ATLANTA —
Government officials who approved financing for a failed
south Georgia ethanol fuel plant that cost taxpayers at least $75 million did
so despite repeated warnings and strong opposition by some of the federal
overseers who reviewed the projected.
The Atlanta Journal-Constitution (http://bit.ly/OIbiRu)
reported Sunday that documents obtained under a Freedom of Information Act
request show the doubts that were surrounding the Range Fuels plant at
Soperton, Ga., before it obtained government backing.
Located about 80 miles west of Savannah, the Range Fuels
operation was proposed to transform wood chips into ethanol fuel, but it closed
last year without producing any usable ethanol. Taxpayers lost at least $75
million in loan guarantees and grants.
The newspaper reported that Hosein Shapouri, a senior
economist with the U.S. Department of Agriculture in Washington, in late 2008
issued a critique that called the proposed Range Fuels plant "a high risk
venture" that should raise "a red flag." Three weeks later, top
USDA officials approved the guarantee anyway; in all, it received access to
some $162 million in government money, including $6.2 million from the state of
Georgia.
The documents show that three USDA officials who vetted the
project approved it, and three opposed it. Three others who made critical
comments about the proposal had their opinions redacted.
Shapouri, now retired, said decision-makers dismissed Range's
many, easily detectable faults.
"Nobody ever expected them to produce anything," he
said in an interview. "I told them not to finance it. They didn't listen
to me. They decided to rush, rush, rush and give them the money."
Federal officials say they learned from the Range Fuels
collapse and have established safeguards to prevent recurrences.
"While the Agency is disappointed that this one company
did not succeed . it is important to remember that USDA has a long history of
successful lending that supports rural homeowners, business owners, utilities
and cooperatives," the agency said in a statement to the newspaper. The
agency said the delinquency rate on more than 1 million loans is a scant 2.16
percent, although relatively few involve alternative energy.
Government support for alternative energy has become a
hot-button political issue, pitting the promise of energy independence against
the prudent use of tax dollars. Both the Bush and Obama administrations
strongly supported Range Fuels, which was expected to showcase the feasibility
of cellulosic ethanol, as did politicians of both parties keen to bring jobs to
Georgia.
Washington continues to hand out grants and guarantees for
the commercially unproven technology which attempts to turn wood pulp into fuel
for cars and trucks. Last month, USDA approved a $99 million loan guarantee for
a North Carolina grass-to-fuel factory.
Opponents criticize giving taxpayer dollars to deep-pocketed
corporations and entrepreneurs like Vinod Khosla, the billionaire co-founder of
computer giant Sun Microsystems and primary financial backer for Range Fuels.
They liken the Range fiasco to the failure of Solyndra, the solar energy
project that received $535 million in federal guarantees and produced only
political heat for the Obama administration.
"Solyndra had a lack of due diligence just as Range
Fuels did," said Sam Shelton, founding director of the Strategic Energy
Institute at Georgia Tech. "It really hurts me to see Energy and
Agriculture department moneys poured down the drain. Government should be
involved in a lot of things, but commercialization of technologies isn't one of
them."
Another alternative energy company — also backed by Khosla,
who declined comment to the newspaper — bought the foreclosed Range Fuels
factory for $5.1 million and plans to produce ethanol using a different method.
Williamson said the new company - which is using the taxpayer-funded machinery,
but not getting additional aid - expects to one day honor the job-creation
goals that triggered Georgia's grant to Range Fuels.
The breakdown of taxpayer losses includes $43.6 million from
DOE and $32 million from USDA. Georgia's loss is $6.2 million - unless the
factory's new owners succeed
USDA now requires more technical and financial information
before, and after, approval of a loan guarantee.
"Obviously, hindsight is perfect," said Brian
Williamson, deputy commissioner of the Georgia Department of Community Affairs.
"If we got the same deal tomorrow, we would use what we experienced from
Range and learn from it."
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