Voters on Nov. 5 rejected the Democratic Party’s costly push for a swift transition away from fossil fuels. But President Joe Biden’s administration is not listening. Or if it listens, it is ignoring the public. That is why it is now doling taxpayer money out as fast as possible while ignoring regulatory safeguards against corruption.
The Department of Energy Office of Inspector General’s latest report found that Biden administration officials are not following conflict of interest reporting requirements that, in the inspector general’s own words, pose “a significant risk of fraud, waste, and abuse.”
At issue is almost $400 billion in loan authority granted to the DOE’s Loan Programs Office, mostly by the inaptly named Inflation Reduction Act. As the inspector general’s report notes, clean energy projects funded through the LPO are inherently risky because the entire program was created to serve investments that “struggled to secure funding from traditional sources such as commercial banks and private equity investors.”
The DOE was not designed to be a bank, and the agency’s employees lack the legal, technical, and financial expertise needed to perform due diligence on loan applications. Therefore, the LPO has signed temporary contracting agreements with over 300 contractors in the clean energy industry who have the required skills, knowledge, and experience to evaluate which projects are most likely to be successful.
These outside contractors, as valuable as their expertise may be, create conflicts of interest risks for taxpayers. While federal regulations require DOE contracting officers to identify and evaluate conflicts of interest, the Biden administration is simply not asking for or tracking that information.
This means a contractor paid by the DOE to evaluate one company’s loan application could be employed by that company on a different project. The incentive for companies to offer generous contracts to DOE contractors on one project so the contractor could give the green light for a much larger federal loan would be substantial. This is why the inspector general says the DOE should ask all contractors to report what other firms they work for. But the DOE isn’t even collecting such information.
The LPO has loaned $15 billion since 2021 and is trying to speed through another $22 billion before President-elect Donald Trump is sworn into office on Jan. 20. The inspector general believes this effort to shovel taxpayer money out the door with little or no oversight is irresponsible, and the report calls for a suspension of all loan guarantees until the LPO shows it has a system in place to monitor conflicts of interest among contractors as federal regulations require.
In line with the Biden administration’s reckless use of the pardon power to protect its political allies, the LPO has chosen to ignore the inspector general’s report and continue to award taxpayer loan guarantees as quickly as possible.
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It has not been lost on voters that the beneficiaries of many of these guarantees and other tax credit spending programs created by the Inflation Reduction Act go to wealthy and politically connected Democratic Party donors. No wonder Biden wants as little oversight as possible.
Trump’s energy secretary nominee, Chris Wright, will assuredly shut down the LPO once he is confirmed. But that may not be enough. He should go a step further and do what the Biden administration refused to do: make sure that no contractor working on loan approvals has any professional relationships with the loan applicants he evaluated.