Since the $25b bailout is a done deal, it’s tempting to think of the “debate” as a fait accompli. Not so. The Department of Energy (DOE) still has to meet with lobbyists study the bill and write-up the regs. Although RF reckons the DOE won’t be rushed (that much), Motown’s white hot for the green, encouraging bailout backers to fire-off warning salvos even before the President’s signature clears the cash. As Green Car Congress reports, Senate Energy & Natural Resources Committee chair Jeff Bingaman (D-NM) is pre-threatening his pals at the DOE.
I have been told there may be some confusion about the terms of the loans as the provision creating the loan program references the “activities” that are the subject of a grant program also authorized in the same section of EISA. The grant program is limited to 30 percent of the costs of a facility. This is a fairly typical cost share for grant programs. Some have raised a question as to whether this 30 percent cap should also apply to the loan program. That is not the way I read the language of the law and was certainly not our intent in writing the provision.
Moreover, I would argue that it would dramatically limit the effectiveness of the program as it would require companies to go to tight credit markets for 70 percent of their financing, precisely the problem we were seeking to remedy with the creation of the loan program. While I don’t expect the Department of Energy to take this limited view of the program, I wanted to go on record here to help alleviate any confusion that may exist. I look forward to working with the Department to aid them in getting this program up and running.
This is an example of why people have such low regard for politicians – of any party.
Here we have an example of legislators actually making an extra effort to not be specific when writing legislation. They knew all along that it would be easier to strong arm the administrators when it came to actually enacting the legislation.
Better to be vague, and have an escape excuse (when things don’t work out…) then to put on paper exactly what they want to do.
Lawyers to the rescue. This is the time for interested parties to sue to restrict the conditions under which money can be handed out. An injunction or two should clog up the works to weed out the most egregious giveaways. Probably won’t happen, but should. Given this is about money, that is money needed by the company to improve MPG, etc., and since money is fungible, money pissed away spent on exec salary and bonuses could be used instead for MPG improvements. Thus how about a criteria based on CEO salary?
You mean Bailout Watch #73, right?
https://www.thetruthaboutcars.com/bailout-watch-72-no-excuses/
Reading the language in the original bill, this section of EISA is far more difficult to interpret than Sen. Bingaman would lead you to believe. The Green Car Congress has an additional quote in their article from the legal counsel for the Senate committee saying that “capping loans at 30% of costs would be weird. I don’t think we’ve done that before.” Just because they’ve never done it that way doesn’t mean that they wrote the original bill clearly enough to sidestep any potential misinterpretation. Seriously, who drafts this stuff? Lawyers or lobbyists? Oh, wait…
Anyway, definitely plenty of fodder here for lawyers, though I have no idea who would take the DOE to court over this program.
One interesting facet of the loan program is that the recipient “must be financially viable without the receipt of additional Federal funding associated with the proposed project,” and must provide “sufficient information…to ensure that the qualified investment is expended efficiently and effectively.” Although it’s certainly wishful thinking, it would be great if this opened a window to the Detroit 2.8’s ledgers. Of course, if this provision were actually applied, would any of them qualify for the loans? Given their current credit rating, I’d say it’s extremely doubtful.
Working in the drinking water industry, I am familiar witht he loans provided to water systems and 1)there are caps on the amount of the loan presumably to keep a few large water systems from sucking up all the milk fom the government teat, 2) the water systems must also show that they are financially viable before they can receive a low or no interest government loan. And, lets remember this is for a necessity that is basically supplied to a captive audience – it’s kind of hard to shop around for a water utility to supply your house seeing as how their will be only one with pipes in the ground to your house and they probably have an exclusive right to supply water to the area where you reside. Why would we have reduced requirements for the provider of a luxury? If GM went belly up would there be no cars for Americans to drive? If your local water system falls apart there really is no other provider of water.
Looks like Jerry Flint is jumping off the Big 3 bandwagon…
http://www.forbes.com/business/2008/09/25/bailout-detroit-autos-biz-cz_jf_0925flint.html?partner=autos_newsletter
easier to strong arm the administrators
This is harder than you might think. Career bureaucrats have nothing to fear from the likes of a Bingaman, and DoE political appointees know they will be out come inauguration time (no matter which candidate wins because the winner will fill those positions with his people). I wouldn’t be surprise if many DoE political appointee positions are actually filled by career bureaucrats in “acting” positions as the political appointees flee the lame duck administration for the private sector. This is a fact of the Federal government world.
Bingamen may be trying to influence the new administration’s appointees but they won’t be in position until March at the earliest. He may be generating fodder for appoinment hearings in the Spring.
Methinks all of this will play out too late for the Detroit3. Bureaucracies don’t move at the speed of buisness or politics, and sometimes for a very good reason.
From Wednesday’s WSJ:
But an Energy Department spokeswoman said Tuesday that Congress failed to lift several restrictions on that process, making it more difficult to meet the (60 day) timeline. She earlier estimated that it could take between six and 18 months to complete.
“Congress set a timed deadline of 60 days for the regulations to be issued — not for the loans to be made,” department spokeswoman Healy E. Baumgardner said in a statement Tuesday. “Specific statutory requirements outline administrative and legal procedures which will require a longer timeframe for full implementation of the program….Congress had the opportunity waive one or more of these requirements enabling for a faster process, but failed to do so.”
Ahhh, bureaucracy at work. It’s lovely in its own way, isn’t it?
[Thanks mel23 for the post.]