2 companies sue, alleging politics steered green energy loans

John McArdle, E&E reporter, Published: Friday, January 11, 2013

Two electric-vehicle companies sued the Department of Energy yesterday for allegedly doling out billions of dollars in green energy loans to companies with political connections to the Obama administration.

XP Vehicles Inc. and Limnia Inc., which sought and didn’t receive funding through DOE’s Advanced Technology Vehicles Manufacturing (ATVM) loan program, also charged in U.S. District Court and Federal Claims Court filings yesterday that DOE leaked patented intellectual property to favored companies.

The companies are seeking a combined $675 million in damages through the suits, which also name as defendants Energy Secretary Steven Chu and the head of DOE’s ATVM program.

The filings come after nearly two years of congressional inquiries into DOE’s loan program. Those investigations focused primarily on the now-bankrupt Solyndra LLC solar energy company but also looked into the agency’s Loan Program Office and billions of dollars in other loans.

In response to the lawsuits, DOE maintained the stance taken through the congressional probes, which were led by Republicans on the House Energy and Commerce and House Oversight and Government Reform committees.

“While the Department does not comment on pending or potential litigation, multiple investigations spanning almost two years and involving millions of pages of documents show that decisions made on the Department’s loan program were made solely on the merits after careful review by the Department’s technical experts,” DOE spokesman Damien LaVera said in an email.

In 2008 and 2009, Limnia and XP Vehicles applied for $55 million in funding through the ATVM program for two projects. Limnia sought $15 million to develop a new advanced vehicle energy storage system, and XP Vehicles sought $40 million to help produce a new gasless SUV-style vehicle that cost less than $20,000 and replaced metal doors and body panels with polymer plastics and a lightweight alloy frame.

But the companies say they were passed over in favor of competitors, including Tesla Motors Inc. and Fisker Automotive Inc., companies with deep-pocketed investors, some of which have connections to the Obama administration. Combined, Fisker and Tesla received nearly a billion dollars in ATVM loans in early 2010.

“Because DOE’s ‘merit review’ criteria and process were so opaque, the taxpayer-funded ATVM Loan Program and [loan guarantee program] became cash cows for government cronies,” the companies argued in one filing. “Politics and political pressure infected these programs, shaping, in whole or in part, the judgment of DOE’s ultimate decision makers.”

In addition, the companies argued that some of their legally protected trade secrets ended up in the hands of other ATVM loan applicants.

An attorney representing the companies in the case is Dan Epstein, a former congressional staffer who now works as executive director of the watchdog group Cause of Action.

Epstein, who had worked for House Oversight and Government Reform Chairman Darrell Issa (R-Calif.), has been involved in a number of efforts to combat what he decries as government overreach in his current endeavor.

Last year, Epstein’s group took on the Interior Department in a long-standing controversy over whether the agency should allow a California oyster farm to continue operating in a potential wilderness area. The group has also battled the Department of Energy’s energy efficiency standards, questioned political campaigning by government official and taken the Food and Drug Administration to task for ordering a man to stop the “manufacture” of his own sperm (Greenwire, Nov. 14, 2012).