives (Washington: GPO, 2009) (hereafter FYlO 10 Ana{vtical Perspectives); OMB, Budget of the 

u.s. Government, FY201!, Analytical Perspectives (Wa'lhington: GPO, 2010) (hereafter FY2011 Analytical Perspectives); and 

OMB, Budget a/the Us. Government. FY20l2, Analytical Perspectives (Washington: GPO, 2011) (hereafter FY2012 Analytical 

Perspectives). 

<l FY2010 Analytical Perspectives, p. 215. See also FYlO! I Analytical Perspectives. p. 143, and FY2012 Analytical Perspectives, 

p. 145. 

~ For additional discussion. see CRS Report R41157, The Statutory Pay~As- You-Go Act 0/2010: Summary and Legislative 

History, by Bill HenitT Jr. 

6 FY2()IO Analytical Perspectives, p. 215. See also FY201 I Analytical Perspectives, p. 150, and FY2012 Analytical Perspectives, 

p. 156. 

7 If enacted, a rescission constitutes the pennanent cancellation of designated budget authority that was previously appropriated. 

For additional discussion, see CRS Report R41373, Expedited Rescission Bills in the I llih and I 12th Congresses: Comparisons 

and Issues, by Virginia A. McMurtry. 

, PY20 10 Analytical Perspectives, p. 215. See also FY20 II Analytical Perspectives, p. 144, and FY20 12 Analytical Perspectives, 

p.149. 
111 


81415.057

Congressional Research Service 

The first two items, above, do not address transparency in the budget formulation process, but might be 

viewed as providing additional salience to the budget deficit and presidential budget proposals, 

respectively. The third item has operated with little transparency to Congress and the public. With regard 

to the question of whether proposals and plans like these would result in the budget process working more 

smoothly or easily, that judgment may be in the eye of the beholder. As noted in the CRS reports that are 

included in the footnotes for these items, Members of Congress sometimes have differed on the 

advisability ofthe proposals and plans. 

Biennial Budgeting Proposals 

Biennial budgeting is a concept that may involve several variations, including two-year budget 

resolutions, two-year appropriations, as well as other changes in the timing of legislation related to 

revenue or spending. to As noted in another CRS report,!! proponents of biennia I budgeting have generally 

advanced three arguments-that a two-year budget cycle would (I) reduce congressional workload by 

eliminating the need for annual review of routine matters; (2) reserve the second session of each Congress 

for improved congressional oversight and program review; and (3) allow better long-term planning by the 

agencies that spend federal funds at the federal, state, or local level. Critics of biennial budgeting have 

countered by asserting that the projected benefits would prove to be illusory. Projecting revenues and 

expenditures for a two-year cycle requires forecasting as much as 30 months in advance, which might 

result in less accurate forecasts and could require Congress to choose between allowing the President 

greater latitude to make budgetary adjustments in the off-years, or engaging in mid-cycle corrections to a 

degree that might undercut workload reduction or intended improvements in planning. Opponents also 

have argued that less frequent review of appropriations may diminish congressional influence over 

agencies, and may correspondingly increase the President's influence. 

The Obama Administration has not expressed a formal position on biennial budgeting. Tn September 

20 I 0, at a Senate confirmation hearing for OMB Director-designate Jacob J. "Jack" Lew, Mr. Lew was 

asked whether he thought biennial budgeting was a good idea. He answered that the "annual budget 

process gives us precious little time to focus on program implementation, both in the executive branch 

and in the legislative branch," but also that "there are many challenges to biennial budgeting."!' In his 

oral testimony, he further elaborated on these issues. 

American Recovery and Reinvestment Act of 2009 

The American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5) may provide an example of 

changes proposed by the Obama Administration for the budget execution process that resulted in greater 

transparency. In the wake of a rapidly deteriorating economic picture and year-long recession that the 

( ... continued) 

9 For additional discussion, see CRS Report R41375. OMB Controls on Agency Mandatory Spending Programs: "Administrative 

PAYGO" and Relaled Issuesfor Congress, by Clinton T. Brass and Jim Monke. 

10 This section draws on CRS Report R41764, Biennial Budgeting: Options. Issues, and Previous Congressional Action, by 

Jessica Tollestrup. 

II Ibid. 

11 U.S. Congress, Senate Committee on the Budget, Nomination a/the Honorable Jacob.J. Lew, a/New York, to be Director of 

the Office of Management and Budget, hearing and executive business meeting, 111lh Cong., 2nd sess., September 16, 20 I 0, 

S.Hrg. 111-737 (Washington: GPO, 2010), pp. 24-25. 
112 


81415.058

Congressional Research Service 4 

Congressional Budget Office called the most severe since World War II, J3 Congress passed ARRA in early 

2009. An early version of the legislation reportedly was drafted by then President-elect Barack Obama's 

transition team working with Members of the House Committee on Appropriations. 14 ARRA was enacted 

in two divisions. Division A, titled "Appropriations Provisions," included many discretionary 

appropriations provisions in 16 titles. Division A also included substantive legislative provisions in some 

titles. These included provisions to, among other things, create a variety of mechanisms and entities 

focused on oversight of ARRA funds (Title XV). For example, Title XV required recipients offunds to 

provide information to agencies for posting on a public website. In addition, the public website was 

required to include a plan from each federal agency receiving funds from Division A on how it would use 

the funds. A title containing general provisions for Division A also focused on oversight (Title XVI). 

*** 

I trust that this memorandum is responsive to your request. Please feel free to contact me if you have 

questions or would like to discuss any of these topics further. In areas outside my subjects of expertise, I 

also would be happy to put CRS analysts or attorneys in touch with you or your office. 

13 U.S. Congressional Budget Office, A Preliminary Ana(vsis oflhe President's Budget and an Update ofeBO's Budget and 

Economic Outlook, March 2009, pp. 19,33. 

!4 For further discussion, see CRS Report R40S72, General Oversight Provisions in the American Recovery and Reinvestment 

Act of2009 (ARRA): Requirements and Related Issues. by Clinton T. Brass. 
113 


81415.059

Urie. Matthew 

From: Richardson, Susan 

Sent: 

To: 

Ce: 

Wednesday, August 19, 2009 10:54 AM 

'Loren.Romano@do.treas.gov' 

'Joseph.Culbertson@do.treas.gov' 

Subject: RE: OMS 

Ok thnx 

-----original Message-----

From: loren. Romano@do. tre.s. gov [maHto: loren. Romano@<:!o,treas.gov) 

Sent: Wednesday, August 19, 2e09 10:44 AM 

To: Richardson, Susan 

Cc: Joseph, Culbertson@do. tre.s. gov 

Subject: RE:OMB 

Susan: 

Re: deviation Given Pete's limited availability, would it be possible for Roger to 

draft a couple paragraphs requesting the deviation, outlining the "special circumstances" and 

reasons why the deviation is necessary and then we can ask Pete to OK the language 

I think this is the fastest way to tee this up 

Thanks) 

Loren 

-----Original Message-----

From: Richardson, Susan [mailto:Susan.Richardson@hg,doe.gov] 

Sent: Wednesday, August 19, 2009 9:33 AM 

To: Romano) Loren 

Subj ect: RE: OMS 

I do indeed. One of them is getting $olyndra closed. I left a vmx for Gary asking that he 

be sure the Pete Beiger is focused, as we need his sign off on docs, and our outside counsel 

will need to discuss opinions wi him. Also, we need request from Treasury for "Deviation" 

under rule to permit pmnts on guaranty before 60 days. (689.15 (f); 609.18). Maybe you could 

help Gary get th.1t out? It can be simple, but we need 

something. Thanks! 

107 
114 


81415.060

Urie. Matthew 

From: Richardson, Susan 

Sent: 

To: 

Wednesday, September 02, 2009 5:12 PM 

'Gary.Burner@do.treas.gov' 

Subject: RE: Solyndra! FFB Docs 

Thanks for all of your help Gary 

-----Or'iginal Message~~---

From: Gary. Burner@do. treas. gov [mailto :Gary. Burner@do. treas. gov] 

Sent; Wednesday, September 02, 2009 5 :03 PM 

To: Brad. Lerner@do.treas.gov; r·stark@curtis.com 

Cc: Richardson, Susan; FJenney@mofo.com)' davram@curtis.com; dlenihan@curtis.com; 

Peter. Bieger@do.treas,gov 

subject: RE: solyridra/ FFB Docs 

Attached is a pdf. We ,1111 deliver the original when you are ready. 

----~Or'igtnal Message-----

From: lerner, Brad 

Sent; Wednesday, September 02, 2009 4; 08 PM 

To: 'Stark, Roger D.' 

Cc: Susan Richardson (E-mail);FJenney@mofo.com; AvramJ Dario D.; Lenihan, Daniel R.; Sieger, 

Peter; Burner, Gary 

Subject: RE; Solyndra/ FFB Docs 

Item #1 below is already taken care of per Gary's e-mail and he has already executed item #2 

below and will send to you. Thanks. 

- - - - -Original Message- - - --

From: Stark, Roger D. [mailto:rstark@curtis.com) 

Sent: Wednesday, September 02, 2009 2;32 PM 

To: Lerner, Brad 

Cc: Susan Richardson (E-mail );FJenney@mofo.com; Avram) Dario D.; Lenihan, Daniel R. 

SUbject: FW: Solyndra/ FFB Docs 

Brad: 

Just a brief note to call your attention to two additional, and I believe uncontroversial, 

iSStleS related to the one we discussed earlier today: 

1. As reflected in the email below, there is a "clean up" edit pending on tl1e Program 

Financing Agreement that Peter agreed to before his departure (scroll down to Pete's email 

beloy.i)~-I I>.'ill send YOll a mark-up of the relevant line of the document shof'tly; and 

2, We are awaiting an executed version of the FFB Deviation Request Memorandum in the form 

Pete agreed to earlier today (I will send you a copy of that email string under separate 

cover) . 

Thanks again for your assistance .. 

Roger 

---~-Original Message-----

Fr'om: Star'k) Roger D. 

182 
115 


81415.061

Sent: Wednesday, September 02, 2009 12: 22 PM 

To: 'Peter, Bieger@do.treas.gov'; Susan. Richardson@hq,doe,gov; FJenney@mofo.com 

Cc: Bill.Miller'@hq.doe.gov; Avr~am) Daria D. j Lenihan, Daniel R. j Wade. Boswell@hq.doe.gov; 

r'iPaist@mofo.comj TEldert@mofo.com; MVelamoor@mofo.comj I"1Ryan@mofo.comj 

'Brad. Lerner@do. treas. gOY' 

Subject: RE: Solyndra/ FFB Docs 

The execution version of the Program Financing Agreement does not reflect the change agreed 

to in the email belo .. (Le. section 4.3 still contains the "additional language"). Please 

make the agreed correction. 

Thanks, 

Roger 

- - .. - -Of'iginal Message- - - --

From: Peter. Bieger@do. treas. gOY [mailto :Peter, Bieger@do, treas, gov] 

Sent: Tuesday, September 01, 2009 9 :48 AM 

To: Susan.Richardson@hq.doe.gov; Stark, Roger D.; FJenney@mofo.com 

Cc: Bill.Miller@hq.doe.gov; Avram, Dario D.; lowin, Benjamin; Lenihan, Daniel R.; 

Wade.BosI;ell@hq.doe.gov; HPaist@mofo.com; TEldef't@mofo,com; MVelamoor@mofo.com; 

MRyan@mofo.com 

Subject: RE: Solyndra/ FFB Docs 

Agreed. We could correct the reference to the obligations under Note Purchase Agreement 

tel'minating under" those cir'cumstances, but \>Je've already covered that in the NPA. So., I 

agree .. no additional language in sec 4.3 of the PFA. 

- - -- -Of'iginal ~lessage .. ---

Fr'OIfl: Richardson, Susan [mail to: Susan. Richardson(uJhq, doe .gov] 

Sent: Tuesday, September 61, 2009 9:13 AM 

To: Stark, Roger D.; Bieger, Peter; FJenney@mofo.com 

Cc: Miller, Billj Avram, Daria D.; Lowin) Benjaminj Lenihan., Daniel R.; Boswell" Wade; 

MPaist@mofo.com; TEldert@mofo.com; MVelamoor@mofo.com; MRyan@mofo.com 

Subject: RE: Solyndra/ FFB Docs 

Absolutely right - was not thinking clearly PFA needs to survive fOf' 

futw'c deals. 

- - - --Original MessageFrom: Stark, Roger D, [mailto: rstark@curtis.com] 

Sent: Tuesday, September 61, 2009 B: 58 AM 

To: Richardson, Susan; Peter .Bieger@do. treas. gov; FJenney@mofo.com 

Cc: Miller, Bill; Avram .. Dario D.; Lowin .. Benjamin; lenihanJ Daniel R.; Boswell, Wade; 

HPaist@mofo.com; TEldert@mofo.com; r4VelamoOf'@mofo.com; MRyan@mofo.(orn 

Subject: Re: Solyndr'a/ FFB Docs 

Pete: 

Sorr'y, 1 think I misread your email first time around. I don't think we want the PFA to 

ter/:Jinate if Solyndr'a fails to timely commence construction. Roger 

From: Richardson, Susan 

To: Peter. Bieger@do.treas.gov FJenney@mofo,com 

183 
116 


81415.062

Cc: !'-Eller) Bill; Starkl Roger D.; Avram) Dario D.; lowin~ Benjamin; Lenihan, Daniel R.; 

Boswell, Wade ; MPaist@mofo.com ; TEldert@mofo.com ; MVelamoor@mofo.com ; MRyan@!l1ofo.com 

Sent: Mon Aug 31 22: 26: 55 2009 

Subject: Rc: Solyndra/ FFB Docs 

Sounds rieht to me 

original Message 

F rom: Peter. Bieger@do. tl'eas .gov <Peter. Bieger@do. treas. gav> 

To: FJenney@mofo.com <FJenney@mafo.cam> 

Cc; Richardson, Susan; Hiller J Bill; rstark@curtis.com <rstar-k@curtis.com>; davram@curtis.com 

<davram@curtis.com>j blowin@curtis.com <blowin@curtis.com>; dlenihan@curtis.com 

<dlenihan@curtis.com>; Boswell, Wade; MPaist@mofo.cam <MPai st@mofo.com>; TEldert@mofo.com 

<TEldert@mofo.com>; flVelamoor@moFo.com <MVeIamoor@mofo.com>; .myan@mafo.cam <MRyan@mofo.com> 

Sent: Man Aug 3122:08:432009 

Subject: RE: Solyndra! FFB Docs 

May I put the following language at the enel of sec 4.3 of the PFA like we have added it to 

the end of section 5.3 of the NPA? 

"ancl Frs's obligJt ions and commitments under this Agreement wi 11 terminate." 

- --Original Message- - - --

Fmm: Jenney, Frederick E. [mailto:FJenney@mofo.com] 

Sent: f~onday, August 31, 2869 2: 26 PM 

To: Sieger, Peter 

ec: Susan. Richardson@hq.doe.gov; bil1.miller@hq.doe.gov; rstark@curtis.com; 

davram@curtis.com; blmvin@curtis.com; dlenihan@curtis. com; wade. boswell@hq.doe.gov; Paist" 

Mark C.; Eldert, Thomas L.; Sanchez Velamoor J Maryso}; Ryan, 1'1011y C. 

Subject: FW: Solyndr"; FFB Docs 

Greetings Pete --

He!-e al-e our comments on the FFB documents. 

let us know if you have any questions -- I think we're ready for execution counterparts at 

this paint. 

Regards, 

- - Rick 

Frederick E. Jenney 

""'orT'.ison & Foerster LLP 

2060 Pennsylvania Ave., N.t,., Suite 5506 Washington, D.C. 20006 Direct 

Telephone: 202-887-1522 General Telephone: 202-887-1500 Fax Number: 

202-887-0763 Fax Confirmation: 202-887-8747 mailto:fjenney@mofo.com 

) From: 

> Sent: f~onday, 

> To: Jenney) 

> Subject: 

Sanchez Vela moor ~ Marysol 

August 31, 20e9 2: 24 PM 

frederick E. 

Solyndra! FFB DOCS 

«Blackline - Advance Request - LODe» «Blackline - DOE Guarantee 

1.00(» «BlackEne Secretarys Certificate - 1.DOe» «Blackline 

> - Promissory Note FFB - LODe» «BlackEne - Note Purchase Agreement 

> FF8 1.00e» «Note Purchase AgmtFFBBS-30-09 - 3.DOe» «Advance 

184 
117 


81415.063

> EequestFFB08-30-09 - 3.DOC» «DOE Guarantee08-30-09 

> «PI'omissory NoteFFB08-30-09 - 3.DOC» «Secretary 

> CertificateOOE08, 30- 39 - 3, DOC» 

> Rick: 

3, DOC» 

> Attached please find the following FFB Documents along with redlines 

> against their pr'ior versions: 

1. Advance Request 

> 2, OOE Guarantee 

> 3, Secl'etary' s Certificate 

> 4, FFS Promissory Note 

) 5, FFB Note Purchase Agreement 

Thanks 1 

> ftarysol 

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18S 
118 


81415.064

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186 
119 


81415.065

Stone, Carla 

From: Carroll, J. Kevin 

Sent: Tuesday, January 11, 20114:44 PM To: 

Subject: 

Lyberg, Sarah A.; Colyar, Kelly T.; Saad, Fouad P.; Stein, Nora; Mertens, Richard A. 

RE: Solyndra 

And that Congress had no intent to govern the program with the statute, 

... ··Original Message····· 

From: Lyberg, Sarah A. 

Sent: Tuesday, January 11, 20114:25 PH 

To: Colyar, Kelly T.; Carroll, J. Kevin; 

Subject: RE: Solyndra 

I think that's right, 

Question: Ho,,~g t~ \17 

prohibited in ft:J jbrl~n~ It seems that $as~cah~ 

any reason, iflonl w,nJ'f,pil 

. ····Original ~e~JagH-lj l' 

From: Colyar, "'~l~~";l, I! 

Sent: Tuesday, '!I'an,}!iry 11, 2en 3: 

Saad, Fouad P.; SteinJ Nora; Mertens] Richard A. 

!unl"n! that just because subordination is 

PDI- c n't do it later, even if it costs money? 

ail' ubordination on any loan, at any time, for 

e}tr~~' 

1 "nl ! ' ~ ." I ~ . c • __ ~><:::l. i;t .. , ti 

To: Lyberg, Sarah A,; Carroll, J, Kevin; 

Subject: RE: Solyndra 

Saad j Fouad P.; Stein, N"ora; Mertens} Richard A. 

I think there are a couple of points here: 

1. Had 'the company' filed f 

loan is with the project com 

taken action under the technic 

DOE's debt would not have been 

2. The statute and regulations 

there was threat of bankruptcy 

AG. 

·····Origlnal Message····· 

Fr'om: Richardson) William 

Sent: Tuesday, January 11, 2011 3:39 PM 

To: Colyar, Kelly T.; Aitken, Steven D.; Lyberg, 

EI'icsson, Sally c.j Saad, Fouad P.; Steinl Noraj 

Subject: RE: Solyndra 

th,s parent company, DOE's 

remote. DOE could have 

arkruptcy and therefore, 

at the parent level. 

a payment default. If 1 hey have consulted with the 

j 

j 

... 

Sarah A.j Carroll 1 J. Kevin; Mas) Alex; 

Mertens} Richard A. j DeGoliaJ Alexander H. 

I spoke today to susan Richardson and Ken Cestari about the legal basis for a refinancing 

that includes subordination, They provided the following analysis, which I asked them and 

they have agreed to provide to us in writing, in the form of a preliminary draft of part of 

the presentation they plan to provlde to the Secretary and OMS, They will also be reaching 

out to Kelly to provide a revised version of their expected values analysiS that addresses 

the questions she has outlined. r'l1 circulate a meeting request for sometime tomorrow so we 

can discuss next steps. 

IS96 
120 


81415.066

Pag'!]S 

DOE's theory is similar to what we expected, 'except that it does not (as we had thought) rely 

on a specific determination that this is a workout scenario under A-ll and FCRA. Based on the 

present tense language and structure of the provision, they read the no subordination 

language as applying only at the time DOE makes the original guarantee, and not as a 

restriction on refinancing down the road that DOE believes is necessary to serve the 

government's interests. They argue that the provision is set forth in a section relating to 

the creation of the loan documents, and not in a later section regarding defaults that they 

believe to govern financial distress down the road. This argument is supported somewhat by a 

2009 revision of their regulations in other respects, in which they. indicate that the later 

section relates to the post-closing default scenario while this provision deals with 

"threshold" requirements at the loan stage. I believe their bottom line position to be that 

Congress did not clearly and expressly deprive the Secretary of the ability of a guarantor to 

address financial distress down the road by adopting commercially reasonable methods to 

protect the interests of the united states in the event of default (a purpose they point out 

is set forth in the default section). As a demonstration that this is a well recognized 

situation for agreeing to subordination in order to attract neW money, they noted that had 

the company filed for bankruptcy as it was about to, the bankruptcy laws would have provided 

for new fin<lncing to be entitled to a senior position. (I have asked them for some 

information on ;ttJefi~~ ~tessor provision to this statute} but we 

don't expect if W.illl\S,~, 1stion.) ~ I, P 

They agree that w4 n~e: ,o.Kelly's questions in order to ensure 

that their ana-tysts lSI s iw>ll be re<lching out to her. 

t!\}ltl 1J/ ~;' l. I 1 l","~j IJ~ 

1597 
121 


81415.067

Questions for the Record for the Hearing Entitled: 

"Continuing Developments Regarding the Solyndra Loan Guarantee" 

Question for Deputy Assistant Secretary Gary Grippo from Representative Burgess 

I. Will the Department confirm that it will supply the Inspector General report on this 

matter to the Committee when the report is completed? 

The Department of the Treasury ("Treasury") supports transparency and openness, and we 

appreciate the important oversight role of the House Energy and Commerce Subcommittee on 

Oversight and Investigations ("Committee") and the Office of the Inspector General for the 

Department of the Treasury ("OIG"). Treasury is cooperating fully with the OIG's ongoing 

review of Treasury's role in the Department of Energy's loan guarantee program and, in 

particular, the loan guarantee provided to Solyndra. Given the independent role of inspectors 

general, Treasury typically defers to OIG regarding the disclosure of its reports to Congress and 

the public. Of course, we would not object to any such disclosure, and we expect that OIG would 

be happy to provide the Committee with any report on this matter. 

Questions for Deputy Assistant Secretary Gary Grippo from Representative Sullivan 

1. Mr. Grippo, in your review of the Solyndra deal at conditional commitment, is 

Treasury making a decision ahout the creditworthiness of Solyndra or about its 

technology? 

The Department of the Treasury ("Treasury") is involved in the Department of Energy ("DOE") 

Loan Guarantee Program in two very distinct ways: as a lender and as a consultant. 

As a lender, in accordance with long-standing Federal credit policy, the Federal Financing Bank 

("FFB") - an independent government corporation created by Congress in the Federal Financing 

Bank Act of 1973 - makes loans to private sector borrowers in cases where a federal agency, 

such as DOE, provides a I 00% guarantee of all principal and interest on the loan. As a 

consultant, Treasury reviews and consults on the terms and conditions that DOE proposes for its 

loan guarantees. Treasury's consultative review occurs prior to DOE's issuance of a conditional 

commitment to the borrower. 

Prior to engaging Treasury on a specific transaction, we understand that DOE receives and 

reviews applications, carries out due diligence, conducts a credit analysis and review of a 

project's creditworthiness, and negotiates an initial term sheet. Given DOE's expertise in energy 

technology and energy markets, Treasury's consultation does not focus on DOE's assessment of 

a project's creditworthiness or technology. Rather, Treasury's consultative input focuses on 

Treasury's area of expertise - providing independent insight and input that may help DOE 

further align the terms and conditions ofa guarantee with the broad objectives of Federal credit 

policies, which are common to all Federal credit programs and are reflected in OMB Circular A129: "Policies for Federal Credit Programs and Non-Tax Receivables." 
122 

Æ 


81415.068

a. If Treasury is looking at the company's creditworthiness, what was 

Treasury's assessment of the Solyndra financial model? 

We understand that, prior to engaging Treasury, DOE analyzed Solyndra's creditworthiness and 

technology, and conducted due diligence in several other areas. Treasury's consultation on 

DOE's loan guarantee to Solyndra did not focus on the company's creditworthiness. 

b. We have seen emails from DOE staff, expressing concern about the liquidity 

of the project and stating that, under the financial model, the company 

would be out of cash by September 2011. What did Treasury conclude about 

the project's liquidity? 

We understand that, prior to engaging Treasury, DOE analyzed Solyndra's creditworthiness, 

including its liquidity, and conducted due diligence in several other areas. Treasury's 

consultation on DOE's loan guarantee to Solyndra did not focus on the company's 

creditworthiness, and as such Treasury did not offer any conclusions as to the project's liquidity. 

c. Liquidity was a serious problem for Solyndra going forward, correct? Do 

you believe DOE took adequate steps to address that issue? 

Although Treasury sought to remain apprised of DOE's monitoring of the Solyndra project after 

DOE issued the loan guarantee in September 2009, and to offer consultative input where 

possible, Treasury generally was not involved in the regular management of the loan guarantee. 

As such, Treasury is not in a position to render an opinion about the steps DOE took in 

monitoring the project and addressing any issues that may have arisen.