Topic: Energy and Environment

GOP Hypocrisy on Energy Subsidies?

When the Solyndra scandal broke in September, I wrote that “Republicans should be careful when casting stones given their past and present support for energy subsidies.” The left has been ripping congressional Republicans for making political hay of the Solyndra affair after having lobbied the Department of Energy to bestow their constituents with similar taxpayer handouts.

ThinkProgress released a report that documents letters sent by 62 Republican members of Congress to Energy officials groveling for subsidies. Are these Republicans hypocrites? I’d say that it depends. I think the members who justified their request on the basis of “job creation” while criticizing the Obama administration for justifying its stimulus packages on the same grounds belong in the “yes” column. Also belonging in the “yes” column are those subsidy-seeking members who have chastised the administration for engaging in “crony capitalism” and “picking winners and losers.” On the other hand, I don’t think the sole act of criticizing the Solyndra deal while begging Energy for money necessarily makes one a hypocrite.

According to ThinkProgress, “Republicans are on a war path to defund all clean energy programs – despite the fact that these Republicans previously were proponents of the program when it helped clean energy companies in their districts.” Even if it were true that Republicans now want to “defund all clean energy programs” (I wish), I wouldn’t have a problem with policymakers suddenly finding religion on the issue. As far as I can tell, all of the letters that ThinkProgress lists were sent pre-Solyndra, which means that the “sinners” now have a chance to repent.

Sen. Jim DeMint (R-SC) recently did this when he called for the abolition of the Economic Development Administration while acknowledging that he wrongly supported the program in the past. Prominent Republicans cited in the report (e.g., Sen. Jeff Sessions (R-AL), Rep. Mike Pence (R-IN), and Republican Study Committee chairman Jim Jordan (R-OH)) now have an opportunity to admit that they were wrong and atone for their mistake by working to eliminate the programs they sought to benefit from.

My expectations for this happening are admittedly very low. Instead, I expect most – if not all – of the Republicans in question to respond with a combination of silence and excuse-making. The chief excuse will be that the money was already appropriated so they might as well try to secure a piece of the pie for their taxpaying constituents. That excuse might fly with some folks on the right, but I think it’s absolute hogwash: you’re either part of the solution or you’re part of the problem.

See this Cato essay for more on why energy subsidies should be abolished.

Big Sky, Big Buses, and Big Bill Niskanen

I first met Bill Niskanen at a conference in Big Sky, Montana soon after he had left the Reagan administration. At the time I was an environmentalist with free-market leanings rather than (as is the case for many of my Cato colleagues) a free marketeer who cared about the environment. Mainly because of James Watt, environmentalists weren’t too happy with the Reagan administration, and all I knew about Bill was that he had chaired Reagan’s Council of Economic Advisers. I must have been intimidated: in my memory he was about 6’-4” tall, and I was surprised later to find he was only a little taller than my 5’-7”.

I didn’t know it at the time, but Bill’s 1971 book, Bureaucracy and Representative Government, would prove to be a major influence on my 1988 book, Reforming the Forest Service. Bill was the first to suggest that government agencies work mainly to maximize their own budgets rather than serve some social good, and the budget maximization hypothesis was the only explanation I could find that fit all of the Forest Service’s behaviors I had observed since the early 1970s.

Years later, when I renewed my acquaintance with Bill, I was surprised to learn he had grown up in Bend, Oregon, a few miles from where I live. The last time I saw Bill, he graciously agreed to chair a policy forum on transportation issues, which I knew interested him because his father (also named William) owned Pacific Trailways and had won a major anti-monopoly lawsuit against Greyhound. Coincidentally, earlier this week I attended the annual meeting of the California Bus Association, many of whose members remembered Bill and asked me to say “hello” for them. Sadly, I won’t get a chance.

Bill’s lifelong habit of putting principle before self-interest is an inspiration for everyone at Cato and in the free-market movement in general. I am proud to have known him.

Solyndra: Peeling Back the Layers

As I noted previously, the story of the taxpayers’ failed $535 million subsidy to the Solyndra company just keeps building as reporters keep digging. When the Democrats on the House and Energy Commerce Committee released selected emails from the Obama administration, I asked one reporter:

If OMB and Obama’s California campaign co-chair, the former California state treasurer, were trying to put the brakes on the Solyndra enthusiasm, who had his foot on the gas?

Could the answer have been merely Steven J. Spinner, “a senior Energy Department adviser … a major fundraiser for President Obama and a Silicon Valley investor tasked with helping the government invest in clean-technology companies [who] had an ethical conflict: His wife worked for Wilson Sonsini, a California law firm that represented Solyndra, the solar-panel maker, in its applications for the government loan”? Spinner is now a senior fellow at the Obama-adjunct Center for American Progress, where as recently as July he was writing, “Even the most controversial loan guarantee recipient—Solyndra, a solar manufacturer—is seeing an operational turnaround” in an article pushing for continued funding of the Department of Energy’s Loan Guarantee Program. But he’s not the sole source of the enthusiasm for “green energy” and stimulus spending, which obviously went to the top of the administration.

Some have tried to dismiss the Solyndra story. Private investors make plenty of mistakes, too, they point out. Companies fail, sometimes through no fault of their own. But this story has all the hallmarks of government decision making: officials spending other people’s money with little incentive to spend it prudently, political pressure to make decisions without proper vetting, the substitution of political judgment for the judgments of millions of investors, the enthusiastic embrace of fads like “green energy,” political officials ignoring warnings from civil servants, crony capitalism, close connections between politicians and the companies that benefit from government allocation of capital, the appearance — at least — of favors for political supporters, and the kind of promiscuous spending that has delivered us $14 trillion in national debt. It may end up being a case study in political economy.

Here’s an updated rundown of how the first rough draft of Solyndra history is playing out before our eyes:

Obama-backed green firm shuts down
The Washington Post, September 1, 2011

Solar firm to cease operations; Solyndra had received a $535-million loan guarantee. It plans to seek Chapter 11.
Los Angeles Times, September 1, 2011

A Third Solar Company Files for Bankruptcy
The New York Times, September 7, 2011

FBI raids offices of solar-panel firm
The Washington Post, September 9, 2011

E-mails cite rush on loan to solar firm
The Washington Post, September 14, 2011

Treasury to probe loan to Solyndra; The Federal Financing Bank’s role in the failed firm’s borrowing will be the focus.
Los Angeles Times, September 16, 2011

White House official: Funding Solyndra further was risky
The Washington Post, September 16, 2011

Amid Solyndra probe, Energy Dept. moving billions in loans
The Washington Post, September 17, 2011

SOLAR FIRM’S OBAMA LINKS PROBED; A fundraiser’s role in a loan program that aided Solyndra stokes concern about the company’s influence.
Los Angeles Times, September 17, 2011

Questions Raised Over Letting Another Lender Help a Failing Solar Company
The New York Times, September 17, 2011

Justice Dept. urged to probe Solyndra
The Washington Post, September 20, 2011

Solyndra officials to invoke Fifth before House panel
The Washington Post, September 21, 2011

Solyndra’s ex-employees tell of high spending, factory woes
The Washington Post, September 22, 2011

In Rush To Assist A Solar Company, U.S. Missed Signs
The New York Times, September 23, 2011

Government OKs new green loans; Two execs of bankrupt solar firm Solyndra plead the 5th before a congressional panel.
Los Angeles Times, September 24, 2011

A solar pariah had Republican parents, too
The Washington Post, September 27, 2011

Where Solyndra said yes, others demurred
The Washington Post, September 27, 2011

Obama aides voiced doubts about loans like Solyndra’s; A top concern was that the vetting process wasn’t rigorous enough.
Los Angeles Times, September 27, 2011

Energy Dept. knew Solyndra had violated its loan terms
The Washington Post, September 29, 2011

U.S. Backs New Loans For Projects On Energy
The New York Times, September 29, 2011

Energy chief cleared Solyndra loan breaks
The Washington Post, September 30, 2011

Trustee Is Sought For Records Of Solyndra
The New York Times, October 1, 2011

E-mails warned Obama of a shaky Solyndra
The Washington Post, October 4, 2011

E-Mails Suggest White House Weighed a 2nd Solyndra Loan Worth Almost Half a Billion Dollars
The New York Times, October 6, 2011

Solyndra loan deal: Warning about legality came from within Obama administration
The Washington Post, October 7, 2011

Obama fundraiser took active interest in Solyndra loan, emails show
Los Angeles Times, October 8, 2011

Government adviser defends Solyndra despite ethics agreement
Washington Post, October 8, 2011

Solyndra Collapse Sparks K Street Rush
Roll Call, October 12, 2011

I found these headlines on Nexis, but of course they can be found on the newspapers’ websites.

Louisiana Man Wins $1.7 Million From EPA For Malicious Prosecution

The legal might of the U.S. government is usually enough to roll right over someone like Opelousas, La. plant manager Hubert Vidrine Jr. But last week the underdog had his day: a federal court awarded Vidrine $1.7 million for having been maliciously prosecuted by the federal Environmental Protection Agency. Our friends at the Washington Legal Foundation, who helped represent Vidrine, give details:

The just-resolved case started in 1996 when the Environmental Protection Agency (EPA) ordered its SWAT-like special operations team (equipped with M-16 rifles and police dogs) to raid the Canal Refinery, Mr. Vidrine’s workplace. The raid led to a criminal investigation against Mr. Vidrine for allegedly unlawful storage and disposal of hazardous wastes under the Resource Conservation and Recovery Act (RCRA).

When it discovered that evidence of the alleged offense was lacking, the feds refused to back off and in fact redoubled their zeal. In a scathing 142-page ruling, Judge Rebecca Doherty wrote that federal prosecutor Keith Phillips “set out with intent and reckless and callous disregard for anyone’s rights other than his own, and reckless disregard for the processes and power which had been bestowed on him, to effectively destroy another man’s life.”

A Greenwire dispatch published in the New York Times is at pains to present the Vidrine case (quoting a former enforcement official) an “isolated situation” arising from the actions of a “rogue” agent. As a local paper reported, “Phillips was accused of targeting Vidrine because of his outspokenness and choosing an investigation in Louisiana to be close to a woman with whom he was having a sexual affair.” The second of these motives, at least, presumably doesn’t figure very often in decisions to pursue federal criminal charges.

Cato readers have reason to be less than surprised when federal enforcers abuse their powers, especially at an agency as convinced of its own righteousness as the EPA. Nine years ago, Cato published James V. DeLong’s “Out of Bounds, Out of Control: Regulatory Enforcement at the EPA.” In 2009 congressional testimony, Cato’s Tim Lynch discussed troubling cases like that of Alaska railroad employee Edward Hanousek (“prosecuted under the Clean Water Act even though he was off duty and at home when the accident occurred”).

Yesterday, incidentally, brought another setback in court for the EPA: a federal judge slapped it down for flagrantly overstepping its legal charter by usurping the Army Corps of Engineers’s statutory role as part of its efforts to restrict coal mining in Appalachia. How many times do the agency and its enforcers have to overstep their authority before those incidents cease to be just ”isolated situation[s]”?

Penn & Teller Tell a Lie

Cato Mencken Fellows Penn Jillette and Teller launch a new hour-long show, “Penn & Teller Tell a Lie,” on the Discovery Channel this Wednesday at 10 p.m. Eastern and Pacific Time. Discovery says:

Penn & Teller bring their unique vision of the world in a new interactive series with a twist. In each episode, Penn & Teller make up to seven outrageous claims. While most of the wildly unbelievable stories are absolutely, positively true - one of them is a BIG FAT LIE. It will be up to viewers to spot the fake and VOTE LIVE  online or with the new GUESS THE LIE app.

They’ll put lots of scientific claims and myths through rigorous testing, continuing their longstanding interest in science, truth, and skepticism.

If you have a DVR, note that Showtime is rebroadcasting an episode of their former series, this one a skeptical look at the environmental movement, at the exact same time: 10:30 p.m. Wednesday.

And if you can’t wait till Wednesday, listen to Cato’s podcast with Penn Jillette recorded a few weeks ago.

The First Rough Draft of the Solyndra Story

Just reading the headlines of the Solyndra stories in major newspapers the past month tells a story that just keeps getting more discouraging:

Obama-backed green firm shuts down
The Washington Post, September 1, 2011

Solar firm to cease operations; Solyndra had received a $535-million loan guarantee. It plans to seek Chapter 11.
Los Angeles Times, September 1, 2011

A Third Solar Company Files for Bankruptcy
The New York Times, September 7, 2011

FBI raids offices of solar-panel firm
The Washington Post, September 9, 2011

E-mails cite rush on loan to solar firm
The Washington Post, September 14, 2011

Treasury to probe loan to Solyndra; The Federal Financing Bank’s role in the failed firm’s borrowing will be the focus.
Los Angeles Times, September 16, 2011

White House official: Funding Solyndra further was risky
The Washington Post, September 16, 2011

Amid Solyndra probe, Energy Dept. moving billions in loans
The Washington Post, September 17, 2011

SOLAR FIRM’S OBAMA LINKS PROBED; A fundraiser’s role in a loan program that aided Solyndra stokes concern about the company’s influence.
Los Angeles Times, September 17, 2011

Questions Raised Over Letting Another Lender Help a Failing Solar Company
The New York Times, September 17, 2011

Justice Dept. urged to probe Solyndra
The Washington Post, September 20, 2011

Solyndra officials to invoke Fifth before House panel
The Washington Post, September 21, 2011

Solyndra’s ex-employees tell of high spending, factory woes
The Washington Post, September 22, 2011

In Rush To Assist A Solar Company, U.S. Missed Signs
The New York Times, September 23, 2011

Government OKs new green loans; Two execs of bankrupt solar firm Solyndra plead the 5th before a congressional panel.
Los Angeles Times, September 24, 2011

A solar pariah had Republican parents, too
The Washington Post, September 27, 2011

Where Solyndra said yes, others demurred
The Washington Post, September 27, 2011

Obama aides voiced doubts about loans like Solyndra’s; A top concern was that the vetting process wasn’t rigorous enough.
Los Angeles Times, September 27, 2011

Energy Dept. knew Solyndra had violated its loan terms
The Washington Post, September 29, 2011

U.S. Backs New Loans For Projects On Energy
The New York Times, September 29, 2011

Energy chief cleared Solyndra loan breaks
The Washington Post, September 30, 2011

I found these headlines on Nexis, but of course they can be found on the newspapers’ websites. I linked to two of the stories last week.

Some have tried to dismiss the Solyndra story. Private investors make plenty of mistakes, too. Companies fail, sometimes through no fault of their own. But this story has all the hallmarks of government decision making: officials spending other people’s money with little incentive to spend it prudently, political pressure to make decisions without proper vetting, the substitution of political judgment for the judgments of millions of investors, the enthusiastic embrace of fads like “green energy,” political officials ignoring warnings from civil servants, crony capitalism, close connections between politicians and the companies that benefit from government allocation of capital, the appearance – at least – of favors for political supporters, and the kind of promiscuous spending that has delivered us $14 trillion in national debt. It may end up being a case study in political economy.

The Solyndra Story Keeps Unfolding

Is the taxpayers’ lost $535 million in the green-energy company Solyndra just an unfortunate business failure, or is there something more scandalous involved? You should read every word of this front-page New York Times article. Sure, it says that “no evidence has emerged that political favoritism played a role in what administration officials assert were merit-based decisions.” But the story is full of smoking guns.

Here’s the opening:

President Obama’s visit to the Solyndra solar panel factory in California last year was choreographed down to the last detail—the 20-by-30-foot American flags, the corporate banners hung just so, the special lighting, even coffee and doughnuts for the Secret Service detail.

“It’s here that companies like Solyndra are leading the way toward a brighter and more prosperous future,” the president declared in May 2010 to the assembled workers and executives. The start-up business had received a $535 million federal loan guarantee, offered in part to reassert American dominance in solar technology while generating thousands of jobs.

But behind the pomp and pageantry, Solyndra was rotting inside, hemorrhaging cash so quickly that within weeks of Mr. Obama’s visit, the company canceled plans to offer shares to the public. Barely a year later, Solyndra has become one of the administration’s most costly fumbles after the company declared bankruptcy, laid off 1,100 workers and was raided by F.B.I. agents seeking evidence of possible fraud.

Solyndra’s two top officers are to appear Friday before a House investigative committee where, their lawyers say, they will assert their Fifth Amendment right against self-incrimination.

And there’s more:

[Solyndra’s] lobbyists corresponded frequently and met at least three times with an aide to a top White House official, Valerie B. Jarrett, to push for loans, tax breaks and other government assistance… Energy Department preliminary loan approvals—including the one for Solyndra—were granted at times before officials had completed mandatory evaluations of the financial and engineering viability of the projects.

…[T]he company spent nearly $1.8 million on Washington lobbyists, employing six firms with ties to members of Congress and officials of the Obama White House. None of the other three solar panel manufacturers that eventually got federal loan guarantees spent a dime on lobbyists… Solyndra’s loan guarantee was the highest of the four companies…

Five lobbyists employed by the McBee group eventually worked on Solyndra’s behalf, including Michael Sheehy, a former top aide to Representative Nancy Pelosi of California, the House Democratic leader. Solyndra has paid McBee Consulting $340,000 since 2009…

Solyndra and its lobbyists continued to provide assurances to the White House and the Energy Department, which still could have stopped the flow of federal money…

The story might well be read in conjunction with yesterday’s Washington Post story, which stressed “questionable spending by management almost as soon as a federal agency approved a $535 million government-backed loan for the start-up… ‘Because of that infusion of money, it made people sloppy.’”