U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

72–270 PDF 2012

OMB’S ROLE IN THE DOE LOAN GUARANTEE 

PROCESS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON OVERSIGHT AND 

INVESTIGATIONS 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

JUNE 24, 2011 

Serial No. 112–68 

( 

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 Chair 

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 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

SUE WILKINS MYRICK, North Carolina 

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 ...................................................................................... 8 

Prepared statement .......................................................................................... 9 

Hon. Marsha Blackburn, a Representative in Congress from the State of 

Tennessee, opening statement ............................................................................ 18 

Prepared statement .......................................................................................... 20 

Hon. Michael C. Burgess, a Representative in Congress from the State of 

Texas, opening statement .................................................................................... 21 

Prepared statement .......................................................................................... 22 

SUBMITTED MATERIAL

Letter from William R. Richardson Jr., Deputy General Counsel, Office of 

Management and Budget, to Mr. Stearns, dated June 22, 2011, submitted 

by Ms. DeGette ..................................................................................................... 11 

Letter from Jeffrey D. Zients, Deputy Director for Management, Office of 

Management and Budget, to Mr. Stearns, dated June 23, 2011, submitted 

by Ms. DeGette ..................................................................................................... 14 

Email from Karen Christian to Allie Neil, dated June 17, 2011, submitted 

by Mr. Stearns ...................................................................................................... 16 

Majority Supplemental Memorandum, dated June 13, 2011, submitted by 

Mr. Stearns ........................................................................................................... 25 

Subcommittee exhibit binder .................................................................................. 31 

(1) 

OMB’S ROLE IN THE DOE LOAN GUARANTEE 

PROCESS 

FRIDAY, JUNE 24, 2011 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATION, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 9:55 a.m., in room 

2123 of the Rayburn House Office Building, Hon. Cliff Stearns 

(chairman of the subcommittee) presiding. 

Members present: Representatives Stearns, Burgess, Blackburn, 

Griffith, and DeGette. 

Staff present: Carl Anderson, Counsel, Oversight; Jim Barnette, 

General Counsel; Sean Bonyun, Deputy Communications Director; 

Karen Christian, Counsel, Oversight; Kirby Howard, Legislative 

Clerk; Carly McWilliams, Legislative Clerk; Andrew Powaleny, 

Press Assistant; Alan Slobodin, Deputy Chief Counsel, Oversight; 

Kristin Amerling, Democratic Chief Counsel and Oversight Staff 

Director; Phil Barnett, Democratic Staff Director; Tiffany Benjamin, Democratic Investigative Counsel; Karen Lightfoot, Democratic Communications Director and Senior Policy Advisor; Ali 

Neubauer, Democratic Investigator; and Anne Tindall, Democratic 

Counsel. 

Mr. STEARNS. Good morning, everybody. The Subcommittee on 

Oversight and Investigations will convene. Our witness, obviously, 

did not show, so what we intend to do is do opening statements, 

myself and the ranking member and the ranking chairman, as well 

as members on this side, and then we will recess after that, after 

we put documents into the record by unanimous consent. 

So I will start 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 

Investigation to investigate OMB’s role in the Department of Energy’s loan guarantee process. The Energy Policy Act of 2005 gave 

the Department of Energy the authority to award loan guarantees 

to companies investing in innovative, clean technologies, or renewable energy projects. Through the stimulus, Congress appropriated 

nearly $2.5 billion to pay the credit subsidy costs for the companies 

receiving these loan guarantees. With that funding, the DOE Loan 

Guarantee Program took off. So far, DOE has announced loan 

guarantees for 20 projects totaling over $11 billion in financing. 

2 

Solyndra, a California company, was the first recipient of a DOE 

loan guarantee. However, since receiving the guarantee, Solyndra 

has suffered a number of financial setbacks. Solyndra’s own auditors noted the company’s ‘‘recurring losses’’ and ‘‘negative cash 

flows.’’ The company canceled a planned Initial Public Offering in 

2010, and was forced to lay off employees in November 2010. 

DOE announced just last March that it had notified—excuse 

me—modified the loan guarantee to extend the repayment period, 

and Solyndra’s investors injected additional funding into the company. 

Due to the number of problems Solyndra experienced, this subcommittee began an investigation of the DOE Loan Guarantee Program and the Solyndra guarantee, in particular. Examining the 

Loan Program was an obvious choice for this subcommittee. This 

committee is the authorizing committee for DOE and the Loan 

Guarantee Program. The Loan Programs Office had received over 

$2 billion in funding from the stimulus, and the committee had yet 

to conduct any oversight of the program. So, on February 17, 2011, 

this committee opened an investigation with a letter to DOE requesting a briefing and documents. As our investigation unfolded, 

we learned that OMB played an important role in the DOE loan 

guarantee process. We also became aware of a White House memorandum sent to President Obama in October 2010, where White 

House staff discussed certain ‘‘risks’’ presented by the loan guarantee program and specifically discussed OMB’s role in reviewing 

these loans. DOE staff were not able to shed much light on these 

issues or on OMB’s processes for reviewing the Solyndra guarantee, 

so this committee sent OMB Director Jack Lew a letter on March 

14, 2011, requesting a briefing and certain specific documents. 

Over three months later, this committee still does not have all 

the information or the full picture of OMB’s review processes with 

respect to Solyndra. At almost every step, OMB has sought to delay 

or frustrate this committee’s efforts to move this investigation forward. We did get a briefing, but OMB staff were able to offer few 

specifics about OMB’s review of Solyndra’s deal. We thought the 

documents would provide those details, but OMB has produced 

only those records that DOE gave to OMB in the course of the 

Solyndra review. These documents reveal nothing about what OMB 

did with DOE’s information, and OMB so far has failed to produce 

any of its own reports, any memorandum, or analyses to demonstrate how it even considered or weighed the risks presented by 

the Solyndra deal. 

Committee staff then pressed OMB for production of the requested communications records, hoping these documents would 

provide the story of OMB’s role over the course of the Solyndra review. OMB refused to produce these documents, stating (1) in 

OMB’s opinion, the committee did not need to see these documents, 

(2) that they had concerns about the confidentiality of staff discussions should these documents be made public. Committee staff attempted to accommodate this second concern by offering to review 

these documents in camera, meaning that committee staff would 

look over these documents but not take possession of them unless 

that review revealed a further need for the committee to take possession of the documents. 

3 

In order to move the investigation forward, I called today’s witness, Deputy Director Jeffrey Zients, 3 weeks ago to see if we could 

reach an agreement about production of these communications. 

During our conversation, I asked OMB to make available to committee staff all emails exchanged on Solyndra, both internally 

among OMB staff and with the Department of Energy, for an in 

camera review. He stated he needed to consult with OMB’s counsel. 

One day later, OMB staff called back to schedule the agreed-upon 

in camera review. But, in what I view as a telling example of 

OMB’s overall approach to this investigation, they did not live up 

to their end of the bargain. Instead of producing all communications relating to Solyndra, as we had discussed, OMB took it upon 

itself to select just eight emails that were exchanged between DOE 

and OMB in late August 2009, just 1 week before the Solyndra 

loan closed. According to OMB staff, they made their own determination that it was not necessary for this committee to see any 

more emails, including OMB’s own internal emails. In their opinion, these eight emails were all the committee needed to see. 

OMB’s position demonstrates a fundamental misunderstanding 

of the Constitutional roles of Congress and the Executive Branch. 

It is not OMB’s job to direct this investigation and decide what 

Congress can and cannot see. This committee has jurisdiction over 

the Department of Energy program. OMB plays a role in approving 

the credit subsidy costs for over $11 billion in loan guarantees. 

Congress appropriated over $2 billion in taxpayer money to pay 

these costs. Congress and the taxpayers have a right to know if 

OMB is doing a good job of weighing the risks that are associated 

with these investments and with these deals. We know that OMB’s 

role extended beyond the 1-week period in late August 2009. I had 

hoped that the Deputy Director would have viewed this hearing as 

I do: OMB’s last chance to finally, and fully, answer the committee’s questions about OMB’s role in reviewing the Solyndra guarantee and simply turn over the requested documents that we have 

sought. 

However, they once again have chosen to delay and frustrate this 

committee’s efforts to resolve this matter. I believe the time has 

come for the committee to fulfill its oversight obligations and responsibility and pursue this information together and with the 

ranking member and the Democrats to move this investigation forward. And ultimately if we can agree, or not agree, we might move 

to possibly a subpoena. 

[The prepared statement of Mr. Stearns follows:] 

4 

5 

6 

7 

8 

Mr. STEARNS. And with that, I recognize the ranking member for 

her opening statement. 

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

Ms. DEGETTE. Thank you, Mr. Chairman. I think that this hearing, ‘‘OMB’s Role in the DOE Loan Guarantee Process,’’ is a potentially very constructive hearing, and that this committee could play 

a real oversight role going forward. The subcommittee could do a 

thoughtful review of the material we have obtained. They could follow the facts where they lead. And obtaining testimony from OMB 

officials is a legitimate means of advancing this effort. 

Having said that, I think it is hard to see how an empty-chair 

hearing would accomplish anything, and I think it is a profound 

waste of everybody’s time. Instead of truly examining OMB’s role 

in the DOE Loan Guarantee Program, we are spending time on a 

hearing that will obtain absolutely no new facts for the record. And 

this proceeding follows on the heels of public statements by the 

chairman this spring, suggesting that the Loan Guarantee Program 

involved political favoritism, an allegation that is completely unsupported by the documents provided by DOE and OMB, and by 

interviews the committee has conducted with relevant parties. 

And by the way, given those statements, it is easy to see why the 

DOE would be a little bit leery about just unlimited document productions. 

Now, the hearing date today was announced before the Majority 

even contacted their witness to ascertain his availability. In fact, 

he received his formal invitation to this hearing just 3–1⁄2 days ago. 

Mr. Zients, as I understand it, is perfectly willing to testify, but 

rather than reschedule the hearing for one of the dozens of days 

he is available, the Majority has called members here to just address their concern to an empty chair. 

Now, he says—Mr. Zients says he is willing to come before the 

committee. He couldn’t come today, but he is willing to come in the 

future. Now, I will also say, the Minority is very willing to work 

with the Majority to make sure that appropriate documents are 

produced by the witnesses. OMB has a duty to provide appropriate 

documents. If they are not providing appropriate documents, then 

that needs to happen. We have agreed, Mr. Chairman, upon a process by which over the next recess, the next 10 days or so, our staffs 

will work together and will work with the OMB to identify and 

produce the appropriate documents. If that does not happen, then 

we will sit down and talk about further steps, because this is an 

appropriate oversight role, and we do look forward to working with 

you. But frankly, I think sitting here this morning is a big waste 

of time. 

And I yield back. 

[The prepared statement of Ms. DeGette follows:] 

9 

10 

Mr. STEARNS. I thank the gentlelady. 

Ms. DEGETTE. Mr. Chairman, I also have two letters I would like 

to enter for the record. The letter from—are they both from Mr. 

Zients? One is from Bill Richardson, the deputy general counsel, 

dated June 22, to you, and the other is from Mr. Zients, dated yesterday. Both these letters express their willingness to come, and 

also their willingness to work with the committee on the documents that would be produced. I ask unanimous consent to enter 

those into the record. 

Mr. STEARNS. Unanimous consent is so ordered, and we had also 

an email here by unanimous consent as shown to your staff. We 

would like to put that as part of the record. 

By unanimous consent, that is part of the record. 

[The information follows:] 

11 

12 

13 

14 

15 

16 

17 

18 

Mr. STEARNS. And I would just point out to the gentlelady that 

we did invite the deputy director 7 days ago, plenty of time in advance, according to the rules. 

And with that, I recognize for 5 minutes the gentlelady from 

Tennessee, Ms. Blackburn. 

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE 

Mrs. BLACKBURN. Thank you, Mr. Chairman. I know that the 

bell has rung for votes, and we will soon be heading in that direction, but I think that as we sit here this morning, even though we 

will not have our hearing as we had wanted to have, that we have 

to remember the words of Reagan, ‘‘trust, but verify.’’ And that is 

what we are going to do over and over again as we look at what— 

the steps that the bureaucracy is taking. Our constituents are hurting, we have unemployment at 9.1 percent. Underemployment is 

getting pretty close to the 20 percent range. Small businesses with 

fewer than 20 employees face an average regulatory cost of over 

$10,000 per employee, due to all of the new federal regulations that 

have been hitting them. It seems as if there is no end in sight on 

those. And if that is not enough, CBO has stated that our Nation’s 

debt will overtake our economy by the end of the decade. 

This is not a rosy outlook. Now, more than ever, this committee 

and OMB have a responsibility. It is a responsibility to the taxpayers to ensure that every dollar that leaves Washington, especially through loan guarantees backed by American taxpayers, are 

being put through the highest levels of oversight and accountability. 

As we examine OMB’s role in the Loan Guarantee Process today, 

one loan in particular that we all were looking forward to discussing is the $535 million loan guarantee to Solyndra in September ’09 to build a solar panel manufacturing facility. I thought 

it was interesting 6 months after the loan guarantee was approved, 

Solyndra’s auditor, PricewaterhouseCoopers, stated that the company had suffered recurring losses from operations, negative cash 

flow since inception, and has a net stockholder’s deficit that, among 

other concerns, raised substantial doubt about its ability to continue as a going concern. 

My questions would be, did OMB and DOE share any of these 

same concerns just 6 months prior to this report? We don’t fully 

know the answer yet, and we are not going to get it today. Also, 

what exactly was OMB’s role throughout the loan guarantee process to Solyndra? And we don’t have the answer to that, either. We 

don’t know, because OMB has yet to produce the notes, analyses, 

memoranda, documents that its staff has created in response to a 

Solyndra review. 

I hope that OMB will change their position and be willing to 

work with us on this issue. Our constituents want some answers. 

We need to have answers to these questions. You know, Mr. Chairman, much of it is due to the fact we are hearing today that the 

President now is wanting to do a half-billion-dollar technology fund 

to do similar things. Congress shouldn’t be—the President and the 

19 

administration shouldn’t be choosing winners and losers, and we 

need to be diligent in our oversight. 

I yield to the gentleman from Texas. 

[The prepared statement of Mrs. Blackburn follows:] 

20 

21 

Mr. STEARNS. Ms. Blackburn yields to the gentleman from Texas. 

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. BURGESS. I thank the gentlelady for yielding. 

So we are here today in the Oversight and Investigations Subcommittee to get information on how funds from the so-called stimulus package from 2009 have been used. This investigation—this 

type of investigation is historically what this subcommittee has 

done best, but we find ourselves thwarted by an administration 

that, once again, is being non-compliant with the will of the Congress. 

Now, shovel-ready is a concept that was thrown around a lot in 

2009, but just over the last few weeks, the President himself admitted that he wasn’t quite sure the definition of shovel-ready, or 

maybe he was unsure of the definition of shovel-ready when the 

bill was passed. But in any event, what started as a $787 billion 

bill turned into $862 billion, and the fact of the matter is, we have 

got very little to show for it. 

In the course of conducting our constitutionally mandated role of 

oversight, this committee has repeatedly attempted to work with 

Office of Management and Budget to review the documents pertinent to this investigation. Time and again, this White House has 

thwarted any sort of sunlight being shown on how the federal taxpayer money is being spent and how determinations were made to 

that end. This is important work, and this committee must accomplish this. The administration must recognize that the Legislative 

Branch is indeed a coequal branch of government, and the will of 

the Legislative Branch must not be thwarted as it has been repeatedly by this administration on numerous fronts. 

I hope the chairman will take this lack of response by the administration very seriously, and be fully prepared to exercise all of the 

authority that this subcommittee has in order to compel this witness to come and testify before our subcommittee. 

Mr. Chairman, I will yield back the balance of my time. 

[The prepared statement of Mr. Burgess follows:] 

22 

23 

24 

Mrs. BLACKBURN. Yield back. 

Mr. STEARNS. I thank the gentleman. I would also ask unanimous consent to enter the following documents into the record: the 

Majority staff’s supplemental memorandum regarding the efforts it 

has taken to obtain documents from OMB, and 2, the document 

binder for the hearing. 

Without objection, so ordered. 

[The information follows:] 

25 

26 

27 

28 

29 

30 

31 

32 

33 

34 

35 

36 

37 

38 

39 

40 

41 

42 

43 

44 

Mr. STEARNS. It is very unfortunate that our witness failed to 

show, but we have made every effort to do so. The subcommittee 

is adjourned. 

[Whereupon, at 10:12 a.m., the subcommittee was adjourned.] 

Æ