When the Government Stands Up for Taxpayers - FINALLY!
Yes, you read that headline correctly, and no, it’s not April Fools’ Day. The Department of Treasury is seeking to recoup taxpayer dollars it dispensed in the form of a loan guarantee to Thompson River, a now-bankrupt green energy company. Perhaps as infrequent as Haley’s comet, it’s worth marking the day that Washington seeks to mitigate the harms it has inflicted on taxpayers.
No different from the other green energy companies who went into bankruptcy despite receiving government loan guarantees and/or cash grants, Thompson River attempted to provide a product that lacked commercial viability. And so despite the $5 million (to be exact: $5,172,064.80) in taxpayer money, Thompson River was unable to compete in the market.
A recent article in The Wall Street Journal provides a succinct rundown of the purpose of the grant and what went wrong with Thompson River’s financials to force it to declare bankruptcy. ‘The grant to Thompson River…was to convert a coal-fired plant to burn wood, which is considered a ‘renewable’ power source. But since receiving the money, the plant never operated either as a coal- or wood-burning plant… and has produced neither power nor new jobs. It is now mothballed. It is not known how many new jobs the firm promised to create, or how many currently are employed at the plant.”
This brings attention to another important point that exposes one more place where the promises included in Obama’s 2009 stimulus plan have proven to come up short. In lobbying in support of the stimulus, Obama sold the superfluous amount of spending in his plan by justifying that the spending – in his terms, investment – was worth the initial costs because of the amount of jobs that would be created as a result. But as The Wall Street Journal article explains, “The  program has given out more than $11 billion, the Treasury Department says. While it’s difficult to calculate the exact number of jobs that were created because of the 2009 stimulus, there’s no question that in the case of Thompson River project no jobs were created.” (emphasis added).
However, thanks to Treasury’s recent announcement that it will seek to recover the $5 million in lost taxpayer money, we can be encouraged that the government will begin to seek funds from other green energy companies that have failed. Hopefully the trend of the government attempting to get our hard earned money back from companies that should never have received it in the first place will replace and put to bed the trend of the government using your money to back industry losers.
But like everything in life, this initial piece of good news must be met with cautious optimism. As a bankruptcy lawyer with DLA Piper explained “since the federal funding came in the form of a grant, it may be difficult to recoup the money through the Chapter 7 bankruptcy process unless the government can show that Thompson River failed to comply with the terms of the grant or committed some kind of ‘misconduct.’”
While this shouldn’t stop the federal government from fighting to get taxpayer money back, Congress has introduced an important bill, the “No More Solyndras Act”, which if made into law would ensure that your hard earned money is never put on the line again to back such risky bets like Abound Solar, Spectrawatt, Beacon Power, Solyndra and many more.