Gov. Phil Bredesen said Tuesday that a private investment deal is back on track following discussions between the company and the head of a legislative panel that questioned a state-backed biofuels initiative in East Tennessee.

The Legislature's Fiscal Review Committee last week delayed approval for an $11 million contract to operate the University of Tennessee plant to turn switchgrass into ethanol. The Democratic governor responded that the move was "outrageous," and could have scuttled a previously unannounced investment related to the project.

But subsequent conversations between the head of the legislative panel, Republican Sen. Bill Ketron of Murfreesboro, and the company have soothed fears over the future of the project and returned the deal into "good shape," Bredesen told reporters Tuesday.

"When you're a sophisticated company I think you sometimes understand how politics works," Bredesen said. "Once we convinced them this was not some rump effort to turn Tennessee away from a commitment to solar power, but really something that was much more of a political transaction, I think it made them comfortable."

Bredesen said he considers the switchgrass project among the state's solar power efforts because it is made from a renewable resource grown by the sun.

"I think we've got this all straightened out," said Ketron. "We see the opportunity for the citizens of Tennessee and we'll move forward in this."

As originally envisioned, the facility was to produce 5 million gallons of ethanol per year that could be sold to pay the operating costs of the research refinery. Under subsequent changes, the facility will now produce only about 250,000 gallons annually.

Officials say that's enough to determine whether the process of turning switchgrass to fuel will work for a full-size refinery, but the legislative review staff said it's not enough to pay for ongoing costs.

After a presentation from Jim White, the panel's executive director, several lawmakers raised questions about the project and Ketron suggested future investment could fall victim to the state's budget crunch.

Ketron on Tuesday chalked up those concerns to a lack of communication between the administration, lawmakers and White. Had they known about the potential third-party investment, "it would have changed the whole perspective," he said.

"We just all need to be focused on working together and communicating," Ketron said.