Credibility-challenged DOE should release legal memo: Editorial

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Turbines at the Shepherds Flat wind farm east of Arlington, one of the controversial beneficiaries of Oregon's generous business energy tax credit program.

(The Oregonian/OregonLive file photo)

It's time to call the Oregon Department of Energy's bluff.

For years, the agency that administers the state's energy tax credit programs has overseen a giveaway of tens of millions of dollars worth of credits to projects that didn't meet requirements or bent the rules into pretzels to get there. The costs and abuses of the Business Energy Tax Credit program grew so embarrassing that legislators finally killed it in 2014. But millions of tax credits from BETC and its successor program live on, and, it turns out, so does DOE's dubious management.

As The Oregonian/OregonLive's Ted Sickinger reported last week, the energy department wants to enact permanent rules formalizing what it has already been doing since 2012: Allowing project developers to sell their state-issued tax credits to private investors at discounts far greater than those authorized by a state pricing formula. The agency contends that those price minimums should apply only when the energy department is brokering the transfers, not if someone else is.

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That's not what lawmakers intended when they passed legislation in 2009 designed to tighten up discounts, according to some legislators. "The statutes we've passed demonstrate clearly that we are interested in tax credit programs that do not give outsized payouts to private investors," Rep. Phil Barnhart, D-Eugene, said in a statement. "Stated another way, tax credits should be spent on the thing which 'earned' them, not on inefficient markets and insider trading."

So if that direction didn't come from legislators, where did the energy department get the idea? According to the agency, the practice is based on legal advice from their lawyers at the Oregon Department of Justice.

That's about all you'll hear, however, about this significant opinion that formed the basis for the energy department's tax-credit policy. The agency denied requests for the legal memo, claiming attorney-client privilege.

In an email to The Oregonian/OregonLive editorial board, spokeswoman Rachel Wray wrote that "we tend to not waive privilege on legal advice - doing so could have effects that we can't necessarily anticipate, including an expectation that all future communications with DOJ would be waived."

Apparently, the energy department believes that somehow it gives up its attorney-client privilege in perpetuity by releasing the memo, an absurd conclusion particularly considering that the energy department has released legal advice previously when legislative interest warranted it.

The absurdity doesn't end there. The department has not answered basic questions about the state-produced memo. Inquiries about who authored the memo, what question prompted it, who requested it, with whom it was shared and even the date of its drafting are all, apparently, state secrets.

All this hemming and hawing makes you wonder just how solid a legal opinion it is and what it was trying to address. Yet, this advice provided the justification for the agency to subvert legislative intent and allow deeply discounted transfers of tax credits for the past three years.

The Justice Department has already launched a criminal investigation into the awarding of $11.8 million in tax credits to an Oregon University System solar project despite faked documents and missed deadlines. At the very least, that investigation should be expanded. DOE's broken management is a problem that doesn't seem to go away.

But in the meantime, Gov. Kate Brown can help reinforce a message of transparency across state government. If the energy department won't release the memo, it's time for her to step in and tell the agency to show its hand.

- The Oregonian/OregonLive editorial board

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