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Darrell Issa Vs. First Solar: Can Politics Sink the Stock?

Stocks in this article: FSLR

"The First Solar Scheme" has three sections: (1) the obviously political aims of a Republican opponent of the president; (2) the technical aspects of the DOE loan program and the original congressional language that authorized the loans -- which Issa says the DOE violated in granting First Solar project loans; and (3) the scope of Issa's Oversight committee as a matter of House procedures in determining the fate of any First Solar project loan guarantee.

Politics and House procedures favor First Solar. The technical issues related to the language used in the congressional authorization may seem complicated, but they are fairly straightforward. One thing that has become clear to me in all the time covering the DOE loan guarantee program and Solyndra is the extent to which the DOE was extremely deliberative in this process, with it being brand new territory for all concerned. In the words of several lawyers with whom I have spoken, who represented projects that applied for the DOE loan program, the one phrase used over and over again to describe the process was that it's "like a slow death."

This process makes for a voluminous file of emails to cherry-pick from in making allegations. In the end, there does not seem to be any smoking gun for Issa among the thousands of words he expended in his damning House report .

The political aspects of the Issa vs. First Solar situation can be boiled down to three findings.

  • Political issue No. 1: Issa gets a lot of backing from the oil and gas lobby.
  • In fact, an analysis of oil and gas campaign contributions done by the Center for Responsive Politics in 2011 showed that Issa led all members of the House Committee on Oversight and Government Reform in contributions from oil and gas. While oil and gas is not Issa's No. 1 source of lobbying contributions, he even passed oil state Oklahoma Republican James Lankford in terms of committee members. As of 2011, Issa was also seeing a steadily increasing level of cash from the oil and gas lobby compared with earlier in his career, according to the Center for Responsive Politics. Issa's home state of California is one of the country's top oil producers.

  • Political issue No. 2: Issa bleeds a lot of ink over First Solar's Agua Caliente project, before admitting he has no real case to make against it.
  • Issa argues at length in "The First Solar Scheme" that the use of inverter technology on the First Solar Agua Caliente project was not a legitimate way for the DOE to define the project as being "innovative."

    The way the word "innovative" is defined in the DOE loan program authorization -- applying to the Energy Policy Act of 2005 and the stimulus act of 2009 -- is the central debate point in Issa vs. First Solar.

    Issa argues that since First Solar thin film panels were not innovative, the company had to turn to other technologies being used on the project -- an inverter that allows the energy generated from the panels to switch between the AC/DC currents.

    The House report refers to the process of using an inverter for the purpose of meeting the "innovation" stipulation as "falsification" and "highly questionable," primarily because these inverters had been in use in Europe for years.

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