Watchdog group: DOE violates records laws

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Michael Bastasch DCNF Managing Editor
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Is the Energy Department violating federal records laws? That’s the concern of a government watchdog group after filing government records requests asking for information on applicants to the department’s controversial loan program.

Cause of Action asked the Energy Department for records regarding the identity and creditworthiness of the 460 applicants who had applied to the agency’s loan program, which guaranteed loans to green energy companies such as Solyndra, Abound Solar and Fisker Automotive.

However, CoA received a response that caused them to question the Energy Department’s record-keeping practices. The agency failed to produce letters they are required to send to the Internal Revenue Service when assessing the creditworthiness of a loan applicant.

This could be in violation of the Federal Records Act, according to CoA.

“The Federal Records Act requires each agency head to make and preserve records,” said Dan Epstein, CoA’s executive director. “By failing to preserve these records, the DOE may have violated the Federal Records Act and its own regulations implementing the Act.”

Cause of Action filed two separate Freedom of Information Act requests to the Energy Department asking for records identifying the names of the 460 applicants who applied for loan guarantees, and for all the letters the agency had sent to the IRS inquiring after the creditworthiness of the loan applicants.

The Energy Department’s Credit Review Board is required to determine the creditworthiness of a company applying for a loan. This is most commonly done by requesting tax delinquency information from government agencies such as the IRS.

Cause of Action was given 131 letters that the IRS submitted in response to the DOE’s tax delinquency requests for loan applicants. This means there should have been 131 corresponding letters from the DOE to match the IRS records. However, the DOE only has corresponding letters for eleven of the 131 letters — meaning it was missing 120 corresponding letters to the IRS.

The DOE told CoA that it does not actually maintain letters it sends to the IRS.

“It is a template letter the Administrative Assistant deletes the latest PII information from the template and replaces it with the new PII information and sends the letter request to the IRS. She does not maintain hard or electronic copies of each letter. IRS would be the best source for copies of the DOE letter to IRS letter,” according to the DOE.

Epstein argues that this failure to maintain records violates the Federal Records Act.

“The loan applicant information DOE sought from the Internal Revenue Service are records under the Federal Records Act,” Epstein told the DCNF.

The Energy Department also redacted the names of all but one of the applicants of loan guarantees in nine of the IRS letters that were given to Cause of Action. The one company that did not have its name redacted was SAGE Electrochromics.

SAGE received a conditional $72 million loan guarantee from the Energy Department on March 5, 2010. However, the DOE did not inquire after the tax delinquency status until August 17, 2011, more than one year after the department granted SAGE the loan commitment.

According to Cause of Action, this violates the DOE Credit Review Board’s charter, as the agency “may not extend financial assistance in the form of a loan, loan guarantee, or loan insurance to any person who DOE knows to be delinquent on a non-tax debt owed to a Federal agency.”

The Energy Department gave SAGE the loan to finance the construction of a 250,000 square foot facility in Minnesota that would build energy-saving windows on a commercial scale. The project was supposed to create 210 jobs over 12 months.

“This investment will help cut utility bills, reduce carbon pollution, and create jobs our economy needs,” said then Energy Secretary Chu in 2010. “It’s a perfect example of the power of American innovation to create a stronger economy and a healthier planet.”

The company also received tax credits from the IRS, which bring the total amount of federal assistance the company received to more than $100 million.

A French company bought 50 percent of SAGE in 2010 and eventually took over the entire company in May of last year.

The Department of Energy did not respond to a request for comment.

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