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Amid political storm, Chu defends Solyndra decision

chu.JPG When it rains it pours on the US Department of Energy. First Republican presidential candidate Rick Perry says he wants to dismantle it (though he couldn’t quite remember that at the crucial moment in a recent Republican debate). Then the department’s own inspector general releases a report recommending a large-scale restructuring of the agency (details below). And today, director Steven Chu found himself on Capitol Hill for more than three hours defending the agency’s investment in the failed solar concern, Solyndra Corporation.

The focus going into Thursday’s hearing by the House Energy and Commerce Subcommittee on Oversight and Investigations was squarely on Chu and how he would hold up under direct fire in an investigation that Republicans have been stoking since Solyndra filed for bankruptcy more than two months ago. The administration has turned over a mountain of documents to the committee, some of which Republicans have released to the press even as they demand more (Washington Post). But many saw Chu’s appearance as a critical juncture in the scandal. Would Republicans pull out the smoking gun? Would Chu crumble under pressure?

As it turned out, the answer to both questions was no. Republicans hammered home on their contention that Chu and the Energy Department should have known that Solyndra was going to fail well before investing $535 million dollars in the concern. Calling the situation “extremely unfortunate,” Chu calmly and repeatedly made simple case that the future wasn’t nearly as clear back then as the past is today. Private investors put roughly twice as much money into the company as the government, Chu said, and even the best analysts didn’t realize that solar prices were going to plummet by 70 percent in 2 1/2 years (sparking a spate of similar failures and possibly a trade war against China).

“Fundamentally this company and several others got caught in a very very bad tsunami, if you will,” Chu said. Did incompetence or undue political influence from the White House play a role? “I would have to say no.”

All told, the hearing felt more like a stalemate than a checkmate. Which is not to say that the political storm is going to subside anytime soon.


Subcommittee Chairman Cliff Stearns of Florida said committee will continue to press for additional documents out of the White House and for additional testimony from other officials within the administration. He and others continued to insinuate that there was political influence from the White House and even a campaign contributor George Kaiser (for background, check The Hill). They questioned whether Chu broke the law by putting private investors in front of government investors in case the company went belly-up.

Despite a swirl of emails that have exposed a hearty and at times embarrassing debate within the administration, Chu said the calculus was simple when the department moved to restructure the programme: accept immediate bankruptcy and definite losses or work with private investors to try and get the company back on its feet. “It was a difficult decision,” he said.

It’s one of many for a man who often seems to be playing the scientific equivalent of Jimmy Stewart in Frank Capra’s Mr. Smith Goes to Washington. Pulled into a world of political machinations and ten-second sound bites, the Nobel-prize winning scientist had to convert a slow-moving scientific bureaucracy (designed to break the back of the former Soviet Union) into a science-based spending machine to manage green investments authorized in the economic stimulus bill of 2009 (for more, see Eric Hand’s 2009 Newsmaker of the Year profile). Now Chu, like so many of his counterparts atop agencies at home and abroad, is faced with the opposite problem, an economic hangover that threatens to mightily curtail earlier ambitions.

Inspector general report

With all of this in mind, the department’s inspector general this week recommended that the administration consider broader structural changes that might better accommodate the austerity measures that are headed down the pike (New York Times).

Among other things, the document poses a fundamental question about whether it makes economic sense to put the nuclear weapons programme in the hands of a semi-autonomous agency within the Energy Department. Established in 2000, the National Nuclear Security Administration was intended to boost accountability and efficiency within the weapons programme, but the inspector general says that premise deserves a second look. The report also says the department needs to start thinking about more drastic changes and create a formal process for assessing – and possibly closing down – science labs. As a model, the report cites the military’s Base Realignment and Closure (BRAC) process.

Indeed, with billions of dollars, dozens of labs and the livelihoods well more than 100,000 employees and contractors at stake, questions about Solyndra will surely pale in significance as Chu and those who follow face up to the future.

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