A GOP Senate candidate is blaming his opponent for a federal grant to a now bankrupt energy company - but he petitioned for the grant as well.
Republicans have jumped on the bankruptcy of the A123 battery company as an example of wasteful energy spending by the Obama administration. But one of the vocal GOP critics, in fact, requested the money in the first place.
A123 Systems, based in Massachusetts, produces lithium batteries for electric cars at two Michigan factories and was awarded almost $250 million in a grant from the American Recovery and Reinvestment Act. The company has received about half the money so far.
When it was announced early Tuesday that the company was filing for bankruptcy, former Michigan congressman and current Republican Senate candidate Pete Hoekstra quickly took to Twitter to place blame on his Democratic opponent, Sen. Debbie Stabenow.
"Obama/Stabenow choose badly with $s borrowed from China! A123 goes bankrupt and our kids are left holding the bag. Enough is enough!" he tweeted.
His Facebook page had equally harsh words. "Unfortunately for Michigan workers and families, this is another example of false hope and broken promises because of the failed Obama-Stabenow government-driven economy," a post said.
There's just one problem: Hoekstra requested the money in the first place.
When he was still representing Michigan's 2nd District back in 2009, Hoekstra seemed to think the grant was a good idea.
In fact, he joined Stabenow, Sen. Carl Levin, and 14 other lawmakers from both parties to write a letter to Energy Secretary Steven Chu petitioning that stimulus funds be spent in Michigan.
"Michigan is uniquely prepared to offer an American-led solution that meets these important goals" of job growth and clean energy, the letter said. "Establishing a North American battery center of gravity in Michigan will significantly improve the federal government's ability to more swiftly meet its ambitious vehicle electrification goals, and will pay dividends across the industrial Midwest through development of a strong supply chain."
Hoekstra's office could not be reached for comment.
But Stabenow's office shot back, accusing the Republican of hypocrisy.
"Once again national media outlets are pointing out Pete Hoekstra's hypocrisy. While he joined bipartisan efforts to grow Michigan's advanced battery industry before, he now wants to celebrate a Michigan company's hardship for political gain," Stabenow spokesman Cullen Schwarz said.
Tuesday's developments shoved President Obama's renewable energy agenda into the spotlight, just hours before his second debate with Republican challenger Mitt Romney.
A123 began the day by announcing its bankruptcy filing, along with a $125 million sale of its automotive battery business to Johnson Controls Inc. The deal, if approved by a bankruptcy court, will give Johnson the factories in Livonia and Romulus, Mich., that were funded in part by federal stimulus grant money awarded in 2009. It will also include a battery factory in China that was not backed by stimulus funds.
The company has drawn about $132 million of a total $249 million grant, and Energy Department spokeswoman Jen Stutsman said the remainder is subject to talks with Johnson Controls about its future plans for the A123 assets.
"The Energy Department’s role is to ensure that the grant money is used for its intended purpose, to establish a domestic battery manufacturing industry and support American jobs," she said. "The disposition of the remaining grant funds will be decided later as we continue to work with the new owners as they determine their plans for the future."
Johnson Controls also agreed to put $72.5 million into A123 to allow it to continue operating during the bankruptcy sale, which will mean no job losses at the factories for now.
A123's chief executive David Vieau said that it had reached the deal after backing away from a politically-controversial $465 million plan to sell a majority ownership stake to Chinese auto parts company Wanxiang Auto Group.
Vieau said in a statement only that the Wanxiang deal was abandoned because of "unanticipated and significant challenges to its completion."
Johnson Controls President Alex Molinaroli indicated in the same statement that his company planned to continue the production of advanced lithium ion batteries that A123 is making for auto companies, including General Motors, Fisker and BMW.
The scope of that future business is unknown, however, as A123 was already battling a slowdown in electric car demand and saddled with millions of dollars in costs to replace defective cells used in some Fisker Karma cars.
"Our interest in A123 Systems is consistent with our long-term growth strategies and overall commitment to the development of the advanced battery industry," Molinaroli said. "We believe that A123’s automotive capabilities are a good complement to our existing portfolio and will further advance Johnson Controls' position as a market leader in this industry," he added.
The bankruptcy at once made A123 the fourth renewable energy company to get funds under the 2009 American Recovery and Reinvestment Act to declare bankruptcy, though the other three relied on loans. A123's grant was from a $2 billion fund that has given money to 29 companies for 45 facilities in 20 states to manufacture advanced electric vehicle components.
The Energy Department director of public affairs Dan Leistikow noted in a blog post that A123 will stay in business with the infusion of cash from Johnson Controls.
"Today’s news means that A123’s manufacturing facilities and technology will continue to be a vital part of America’s advanced battery industry," he said.
Leistikow added that the government first awarded $6 million to A123 under former President George W. Bush and that the 2009 grant was sought by the entire Michigan delegation. Bush in 2007 examined a plug-in hybrid Toyota Prius on the White House South Lawn equipped with an A123 battery pack, along with a hybrid pick up truck.
A123 Systems is a Michigan-based company that makes lithium batteries for electric cars. The company received $250 million in grants from the Recovery Act, but has now declared bankruptcy, drawing fire from Republicans who are comparing it to Solyndra (another energy company that went bankrupt after taking federal money).
The American Recovery and Reinvestment Act of 2009, or Recovery Act, is an $831 billion program advocated by President Barack Obama that was designed to inject money into a stagnating economy and provide jobs while improving the infrastructure of the U.S.
