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Economy

The Trump administration wrongfully withheld funds from a popular energy program, a federal watchdog rules

By Steven Mufson

December 12, 2017 at 4:32 PM

U.S. President Donald Trump speaks before signing the National Defense Authorization Act (NDAA) for fiscal year 2018 on Tuesday, Dec. 12, 2017. The NDAA authorizes $626 billion of the base budget resources for the Department of Defense and the national security programs of the Department of Energy . Photographer: Joshua Roberts/Bloomberg (Joshua Roberts/Bloomberg)

The Trump administration ­violated the law by wrongly withholding funds for a popular Energy Department program supporting innovation, the Government Accountability Office said Tuesday.

The GAO said the Trump administration had violated the Impoundment Control Act by failing to spend $91 million budgeted for the Energy Department's Advanced Research Projects ­Agency-Energy (ARPA-E). The program supports the research and development of novel energy technologies.

The GAO said the administration has since released the funds, which were part of the fiscal 2017 budget, but the report points to a tactic that Democrats worry could be used again for the nullification of spending already approved by Congress.

In another dispute over federal energy spending, the administration is urging Congress to abolish the Energy Department's loan guarantee programs, aimed at giving projects a boost for commercial development. The current drafts of spending bills in the House and Senate would cut about $22 million needed to administer $41 billion in available funds under the Energy Department's Title XVII and advanced vehicle program.

However, the administration has made an exception by awarding Southern Co. and its partners loan guarantees of $3.7 billion to help finish building a pair of nuclear reactors in Georgia. The big loan guarantees for the nuclear reactors — as well as one for a chemical plant in Louisiana that the administration supports — would be the last ones to squeeze in before the loan program's final deadline.

Dozens of other projects are in the pipeline awaiting approval and will probably be left out unless Congress restores the money needed.

The GAO report addresses worries that the Trump administration could cut programs that have the support of Congress and have lines in the federal budget.

The Impoundment Control Act was adopted in 1974 because of fears in Congress that President Richard M. Nixon was abusing his power by withholding funding for programs that he opposed but that Congress had adopted. The act required the president to notify Congress if he wanted to rescind certain items of budget authority — and Congress would then have to act to block him.

"When Congress provides money for the executive branch, the President must spend that money," the GAO's deputy general counsel, Emmanuelli Perez, said in a statement. "An agency violates the law if it intentionally slows down or halts spending in response to legislative proposals to reduce or eliminate a program. Agencies generally cannot halt a program because an administration doesn't support the program."

Sen. Maria Cantwell (Wash.), the ranking Democrat on the Senate Energy and Natural Resources Committee, who wrote a letter about the issue in May signed by 27 of her colleagues, said she was "deeply troubled" by the GAO's report. "These actions ignore Congressional intent, and are explicitly prohibited by law," she said. "The President cannot ignore statutory requirements or funding direction provided by Congress."

In the case of ARPA-E, the administration planned to simply cancel half of the unspent $91 million and use the other half to shut down the program, which was not its legislated purpose.

"Agencies may only withhold budget authority from obligation if the President has transmitted a special message to Congress," the GAO said.

The Trump administration's opposition to federal loan guarantees could also deal a blow to efforts to commercialize new energy technologies. As part of his economic stimulus plan, President Barack Obama pumped more funds into the loan guarantee program, adopted as part of the Energy Policy Act of 2005.

Lobbyists for the program say the Trump administration is making a mistake because its cost is minimal.

Despite the failure of a handful of firms, including the infamous bankruptcy of solar panel maker Solyndra, the loan guarantee program has made about $2 billion and created jobs while improving the nation's energy infrastructure.

Supporters argue that the federal support for five initial utility-scale solar projects has helped generate enough investor confidence and technological advances to fund 43 similar-size solar projects without federal loan support.

The loan programs, designed to bridge the gap between research and private financing, have also been used to aid Tesla's electric vehicles, Ford's drive for more efficient internal combustion engines and energy storage for renewables.

"The appropriate function of government is to support new technologies, even though some could fail, so that society would benefit while creating jobs and improving competitiveness," said Craig "CJ" Evans, a lobbyist and managing director of America First, an energy consulting service.

Mick Mulvaney, the Trump administration's budget director and a former House member, has long been a foe of the Energy Department's loan guarantee program. "I'm tired of people coming to the government as part of their business plan," he said at a House hearing in 2012. "As someone who came from the private sector, I'm sick of it."

The glaring exception is Southern's Georgia Power subsidiary and its partners, whose project has been buffeted by delays and cost overruns and by the bankruptcy of the nuclear project's main contractor, Westinghouse.

The administration's offer of loan guarantees would substantially reduce borrowing expenses, a critical part of the entire project's cost.

The money would come from the Energy Department's nuclear loan program. The Obama administration gave this same project $8.3 billion in loan guarantees.

The Trump administration has also made an exception for up to $2 billion in loan guarantees for Lake Charles Methanol to construct the first methanol production facility to employ carbon-capture technology in Lake Charles, La.

The Obama administration offered a conditional commitment to the project in December 2016, but Lake Charles Methanol needed an extension beyond the end of the fiscal year to qualify for the guarantees.


Steven Mufson covers energy and other financial matters. Since joining The Washington Post in 1989, he has covered economic policy, China, U.S. diplomacy, energy and the White House. Earlier he worked for The Wall Street Journal in New York, London and Johannesburg.

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Economy

The Trump administration wrongfully withheld funds from a popular energy program, a federal watchdog rules

By Steven Mufson

December 12, 2017 at 4:32 PM

U.S. President Donald Trump speaks before signing the National Defense Authorization Act (NDAA) for fiscal year 2018 on Tuesday, Dec. 12, 2017. The NDAA authorizes $626 billion of the base budget resources for the Department of Defense and the national security programs of the Department of Energy . Photographer: Joshua Roberts/Bloomberg (Joshua Roberts/Bloomberg)

The Trump administration ­violated the law by wrongly withholding funds for a popular Energy Department program supporting innovation, the Government Accountability Office said Tuesday.

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