Energy Inspector General Warns Again of Risk in Green Loans Program

The Department of Energy in Washington on July 31, 2023. Madalina Vasiliu/The Epoch Times

The Department of Energy’s rush to fund new green energy projects before the end of President Joe Biden’s presidency has met renewed criticism from the Department of Energy inspector general.

In a Dec. 17 interim finding, Inspector General Teri Donaldson warned that $385 billion in new money made available by the Inflation Reduction Act and related bills is being administered without adequate safeguards against organizational conflicts of interest.

“This poses a significant risk of fraud, waste, and abuse,” the memorandum states.

A Department of Energy spokesperson told The Epoch Times via email that the memorandum chastising the department’s Loan Programs Office (LPO) was riddled with errors.

“We stand confident in knowing LPO is in full compliance with the Department of Energy’s conflicts of interest regulations and take conflicts of interest very seriously,” the spokesperson wrote.

The LPO, which now has a portfolio in the hundreds of billions, was previously administering just $17.2 billion in loans as of 2021. It has been led since March 2021 by Jigar Shah, who previously worked in green energy.

Donaldson’s memorandum notes that it was issued because the LPO stated it intends to issue $22 billion in loans and loan guarantees before leaving office, on top of the $15 billion since 2021.

The interim report came out the same day that the LPO announced its conditional commitment of up to $15 billion to the California utility Pacific Gas & Electric for additional transmission capacity, hydropower, and more.

November IG Report Voiced Similar Concerns

The latest memorandum follows a November report from the IG outlining similar concerns with the LPO.

It cited concerns with the rapid timeline for disbursing financing, the potential for funding foreign adversaries, and the number of applications being processed.

The November report warns of “tremendous risk to the taxpayer” posed by the LPO.

In response to that report, Republicans on the House Committee on Science and Commerce wrote to Shah requesting that he pause any new loans or related moves in the waning days of the Biden administration.

“On election day, the American people rejected the Biden–Harris administration’s rush-to-green agenda. To honor the will of our electorate and facilitate an orderly transition, we insist that the Biden–Harris administration cease its campaign to quickly distribute federal funding before the incoming administration takes office,” that letter states.

The new memorandum delves into the IG’s concerns and applicable law, including the Federal Acquisitions Regulations.

“The OIG [Office of Inspector General] audit team was surprised to learn that the LPO does not ensure that contracting officers and contracting officers’ representatives track third-party experts,” it states, noting that the Federal Acquisitions Regulation mandates scrutiny of possible conflicts of interest.

The memorandum states that the office “had no records of disclosures made or waivers requested for the technical/engineering, financial, and other support contractors.”

It also states that the LPO’s prime contractor, Archetype, did not follow elements of a required organizational conflict of interest management plan.

“The LPO was unaware that the contractor had not implemented key aspects of the plan, such as the training requirement, which is arguably the foundation of the contractor’s organizational conflict of interest strategy,” the memorandum states.

The memorandum calls for immediate action by the LPO’s director, including the temporary suspension of loan and loan guarantee packages ahead of any corrective steps by the LPO.