Legislators support clawback of fraudulent energy tax credits
Published 8:00 am Friday, November 4, 2016
- EO MEDIA GROUP - The legislative oversight committee considering the future of the Oregon Department of Energy Friday encouraged the Department of Justice to recoup money obtained through improperly issued Business Energy Tax Credits.
SALEM — Members of a legislative committee assessing the future of the state’s energy department agreed Friday that they would “encourage” the Oregon Department of Justice to find ways to recoup money lost to renewable energy projects that may have improperly received tax credits.
The Business Energy Tax Credit program, referred to by its acronym, BETC, has become the bane of the Department of Energy in recent years, after allegations that the program was improperly administered.
All in all, about $1 billion worth of tax credits were issued to scores of wind, solar and other renewable energy projects, and more than $300 million worth of credits have been called into question after auditors labeled scores of projects “suspicious” or “concerning.”
Although auditors hired to inspect the program this year found no “direct” evidence of fraud in the administration of the BETC program, they forwarded a host of projects that received credits under suspicious circumstances to the Attorney General’s Office for further review.
A list of those suspicious projects — including multiple projects at the same site address and projects that exceeded costs eligible for the credits — was released publicly last week.
The Department of Justice, through a spokeswoman, said earlier this week that DOJ was reviewing the projects for any potential civil or criminal violations.
Some members of the legislative committee expressed interest in opportunities to reclaim what auditors estimated was about $347 million in tax credits issued to projects that provoked auditors’ “concern.”
Sen. Doug Whitsett, R-Klamath Falls, described some of the suspected problems outlined by auditors.
“…The people of Oregon have not been reimbursed for any of that,” Whitsett said. “Where is the opportunity within this BETC program, if any, to claw back some of this stuff, to get some of that money back?”
One of the committee’s chairs, Sen. Lee Beyer, D-Springfield, agreed that the department ought to encourage DOJ to recoup any “ill-gotten” money, but noted that the committee should be “realistic” about already-issued credits and that the cost of recouping those amounts could be higher than what may be recovered.
Under Oregon law, the energy department can suspend or revoke tax credits in certain circumstances, such as when the certification is obtained by misrepresentation or fraud, or when the facility is not in operation.
However, that statute did not include those exact provisions throughout the entirety of BETC’s lifetime, and department officials have previously said it can be difficult to recoup money, as some tax credits were sold to other entities.
Beyer added that the attorney general is an independently elected official.
“We have no control over the Department of Justice,” Beyer said.
Bentz said the approximately $300 million allegedly lost to “concerning” projects stuck in his mind.
“We just want to make sure we’ve asked the right people to look into that and make sure we’re not leaving $300 million somehow on the table,” said Rep. Cliff Bentz, R-Ontario.
More broadly, legislators agreed, language should be included in the committee’s final recommendations reflecting “lessons learned” from the failures of the BETC program.
Bentz advocated for determining what benefits the state may have gotten out of the program, although, he said, “I don’t want to spend huge amounts of time delving through the wreckage.”
The Department of Energy’s future has been under review by the committee since January, after several significant issues, including the BETC program, came to the fore.
In the first draft of a report released this week, the committee’s co-chairs, Beyer and Rep. Paul Holvey, D-Eugene, stated there is a continued need for the department and suggested the governor appoint a board to oversee it.
They identified problems with a longstanding loan program for small-scale local energy projects, and noted controversy over the process of siting energy facilities and over the annual fee that energy suppliers are supposed to pay to the department.
The discussion on potential clawbacks came in the context of the committee’s broader recommendation that future energy incentives offered by the state ought to track project performance and outcome.