SolarCity, the California-based solar-energy giant that will benefit from $750 million in New York State investments to open a production facility near Buffalo, is a subject in two separate federal probes of its business practices.
The company, which has expanded on Long Island to more than 100 employees with the explosion in the popularity of leased solar power systems, has acknowledged the probes.
In Securities and Exchange Commission filings as recently as August, SolarCity said it is cooperating in a two-year investigation by the U.S. Treasury's inspector general and the civil division of the U.S. Department of Justice into "possible misrepresentations concerning the fair market value of the solar energy systems submitted by [SolarCity] in U.S. Treasury grant applications."
If misrepresentations are found, SolarCity said, the Justice Department "could decide to bring a civil action to recover amounts it believes were improperly paid to" SolarCity, which "could be required to pay material damages and penalties for any funds received."
Separately, SolarCity in its filings said it has been the subject of a wage-and-hour investigation by the U.S. Department of Labor, initially at its Foster City, California, facility. Since then, the department requested information regarding certain employee positions in the company going back to 2010, according to the filings.
In February, the Labor Department told SolarCity it had made a preliminary finding "that some of its employee positions were not properly classified," though no penalties or damages have been assessed.
If the Labor Department finds that SolarCity violated labor laws, the company "would be required to make the appropriate payments of back wages and other amounts to employees, and the company might be subject to fines or penalties," according to the filings.
SolarCity spokesman Jonathan Bass said that the federal scrutiny of the company's federal grant applications was part of a broader review of the program, which provides federal tax credits of 30 percent for the value of solar-energy installations. "Reviews like that are not unusual," he said, adding the company "followed all the rules of the program."
Bass noted that it's been more than two years since the probe began and the authorities "haven't asserted any claims or made any allegations of wrongdoing."
Last week, Gov. Andrew M. Cuomo announced that the state would invest $750 million to build what it termed the largest solar panel manufacturing plant in the Western Hemisphere under the SolarCity brand. Under the agreement, the state will spend $350 million to build and own the facility, and allow SolarCity to use it free for a decade. The state also will provide $400 million in loans for equipment to SolarCity tied to jobs and investments by the company.
If the targets are missed, SolarCity could be forced to repay the state up to $41.2 million annually.