[Senate Hearing 111-478]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 111-478
 
             AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009 

=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                                   TO

     EXAMINE THE DEPARTMENT OF ENERGY'S IMPLEMENTATION OF PROGRAMS 
AUTHORIZED AND FUNDED UNDER THE AMERICAN RECOVERY AND REINVESTMENT ACT 
                                OF 2009

                               __________

                             MARCH 4, 2010


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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                  JEFF BINGAMAN, New Mexico, Chairman

BYRON L. DORGAN, North Dakota        LISA MURKOWSKI, Alaska
RON WYDEN, Oregon                    RICHARD BURR, North Carolina
TIM JOHNSON, South Dakota            JOHN BARRASSO, Wyoming
MARY L. LANDRIEU, Louisiana          SAM BROWNBACK, Kansas
MARIA CANTWELL, Washington           JAMES E. RISCH, Idaho
ROBERT MENENDEZ, New Jersey          JOHN McCAIN, Arizona
BLANCHE L. LINCOLN, Arkansas         ROBERT F. BENNETT, Utah
BERNARD SANDERS, Vermont             JIM BUNNING, Kentucky
EVAN BAYH, Indiana                   JEFF SESSIONS, Alabama
DEBBIE STABENOW, Michigan            BOB CORKER, Tennessee
MARK UDALL, Colorado
JEANNE SHAHEEN, New Hampshire

                    Robert M. Simon, Staff Director
                      Sam E. Fowler, Chief Counsel
               McKie Campbell, Republican Staff Director
               Karen K. Billups, Republican Chief Counsel

























                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Bingaman, Hon. Jeff, U.S. Senator From New Mexico................     1
Dalton, Patricia, Managing Director, Natural Resources and 
  Environment, Government Accountability Office..................    11
Murkowski, Hon. Lisa, U.S. Senator From Alaska...................     2
Nellenbach, Michele, Director, Natural Resources Committee, 
  National Governors Association.................................    20
Rogers, Matthew, Senior Advisor to the Secretary for Recovery Act 
  Implementation, Department of Energy...........................     4
Woolf, Malcolm, Director, Maryland Energy Administration, and 
  Vice Chair, National Association of State Energy Officials, 
  Annapolis, MD..................................................    26

                                APPENDIX

Responses to additional questions................................    55


             AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009

                              ----------                              


                        THURSDAY, MARCH 4, 2010

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:03 a.m. in 
room SD-366, Dirksen Senate Office Building, Hon. Jeff 
Bingaman, chairman, presiding.

OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW 
                             MEXICO

    The Chairman. OK, why don't we get started. Thank you all 
for being here.
    The purpose of this hearing is to focus on the progress 
that the Department of Energy has made in implementing the 
Recovery Act in the year that has elapsed since it was passed. 
This is an important effort, both to create high quality jobs 
in the near term and also to begin to reverse the course that 
we've been on of under investing in our country's 
competitiveness in clean energy technology.
    While we all feel the urgency to get these programs moving 
and to generate jobs, I'm glad to see that there's been some 
real progress in recent months on that front. It's also 
important that we be sure these investments are the right 
investments. So, I look forward to hearing the testimony today 
on both of those issues.
    The scale of the investment that the Department has been 
asked to manage is very substantial. In many cases, programs 
were either never funded before or were funded at a level that 
is a fraction of what was provided in the Recovery Act. This 
was a particular challenge for State and local officials who 
faced constrained local budgets even as they tried to scale up 
their management of new Federal funds, and the reporting and 
accountability requirements that went with those new Federal 
funds.
    I believe the care that the Department and its partners in 
the States have exercised in setting up these programs will pay 
great dividends over the long term. The energy infrastructure 
needs of the country are so substantial that I think we can 
only regard these investments as a downpayment. If we can get 
the market incentives as they should be and provide some of the 
initial support that's needed, I believe there are substantial 
private-sector funds ready to be invested in these areas.
    We've heard testimony before here in the committee that the 
scale of potential for investments in the energy sector dwarfs 
previous investments that were made in the information sector 
or in biotechnology. Those are 2 areas where the United States 
has led the world. So, if we're to similarly lead in clean 
energy and reap the associated benefits in economic and energy 
security, it will take a sustained commitment and a urgency of 
purpose to do that. I think the Recovery Act has had that as 
one of its purposes, and we're anxious to hear how that's 
coming and what to expect in the future.
    So, let me defer to Senator Murkowski for her comments, and 
then I'll introduce our witnesses.

        STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR 
                          FROM ALASKA

    Senator Murkowski. Thank you, Mr. Chairman.
    Welcome, to all of our witnesses this morning. I appreciate 
you being here and your expertise in this area.
    As many of you know, I did not support the American 
Recovery and Reinvestment Act last year. During the debate on 
it I detailed some of the concerns that I had at that time, 
including those that are related to the energy sector, that it 
was not timely, targeted, and temporary, as we had hoped, that 
green jobs, that shovel-ready projects would not materialize as 
promised, and that unprecedented Federal spending was not the 
only way to overcome our economic challenges. I had some 
criticism.
    That criticism remains, as recently as just 2 weeks ago, 
when we came to that first anniversary marker. I think it's 
fair to say that there's still some pretty wide division over 
whether the bill is intending what we had hoped it would 
accomplish.
    But, we're not here to debate that. That's a good thing. 
We're here to review just one part of it, and that is a focus 
on the Department of Energy.
    The DOE received nearly $37 billion. I think this hearing 
gives us an opportunity to determine whether those funds are 
being disbursed in a timely and in an effective manner.
    I will have say though, that I have been disappointed, with 
the Department's record, as we understand that DOE has just 
spent out just over 7 percent of its funding in the past year. 
The Web page ProPublica developed this information. You have to 
look all the way down to the bottom of the page to get to the 
DOE, because it's in next-to-last place amongst the Federal 
agencies.
    Now, I'm sure we'll hear this morning that it's 
bureaucratic delays that have hampered spending. To no one's 
surprise, it appears that much of that delay can be pointed 
back to those of us here and the decisions made in Congress. 
The joke that, ``Congress does cut the red tape, but it cuts it 
sideways.''
    With regard to weatherization, we had a tried-and-true 
program that already exists within DOE. We haven't seen the 
splash that we anticipated. Some areas where spending is 
occurring, of course, have come under fire. There's an article, 
in this morning's Post, where several of my Democratic 
colleagues have sided specifically to these wind energy 
projects and the funds going overseas or to foreign countries.
    Researchers have found that 80 percent of the renewable 
energy grants have been awarded to foreign companies, including 
nearly 200 million awarded to a bankrupt Australian company 
that built a Texas wind farm using turbines made by a Japanese 
company. It's things like this, of course, that get people 
agitated, excited, and clearly very emotional about it.
    The CBO's estimated spend-out rates, which projected a very 
low spend-out last year, increases to just 22 percent this 
fiscal year. I'm also very mindful that the stimulus 
effectiveness depends not only how much money is spent, but 
when it's spent. Some of our Nation's best economists have told 
us, over and over and over, that time is of the essence. 
They're right. We've seen the cost of last year's stimulus 
balloon by 75 billion, and I believe that is at least partially 
because of the slow pace of the expenditures that we see, and 
maybe more particularly in agencies like DOE.
    As we move forward with jobs, agenda packages here in the 
Congress, unemployment right near 10 percent, we're seeing new 
legislation that attempts to further create jobs. Here in this 
committee, this is going to be an interesting debate. We're 
more than a year into a program that was pitched as capable of 
getting the economy back on track, but only 7 percent of the 
timely, targeted, temporary funding given to the Department of 
Energy has actually been spent.
    So, Mr. Chairman, I really appreciate the hearing this 
morning. I think it comes at a very critical juncture in our 
discussions. I really do hope that we will hear some good news 
from folks today, because, before Congress commits to new 
spending, even greater deficits, we need to make sure that 
we've learned from our recent experiences in order to make the 
best possible decisions for our country and for our 
constituents.
    With that, again I thank the witnesses, and I look forward 
to the opportunity for questions.
    The Chairman. Thank you very much.
    Let me just introduce our witnesses briefly.
    Matthew Rogers is the senior advisor to the Secretary of 
Energy for Recovery Act Implementation. We very much welcome 
Matt here. He's been a witness several times before our 
committee in the past, and we welcome him back.
    Patricia Dalton is the managing director of the Natural 
Resources and Environment section at the Government 
Accountability Office.
    Thank you for being here.
    Michele Nellenbach is director of the Natural Resources 
Committee with the National Governors Association.
    Thank you for being here.
    Malcolm Woolf is the director of the Maryland Energy 
Administration. Also, he is vice chair of the National 
Association of State Energy Officials, in Annapolis. His 
location is in Annapolis.
    All right. So, why don't we start, and just go across the 
table there. If each of you could take 5 or 6 minutes and tell 
us the main points you think we need to understand, that would 
be most helpful. Then we will, of course, put your entire 
statements in the record.
    Matt, please go right ahead.

  STATEMENT OF MATT ROGERS, SENIOR ADVISOR TO THE SECRETARY, 
                      DEPARTMENT OF ENERGY

    Mr. Rogers. Thank you very much. Chairman Bingaman, Ranking 
Member Murkowski, members of the committee, thank you for the 
opportunity to appear before you today to report on the 
progress of the American Recovery and Reinvestment Act within 
the Department of Energy. I'll make my opening remarks brief. I 
have submitted a more detailed statement for the record.
    As this committee knows, the Department of Energy's 
recovery program focuses both on creating high quality jobs 
quickly and accelerating the pace of innovation to lay the 
foundation for long-term economic growth and prosperity. To 
support this work, Congress entrusted the Department with $36.7 
billion in appropriations. The Recovery Act also directed DOE 
to work with Treasury to underwrite more than $5 billion in 
clean energy tax credits and grants. These funds, combined with 
cost share and leverage, will support more than $100 billion in 
projects.
    During the last full recipient reporting period, the 
October through December 2009 period, DOE Recovery Act programs 
directly created or saved 16,300 jobs. Beyond those jobs 
reported in FederalReporting.gov, subcontractors generated more 
than 4,000 additional jobs and grant recipients reported an 
additional 12,000 jobs. As spending accelerates this year, we 
expect that tens of thousands of additional jobs will be 
created or saved under DOE Recovery Act programs.
    DOE has been focused on moving the money out the door 
quickly to create jobs and spur economic recovery. We have used 
competitive processes to select exceptional projects. We have 
increased transparency. We are building a culture of 
accountability within DOE, based on the mantra, 
``Accountability Every Day.''
    DOE's $36.7 billion in appropriations came in 4 different 
categories, each with a different time horizon and a different 
contracting vehicle. DOE received $7.5 billion in contracts, 
largely for the Office of Science and the Office of 
Environmental Management, to accelerate a set of projects, many 
of which were already underway. Today, we've obligated $6.8 
billion of these funds and outlaid $1.6 billion.
    We also received $11.2 billion in formula grants for 
States, counties, cities, and tribes through the Recovery Act. 
We've obligated $10.6 billion of these funds, and we are now 
supporting our partners as they spend these funds through local 
contracting processes. The State weatherization programs have 
contracted more than half of their funds and have outlaid more 
than $590 million as of this morning.
    The more project-based State Energy programs have 
contracted more the $770 million of their funds, and we have 
reimbursed $64 million for completed projects under the State 
Energy programs.
    The third block of funds includes $14 billion in 
competitive grants. Congress asked us to compete these funds to 
find the very best projects in the country. This required us to 
work through the funding opportunity, to application review, to 
merit selection process. These were very highly competitive 
processes, where we were heavily oversubscribed--5 to 1, on 
average. So, we were only able to select the best 20 percent of 
the projects who applied. We've made over 90 percent of the 
selections under the competitive grant areas, and we've 
obligated $8 billion of these funds to date.
    The loan and borrowing authority take the longest to move, 
because in those contexts we have to underwrite the full value 
of the project, not just the credit subsidy that shows up in 
the appropriations. In our loan programs, we've issues more 
than $2 billion in conditional loan commitments to renewables, 
out of more than $18 billion in total loans that the Department 
has made in the last year.
    In addition, we supported Treasury in selecting 183 
projects in 43 States to receive $2.3 billion in renewable 
energy manufacturing tax credits, a really important program to 
build clean-energy, high-technology manufacturing in the United 
States. We've also evaluated over $2.6 billion in grants in 
lieu of tax credits for 393 renewable generation projects that 
have been finished thus far.
    We are ahead of where we expected to be on selections, on 
obligations, and on job creation. We are on track with where we 
expected to be in contracting. We are slightly behind where we 
planned to be on an outlays basis, based on the master plan 
that we developed at the beginning of this program.
    Over the next 6 months, we expect to see an accelerating 
rate of job creation, contracting, and reimbursements. We are 
working with more than 5,000 individual recipients now to 
ensure that each delivers on their commitments to create jobs 
and meet their project milestones on time and on budget.
    As we put people back to work, DOE's Recovery Act programs 
are making our homes and buildings more energy efficient. We're 
expanding U.S. high technology, clean-energy manufacturing and 
generation. We're modernizing our electric grid. We're 
transforming the transportation sector. We're accelerating the 
cleanup of legacy cold-war nuclear sites. We're laying the 
foundation for the United States to take a leadership role in a 
global clean energy economy.
    I thank you for the opportunity to testify today, and I 
look forward to answering your questions.
    [The prepared statement of Mr. Rogers follows:]

  Prepared Statement of Matt Rogers, Senior Advisor to the Secretary 
                          Department of Energy
    Chairman Bingaman, Ranking Member Murkowski, and Members of the 
Committee, thank you for the opportunity to appear before you today to 
report on the progress of ``The American Recovery and Reinvestment 
Act'' (Recovery Act).
                          recovery act impact
    One year after the passage of the Recovery Act, approximately 2 
million jobs have been created or saved thanks to the Act's impact on 
hiring in the private sector, by local and state governments and by 
non-profits. The Recovery Act's $787 billion came in three pieces: 
roughly a third in tax cuts directly to the American people, another 
third in emergency relief for hard-hit families, businesses, and state 
governments, and a third in investments in the infrastructure and 
technology, creating platforms for economic growth.
    The Department of Energy's Recovery program focuses on the third 
leg, accelerating innovation to lay the foundation for long term 
economic growth. To support this work, Congress entrusted the 
Department of Energy with $36.7 billion in appropriations and $6.5 
billion in power marketing administration borrowing authority. The 
Recovery Act also directed DOE to work with Treasury to provide more 
than $5 billion in clean energy manufacturing tax credits and 
generation tax grants. These funds combined with private cost share and 
leverage will support more than $100 billion in projects.
    The Recovery Act investments in energy are putting Americans to 
work, helping to build a clean energy economy, accelerating energy 
innovation, and reducing our dependence on oil. During the last full 
recipient reporting period (Oct-Dec 2009), DOE Recovery Act programs 
directly created or saved over 16,300 full-time equivalents (FTEs) as 
reported by recipients. Contractors have reported another 4,000 FTEs 
have been created or saved at the subcontractor level (not required to 
report to FederalReporting.Gov) and more still down the supply chain. 
Meanwhile, Section 1603 programs which provide grants in lieu of tax 
credits for renewable energy projects are creating a self-reported 
12,633 jobs. As spending accelerates this year, we expect that tens of 
thousands of additional jobs will be created or saved under DOE 
Recovery Act programs.
    As we put people back to work, DOE's Recovery Act is making our 
homes and buildings more energy efficient, expanding US high technology 
clean energy manufacturing and generation, modernizing our power 
infrastructure, transforming the transportation sector, accelerating 
the clean-up of legacy cold war nuclear sites, and laying the 
foundation for the next generation of technological and scientific 
innovation.
    Our programs are providing benefits across sectors and across the 
country. DOE's formula grant selections include over 2,300 state and 
local governments in all fifty states and territories to receive nearly 
$11 billion of Recovery Act funds. Native American tribes in over 575 
towns have been selected for nearly $55 million in energy efficiency 
conservation block grants and an additional $27.5 million for a 
combination of Smart Grid, Weatherization and renewable energy 
projects. 200 small businesses have received nearly $1 billion in 
grants and $2 billion in loans. Educational institutions in 43 states 
have been selected for over $600 million to support 200 projects 
focused on innovation.
                       doe implementation status
    From the first day after the Recovery Act was signed into law, DOE 
has been focused on moving the money out the door quickly to create 
jobs and spur economic recovery. We have used competitive processes to 
select exceptional projects. We have streamlined DOE operating 
processes across the board. We are providing unprecedented transparency 
and insist on clear accountability every day. We are partnering with 
the private sector to make a meaningful down-payment on the nation's 
clean energy future.
    DOE's $36.7 billion in appropriations came in four different 
categories each with a different time horizon. DOE received $7.5 
billion in the form of contracts for the expansion and acceleration of 
Office of Science and the Office of Environmental Management projects. 
To date, $6.8 billion of contract funds have been obligated. Through 
the Recovery Act, we also received $11.2 billion in formula grants for 
states, counties, cities, territories, and tribes through the Recovery 
Act. We have obligated $10.6 billion of the $11.2 billion and have 
accelerated full obligation of these formula awards, using an 
unprecedented SWAT team process, to enable the recipients to work 
through their local competitive selection processes quickly. The third 
block of funds includes $14 billion in competitive grants. We have 
obligated $8 billion of these funds to date. These highly competitive 
processes were over-subscribed with strong projects, 5:1 on average, 
presenting us with the challenge and the opportunity to select the best 
20%, using over 4,500 reviewers. Finally, the loans and borrowing 
authority take the longest to move as we finance a large portion of the 
value of the project in the loan guarantee program and the power 
marketing administration borrowing programs.
    In addition, we are providing support to the Treasury in allocating 
$2.3 billion in renewable energy manufacturing tax credits. We have 
also been continuously reviewing renewable energy generation grant in-
lieu of tax credit applications for Treasury, recommending over $2.5 
billion in grants for finished projects thus far.
    Working across these funding categories we have made substantial 
progress over the last year. We are working with more than 3,500 
recipients who have been selected to receive over $31.4 billion in DOE-
funded contract and grant funds. We have obligated $25.7 billion of the 
$31.4 billion in funds awarded, and supported Treasury in awarding $4.9 
billion in tax credits and payments in lieu of tax credits. In our loan 
program, we have issued more than $2.1 billion in conditional loan 
commitments. We have paid out $2.5 billion to recipients of DOE's 
appropriated ARRA funds, while Treasury has provided recipients an 
additional $2.6B in the form of Section 1603 payments in-lieu of tax 
credits. These funds are being matched with nearly $25 billion in 
private capital. We are ahead of where we expected to be on selections, 
obligations, and job creation. We are slightly behind where we expected 
to be on payments based on our plans from last spring.
    We plan to announce the remaining contract and grant selections 
before the end of June. We are now working actively with our more than 
3,500 recipients to accelerate costing and ensure each delivers on 
project goals and commitments, on time and on budget. We are confident 
that the next six months will be the period of most rapid job creation 
for Department of Energy Recovery Act programs.
    The remainder of this statement provides detail on each energy 
Recovery Act investment area in turn.
  saving consumers money and improving the environment through energy 
                               efficiency
    Under the Recovery Act, we are making the largest single investment 
in home energy efficiency in U.S history. For low-income families that 
are hit hardest by high utility bills, the Recovery Act provides $5 
billion for the Weatherization Assistance Program, which funds local 
agencies to perform home energy audits and weatherization services. We 
are working closely with our partners to deliver this vital program. 
Each state has made clear performance commitments and we have worked 
directly with the Governor's office in every state towards a shared 
plan to reach these performance targets. We have taken steps to address 
barriers that we have identified, as well as issues raised by GAO and 
the DOE Inspector General. During January, states significantly 
increased their spending and the number of homes weatherized under the 
Recovery Act, moving monthly output to a preliminary estimate of 17,000 
units and we are working with the community action agencies towards 
meeting their full run rate commitments by the end of March. The 
Department undertook a broad-based restructuring program to address the 
initial challenges in program implementation. As a result of these 
efforts, states reported that they weatherized more than 125,000 homes 
in 2009, including over 25,000 with Recovery Act funds and based on 
this reporting are on pace to deliver at least 250,000 homes with 
Recovery Act funds this year. In fact, since September 2009, we have 
tripled the pace of Recovery Act-funded home weatherization. Still, our 
goal is to improve further, reaching run rate performance goals by the 
end of March 2010 and we are moving forward with additional new 
measures that should increase our pace of weatherization. The 
Department will remain focused on providing each of the states and 
local agencies with the resources they need to quickly and effectively 
implement this program. We expect to weatherize nearly 600,000 homes 
with Recovery Act funds by March of 2012.
    The Recovery Act also includes $3.1 billion for DOE's State Energy 
Program and $300 million to states for energy efficient appliance 
rebates, showcasing cooperation between federal and state governments. 
The state energy programs are sponsoring very innovative projects. Ohio 
is using some of their state energy grant money to increase industrial 
energy efficiency, helping companies reduce cost and become more 
competitive in the market. Idaho is improving energy efficiency in 210 
K-12 schools across the state, putting money back into school budgets. 
The state energy programs appear to be ahead of their plan to ensure 
more than $1 billion of their $3.2 billion is contracted by the end of 
March. All of the states already have their appliance rebate funds and 
most have completed their program offerings, helping consumers improve 
appliance efficiency significantly.
    The Recovery Act provided $3.2 billion to fund the Energy 
Efficiency and Conservation Block Grant program for the first time, 
which this committe was instrumental in creating. This program will 
help over 2,300 cities, counties, states, territories and Indian tribes 
to develop their own efficiency programs, including: building code 
development, energy audits and retrofits, efficient public lighting and 
landfill gas capture. Standing up a new program always takes a little 
more effort-it took a dedicated 125 person SWAT team in the basement of 
DOE to process all the new EECBG applications, working with recipients 
directly on the phone to ensure each application met the statutory 
requirements and to minimize bureaucratic back and forth. This hard 
work will pay dividends in the coming months, as states and communities 
bring innovative projects on line. We are particularly excited about 
the competitive portion of the energy conservation block grant program, 
known as Retrofit Ramp up. The leading projects under this program will 
define new approaches to make energy efficiency services available to 
all Americans at significantly lower cost.
    These formula grant programs have created opportunities for 
innovation in how the Department of Energy works. Our expanded call 
center has handled almost 10,000 calls from formula grant recipients, 
guiding people through the process. We now have dedicated account 
representatives for each state, providing service continuity. We 
collaborate with the national weatherization and state energy 
organizations weekly, building a shared view on performance. Each 
innovation not only moves this program faster every day, but better 
positions DOE for long-term base performance as well.
    developing the strongest renewable energy industry in the world
    Recovery Act investments and incentives totaling $23 billion 
combined with more than $40B in private capital are putting us on track 
to meeting our goal of doubling both renewable electricity generating 
capacity (excluding conventional hydropower) and advanced energy 
manufacturing by 2012. Recovery Act programs are also quickly expanding 
high technology, clean energy manufacturing in the U.S.
    We are funding a range of renewable energy generation technologies, 
including wind, solar, and geothermal. DOE has supported Treasury in 
implementing the 1603 program, which has provided $2.6 billion in 1603 
payments to 392 renewable energy generation projects across the 
country. By partnering with private industry, Treasury and DOE have 
already funded enough new renewable energy projects through these 
payments to power over one million homes, enough clean energy to power 
the homes of everyone living in Boston, Seattle, Atlanta, Kansas City, 
and Cincinnati combined. These projects have already been completed.
    DOE has also supported Treasury in awarding $2.3 billion in tax 
credits for 183 clean energy manufacturing projects in 43 states under 
the 48C program. The manufacturing capacity supported by these grants 
will produce solar panels, wind turbines, geothermal equipment, nuclear 
plant components, and energy efficient building products, putting the 
US on track to double our capacity to manufacture these high 
technology, clean energy components by 2012. These facilities represent 
some of the premier companies in renewable manufacturing. These 
projects will generate more than 17,000 jobs. This investment will be 
matched by as much as $5.4 billion in private sector funding likely 
supporting up to 41,000 additional jobs.The interest was extraordinary 
and the program was oversubscribed by a ratio of more than 3 to 1. The 
Administration has called on Congress to provide an additional $5 
billion to expand the program. Because there is already a deep pipeline 
of projects, these funds could be deployed quickly to create jobs and 
support economic activity.
    We have announced more than $2 billion in conditional commitments 
to build renewable energy and grid electrification projects in the US 
under the Recovery Act including Solyndra (CA), Nordic (ID), and Beacon 
(NY), and Brightsource (CA). These conditional commitments have proven 
very effective in bringing private capital off the sidelines and into 
the market at scale. Solyndra, Nordic, and Beacon are all in 
construction.
    We're also investing over $600 million in grants in the research, 
development and deployment of renewable energy. For example, $24 
million in Recovery Act funding has gone to three universities (in IL, 
ME, and SC) around the country to improve wind turbine performance and 
reliability. The Solar Incubator is providing $10 million in Recovery 
Act funds to help 4 companies in North Carolina and California lower 
the cost and improve performance of promising PV technologies. We are 
awarding up to $81 million to 45 geothermal projects in 20 states 
developing innovative approaches to enhanced geothermal systems, 
potentially unlocking vast amounts of baseload power.
                 transforming the transportation sector
    The Recovery Act provided $3.4 billion to help develop the next 
generation of vehicles and the fueling infrastructure to support these 
innovative new technologies. This is in addition to $8.4 billion so far 
from our Advanced Technology Vehicle Manufacturing loan program outside 
the Recovery Act. These projects aim to transform the transportation 
sector by creating competition among electrification, natural gas 
vehicles, advanced biofuels, hydrogen and improvements in internal 
combustion engine efficiency.
    Over the next six years, we expect to make three new electric 
vehicle plants--the first ever in the United States--and 30 new battery 
and other electric-vehicle component manufacturing plants fully 
operational. We've made investments in battery and component suppliers 
like A123, Enerdel and Cellgard, as well as manufacturers\1\ like 
Nissan, Tesla, Fisker and Ford to make advanced vehicles in the United 
States. By 2015, these plants will be expected to have capacity to 
produce 250,000 electric-drive cars and batteries to power 500,000 
plug-in hybrid electric vehicles. We are also building the 
infrastructure to support these vehicles, including more than 10,000 
charging locations in a dozen cities.
---------------------------------------------------------------------------
    \1\ Manufacturers Ford, Nissan, Tesla and Fisker are funded by the 
Advanced Technology Vehicle Manufacturing Program, which is not part of 
the Recovery Act.
---------------------------------------------------------------------------
    We've selected $300 million in Recovery Act grants to 25 Clean City 
coalitions of public and private fleets, of which $260 million has been 
obligated to date. These grants significantly expand city-and county-
led efforts to reduce petroleum consumption and deploy high-efficiency 
cars, trucks and buses that run on alternative fuels. The 25 projects 
support over 9,000 alternative-fuel vehicles, 70 percent of which will 
run on natural gas, mainly for heavy-duty trucks.
    At the same time, Recovery Act investments will support the 
development and deployment of the next generation of biofuels. Over 
$600 million in Recovery Act grants will support 19 pilot, 
demonstration, and commercial-scale bio-refineries. These facilities 
will convert biomass into fuels and chemicals that otherwise would be 
produced from oil, while creating jobs and raising farm incomes in 
rural communities across the country. Before these investments, the 
development of an advanced biofuels industry was at a virtual 
standstill as numerous facilities at the pilot stage had faltered 
during the economic downturn.
    More than $100 million from the Recovery Act, plus an additional 
$87 million in base budget funding, will go to improving the efficiency 
of heavy-duty trucks and passenger vehicles. With private sector cost-
sharing, this will support nearly $375 million in total investment, 
positioning the US as a leader in heavy duty fuel efficiency and 
reducing transportation costs across the country.
            investing in a 21st-century grid infrastructure
    Our electrical grid is a critical piece of infrastructure, but 
today it uses century-old technology. It wastes too much energy, it 
costs us too much money, and it's too susceptible to outages and 
blackouts. Just as President Eisenhower's investment in an interstate 
highway system revolutionzed the way Americans travel, our Recovery Act 
investments in the smart grid and new transmission lines is 
revolutionizing how we produce, transport and use energy.
    The more than $4 billion in Recovery Act smart grid investments are 
being matched by more than $5.5 billion in private sector funding, 
supporting 132 projects that will reduce electricity costs, increase 
reliability, and give consumers more choice and control over their 
energy use. By 2015, we expect a combination of public and private 
investment to lead to the deployment of 18 million smart meters 
nationally (more than double the number currently in service). The 
Recovery Act is also funding the installation of nearly 1,000 sensors 
on the electric transmission system to improve reliability and 
security, for the first time providing visibility and control across 
the entire U.S. transmission system. 200,000 smart transformers and 
nearly 700 automated substations will allow power companies to replace 
units before they fail, and respond more effectively to restore service 
when bad weather knocks down power lines. These are important first 
steps toward the modernization of our power infrastructure.
supporting the goal that carbon capture and sequestration (ccs) can be 
                        economical in 8-10 years
    With $3.4 billion from the Recovery Act ,we are making 
unprecedented investments in carbon capture and sequestration 
technologies, attracting approximately $7 billion in private capital. 
Projects we are supporting are projected to capture more than 10 
million tons of CO2 annually by 2015 and put us on a path to 
demonstrating that carbon capture and sequestration can be economical 
by 2020. Realizing the promise of low-carbon electricity from coal 
requires an economical solution to capturing CO2. The 
leading processes today are amine and ammonia-based processes that cost 
$60 per ton and have a very significant energy penalty, which has 
prevented them from reaching widespread commercial implementation. New 
CO2 capture technologies, using different solvents, 
adsorbents and absorbents, hold the promise to significantly reduce the 
energy penalty, cut capital costs and reduce the cost per ton by more 
than half. Our innovative grants are funding entirely new approaches 
such as synthetic enzymes or conversion of CO2 into valuable 
fuels or chemicals, that could reduce the cost even more.
             cleaning up the legacy cold war nuclear sites
    DOE also has the important role of cleaning up sites across the 
country associated with the legacy of our nation's nuclear weapons 
program. DOE's Office of Environmental Management has allocated $6 
billion in Recovery Act funding to ongoing cleanup work at 17 sites. 
The stimulus funding is being used to accelerate cleanup work to reduce 
the lifecycle cost of EM's cleanup effort. These projects have 
permanently disposed of over 1,300 cubic meters of transuranic waste 
and nearly 11,000 cubic meters of low-level waste, and over 400,000 
square feet of contaminated facility demolition. The EM program's 
Recovery Act goal is to help reduce the footprint of land and 
structures requiring cleanup by 40 percent by 2011.
    EM and site prime contractors have obligated approximately $700M in 
Recovery Act Small Business contracts. In fiscal ear 2009 EM Prime 
Small Business contractors were awarded about $396 million which 
exceeded EM's goal of 4.8 percent ($288M) of EM Recovery Act funds by 
achieving 136 percent of the goal. In fiscal year 2010, EM anticipates 
additional Small Business contracts to both prime contractors and 
subcontractors.
    These projects have already created nearly 8,000 direct jobs as of 
December 31, 2009 at the prime and sub-contractor level, in communities 
like Hanford Washington, Savannah River South Carolina and Oak Ridge 
Tennessee. The Environmental Management projects were among the first 
to start and more than 90% of the funds have been obligated and almost 
25% has been spent.
         maintaining u.s. leadership in science and technology
    The Recovery Act is accelerating the pace of scientific and 
technological innovation in the energy sector, laying the foundation 
for sustained future economic growth. There is widespread agreement in 
the economic community that innovation is a primary driver of long-term 
economic growth and prosperity. Historically, however, energy has been 
one of the slowest sectors to innovate, taking decades to change. 
Nevertheless, when it occurs, the economic impact from energy 
innovation has been significant. Energy innovation in production and in 
end-use technologies has been a key ingredient in US economic growth 
for the last century. Energy innovation is essential to address global 
energy security and climate change concerns on time and on budget. 
Innovation also drives job creation. Long term, high quality jobs stay 
in industries where there is a high degree of innovative content.
    For instance, the Recovery Act included $400 million for the 
Advanced Research Projects Agency--Energy (ARPA-E), modeled after the 
Defense Department's famed DARPA. DARPA is widely credited for 
inventing, among other things, the Internet. ARPA-E will fund high-
risk, high-reward energy technology research. Not every project will 
succeed, but those that do have the potential to radically transform 
our energy system.
    Potentially game-changing research funded through ARPA-E so far 
includes: Grid-scale liquid metal batteries that could cut battery 
costs by 90% while doubling energy density; Direct solar fuels--
photosynthetic organisms that produce hydrocarbons instead of 
carbohydrates, combining CO2, sun and water to produce 
ultra-clean gasoline; and Super-high-efficiency small wind turbines, 
leveraging advanced aerospace designs and materials to reduce the cost, 
improve the reliability and expand the range of wind energy. The 
projects we have funded under the Recovery Act--and the many great 
projects we have not been able to fund--highlight the opportunity for 
the United States to accelerate clean energy innovation and take a 
global leadership position in clean energy industries globally.
    The Office of Science has invested $1.6 billion to advance basic 
research (e.g. 17 new energy frontier research centers, the world's 
fastest super computer at Oak Ridge), to expansion science 
infrastructure (e.g. national synchrotron light source at Brookhaven, a 
new Continuous Beam facility at TJ lab, new battery user facilities at 
Argonne) and to increase funding for promising early career scientists. 
Science is almost 90% obligated and is expected to disburse over 20% of 
their funds when the next set of data is reported.
    The next six months will expect to see an accelerating rate of job 
creation, contracting, and reimbursements. We are working with more 
than 5,000 recipients to deliver on their commitments to job creation 
and meet their agreed project milestones, on time and on budget. Our 
task remains to knock down barriers to ensure each recipient can 
perform and to hold our funding partners accountable to deliver on 
their commitments. We have great projects at every level that are 
contributing to job creation and economic growth now and laying the 
foundation for long-term US leadership in these industries.

    The Chairman. Thank you very much.
    Ms. Dalton, go right ahead.

  STATEMENT OF PATRICIA A. DALTON, MANAGING DIRECTOR, NATURAL 
  RESOURCES AND ENVIRONMENT, GOVERNMENT ACCOUNTABILITY OFFICE

    Ms. Dalton. Thank you, Mr. Chairman, Ranking Member 
Murkowski, members of the committee.
    I'm pleased to be here today to discuss the status of DOE's 
implementation of programs under the Recovery Act. My statement 
today is based on 2 recent GAO reports, and will focus on the 
extent to which DOE has obligated and spent Recovery Act funds 
and the factors that have affected its ability to select and 
start Recovery Act projects.
    The Recovery Act provided DOE more than $43 billion, 
including 6.5 billion in borrowing authority. As of February 
28, DOE reported it had obligated $25.7 billion, or 70 percent 
of its spending authority; and had reported expenditures of 
$2.5 billion, 7 percent of its expenditure authority.
    The percentage of Recovery Act funds obligated varied 
widely across DOE offices. Several program offices had 
obligated more than 85 percent of the Recovery Act funds, as of 
February 28, while other program offices had obligated less 
than a third of their funds. It should be noted that, in some 
of these cases, awards and obligations were not expected until 
at least 2010. The percentage of Recovery Act funds spent also 
varied across DOE offices, but to a lesser extent than the 
funds obligated. None of the offices reported expenditures of 
more than a third of their Recovery Act funds, and some 
reported zero.
    The Federal requirements and other factors affected the 
timing of project selection and starts. In particular, DOE 
reported that the Davis-Bacon and environmental requirements 
slowed some project selection and starts, while State officials 
also reported to us that the National Historic Preservation Act 
had an impact.
    DOE's Weatherization Assistance Program became subject to 
Davis-Bacon requirements for the first time under the Recovery 
Act. In general, the States we reviewed used only small 
percentage of their available Recovery Act funds in 2009. 
Davis-Bacon requirements contributed to this low spend rate. 
Many States chose to use funds from their annual appropriation, 
which were not subject to Davis-Bacon, before beginning using 
their Recovery Act funds. The Department of Labor issued its 
wage determinations for residential weatherization workers in 
early September. Many States also waited for these 
determinations before beginning to use Recovery Act funds.
    DOE officials told us that the timing of certain projects 
may also be slowed by environmental requirements. DOE has taken 
steps to mitigate potential delays; nevertheless, they told us 
that several offices, including the Loan Guarantee and Fossil 
Energy Offices, will likely have projects that have a 
significant environmental impact, and therefore will require 
environmental assessments or impact statements.
    Several State officials told us that historic preservation 
requirements also affect Recovery Act project selection and 
starts. For example, in Michigan, officials estimated that 90 
percent of the home units scheduled to be weatherized were 
going to need an historic review. In November, they did sign an 
agreement with the State Historic Preservation Office that is 
designed to expedite the review process.
    Officials also told us that factors other than Federal 
requirements have affected the timing of project selection and 
starts, including the newness of programs, staff capacity, and 
State and local issues. Because some Recovery Act programs were 
newly created, in some cases officials needed to establish 
procedures and provide guidance before implementing projects. 
Officials from DOE stated that they needed to hire an 
additional 550 people both permanent and temporary--to carry 
out Recovery Act project work. Some State officials told us 
that they experienced heavy workloads as a result of the 
Recovery Act, which impaired their ability to implement 
programs. Smaller localities, which are often rural, told us 
that they faced challenges because of the lack of staff to 
understand, apply for, and comply with the Recovery Act 
requirements. Officials from the National Association of 
Counties have told us that some localities turned down Recovery 
Act funds to avoid the administrative burdens associated with 
the Act's reporting requirements. The effects of the economic 
recession on States' budgets, also had an effect, in that, for 
example, State hiring freezes and furloughs their ability to 
implement new programs.
    GAO is continuing to review energy programs, including the 
reporting systems. With respect to recipient reporting, DOE has 
established a data quality assurance plan to assist in 
identifying reporting errors, and we are reviewing that system. 
In addition, we have several ongoing engagements that are 
looking at other Energy Department programs, including the Loan 
Guarantee Program, and environmental management for nuclear 
waste cleanup.
    Mr. Chairman, that concludes my statement. I'd be happy to 
take any questions.
    [The prepared statement of Ms. Dalton follows:]

 Prepared Statement of Patricia A. Dalton, Managing Director, Natural 
      Resources and Environment, Government Accountability Office
                         why gao did this study
    The American Recovery and Reinvestment Act of 2009 (Recovery Act)-
initially estimated to cost $787 billion in spending and tax 
provisions-aims to promote economic recovery, make investments, and 
minimize or avoid reductions in state and local government services. 
The Recovery Act provided the Department of Energy (DOE) more than 
$43.2 billion, including $36.7 billion for projects and activities and 
$6.5 billion in borrowing authority, in areas such as energy efficiency 
and renewable energy, nuclear waste clean-up, and electric grid 
modernization.
    This testimony discusses (1) the extent to which DOE has obligated 
and spent its Recovery Act funds, and (2) the factors that have 
affected DOE's ability to select and start Recovery Act projects. In 
addition, GAO includes information on ongoing work related to DOE 
Recovery Act programs. This testimony is based on prior work and 
updated with data from DOE.
                              recovery act
Factors Affecting the Department of Energy's Program Implementation
What GAO Found
    As of February 28, 2010, DOE reported it had obligated $25.7 
billion (70 percent) and reported expenditures of $2.5 billion (7 
percent) of the $36.7 billion it received under the Recovery Act for 
projects and activities. For context, as of December 31, 2009, DOE 
reported that it had obligated $23.2 billion (54 percent) and reported 
expenditures of $1.8 billion (4 percent). The percentage of Recovery 
Act funds obligated varied widely across DOE program offices and ranged 
from a high of 98 percent in the Energy Information Administration to a 
low of 1 percent for the Loan Guarantee Program Office. None of DOE's 
program offices reported expenditures of more than a third of their 
Recovery Act funds as of February 28, 2010.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Officials from DOE and states that received Recovery Act funding 
from DOE cited certain federal requirements that had affected their 
ability to implement some Recovery Act projects. For example:

   Davis Bacon Requirements.--Officials reported that Davis-
        Bacon requirements had affected the start of projects in the 
        Weatherization Assistance Program because the program had 
        previously been exempt from these requirements.
   National Environmental Policy Act (NEPA)--. DOE officials 
        told us that NEPA may affect certain projects that are likely 
        to significantly impact the environment, thereby requiring 
        environmental assessments or environmental impact statements.
   National Historic Preservation Act (NHPA).-- Officials from 
        the Michigan Department of Human Services told us that about 90 
        percent of the homes scheduled to be weatherized under the 
        Weatherization Assistance Program would need a historic review.

    Additionally, DOE and state officials told us that other factors 
also affected their ability to quickly select or start projects. For 
example:

   Newness of programs.--In some cases, because some Recovery 
        Act programs were newly created, officials needed time to 
        establish procedures and provide guidance before implementing 
        projects.
   Staff capacity.--DOE officials also told us that they 
        experienced challenges in hiring new staff to carry out 
        Recovery Act work. Also, District of Columbia officials told us 
        they needed to hire 6 new staff members to oversee and manage 
        the weatherization program.
   State, local, or tribal issues.--The economic recession 
        affected some states' budgets, which also affected states' 
        ability to use some Recovery Act funds, such as difficulty 
        providing matching funds. The American Recovery and 
        Reinvestment Act of 2009 (Recovery Act)-initially estimated to 
        cost $787 billion in spending and tax provisions-aims to 
        promote economic recovery, make investments, and minimize or 
        avoid reductions in state and local government services. The 
        Recovery Act provided the Department of Energy (DOE) more than 
        $43.2 billion, including $36.7 billion for projects and 
        activities and $6.5 billion in borrowing authority, in areas 
        such as energy efficiency and renewable energy, nuclear waste 
        clean-up, and electric grid modernization.
    Mr. Chairman and Members of the Committee:
    I am pleased to be here today to discuss the status of the 
Department of Energy's (DOE) implementation of programs funded under 
the American Recovery and Reinvestment Act of 2009 (Recovery Act). 
Congress and the administration have fashioned a significant response 
to what is generally considered to be the nation's most serious 
economic crisis since the Great Depression. The Recovery Act is 
intended to promote economic recovery, make investments, and minimize 
or avoid reductions in state and local government services. Enacted on 
February 17, 2009, the act was a response to the economic recession at 
a time when the jobless rate was approaching 8 percent. In early 2009, 
the Congressional Budget Office estimated that the Recovery Act's 
combined spending and tax provisions would cost approximately $787 
billion. On January 26, 2010, CBO updated its estimate of the cost of 
the Recovery Act. It now estimates that the Recovery Act will cost $75 
billion more than originally estimated-or a total of $862 billion from 
2009 through 2019. That amount includes more than $43.2 billion for DOE 
efforts in areas such as energy efficiency and renewable energy, 
nuclear waste cleanup, and electric grid modernization.
    The Recovery Act specifies several roles for GAO, including 
conducting ongoing reviews of selected states' and localities' use of 
funds made available under the act. We recently completed our fifth 
review, issued yesterday, which examined a core group of 16 states, the 
District of Columbia, and selected localities.\1\ We also recently 
completed a review on the impact of certain federal requirements and 
other factors on Recovery Act project selection and starts.\2\
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    \1\ GAO, Recovery Act: One Year Later, States' and Localities' Uses 
of Funds and Opportunities to Strengthen Accountability, GAO-10-437 
(Washington, D.C.: Mar. 3, 2010).
    \2\ GAO, Recovery Act: Project Selection and Starts Are Influenced 
by Certain Federal Requirements and Other Factors, GAO-10-383 
(Washington, D.C.: Feb. 10, 2010).
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    My statement today is based largely on these two prior reviews and 
updated with data from DOE and focuses on (1) the extent to which DOE 
has obligated and spent its Recovery Act funds, and (2) the factors 
that have affected DOE's ability to select and start Recovery Act 
projects. In addition, we include information on ongoing GAO work on 
DOE Recovery Act programs. We obtained financial data from DOE on its 
obligations and expenditures for Recovery Act projects and also asked 
DOE-and 26 other federal agencies-which federal requirements, if any, 
affected the timing of project selection and start dates, as well as 
whether any requirements at the state and local levels, or any other 
factors, affected project selection and start dates. To supplement the 
federal agencies' responses, we spoke with officials in 16 states and 
the District of Columbia who are responsible for implementing Recovery 
Act projects. We are reviewing these 16 states and the District of 
Columbia for our bi-monthly reviews on Recovery Act implementation. The 
states selected contain about 65 percent of the U.S. population and are 
estimated to receive collectively about two-thirds of the 
intergovernmental federal assistance funds available through the 
Recovery Act. We selected these states and the District of Columbia on 
the basis of federal outlay projections; percentage of the U.S. 
population represented; unemployment rates and changes; and a mix of 
states' poverty levels, geographic coverage, and representation of both 
urban and rural areas. We also spoke with representatives from the 
National Governors Association; the National Association of State 
Auditors, Comptrollers, and Treasurers; and the National Association of 
Counties.
    Our prior work was conducted in accordance with generally accepted 
government auditing standards. Those standards require that we plan and 
perform the audit to obtain sufficient, appropriate evidence to provide 
a reasonable basis for our findings and conclusions based on our audit 
objectives. We believe that the evidence obtained provides a reasonable 
basis for our findings and conclusions based on our audit objectives.
Background
    The Recovery Act provided DOE more than $43.2 billion, including 
$36.7 billion for projects and activities and $6.5 billion in borrowing 
authority.\3\ Of the $36.7 billion for projects and activities, almost 
half-$16.8 billion-was provided to the Office of Energy Efficiency and 
Renewable Energy for projects intended to improve energy efficiency, 
build the domestic renewable energy industry, and restructure the 
transportation industry to increase global competitiveness. The 
Recovery Act also provided $6 billion to the Office of Environmental 
Management for nuclear waste cleanup projects, $4.5 billion to the 
Office of Electricity Delivery and Energy Reliability for electric grid 
modernization, $4 billion to the Loan Guarantee Program Office to 
support loan guarantees for renewable energy and electric power 
transmission projects, $3.4 billion to the Office of Fossil Energy for 
carbon capture and sequestration efforts, and $2 billion to the Office 
of Science and the Advanced Research Projects Agency-Energy for 
advanced energy technology research.
---------------------------------------------------------------------------
    \3\ DOE was initially appropriated $45.2 billion in the Recovery 
Act; however, $2 billion for the Loan Guarantee Program was transferred 
from DOE's Recovery Act appropriation. As a result, DOE's 
appropriations under the Recovery Act now total $43.2 billion.
---------------------------------------------------------------------------
DOE Obligated 70 Percent and Reported Expenditures of 7 Percent of its 
        Recovery Act Funds as of February 28, 2010
    As of February 28, 2010, DOE reported that it had obligated $25.7 
billion (70 percent) and reported expenditures of $2.5 billion (7 
percent) of the $36.7 billion it received under the Recovery Act for 
projects and activities (see table 1). By comparison, as of December 
31, 2009, the department reported it had obligated $23.2 billion (54 
percent) and reported expenditures of $1.8 billion (4 percent).

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    The percentage of Recovery Act funds obligated varied widely across 
DOE program offices. Several program offices-Energy Efficiency and 
Renewable Energy, the Energy Information Administration, Environmental 
Management, and Science-had obligated more than 85 percent of their 
Recovery Act funds by February 28, 2010, while other program offices-
Fossil Energy, the Loan Guarantee Program, and the Western Area Power 
Administration-had obligated less than a third of their Recovery Act 
funds by that time.
    The percentage of Recovery Act funds spent also varied across DOE 
program offices, though to a lesser degree than the percentage 
obligated. None of the program offices reported expenditures of more 
than a third of their Recovery Act funds as of February 28, 2010. The 
percentage of funds spent ranged from a high of 31 percent for 
Departmental Administration to a low of zero percent for the 
Electricity Delivery and Energy Reliability, Energy Information 
Administration, and Fossil Energy offices.
Federal Requirements and Other Factors Affected the Timing of Project 
        Selection and Starts
    Officials from DOE and states that received Recovery Act funding 
from DOE cited certain federal requirements and other factors that had 
affected their ability to implement some Recovery Act projects. In 
particular, DOE officials reported that Davis-Bacon requirements and 
the National Environmental Policy Act affected the timing of some 
project selection and starts, while state officials reported that the 
National Historic Preservation Act affected their ability to select and 
start Recovery Act projects. Other factors unrelated to federal 
requirements-including the newness of programs, staff capacity, and 
state and local issues-also affected the timing of some projects, 
according to federal and state officials.
            DOE and State Officials Reported that Certain Federal 
                    Requirements Affected Project Selection and Starts
    Officials from DOE and states that received DOE funding cited 
certain federal requirements that had affected their ability to select 
or start some Recovery Act projects. For example:

   Davis-Bacon requirements.\4\ DOE's Weatherization Assistance 
        Program became subject to the Davis-Bacon requirements for the 
        first time under the Recovery Act after having been previously 
        exempt from those requirements.\5\ Thus, the Department of 
        Labor (Labor) had to determine the prevailing wage rates for 
        weatherization workers in each county in the United States. In 
        July 2009, DOE and Labor issued a joint memorandum to 
        Weatherization Assistance Program grantees authorizing them to 
        begin weatherizing homes using Recovery Act funds, provided 
        they paid construction workers at least Labor's wage rates for 
        residential construction, or an appropriate alternative 
        category, and compensated workers for any differences if Labor 
        established a higher local prevailing wage rate for 
        weatherization activities. On September 3, 2009, Labor 
        completed its determinations; later that month, we reported 
        that Davis-Bacon requirements were a reason why some states had 
        not started weatherizing homes.\6\ Specifically, we reported 
        that 7 out of 16 states and the District of Columbia decided to 
        wait to begin weatherizing homes until Labor had determined 
        county-by-county prevailing wage rates for their state. 
        Officials in these states explained that they wanted to avoid 
        having to pay back wages to weatherization workers who started 
        working before the prevailing wage rates were known. In 
        general, the states we reviewed used only a small percentage of 
        their available funds in 2009, mostly because state and local 
        agencies needed time to develop the infrastructures required 
        for managing the significant increase in weatherization funding 
        and for ensuring compliance with Recovery Act requirements, 
        including Davis-Bacon requirements. According to available DOE 
        data, as of December 31, 2009, 30,252 homes had been 
        weatherized with Recovery Act funds, or about 5 percent of the 
        approximately 593,000 total homes that DOE originally planned 
        to weatherize using Recovery Act funds.\7\
---------------------------------------------------------------------------
    \4\ The Davis-Bacon Act requires that contractors and 
subcontractors pay workers the locally prevailing wages on most 
federally funded construction projects, and it imposes several 
administrative requirements relating to the payment of workers on 
qualifying projects. The Recovery Act generally applies Davis-Bacon 
requirements to all Recovery Act-funded projects, requiring contractors 
and subcontractors to pay all laborers and mechanics at least the 
prevailing wage rates in the local area where they are employed, as 
determined by the Secretary of Labor. In addition, contractors are 
required to pay these workers weekly and submit weekly certified 
payroll records, generally to the contracting federal agency.
    \5\ The Recovery Act appropriated $5 billion for the Weatherization 
Assistance Program, which DOE is distributing to each of the states, 
the District of Columbia, and seven territories and Indian tribes. The 
program seeks to assist low-income families by making such long-term 
energy efficiency improvements to their homes as installing insulation; 
sealing leaks; and modernizing heating equipment, air circulation fans, 
and air conditioning equipment.
    \6\ GAO, Recovery Act: Funds Continue to Provide Fiscal Relief to 
States and Localities, While Accountability and Reporting Challenges 
Need to Be Fully Addressed, GAO-09-1016 (Washington, D.C., Sept. 23, 
2009).
    \7\ DOE collects data reported by states and territories on the 
number of homes weatherized and on state and territory expenditures of 
funds on a quarterly basis. The data reported by states as of a certain 
date (such as for the quarter ending December 31, 2009) can change as 
states finalize figures for homes weatherized and funds spent. DOE 
originally planned to weatherize 593,000 homes with Recovery Act 
funding by March 31, 2012. A DOE report issued on February 24, 2010, 
indicated that 30,252 homes had been weatherized nationwide as of 
December 31, 2009, though numbers are not yet finalized.

   National Environmental Policy Act (NEPA).\8\ DOE officials 
        told us that while NEPA is unlikely to impose a greater burden 
        on Recovery Act projects than on similar projects receiving 
        federal funds, the timing of certain projects may be slowed by 
        these requirements. However, DOE officials reported that the 
        agency had taken steps to expedite the NEPA review process and 
        said that the agency's funding opportunity announcements 
        specified that projects must be sufficiently developed to meet 
        the Recovery Act's timetable for commitment of funds. 
        Nevertheless, DOE officials also told us that several program 
        offices-including Loan Guarantee, Fossil Energy, Electricity 
        Delivery and Energy Reliability, and the Power Marketing 
        Administrations-will likely have projects that significantly 
        impact the environment and will therefore require environmental 
        assessments or environmental impact statements. DOE officials 
        told us that they plan to concurrently complete NEPA reviews 
        with other aspects of the project selection and start process. 
        State officials in California and Mississippi also told us that 
        NEPA had caused delays in DOE Recovery Act projects. For 
        example, California officials said that the State Energy 
        Commission must submit some of its Recovery Act projects to DOE 
        for NEPA review because they are not covered by DOE's existing 
        categorical exclusions.\9\ State officials said that such 
        reviews can take up to 6 or more weeks. Both California and 
        Mississippi officials told us that activities that are 
        categorically excluded under NEPA (e.g., road repaving or 
        energyefficient upgrades to existing buildings) still require 
        clearance before the state can award funds. Staff must spend 
        time filling out forms and supplying information to DOE on 
        projects that may qualify for a categorical exclusion.
---------------------------------------------------------------------------
    \8\ NEPA established national environmental policies and goals to 
ensure that federal agencies properly consider environmental factors 
before deciding on a project. Under NEPA, federal agencies evaluate the 
potential environmental effects of projects they are proposing using an 
environmental assessment or, if projects may significantly affect the 
environment, a more detailed environmental impact statement.
    \9\ If an agency determines that activities of a proposed project 
fall within a category of activities the agency has already determined 
has no significant environmental impact-called a categorical exclusion-
then the agency generally does not need to prepare an environmental 
assessment or environmental impact statement.

   National Historic Preservation Act (NHPA).\10\ State 
        officials told us that NHPA had also affected DOE Recovery Act 
        project selection and starts.\11\ Mississippi officials, in 
        particular, cited NHPA's clearance requirements as one of the 
        biggest potential delays to project selection in energy 
        programs. Many of the city-and county-owned facilities that 
        could benefit from the Energy Efficiency and Conservation Block 
        Grant program could be subject to historic preservation 
        requirements, which mandate that projects must be identified 
        within 180 days of award.\12\ In part because of this 
        requirement, the state had to adjust program plans and limit 
        the scope of eligible recipients and projects to avoid historic 
        preservation issues. Likewise, officials from the Michigan 
        Department of Human Services told us that NHPA requires that 
        weatherization projects receiving federal funds undergo a state 
        historic preservation review. According to Michigan officials, 
        this requirement means that the State Historic Preservation 
        Office may review every home over 50 years of age if any work 
        is to be conducted, regardless of whether the home is in a 
        historic district or on a national registry. These officials 
        estimated that 90 percent of the homes scheduled to be 
        weatherized would need a historic review. These reviews are a 
        departure from Michigan's previous experience; the State 
        Historic Preservation Office had never considered 
        weatherization work to trigger a review. Furthermore, Michigan 
        officials told us that their State Historic Preservation 
        Office's policy is to review weatherization applications for 
        these homes within 30 days after receiving the application and 
        advise the Michigan Department of Human Services on whether the 
        work can proceed. However, as of October 29, 2009, the State 
        Historic Preservation Office had only two employees, so state 
        officials were concerned that this process could cause a 
        significant delay. To avoid further delays, Michigan officials 
        told us that in November 2009, they signed an agreement with 
        the State Historic Preservation Office that is designed to 
        expedite the review process. They also told us that with the 
        agreement in place, they expect to meet their weatherization 
        goals.
---------------------------------------------------------------------------
    \10\ NHPA declares that the federal government has a responsibility 
to expand and accelerate historic preservation programs and activities 
in order to preserve the nation's historical and cultural foundations. 
The act requires that for all projects receiving federal funding or a 
federal permit, federal agencies must take into account the project's 
effect on any historic site, building, structure, or other object that 
is or can be listed on the National Historic Register. Under the act 
and its implementing regulations, the agency must consult with relevant 
federal, state, and tribal officials with regard to such a project.
    \11\ DOE officials told us in January 2010 that they were in the 
process of developing an agreement with the Advisory Council on 
Historic Preservation and the National Conference of State Historic 
Preservation Officers to create a manageable framework for streamlining 
DOE's compliance with NHPA requirements.
    \12\ The Energy Efficiency and Conservation Block Grants program, 
administered by DOE, provides funds through competitive and formula 
grants to units of local and state government and Indian tribes to 
develop and implement projects to improve energy efficiency and reduce 
energy use and fossil fuel emissions in their communities. The Recovery 
Act includes $3.2 billion for the program.

   Buy American provisions.\13\ DOE officials told us that Buy 
        American provisions could cause delays in implementing Recovery 
        Act projects. Officials from other federal agencies said those 
        provisions have affected or may affect their ability to select 
        or start some Recovery Act projects. In some cases, those 
        agencies had to develop guidance for compliance with Buy 
        American provisions, including guidance on issuing waivers to 
        recipients that were unable to comply. For example, according 
        to Environmental Protection Agency officials, developing Buy 
        American guidance was particularly challenging because of the 
        need to establish a waiver process for Recovery Act projects. 
        At the local level, officials from the Chicago Housing 
        Authority (CHA) reported that the only security cameras that 
        are compatible with the existing CHA system and City of Chicago 
        police systems are not made in the United States. CHA worked 
        with the Department of Housing and Urban Development to 
        determine how to seek a waiver for this particular project. 
        Moreover, an industry representative told us that the Buy 
        American provisions could interrupt contractors' supply chains, 
        requiring them to find alternate suppliers and sometimes change 
        the design of their projects, which could delay project starts.
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    \13\ The Buy American Act generally requires that raw materials and 
manufactured goods acquired for public use be made or produced in the 
United States, subject to limited exceptions. Federal agencies may 
issue waivers for certain projects under specified conditions, for 
example, if using American-made goods is inconsistent with the public 
interest or the cost of those goods is unreasonable. Agencies also need 
not use American-made goods if they are not sufficiently available or 
of satisfactory quality. The Recovery Act has similar provisions, 
including one limiting the ``unreasonable cost'' exception to those 
instances when inclusion of American-made iron, steel, or other 
manufactured goods would increase the overall project cost by more than 
25 percent.
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            DOE and State Officials Reported that Other Factors Have 
                    Also Affected the Timing of Project Selection and 
                    Starts
    Officials from DOE and states also told us that factors other than 
federal requirements have affected the timing of project selection or 
starts. For example:

   Newness of programs.--Because some Recovery Act programs 
        were newly created, in some cases, officials needed time to 
        establish procedures and provide guidance before implementing 
        projects. In particular, the DOE Inspector General noted that 
        the awards process for the Energy Efficiency and Conservation 
        Block Grant program, newly funded under the Recovery Act, was 
        challenging to implement because there was no existing 
        infrastructure. Hence, Recovery Act funds were not awarded and 
        distributed to recipients in a timely manner.
   Staff capacity.--Officials from DOE stated that they would 
        need to hire a total of 550 staff-both permanent and temporary-
        to carry out Recovery Act-related work. However, several issues 
        affected DOE's ability to staff these federal positions, 
        including the temporary nature and funding of the Recovery Act 
        and limited resources for financial management and oversight. 
        To address those issues, DOE was granted a special direct hire 
        authority as part of the Recovery Act for certain areas and 
        program offices. The authority allowed DOE to expedite the 
        hiring process for various energy efficiency, renewable energy, 
        electricity delivery, and energy reliability programs and 
        helped DOE fill longer term temporary (more than 1 year, but 
        not more than 4 years) and permanent positions. However, 
        according to DOE officials, government-wide temporary 
        appointment authority does not qualify an employee for health 
        benefits, and thus few candidates have been attracted to these 
        temporary positions. According to DOE officials, the Office of 
        Management and Budget recently approved direct-hire authority 
        for DOE, which officials believe will alleviate issues related 
        to health care benefits.
    Some officials told us that they experienced heavy workloads as a 
        result of the Recovery Act, which impaired their ability to 
        implement programs. As we reported in December 2009, smaller 
        localities, which are often rural, told us that they faced 
        challenges because of a lack of staff to understand, apply for, 
        and comply with requirements for federal Recovery Act 
        grants.\14\ For example, some local government officials 
        reported that they did not employ a staff person to handle 
        grants and therefore did not have the capacity to understand 
        which grants they were eligible for and how to apply for them. 
        In the District of Columbia, Department of the Environment 
        officials explained that weatherization funds had not been 
        spent as quickly as anticipated because officials needed to 
        develop the infrastructure to administer the program. For 
        example, the department needed to hire 6 new staff members to 
        oversee and manage the program. Officials reported that, as of 
        late January 2010, the department had still not hired any of 
        the six new staff required. Officials from the National 
        Association of Counties said that some localities had turned 
        down Recovery Act funding to avoid the administrative burdens 
        associated with the act's numerous reporting requirements.
---------------------------------------------------------------------------
    \14\ GAO, Recovery Act: Status of States' and Localities' Use of 
Funds and Efforts to Ensure Accountability, GAO-10-231 (Washington, 
D.C.: Dec. 10, 2009).
---------------------------------------------------------------------------
   State, Local, or Tribal Issues.--In our recently issued 
        report on factors affecting the implementation of Recovery Act 
        projects, we noted that the economic recession affected some 
        states' budgets, which, in turn, affected states' ability to 
        use some Recovery Act funds.\15\ For example, according to a 
        recent report by DOE's Office of Inspector General, 
        implementation of the Weatherization Assistance Program's 
        Recovery Act efforts was delayed in part by state hiring 
        freezes, problems resolving local budget shortfalls, and state-
        wide furloughs.\16\ State-level budget challenges have affected 
        the implementation of Recovery Act projects. For example, 
        officials from the Department of Defense told us that because 
        states were experiencing difficulties in passing their current-
        year budgets, some were unable to provide matching funds for 
        certain Army National Guard programs. As a result, the 
        Department of Defense had to revise its Recovery Act project 
        plan to cancel or reduce the number of Army National Guard 
        projects with state matchingfunds and replace them with other 
        projects that did not require matching funds. Officials from 
        the Department of Housing and Urban Development also told us 
        that project starts in some instances were affected by the need 
        for state and local governments to furlough employees as a 
        result of the economic downturn.
---------------------------------------------------------------------------
    \15\ GAO-10-383.
    \16\ DOE Office of Inspector General, OAS-RA-10-04, Special Report: 
Progress in Implementing the Department of Energy's Weatherization 
Assistance Program Under the American Recovery and Reinvestment Act 
(February 19, 2010).
---------------------------------------------------------------------------
GAO Has Ongoing Work on DOE Recovery Act Programs
    In a report issued yesterday, we discussed recipient reporting in 
DOE's Weatherization Assistance Program.\17\ Specifically, we noted 
that reporting about impacts to energy savings and jobs created and 
retained at both the state and local agency level is still somewhat 
limited. Although many local officials that we interviewed for that 
review have collected data about new hires, none could provide us with 
data on energy savings. Some states told us they plan to use 
performance measures developed by DOE, while others have developed 
their own measures. For example, Florida officials told us they plan to 
measure energy savings by tracking kilowatts used before and after 
weatherization, primarily with information from utility companies. In 
addition, local agencies in some states either collect or plan to 
collect information about other aspects of program operations. For 
example, local agencies in both California and Michigan collect data 
about customer satisfaction. In addition, a local agency in California 
plans to report about obstacles, while an agency in New York will track 
and report the number of units on the waiting list.
---------------------------------------------------------------------------
    \17\ GAO-10-437.
---------------------------------------------------------------------------
    As we reported, DOE made several outreach efforts to their program 
recipients to ensure timely reporting. These efforts included e-mail 
reminders for registration and Webinars that provided guidance on 
reporting requirements. For the first round of reporting, DOE developed 
a quality assurance plan to ensure all prime recipients filed quarterly 
reports, while assisting in identifying errors in reports. The 
methodology for the quality assurance review included several phases 
and provided details on the role and responsibilities for DOE 
officials. According to DOE officials, the data quality assurance plan 
was also designed to emphasize the avoidance of material omissions and 
significant reporting errors.
    In addition to our reviews of states' and localities' use of 
Recovery Act funds, GAO is also conducting ongoing work on several DOE 
efforts that received Recovery Act funding, including the Loan 
Guarantee Program and the Office of Environmental Management's 
activities.
    As I noted earlier, Congress made nearly $4 billion in Recovery Act 
funding available to DOE to support what the agency has estimated will 
be about $32 billion in new loan guarantees under its innovative 
technology loan guarantee program. However, we reported in July 2008 
that DOE was not well positioned to manage the loan guarantee program 
effectively and maintain accountability because it had not completed a 
number of key management and internal control activities.\18\ To 
improve the implementation of the loan guarantee program and to help 
mitigate risk to the federal government and American taxpayers, we 
recommended that, among other things, DOE complete internal loan 
selection policies and procedures that lay out roles and 
responsibilities and criteria and requirements for conducting and 
documenting analyses and decision making, and develop and define 
performance measures and metrics to monitor and evaluate program 
efficiency, effectiveness, and outcomes. We are currently engaged in 
ongoing work to determine the current state of the Loan Guarantee 
Program and what progress DOE has made since our last report, and we 
expect to report on that work this summer.
---------------------------------------------------------------------------
    \18\ GAO, Department of Energy: New Loan Guarantee Program Should 
Complete Activities Necessary for Effective and Accountable Program 
Management, GAO-08-750 (Washington, D.C., July 7, 2008).
---------------------------------------------------------------------------
    Ongoing work also focuses on DOE's Office of Environmental 
Management, which also received Recovery Act funding. The Office of 
Environmental Management oversees cleanup efforts related to decades of 
nuclear weapons production.\19\ The Recovery Act provided DOE with $6 
billion-in addition to annual appropriations of $6 billion-for cleanup 
activities including packaging and disposing of wastes, decontaminating 
and decommissioning facilities, and removing contamination from soil. 
DOE has begun work on the majority of its more than 85 Recovery Act 
projects at 17 sites in 12 states and has spent nearly $1.4 billion 
(about 23 percent of its total Recovery Act funding) on these projects. 
We are currently conducting work to evaluate the implementation of 
these projects, including the number of jobs that have been created and 
retained, performance metrics being used to measure progress, DOE's 
oversight of the work, and any challenges that DOE may be facing. We 
expect to report on that work this summer.
---------------------------------------------------------------------------
    \19\ DOE estimates that the total cost to complete this work will 
come to about $300 billion and that it will take several more decades.
---------------------------------------------------------------------------
    Mr. Chairman, this completes my prepared statement. We will 
continue to monitor DOE's use of Recovery Act funds and implementation 
of programs. I would be happy to respond to any questions you or other 
Members of the Committee may have at this time.

    The Chairman. Thank you very much.
    Ms. Nellenbach, go right ahead.

 STATEMENT OF MICHELE NELLENBACH, DIRECTOR, NATURAL RESOURCES 
           COMMITTEE, NATIONAL GOVERNORS ASSOCIATION

    Ms. Nellenbach. Thank you Chairman, Ranking Member 
Murkowski.
    My name is Michele Nellenbach. I'm the director of the 
Natural Resources Committee for the National Governors 
Association. On behalf of the Governors, thank you for this 
opportunity to talk with you about what they've experienced, 
over the last year, implementing DOE's ARRA-related programs.
    In October 2008, the Governor sent a letter to the Hill and 
also met with then Governor--then President-elect Obama to talk 
about stimulus funding and what they would like to see in a 
bill. They had identified 4 items. One was FMAP; the second was 
infrastructure funding; the third was accountability 
provisions--the Governors wanted the tough questions about how 
they're going to spend this money, they wanted the use-it-or-
lose-it provisions, they asked for those things in the bill; 
and finally, they asked for no new red tape. They got 3 of the 
4. As you just heard from GAO, I think the fourth is the reason 
we're here today, is because of some of the obstacles 
encountered dealing with that red tape.
    Now, the Governors do believe most of that is behind us 
now. So, I'd like to focus, sort of, on what we see as the path 
forward. There are a few issues that are still out there that 
we need to address.
    DOE is working tirelessly to do NEPA reviews, but they are 
still taking a--they're still taking some time. We had one 
State that had its EECBG grant approved in September 2009. They 
are still waiting for that NEPA determination, and they cannot 
spend that money until they have it. So, that's still an issue. 
Again, DOE has got SWAT teams on it now, and they're working 
tirelessly to get those reviews done. They've established a 
pretty aggressive agenda for when they want to do that, but it 
is a concern, moving forward.
    One issue that hasn't been talked very much about, and is a 
very big issue for the Governors, is reporting requirements. 
The Governors don't just oversee the Energy Program, they--we 
have--$240 billion worth of the Recovery Act money is going 
through the States or to the States. That's a lot of money to 
manage. While we're happy--they're happy to do it, and 
committed to meeting the goals of the Recovery Act, there is 
some concern that some recent actions by the Department, if 
others pile on, it's really going to overwhelm the programs 
with administrative requirements.
    The DOE finalized, this week, a requirement that we--that 
the States report monthly on the State energy program and the 
weatherization program. We expect, very soon, to get 
notification that the same monthly requirements will kick in 
for EECBG.
    So, putting this in the context of State budgets, as you 
all know, talking to your States, they are not hiring; they are 
laying off workers; they're furloughing workers; programs that 
previously were untouchable, like K-12 education, unfortunately 
are very much touchable now.
    So, we need--they need every possible man-hour committed to 
approving applications and getting that money out the door so 
that we can be weatherizing homes and doing energy audits and 
getting people back to work. That's what the Governors want to 
be doing. Instead, they're going to have to devote more man-
hours to sending reports to Washington that are not going to 
affect the year-long delay we've encountered, they're not going 
to increase the number of homes we weatherize just because 
we're reporting more often. So, that's a very big concern for 
the Governors.
    A recent development from last week: As you all know, with 
each Weatherization Program in a State, there's an approved 
weatherization plan that indicates the exact number of homes 
that State believes it has the money and the time and the staff 
to weatherize. Last week, the Department sent out letters to 
all the energy officials in the country--in each State, giving 
them a new target for homes to be weatherized that is above and 
beyond what is in those plans. Now, I understand from the--Mr. 
Rogers' written statement that they're still committed to the 
600,000 home weatherized goal, which we're really happy to hear 
about, because that's the goal that we can meet, based on the 
numbers in those plans. So, we're just concerned about what the 
expectations are, moving forward, and want to work with the 
agency to clarify exactly what number the States are supposed 
to be striving for.
    So, those are just a few of the issues that are moving 
forward. Again, the major issues, the big problems, we think 
are largely behind us, and States are having a great deal of 
success. What it's important to remember is that ARRA gave the 
States until September 10, 2010, to obligate the money. The 
Governors will meet that number. Then we have until March 2012 
to spend the money. So, for all 3 of these programs--EECBG, 
Weatherization, and SEP--they have plans in place to spend that 
money over the course of the next 2 years.
    We're already seeing a lot of successes. For instance, in 
the State of Kansas, they have a--they've trained 45 new energy 
auditors. That's up 15 from a year ago. Most of those auditors 
have gone out and started their own new businesses. So, that's 
job growth, right there in Kansas, and its promoting the green 
energy economy through energy audits.
    In New York State, they're on their third request for 
proposals for $74 million of its State energy program. They're 
going to fund energy conservation projects, energy efficiency, 
and renewable energy programs. We've heard from State after 
State that they're oversubscribed for a lot of these programs, 
there's a huge demand for them.
    Puerto Rico estimates that 15--5,500 families will benefit 
from their weatherization program. They have set up a hotline, 
of sorts--a call center; and in the first month of the call 
center they set up, 11,000 appointments were scheduled.
    So, there are some great things happening in the States. 
Again, I just would like to close with stating that the 
Governors are committed to meeting the goals that Congress laid 
out for them. They have 2 years to do that. They have through 
March 2012. So, I think you'll see a significant ramp up, and 
particularly in weatherization, in the coming weeks and months, 
now that the Davis-Bacon issue has been resolved on that 
program.
    With that, I'll close and would be happy to take any 
questions.
    [The prepared statement of Ms. Nellenbach follows:]

 Prepared Statement of Michele Nellenbach, Director, Natural Resources 
               Committee, National Governors Association
    Chairman Bingaman, Senator Murkowski and Committee Members, on 
behalf of the National Governors Association, thank you for the 
opportunity to testify on implementation of the American Recovery and 
Reinvestment Act's (ARRA) energy-related provisions.
    As you know, ARRA outlined three basic goals: spend the money 
quickly, create jobs, and maintain full transparency and accountability 
in spending taxpayer dollars. Governors have worked diligently since 
passage of the Act on February 17, 2009 to efficiently and 
transparently manage and spend over $240 billion in ARRA funds flowing 
to or through states. While there have been delays at the federal and 
state levels in fully implementing some of ARRA's energy-related 
programs, those delays are mostly behind us and states are focused on 
meeting the Act's September 30, 2010 deadline to obligate and expend 
all funds by the Department of Energy's (DOE) deadline of spring 2012.
Background
    On October 27, 2008, the National Governors Association (NGA) 
joined with five other associations that represent state and local 
elected officials to urge congressional leaders to provide 
countercyclical assistance to state and local governments to help 
offset declining tax revenues and growing safety net expenditures. NGA 
asked that Congress provide a two-year increase in the Federal Medical 
Assistance Percentages, a Medicaid component that would provide 
immediate fiscal relief to states. NGA also asked that the stimulus 
package include funding for infrastructure, including funds for 
airports, highways, transit, clean water, drinking water and schools. 
While NGA did not take a position on the inclusion of state energy and 
weatherization programs in the stimulus bill, governors are committed 
to efficiently using these funds to create jobs, reduce energy costs 
including for low-income citizens and small businesses and promote 
renewable energy.
State Energy Program; Weatherization Assistance Program; Energy 
        Efficiency and Conservation Block Grant
    ARRA provided significant increases for three energy programs 
administered by state and local governments: the State Energy Program 
(SEP) received $3.1 billion; the Weatherization Assistance Program 
(WAP) received $5 billion and the newly-created Energy Efficiency and 
Conservation Block Grant (EECBG) received $3.2 billion. In the cases of 
SEP and WAP, these amounts represented significant increases above the 
programs' annual appropriations of $50 million in fiscal year 2009 and 
$200 million respectively. EECBG, as a new program, had never received 
an appropriation nor had any existing infrastructure or regulations to 
guide its implementation.
    ARRA also continued several existing program requirements and 
imposed new restrictions on the programs. For example, ARRA continued 
requirements that the programs comply with the National Environmental 
Policy Act (NEPA) and the National Historic Preservation Acts (NHPA); 
laws requiring sometimes lengthy processes to ensure the projects have 
a minimal environmental impact and protect historic buildings. In 
addition, although SEP and WAP had always been exempt from Davis Bacon 
prevailing wage requirements and Buy American procurement provisions, 
ARRA required recipients of SEP, WAP and EECBG funds to comply with 
both provisions. These new and existing requirements, especially when 
combined with unprecedented levels of funding and ARRA's objectives of 
accountability and transparency, required the Department of Energy 
(DOE) to establish new programguidelines before states could fully 
implement the programs.
Federal Delays
    In December 2009, NGA sent Secretary Chu a letter along with its 
colleagues in the other ``Big 7'' associations (the National Conference 
of State Legislatures, the National League of Cities, the U.S. 
Conference of Mayors, the National Association of Counties, the Council 
of State Government and the International City Managers Association) 
articulating frustration with the slowness in which federal guidance 
was issued. This frustration was subsequently underscored by both the 
Government Accountability Office and DOE's own Inspector General (OIG) 
in reports detailing some of the obstacles the Department encountered 
in 2009. The OIG summed up the situation by stating `` . . . as 
straight forward as [the Weatherization Assistance Program] may have 
seemed and despite the best efforts of the Department, any program with 
so many moving parts was extraordinarily difficult to synchronize.''
    The following paragraphs outline federal obstacles identified by 
states and articulated by GAO and OIG as having slowed spending for the 
SEP, WAP and EECBG programs.
    NEPA/Historic Preservation: Despite having experience with NEPA and 
the NHPA, ARRA's significant increase in funding for SEP and WAP 
generated significantly more projects subject to NEPA and NHPA review. 
In hindsight, increasing the capacity of the NEPA and historic 
preservation processes would have helped avoid delays caused by the 
sheer volume of projects subject to review. We very much appreciate 
that DOE has developed a model programmatic agreement for states to use 
that will speed historic preservation reviews, but note that the model 
was just released in February of this year. In contrast, NEPA reviews 
continue to be a problem. For instance, DOE is still conducting its 
NEPA review for one state's EECBG plan that was approved in September 
2009. Until the NEPA review is completed, the state cannot use its 
EECBG funds.
    Davis Bacon--While the Secretaries of Energy and Labor issued a 
joint memorandum in July 2009 encouraging recipients to spend the money 
while the Department of Labor conducted the wage survey necessary to 
determine the prevailing wage for weatherization projects, many states 
did not proceed with awarding grants out of fear of future liability. 
States were concerned they would have to later divert funds from one 
project to retroactively pay workers on another project that were 
unintentionally paid less than the prevailing wage or would have to 
take money away from workers who were paid more than the contractually-
mandated prevailing wage.
    While the new wage determination is now in place for the WAP, DOE 
just received final word from the Department of Labor stating that this 
same wage rate cannot be used for residential projects funded through 
EECBG and SEP. This delay, through no fault of DOE, tied up millions of 
dollars from these programs.
    Inconsistent messages: DOE encouraged states to establish loan loss 
reserves, a credit enhancement mechanism through SEP and EECBG. 
However, it has recently come to light that such credit enhancements 
may be disallowed under an OMB circular. Several states are holding 
funding until this issue is resolved.
Reporting
    Since December, communication between DOE, NGA and the other Big 7 
organizations has improved. Representatives of the seven associations 
now have weekly calls with the department to review issues and receive 
updates. However, there is one remaining issue over which the Governors 
are at odds with the department: DOE's new monthly reporting 
requirements.
    While states share the DOE's interest in tracking spending and job 
creation, the additional reporting sought by the department will do 
nothing to speed the expenditure of funds or hasten the creation of 
jobs through these programs. States have made it clear that from a 
capacity standpoint, their personnel are already fully dedicated to 
implementing ARRA programs and meeting quarterly reporting 
requirements. Any additional requirements or responsibilities will 
diminish the amount of time state officials can spend implementing the 
programs and meeting existing requirements.
    States were particularly dismayed that OMB gave DOE emergency 
information collection authority for the SEP and WAP programs and 
required that DOE seek public comment only on how to implement the 
reporting authority and whether to proceed with monthly reporting for 
the EECBG program. I have attached the comments submitted by the NGA, 
the Council of State Governments and the National Conference of State 
Legislators expressing our concerns with the monthly reporting 
requirements, and ask that the letter be included in the hearing 
record.
    NGA maintains that the quarterly reports DOE already receives and 
the OMB jobs reporting guidance issued on December 18, 2009 are 
sufficient to meet federal data collection needs, and that DOE's 
additional job counting requirements are inconsistent with existing job 
calculations. While OMB requires all recipients report on full time 
equivalent (FTE) jobs created by ARRA funding, DOE will also now 
require the collection of non-federally funded FTEs. NGA believes this 
invites criticism that recipients are using subjective calculations to 
`inflate the numbers' to make ARRA look better. One of OMB's goals with 
its new guidance was to move away from subjective criteria to improve 
the job calculation. As noted by OMB in its guidance, ``Previous 
guidance required recipients to make a subjective judgment on whether a 
given job would have existed were it not for the Recovery Act. The 
updated guidance eliminates this subjective assessment and defines jobs 
created or retained as those funded in the quarter by the Recovery 
Act.''
    Further, DOE has added to its requirement that states report 
quarterly on more than 100 SEP metrics, a requirement that states 
report monthly on over 40 metrics. States are awaiting a final 
determination as to whether similar reporting requirements will be 
placed on EECBG.
    Even if there is some value in having the information the 
Department is seeking on a monthly basis, NGA disagrees that the value 
of that information exceeds the level of burden it places on state and 
local recipients. States have designed new computer programs and 
systems to automate the unprecedented reporting requirements of ARRA. 
If DOE proceeds with its proposals for new data points on a monthly 
timeframe, state systems will have to be reprogrammed or changed 
increasing the initial burden of the requirements beyond what DOE has 
projected.
    More importantly, DOE's proposed requirements must be viewed as 
part of the comprehensive reporting process required by ARRA. Over half 
of the states are central reporting states for Section 1512 reporting 
purposes, meaning that reports flow through a central system with its 
own level of verification and validation. Adding reporting requirements 
on recipients therefore translates into additional hours at each level 
of government responsible for collecting information. These additional 
reporting requirements were not included in the states' original 
estimates of personnel costs which will now have to be recalculated 
potentially affecting overall grant amounts.
    Governors are very concerned that other departments will follow 
DOE's lead and institute their own monthly reporting requirements. For 
states charged with administering more than $240 billion worth of 
recovery funding on thousands of projects, any further reporting 
requirements threaten to quickly overwhelm recipients and slow 
implementation.
Fiscal Condition of the States
    A final critical factor in the expediency with which funds are 
being spent is capacity and the financial crisis affecting nearly all 
state and local governments. According to a fiscal survey conducted by 
NGA with the National Association of State Budget Officers in February, 
states experienced historic drops in revenues in fiscal years 2009 and 
2010, which resulted in a 3.4 percent decline in general fund spending 
for fiscal 2009 and a 5.4 percent decline in fiscal 2010. Moreover, 
between now and the end of fiscal 1012, state balanced budget 
requirements will force states to close budget gaps in excess of $136 
billion. These gaps translate into spending cuts, hiring freezes and 
furloughs that hinder the ability of states to implement new programs 
or administer the explosive growth in programs like SEP and WAP. As the 
OIG noted:

          Ironically, given the anticipated stimulus effect of the 
        program, economic problems in many states adversely impacted 
        their ability to ensure that weatherization activities were 
        performed. State hiring freezes, problems with resolving 
        significant local budget shortfalls, and state-wide planned 
        furloughs delayed various aspects of the program and 
        contributed to problems with meeting spending and home 
        weatherization targets.

    While the OIG was speaking of the WAP program, its comments could 
just as easily be applied to the SEP and to a lesser extent, the EECBG, 
which had to be created from the ground-up. ARRA itself did not provide 
administrative funding for the states. The Weatherization program does 
authorize states to use 5% for administrative expenses and EECBG and 
SEP authorize the use of 10%, but most state hiring-freezes apply 
across the board, making it extremely difficult for states and local 
governments to rapidly increase capacity to the level proportionate 
with the amount of funding provided.
State Implementation
    Despite federal delays and state and local fiscal constraints, 
states are focused on using ARRA money to create jobs and promote 
energy conservation. Governors believe that most of the obstacles to 
implementation are now behind us and are confident states can fully and 
efficiently spend SEP, WAP and EECBG funds. Here are just a few 
examples of the successes Governors are having throughout the country 
with their energy programs:

          1. The State of Minnesota typically provides about 4,000 
        Minnesota households per year with weatherization services, but 
        with ARRA the state expects to weatherize 17,000 homes by March 
        2012. Minnesota estimates that the enhanced weatherization 
        program has created over 340 new jobs through December 31, 
        2009.
          2. OH was one of the few states that proceeded with 
        weatherization projects without having the final wage 
        determination from DOL and as a result, has weatherized 7,289 
        homes and created job activity equivalent to 2,485 FTE jobs. 
        DOE estimates that for every $1 invested in OH's weatherization 
        program returns $2.73 to the household and society. Further, 
        since January 2009, OH has trained over 350 weatherization 
        workers, 100 inspectors, 130 existing heating contractors and 
        completed 40 inspector and 10 heat tech re-certifications.
          3. California has obligated $195.4 million of its $226 
        million SEP grant, including $25 million for a low interest 
        loan program that is currently oversubscribed and $20 million 
        for green jobs workforce training through the state. The state 
        expects to begin in April or May of this year a clean energy 
        business loan program that would use up the remainder of its 
        grant.
          4. Pennsylvania also saw the infusion of ARRA money as a 
        prime opportunity to update and reform its program establishing 
        new standards and monitoring requirements for weatherization 
        work. The state also hired eight new program monitors to ensure 
        the quality of weatherization activities. While much of the 
        work in Pennsylvania was delayed by protracted budget 
        negotiations, weatherization efforts took off in November and 
        December. The state has already met its goal of weatherizing 
        1,500 homes per month.
          5. Michigan's State Energy Program's funding opportunities 
        are oversubscribed by a range from 2:1 to 10:1. Among the 
        projects Michigan has funded is $15.5 million in grants to 
        support Clean Energy Advanced Manufacturing of renewable energy 
        systems and components in Michigan and the installation of 
        anemometers to assist in the collection of data to support wind 
        development in the state. Michigan plans to use $10 million for 
        its revolving loan program but is awaiting final DOE 
        determination regarding the loan loss reserve issue.
          6. Michigan expects to have 100% of its EECBG funds under 
        contract by March 2012. Projects funded through EECBG will 
        include a mobile recycle center program and tire and electronic 
        recycling collections in Montcalm County; conducting building 
        audits and retrofits and developing energy conservation 
        strategies for several towns.
          7. North Carolina used some of its ARRA SEP money to provide 
        technical assistance to applicants prior to the issuance of its 
        EECBG RFP. The Energy Office provided nearly 300 local 
        governments and education units with strategic energy plans. 
        The state will soon issue an RFP for the SEP program, following 
        on one already done for the EECBG program, providing funds to 
        its Main Street Programs which fund preliminary and detailed 
        energy surveys of private businesses. Grants are provided on a 
        dollar-for-dollar match.
          8. North Carolina, like several other states, also saw the 
        infusion of ARRA money as an opportunity to update its 
        weatherization program to ensure timely and efficient 
        expenditure of federal funds. In particular, NC, through its 
        community colleges, redesigned its training programs for both 
        local nonprofits and vendors.
          9. The State of Kentucky has established the Green Bank of 
        Kentucky Revolving Loan Program to promote energy efficiency in 
        state buildings with its first loan going to the Kentucky 
        Department of Education (KDE). KDE will use the loan to make 
        improvements and implement Energy Conservation Measures (ECM) 
        for a total savings of $2.15 million over the life of the 
        project.
          10. Beginning in June, Kentucky will begin its Kentucky Home 
        Performance program leveraging ARRA funds at a 3:1 ratio with 
        private capital to make loans for home energy retrofits. The 
        state hopes to make available $20 million in loans.
          11. The State of Mississippi has weatherized over 1,500 homes 
        using ARRA funding and anticipates weatherizing 5,468 homes by 
        March 2012.
          12. The State of Nevada will use $7.9 million of its SEP 
        grant for energy efficiency and renewable energy projects in 
        state buildings and $10 million of its grant to provide energy 
        efficient lighting in each of Nevada's 17 school districts.
          13. In Oklahoma, the Governor has committed $11million from 
        the state's SEP funding for compressed natural gas vehicle and 
        infrastructure development.
          14. Pennsylvania has allocated $10 million from its SEP grant 
        for the deployment of innovative alternative and renewable 
        energy generation, efficiency and demand side reduction 
        projects. Another $12 million of its SEP grant will fund a 
        competitive grant program for combine heat and power projects.
Conclusion
    Thank you again for the opportunity to talk with the Committee 
regarding state implementation of DOE's ARRA-funded energy programs. 
Governors are committed to the successful implementation of these 
programs over the next two years and are optimistic about their 
potential to create jobs and energy savings.

    The Chairman. Thank you very much for your testimony.
    Mr. Woolf, go right ahead.

     STATEMENT OF MALCOLM WOOLF, DIRECTOR, MARYLAND ENERGY 
 ADMINISTRATION, AND VICE CHAIR, NATIONAL ASSOCIATION OF STATE 
                ENERGY OFFICIALS, ANNAPOLIS, MD

    Mr. Woolf. Thank you, Mr. Chairman.
    My name is Malcolm Woolf. I am appearing today on behalf of 
the National Association of State Energy Officials. I'm vice 
chair of NASEO, as well as serving as--on behalf of Governor 
O'Malley as director of the Maryland Energy Administration.
    From NASEO's perspective, the energy portion of the 
stimulus funds has been a success. Clean energy investments are 
being made, in every State, that address the Nation's short-
term needs to boost job creation with our long-term needs to 
reduce household bills, promote energy independence, and 
preserve our environment.
    I have 3 messages that I'd like to share with the committee 
today:
    First, over half of the State Energy program funds have 
already been committed--over $1.8 billion--which enables the 
companies to hire workers, purchase new products, even though 
that money has not yet been spent, by the way that the Federal 
Government and DOE tracks it. So, real jobs are being created 
today, even if it's not showing up in GAO's numbers yet.
    Second, the initial delays have been largely overcome.
    Third, the ARRA energy investments are beginning to pay 
significant dividends.
    Let me briefly elaborate on each of these issues:
    First, a survey of NASEO members last week indicated that 
well over one-half, 1.8 billion, of the SEP funds are actually 
committed and approximately $777 million is actually under 
contract. This is critically important because, unlike other 
programs, States generally pay for energy retrofits or 
renewable installations only after the work has been 
satisfactorily performed. However, businesses hire new workers 
and purchase extra supplies many months earlier, when the 
contracts are awarded. In other words, to evaluate how well 
stimulus is doing in creating new jobs, it's more important to 
look at the pipeline of projects and the work that's actually 
committed than it is to look at the money actually being spent, 
because the money isn't spent until all the work has been 
completed.
    Moreover, States are leveraging the Federal funds to 
attract significant additional resources toward projects, a 
fact that's ignored under Federal guidelines for calculating 
job creation. In addition to the SEP program, States have made 
considerable progress in implementing the other ARRA programs. 
Spending under the EECBG program, which--over 2,000 grant 
recipients--is accelerating in accordance with the statutorily 
required local government plans. The ENERGY STAR Appliance 
Rebate Program has been very popular with consumers and 
retailers alike; in many States, it's oversubscribed. Spending 
should generally be completed by the first half of 2010. In 
addition, spending for weatherization funds has accelerated 
significantly in recent years--in recent months--excuse me--
despite the initial delays caused by Davis-Bacon. We're 
confident that the national target of 600,000 weatherized homes 
by March 2012 will be achieved.
    Progress under ARRA has certainly been slower than anyone 
would've hoped. Much of the initial delays were caused by the 
need of DOE and the States to ramp up and to comply with a host 
of newly applicable requirements. For example, the NEPA statute 
for States to look for shovel-ready projects that literally 
didn't involve shovels because physical construction would take 
too long and trigger the lengthy NEPA review. A year later, DOE 
has now issued over 5,000 NEPA determinations, which equates to 
$1.8 billion of spending.
    ARRA has also applied Davis-Bacon to the State 
weatherization activities for the first time. We had to wait 
for the establishment of wage-class rates from the Department 
of Labor, which didn't occur until September 2009. Contracts 
were issued immediately thereafter, and the work has ramped up 
dramatically as a result. We're still waiting for wage 
determinations in 5 States. In addition, we understand that the 
Department of Labor recently declined to allow the wage rates 
for residential energy efficiency retrofits under the 
Weatherization Program to be applied to the exact same 
activities under the EECBG or SEP programs. With approximately 
$800 million in residential energy efficiency retrofits planned 
in the EECBG and SEP programs, we need a rapid resolution to 
that problem. There's no reason why a contractor doing energy 
retrofits in a low-income home on Monday doesn't get paid the 
same wage rate if they're doing it in a private home on 
Wednesday.
    I've heard it said that ``statistics lie, but stories tell 
the truth.'' I've included, in my written testimony, stories 
from the States represented on the committee showing how the 
clean energy investments are paying dividends in your State. In 
Maryland, I could share stories about the over 1300 low-income 
residents who are having their apartments retrofitted to reduce 
their bills or the roughly 1,000 homeowners who are trying to 
take control of their own energy future by installing solar, 
geothermal, or even backyard wind systems in their homes.
    But, the one story that I'd like to highlight today is our 
innovative effort to tackle one of the fundamental barriers 
preventing further investment in clean energy by homeowners, 
and that's the upfront cost. We--the emPOWER Financing 
Initiative in Maryland seeks to leverage the public money from 
stimulus with private capitol to provide homeowners low-cost 
loans voluntarily secured through their property. Both 
Annapolis and Montgomery County have enacted local enabling 
jurisdiction, and we should be issuing loans shortly.
    In sum, the ARRA clean energy investments are working to 
promote--are working to create jobs and reduce household bills 
in the short run, as well promote American energy independence, 
economic competitiveness, and the environment in the long run.
    I thank you for the opportunity to share our experiences. I 
look forward to your questions.
    [The prepared statement of Mr. Woolf follows:]

    Prepared Statement of Malcolm Woolf, Director, Maryland Energy 
  Administration and Vice-Chair, National Association of State Energy 
                        Officials, Annapolis, MD
    Mr. Chairman, my name is Malcolm Woolf and I am appearing today on 
behalf of the National Association of State Energy Officials (NASEO). I 
am Vice-Chair of NASEO and the Director of the Maryland Energy 
Administration. I am also pleased to be here today alongside the 
National Governors Association, where I previously served as the Staff 
Director of the Natural Resources Committee. I also previously worked 
as a staff counsel for the Senate Environment and Public Works 
Committee.
    NASEO represents the energy offices in the states, territories and 
the District of Columbia. We are focused on a balanced national energy 
policy. At the present time, the Association is focused on working with 
the states in ensuring that the energy portion of the stimulus funds 
directed to state activities is effectively distributed.
    The short answer is that the energy portion of the stimulus funds 
operated by the state governments has been a success. Clean energy 
investments are being made in every state that are creating jobs, 
reducing household bills and promoting renewable power sources to 
accelerate our energy independence. We are seeing a significant ramp-up 
in spending across the United States and we are certainly observing a 
flood of innovative activities by state and local governments.
    During NASEO's recent winter meeting here in Washington, D.C., I 
discussed with my colleagues a wide variety of creative solutions being 
implemented by my fellow energy directors. The dynamism and progress 
was palpable. In my own state of Maryland, we have instituted energy 
programs in all sectors of the economy that are retaining and producing 
jobs.
    Today, I will focus on describing our activities under the State 
Energy Program (SEP) and the Energy Efficiency and Conservation Block 
Grant (EECBG). I will also discuss the Weatherization Assistance 
Program (WAP) and the Energy Star Appliance Rebate Program. SEP 
received $3.1 billion under ARRA, EECBG received $3.2 billion under 
ARRA, WAP received $5 billion under ARRA and the Appliance Rebate 
Program received $300 million under ARRA.
    SEP and WAP have been funded since the 1970s and have a strong 
track record of success. ARRA funds were added to base funding with an 
existing infrastructure. Congress was wise to build on existing 
programs and existing authorizations. EECBG was authorized in the 
Energy Independence and Security Act of 2007 (EISA) and the Appliance 
Program was authorized in the Energy Policy Act of 2005 (EPACT 2005). 
Neither of these programs received funding until ARRA was passed.
    There is no doubt that the ramp-up of existing programs and the 
implementation of new programs has been a challenge, both at the 
federal and state levels. The federal government has been adding and 
training new employees . The state governments are suffering through 
the worst cutbacks since the Great Depression, which has led to 
difficulties, but we are adding energy jobs and persevering to 
effectively invest the federal funds.
 over half of sep funds are already committed, which enables companies 
    to hire employees and begin work long before funds are formally 
                               ``spent''
    In the case of SEP and EECBG, the present reporting mechanisms 
under ARRA do not reflect the whole picture. With respect to SEP, our 
recent survey from last week indicates that well over one-half ($1.8b. 
+) of the SEP funds are committed (grantees selected and awards made) 
and approximately $777 million is actually under contract. This is very 
important, because the actual rate of ``costing'' or federal spending 
does not accurately reflect the jobs created or the impact on the 
economy. I should also note that DOE NEPA reviews have been completed 
for $1.86 billion in projects.
    For illustrative purposes, the vast majority of the states utilize 
private sector companies to conduct the energy efficiency activities. 
In the case of an energy service company (ESCO) that has received a 
contract to undertake energy efficiency upgrades in a school building, 
the contract generally provides that payments are not made until the 
work is actually completed or milestones under the contract are 
satisfied. In general, the ESCO begins hiring upon contract execution 
and conducts the work. The economy is directly and indirectly impacted. 
However, the spending or ``costing'' (in federal parlance) does not 
occur until the work is completed, the state is satisfied that the work 
is done properly and then the payment is made. Payments are not 
generally made up-front in order to protect the public against waste, 
fraud and abuse. Our ability to enforce the terms of these agreements 
are greatly enhanced if the state is holding the money, not the 
contractor. So, while the ``costing'' figure is low, the work conducted 
and jobs created is accelerating. We will not waste federal or state 
dollars by changing these contract terms. However, businesses can add 
employees and receive financing once the binding contracts are 
executed, with appropriate performance guarantees.
    The state energy director in Arizona recently reflected on this 
example, when he described being in his office one day in January when 
two contractors appeared looking at lighting and examining the facility 
in great detail--they were hired by the state's contractor--and they 
were doing a technical energy audit as the precursor to implementing 
the energy efficiency measures. The state had not yet paid them, thus 
the federal money was not yet ``costed'' but the work was surely being 
done and these individuals were surely being paid.
    Moreover, the federal tally of jobs created does not reflect the 
substantial leverage states are achieving with excellent program 
design. In the case of state and local government building retrofits, 
states typically obtain 4-to-1 private capital leverage for projects. 
The federal guidelines for jobs created does not allow for the counting 
of any of the jobs directly created by this leverage. Given states' use 
of at least one third of SEP funding for these types of retrofits the 
jobs count provided by DOE is far lower than reality.
    Spending of WAP funds has accelerated this quarter, despite the 
delays caused by Davis-Bacon compliance. The National Association of 
State Community Service Programs (NASCSP) and the National Community 
Action Foundation (NCAF) have been working closely with DOE to 
accelerate program delivery. We are confident that the target of 
600,000 weatherized homes by March of 2012 will be achieved.
    For example, in New York the WAP program will dramatically exceed 
its goal by weatherizing 15,000 low-income houses and apartments in 
2010, with an ultimate goal of 45,000 units by March of 2012. 550 
housing units have now been completed and more than 17,400 units are in 
process. As of December 31, 2009, 226 jobs were directly created with 
many more subcontractor jobs and more than 720 people have been 
trained. In New York, $60 million from ARRA has been targeted for 
multi-family dwellings.
    In Arizona, 110 homes received weatherization services in September 
and October 2009 with ARRA funds and an additional 369 houses were 
weatherized with regular appropriated dollars (an increase of 50% above 
normal rates).
    EECBG funds have been provided to well over 2000 cities, towns and 
tribes, many of which have not operated energy programs previously. In 
addition, the authorizing legislation also requires the development of 
an energy strategy. We have been impressed with the types of projects 
that are being implemented. The states are also tasked to work with the 
smaller communities directly. This has led to more coordinated energy 
programs and the use of ``best practices.'' We are also working closely 
with the U.S. Conference of Mayors, National League of Cities and the 
National Association of Counties to share information and assist the 
local and state governments.
    The State Energy Efficient Appliance Rebate Program (SEEARP), 
totaling $300 million, is being rolled out across the country, 
generally in the first two quarters of 2010. The states are working 
with retailers to identify target time frames for program initiation, 
e.g., President's Day sales or Earth Day. The program is over-
subscribed and has had an immediate impact. The DOE Energy Savers web 
site has updated information (www.energysavers.gov/rebates).
    We are also trying to use these funds to transform energy markets 
and produce long-term, sustainable jobs. Thus, it is critical to plan 
our programs so that projects are conducted over time rather than over 
1-3 months. This will help more effectively train workers, allow the 
demand to increase and allow a ``green'' workforce to develop. SEP ARRA 
funds are leveraging almost an additional $5 billion in investments, 
beyond the ARRA dollars.
                initial delays are now largely overcome
    The most significant problems in ramping-up these programs have 
simply been in the processing of the paperwork and the need for 
federal, state and local employees to gear-up. This was an enormous 
job. SEP went from $50 million to $3.1 billion (though state-
administered funding was in the hundreds of millions). WAP went from a 
DOE funding level of $450 million (though much more when considering 
other sources of funds) to $5 billion. EECBG went from $0 to $3.2 
billion, with over 2,300 direct grantees. The Appliance Rebates went 
from $0 to $300 million.
    With that said, the work completed thus far has been extraordinary. 
While there are, and there will be, examples of problems that are 
slowing us down, the results have been very positive. While there have 
been frustrations, the federal, state and local governments are working 
together--we are sharing successful approaches and looking at ways to 
streamline the systems.
    To step up to the challenge, NASEO hired on a part-time basis (with 
DOE support), 7 former state energy officials to help coordinate on a 
regional basis to ensure that every time a problem was solved we would 
not have to solve that exact problem again. DOE has also assembled a 
remarkable team. Matt Rogers has been extremely helpful in moving the 
ball forward. Cathy Zoi, as the Assistant Secretary for Energy 
Efficiency and Renewable Energy, has been tremendously accessible and 
moved quickly to find creative solutions. Gil Sperling first and now 
Claire Johnson, as the heads of the Office of Weatherization and 
Intergovernmental Programs (managing SEP, WAP and EECBG), and their 
staff, have been critical in addressing problems. Scott Blake Harris, 
the DOE General Counsel, recommended holding monthly calls with the 
state energy officials and the appropriate legal officials in the 
states to address problems. These calls have produced positive results. 
General Counsel Harris has also imposed a 48-hour rule--he attempts to 
solve problems in 48 hours. They have also set up a hotline 
([email protected]) to respond to state and local legal problems. 
Sky Gallegos, the Principal Deputy Assistant Secretary for 
Congressional and Intergovernmental Affairs, has also been a key 
problem-solver for the Department. The National Energy Technology 
Laboratory (NETL) and the Golden Field Office (GO) are the key 
procurement arms for the Energy Efficiency and Renewable Energy 
Division (EERE) and they have been staffing up and improving their 
response times. Have there been issues--absolutely. Do we wish that 
problems were solved earlier--absolutely. However, we all recognize 
that the personnel are trying hard to get the job done and are more 
rapidly processing the paperwork.
    The greatest burdens have been in five areas: 1) general ramp-up 
issues; 2) the National Environmental Policy Act (NEPA); 3) Davis-
Bacon; 4) Buy-American; and 5) Historic Preservation. In each case, 
spending has been delayed but the laws are being complied with and the 
programs are being implemented. DOE's efforts to address these issues 
resulted in the issuance of multiple guidance documents by the 
Department in November and December 2009. With this guidance in hand, 
states were then able to rapidly move funds to grantees. This process 
is accelerating.
    Ramp-up issues:--DOE has been faced with quickly building the 
capacity to manage massive new responsibilities. In addition to huge 
paperwork increases, DOE also needed to hire and train new personnel. 
The rapid expansion at DOE has led to some inconsistent decisions where 
one DOE program manager approves a state program while the identical 
program is rejected by another DOE official.
    To minimize the risk of waste, fraud or abuse, states also have 
detailed procurement processes that hindered rapid ramp-up. In 
Maryland, for example, any contract over $200,000 goes before a three 
member Public Works Commission, consisting of the Governor, Comptroller 
and Treasurer. While such procurement procedures take time, they help 
ensure that taxpayers receive the maximum value for their dollar.
    NEPA--NEPA posed a variety of challenges. First was simple 
logistics--there were simply not enough trained DOE personnel to 
evaluate these projects and programs. DOE has acted on over 5,000 NEPA 
actions, though there are thousands more.
    Second, NEPA forced states to look for ``shovel-ready'' projects 
that didn't involve shovels, since physical construction would likely 
trigger a lengthy NEPA review process. Maryland, for example, submitted 
its SEP application in June 2009 with programs designed to qualify for 
so-called ``Categorical Exclusions'' under NEPA. In early November 
2009, DOE created ``templates'' for SEP and EECBG to make it easier for 
state and local governments to get ``Categorical Exclusions.'' Once we 
revised our application to fit the new DOE templates, DOE finally 
approved Maryland's categorical exclusions in January 2010. For 
example, NEPA reviews for solar activities in Tennessee has slowed 
spending in that state. Nationwide, NEPA determinations have been 
completed on over $1.8 billion of SEP projects.
    Davis-Bacon--ARRA applied the Davis-Bacon statute to state energy 
activities for the very first time, creating a series of issues. In the 
WAP program we had to wait for the establishment of the wage rate for 
WAP workers by the Department of Labor before issuing contracts for WAP 
work. This wage rate was not established until September 2009, after 
the survey was completed in late August. Contracts were issued within a 
couple of months and work has ramped-up.
    In the recent IG report (OAS-RA-10-04) regarding the WAP program, 
the IG suggests that the states could have initiated these programs 
without knowing the wage rates. Unfortunately, the DOE IG simply has a 
lack of knowledge about these programs. If the preliminary wage rate 
was too high, does the IG suggest that we should get the money back 
from the employees? In the case of Ohio, where they did move more 
aggressively, the Department of Labor essentially reprimanded the state 
for moving too quickly. Wage determinations are still required for 5 
states. In addition, we are still awaiting a determination by the 
Department of Labor that the WAP wage rates for residential energy 
efficiency programs can be utilized for the approximately $800 million 
in residential energy efficiency programs planned under SEP and EECBG. 
This determination will be critical and needs to happen quickly. 
Twenty-five percent unemployment in the construction trades and a 38% 
drop in reseidential construction jobs since the recession started, 
could be partially alleviated by permitting these projects to go 
forward.
    Another provision of Davis-Bacon requires that employees be paid 
weekly. In Maryland, and I believe elsewhere, many potential recipients 
of federal stimulus funds have declined awards upon learning of the 
need to reprogram their entire payroll system. It simply costs too much 
to accept the federal grant.
    Buy-American--For Buy-American requirements, three product waivers 
have been issued since the start of 2010 for LED street lighting, CFLs 
and certain types of electronic ballasts. These products are simply not 
made here. Without more guidance in the Davis-Bacon and Buy-American 
areas, the state and local governments are simply requiring that fund 
recipients ensure that the laws are complied with. We recognize the 
importance of these legal requirements; we are simply stating that it 
has caused delay.
    Historic Preservation--ARRA has created an avalanche of new work 
for state historic preservation agencies. Maryland, for example, will 
issue over a thousand ARRA grants and each one will need to be reviewed 
by our state historic preservation office. We have worked 
collaboratively to establish a screening process whereby grants at 
newly constructed buildings are approved quickly, whereas work 
performed at older buildings receive heightened scrutiny. Despite this 
workable arrangement, it sometimes causes frustrating delays. DOE, the 
National Conference of State Historic Preservation Officers and the 
Advisory Council on Historic Preservation recently concluded a model 
agreement that will hopefully speed program implementation.
  arra's energy investments are beginning to pay significant dividends
    It is sometimes said that ``Statistics lie, but stories tell the 
truth.'' Let me briefly highlight four examples of early successes that 
Governor O'Malley and the Maryland Energy Administration have achieved 
thus far. I believe these stories show that ARRA's clean energy 
investments are beginning to show significant returns.
    First, we announced last week the ``Greens at Liberty Road'' 
project, which involves the construction of 105 affordable rental 
housing units for the elderly in northwest Baltimore County. The 
typical resident will enjoy energy savings of approximately 20%. The 
savings are particularly significant because low income families pay a 
disproportionate share of their income on energy.
    Thus far, over 1,300 apartments occupied by low income Marylanders 
have been retrofitted to date with ARRA funds. The Maryland Energy 
Efficiency Housing Affordability program provides grants for energy 
audits and the purchase and installation of equipment and materials for 
energy efficiency and renewable energy measures in affordable multi-
family rental housing. The program is an ongoing partnership between 
the Maryland Department of Housing and Community Development and the 
Maryland Energy Administration and is part of Governor Martin 
O'Malley's EmPOWER Maryland initiative, which aims to reduce the 
state's peak demand and overall energy consumption by 15 percent by 
2015.
    Governor Martin O'Malley also announced last week a ``Clean Energy 
Economic Development Initiative'' grant to TDI, a Bethesda based 
company that manufacturers components of energy efficient lighting. 
With this funding, TDI will be able to transform their production from 
`batch' to `continuous' and they anticipate hiring new employees. TDI 
was one of four companies receiving the first round of performance-
based awards to businesses that will spur clean energy production and 
create jobs in Maryland. Other winners include SWEBO, a Swedish-based 
biomass company that recently opened its U.S. headquarters in Bowie, 
Maryland, Competitive Power Ventures, which is proposing to build a 
10MW solar installation in Charles County, and Maryland Environmental 
Services, which is developing a poultry litter-based biomass facility 
at the Maryland Eastern Correctional Installation.
    To bring the benefits of clean energy within reach of Main Street 
Maryland, Governor O'Malley has also invested $4 million of SEP funds 
into the development of an innovative, property-assessed clean energy 
(PACE) loan program. The EmPOWER Financing initiative seeks to leverage 
public funds with private capital to offer local governments a 
voluntary, clean energy loan program for their citizens. Maryland 
families and small businesses will benefit from the opportunity to 
obtain loans, which will be assessed on their property, to lower 
upfront costs for energy efficiency improvements and renewable energy 
installations. In close partnership with the Maryland Clean Energy 
Center, both the City of Annapolis and Montgomery County have enacted 
implementing local ordinances and several other localities are actively 
following suit. We hope to issue the first 50 loans over the next 
quarter.
    My final story involves our residential solar grant program. With 
hundreds of Marylanders on our wait-list, the Maryland Energy 
Administration exhausted its annual budget early in the fiscal year. 
Using ARRA funds, MEA was able to keep this program running. In just 
the last few months, over 100 homeowners have installed systems on 
their homes. An additional 185 homeowners have been approved for 
grants, while over 400 individuals are on a wait-list. The wait-list 
ensures a steady flow of work and avoids the boom and bust cycle, so 
solar installers can hire new crews with the confidence that the funds 
will continue through April 2012, the end of ARRA.
    Qualified Energy Conservation Bonds--Last week, when the Senate 
passed the first Jobs Bill, it approved a provision to allow Qualified 
Energy Conservation Bonds (QECBs), which are currently structured as 
tax-credit bonds, to be issued as direct-subsidy bonds, which have been 
far more successful. This is an important change for a valuable yet 
difficult-to-issue Stimulus bond program. I thank the Committee for 
your leadership on this issue and encourage you to work with the House 
to not only keep the Senate language in the final bill but also raise 
the subsidy level.
    Maryland's QECB allocation is a little more than $58 million, split 
among 12 local governments and the state. Maryland's eligible local 
governments are very interested in issuing QECBs to help finance viable 
energy projects that will save energy and create jobs. Until the change 
to direct-subsidy bonds and a higher subsidy level are enacted, QECBs 
will continue to be tantalizingly out of reach.''
    Smart Grid--We are also concerned about the apparent impasse 
between the IRS and DOE on the taxability of ``Smart Grid'' grants. 
These grants should not be subject to federal taxation. This is slowing 
these projects and will reduce their reach and effectiveness.
                        programs in other states
    More complete updates are attached to this testimony.*
---------------------------------------------------------------------------
    * Updates have been retained in committee files.
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    Alabama--This state has focused on a revolving loan program ($25 
million), funding for energy efficient school retrofits ($5 million) 
and $20 million for state building energy efficiency retrofits 
including performance contracting.
    Alaska--The state is working to establish a bond program that would 
utilize $18 million in ARRA funds to match $250 million in bonds for 
revolving loans for state and municipal building retrofits. Their 
appliance rebate program is targeted to begin on March 16, and will 
work with Alaskans with disabilities.
    Arizona--$19 million is being dedicated to school energy efficiency 
programs, with additional innovative activities in the agricultural 
sector and for non-profits.
    Arkansas--This state has also established a revolving loan fund for 
K-12 schools, job training at technical and community colleges and 
industrial and agricultural energy efficiency programs. Arkansas has 
also established a $12 million revolving fund for sustainable building 
design.
    Colorado--$19 million of Colorado's funds went to revolving loan 
funds, New Energy Economy Development Grants, renewable energy finance 
and a cooperative activity on technology commercialization with NREL. 
Residential energy efficiency programs received almost $6 million and a 
variety of renewable energy activities received almost $10 million.
    Kansas--Over $34 million in ARRA funds have been committed to 
revolving loans for residences and small businesses. The state is 
providing a $250 rebate to local banks to defray the costs for 
financing energy efficiency improvements.
    Kentucky--Almost $10 million is allocated for energy efficiency 
programs in schools. They have also allocated funds for agricultural 
energy programs and a Home Performance with Energy Star program.
    Louisiana--Almost $26 million was allocated to energy efficiency in 
state university buildings. They have also expanded their home energy 
efficiency rebate (HERO) program. They have also developed a commercial 
buildings energy efficiency program.
    Michigan--They allocated $24 million for energy efficiency in small 
industrial operations and supplier expansion activities for wind, 
solar, geothermal and biomass.
    New Hampshire--This state has 16 separate SEP programs, including 
their revolving loan fund and a first-time homebuyer's energy 
efficiency program.
    New Jersey--$7 million has been allocated to fund solar 
installations on multi-family buildings for income-qualified 
recipients. Residential energy efficiency activities also received $8 
million (including single and multi-family residences).
    New Mexico--$24 million under SEP was awarded to schools, colleges, 
tribes and other agencies to improve energy efficiency. Transportation 
programs and community-based district heating and cooling also received 
funds.
    North Carolina--Over $11 million was allocated to small businesses 
and industry for energy savings and renewable energy activities. $18 
million was used to create an energy investment revolving loan fund for 
businesses, schools and other agencies.
    North Dakota--This state is working with the utilities providing 
consumer rebates for installation of energy efficiency and renewable 
energy equipment. Their wide variety of projects include extensive work 
with the agricultural and industrial sector and a high efficiency 
furnace rebate program.
    Pennsylvania--$82 million in SEP ARRA funds have been awarded, with 
most of the contracts executed for wind, biogas, combined heat and 
power and solar projects. Like many states, Pennsylvania has allocated 
funds for revolving loan programs ($12 million for the Green Energy 
Revolving Loan Fund).
    South Dakota--They committed $20 million for a revolving loan for 
state institutions. They are also targeting on-site generation 
activities, ground source heat pumps and HVAC improvements.
    Tennessee--$24 million has been committed to the Tennessee Solar 
Institute, and additional funds for comprehensive solar programs 
throughout the state.
    Utah--$3 million has been dedicated to a whole home retrofit 
initiative with an additional $3 million for builder rebates for high 
performance homes. Public schools also received funding directly and 
through a revolving loan.
    Vermont--In this state they are expanding grants and loans for 
renewable energy through the Clean Energy Development Fund.
    Washington--They established an energy efficiency and renewable 
energy loan and grant program. They also dedicated $14 million for 
community-wide urban residential and a commercial energy efficiency 
pilot program. An additional $5 million was provided as a credit 
enhancement to support $50 million in project expenditures.
    Wisconsin--This states' Energy Independent Communities Program has 
been on excellent example of state-local cooperation. This is 
complementing efforts under EECBG and SEP. Wisconsin has utilized ARRA 
funds to focus on manufacturing retooling and expanding new energy 
efficiency and renewable energy efforts.
    Wyoming--$19 million was provided for energy efficiency upgrades 
for public buildings, tribal entities and non-profit organizations. 
$3.5 million was contributed to weatherize homes for individuals above 
the WAP level, up to 250% of poverty.

    The Chairman. Thank you very much. Thank you all for your 
testimony.
    Let me start with a few questions. Matt, let me ask you, on 
this issue that Ms. Nellenbach raised about monthly reporting. 
I've heard this same concern raised in my home State, where the 
same folks working in State government to get these funds 
distributed and allocated and all are the ones who are being 
asked to do these reports. They've been doing quarterly 
reports, as I understand it, and now they've been told they 
need to do monthly reports. I heard the same concern that I 
think Ms. Nellenbach talked about is--if this is the Department 
of Energy's requirement, then are we going to see this all 
across the Federal Government, that we've got to do monthly 
reports for all ARRA spending, going forward? It seems like a 
very major recordkeeping burden. I don't know if there's any 
justification that you folks have settled on, that you think 
causes you to require it.
    Mr. Rogers. So, in terms of the managerial reporting 
requirements, if you think about the quarterly reporting, that 
is about public accountability, making sure that, every 
quarter, we talk about how many jobs are created and how much 
money has been spent.
    Monthly reporting is what I would refer to as ``managerial 
oversight.'' We're targeting managerial oversight reporting 
requirements on 12 specific projects that, up front, were 
identified as potentially high risk areas, weatherization being 
one of them, because what it allows us to do within the 
Department is to focus resources on helping those States and 
localities that are struggling the most.
    So, if we take weatherization--it's actually a very simple 
reporting requirement. We want units weatherized and funds 
spent every month. By getting units weatherized and funds spent 
every month, what it allows us to do, then, is to identify 
those States and localities that are having the hardest time 
actually getting the units done against the targets that they 
have set for themselves working together with DOE. What that 
then allows us to do is to focus our training, oversight, and 
technical support resources on those communities that need them 
the most.
    The challenge is, without that data, we end up having to 
search around and find the areas that are in most need. The 
paradox is that sometimes the communities in most need, because 
they are under water, don't even know what to ask for. What 
this does is, it gives us the kind of managerial data that, 
frankly, any business has. How much data do we need to have? 
Just in those programs where there is a great risk that we may 
not be achieving the numbers that we expect.
    The Chairman. All right. I think, we'll just have to sort 
of feel our way along and see if the requirement is one that 
can be accommodated by the States and still get all the rest of 
what they need to do done.
    Let me ask--I think, also, you talked, Matt, about the 
various programs that have been oversubscribed, and the number 
of folks who've come forward with good applications that you 
haven't been able to fund. Are there some particular areas that 
you folks have made funds available in that you think 
additional funds ought to be made available in by the Congress 
in future budgets, for example, because of the quality and 
quantity of applications that you've received?
    Mr. Rogers. One of the real privileges of this role is to 
look at the pipeline of new innovation going on in the United 
States right now. It is a rich and deep pipeline of very high 
quality projects.
    The area that I was most excited about, and most 
disappointed in our inability to fund fully, were the 48C 
manufacturing tax credits. We were oversubscribed in that 
program, by 3 to 1, with really terrific projects. We were able 
to fund 183 projects, 43 States, for $2.3 billion, but we could 
have easily done double that with projects that, as we went 
through this competitive merit review process, were above the 
line, really good projects that we would have been excited to 
fund.
    What we're trying to do under that program is rebuild U.S. 
leadership in high technology, clean energy manufacturing. It's 
in wind, it's in solar, it's in nuclear, it's in geothermal, 
it's in energy efficiency, it's in the automotive sector, where 
U.S. manufacturers have the potential to produce the most 
competitive products in the world, but need the capital and 
need the kind of tax breaks to be able to make upgrades to 
their manufacturing facilities. So, that was the one that we 
were most excited about the project pipeline, and most 
disappointed with the quality of the projects that we were not 
able to fund.
    The Chairman. Let me just ask--this runs over my time, but 
I'd like to ask one followup on that. We're likely to be 
debating, on the Senate floor, one or more amendments related 
to foreign-produced wind turbines, particularly wind turbines 
produced in China, and whether or not it's appropriate for us 
to limit the use of Recovery Act funds to--and tax benefits--to 
projects that produce--or that involve the use of wind turbines 
manufactured here in this country.
    I don't know if you've had a chance to look at these 
amendments, or if you have any thoughts about the issue; if you 
do, I'd be interested in hearing.
    Mr. Rogers. We share a common goal, which is creating jobs 
for American workers. That's clearly the focus of the Recovery 
Act, it's the focus of every dollar that we spend within the 
Department of Energy. With respect to the 1603 program, in 
particular, 100 percent of those funds go to U.S. projects. So, 
the reporting has been more than a little misleading in this 
area.
    Vestas is a foreign company that has invested in the United 
States, in Colorado, to build a facility. Those are the kind of 
jobs that we actually want. We've seen, as a result of 1603 and 
48C, $10 billion of foreign investment in the United States in 
the last year. When Nissan builds an auto factory in Smyrna, 
Tennessee, we are really excited about that, because that's 
jobs for American workers. Frankly, whereever the headquarters 
are, what we want are the jobs here.
    The other issue which is important in this discussion is, 
today about 63 percent of the value-added of a wind turbine, as 
a simple example, is made in the United States; the rest is 
imported. The biggest problem we have is not enough 
manufacturing capacity in the United States. So, things like 
the 48C program, where we're trying to expand the manufacturing 
capacity, are essential. The most important thing we could do 
to fix the--make sure we get more jobs in America is to expand 
the manufacturing capacity here in the United States.
    What we've done with the 1603 program--this is a program 
that is really working. We were going to see about a 50-percent 
drop in employment in the wind sector last year if we hadn't 
done that. So, these were jobs that were saved. Instead, we saw 
a 3-percent increase in wind energy capacity in the United 
States, and an increase--we've more than doubled the American 
content of wind turbines in the last 5 years. This is a program 
that's working. What we need to do is build more manufacturing.
    So, we are very excited about working with Congress to 
develop programs that make sure more and more of that is U.S. 
content. That, we can work with Congress and, I think, 
develop--while I have not seen the current language. I think 
the challenge is--what we don't want to do is stop a program 
that's really, really working well and putting Americans to 
work today.
    The Chairman. Thank you.
    Senator Murkowski.
    Senator Murkowski. Thank you, Mr. Chairman.
    Mr. Rogers, would like to follow up. I absolutely agree 
with you that we need to be looking to the number of jobs that 
are created here. Oftentimes you look at the name of the 
corporation and where it's based, and you say, ``Ah, there's 
the issue'' It oftentimes turns out to be a red herring. I 
would like your comments on this American University report, 
because in that report they indicate that almost 80 percent of 
the money has gone to foreign manufacturers of wind turbines. 
It may be that it's explained, as you have said, that they were 
foreign-based. But, they go further to state that, ``The 
stimulus bill created approximately 6,000 jobs overseas and 
maybe a couple hundred in the United States.'' I am not sure if 
this was necessarily part of the American University report, 
but there are some press accounts that there is a Chinese 
company called A-Power, which is helping to build a wind farm 
in Texas. They expect to receive 450 million in stimulus. 
dollars. The American partner on that project, which allows the 
American base, estimates that it could create about 300 
temporary construction jobs in this country, but it's creating 
2,000 manufacturing jobs in China.
    I agree with you, we have to do more to build our 
manufacturing base here. But, can you comment on, first, the 
American University report. How do we balance this out to 
ensure that we really get the bulk of the jobs here in this 
country, and not 6,000 overseas and a couple hundred here, and 
then we then claim that this is a jobs-producing bill for us? I 
would also like you, in this vein, to comment on the request 
from our colleagues Senators Schumer, Casey, Brown, and Tester, 
on their call for an immediate suspension of the Wind Energy 
Grant Program, until we can sort all this out. If you can 
address that, I would appreciate it.
    Mr. Rogers. Over the last decade, one of the challenges 
that the United States faced is that we did not have a set of 
incentives, either for clean energy development or for clean 
energy manufacturing, that were competitive on a global basis. 
So, some of the most successful companies in the world decided 
to startup elsewhere; they started in Spain, they started in 
Denmark, they started in Germany. One of the things that we are 
trying to do is to change that landscape.
    So when we now have created a set of incentives, both on 
the manufacturing side and on the development side, that are 
attractive, these companies, the best companies in the world in 
clean energy, are investing in the United States, because the 
United States has actually created the most attractive market 
for investment and job creation in the world. That's actually 
what we want to be doing.
    The 1603 program is doing that, and bringing those jobs 
here. So, when the American University says that--I forget the 
number--80 percent, 79 percent of the companies were 
headquartered abroad, that's probably a true statement. The 
fact that those jobs are here in the United States is somehow 
missed in the report.
    What we're seeing is investment in manufacturing. Gamesa is 
a Spanish company. They took a U.S. steel facility and turned 
it into a wind facility in Pennsylvania. They are now bringing 
people back to work. Over the last month, they actually just 
brought back 2 full shifts of operation because of the demand 
that they saw under the 1603 program.
    If we lead to an immediate cessation, the problem is that 
what Gamesa will have to do is lay those folks off, because all 
of the sudden the project can't continue going forward, because 
the project somehow doesn't meet a requirement or because we 
create such regulatory uncertainty that people say, ``You know, 
I really don't want to move ahead.''
    The last piece is with respect to the Texas project. There 
is no project. We have no application. They haven't broken 
ground on anything. One of the challenges that we face in clean 
energy development--I'm sure you see this all time--is, lots of 
people announce projects on paper, because they really, really 
would like to attract investors, and they'd like to position 
themselves well for other things. Until we have a project, we 
have nothing that we can actually evaluate. If we have a 
project, what we see is, in the vast majority of projects in 
the United States, the vast majority of the content is 
domestically based. So, we can only evaluate what we actually 
have. There is no Texas wind project, other than on a press 
release. So, until we see that application, it's really hard to 
evaluate it.
    Senator Murkowski. Would you dispute, the American 
University report, when it says that some 6,000 jobs have been 
created overseas and maybe a couple hundred is what----
    Mr. Rogers. I would----
    Senator Murkowski [continuing]. The terminology----
    Mr. Rogers [continuing]. I would say that----
    Senator Murkowski [continuing]. That they used.
    Mr. Rogers [continuing]. That was factually false.
    Senator Murkowski. Factually false. I will have to check 
back on this, because we've looked at the situation with the 
Spanish firm Iberdrola, and the manufacturer Gamesa. It was my 
understanding within the Pennsylvania facilities, that they had 
to lay off about 100 workers, and I'm understanding it's 
temporary but, based on what's going on within the market, they 
had to lay off their workers as well.
    Mr. Rogers. With respect----
    Senator Murkowski. So----
    Mr. Rogers [continuing]. Specifically, to the Gamesa 
facility, they called them back, about 3 weeks ago, to full 
strength--again, based on the demand that they were seeing in 
the marketplace. So, again, this is--these are the things that 
we find very reassuring and very confidence- building. One of 
the things that we don't--one of the challenges that we've 
faced in--particularly in clean energy regulation, is we've 
been inconsistent with what we were doing, and so, people 
freeze and then, you know, don't invest the capital. We're 
actually seeing the capital investing, we're seeing rapid 
growth in the market, we're seeing people called back to work. 
So, what we don't want to do is disrupt that. At the same time, 
I do think we need to work to make sure that we're maximizing 
the jobs here in the United States.
    Senator Murkowski. I understand, based on what you said, 
you would disagree with our democratic colleagues, with their 
request to halt the funding to the wind grant programs.
    Mr. Rogers. We are looking forward to working with Congress 
to make sure that we have appropriate provisions. Halting a 
program at this point would not be helpful for jobs.
    Senator Murkowski. Thank you, Mr. Chairman.
    The Chairman. Senator Stabenow.
    Senator Stabenow. Thank you very much, Mr. Chairman.
    Welcome, to each of you. I would just like to follow along 
this discussion, which I think is so very important.
    First, coming from Michigan, I can say that the Recovery 
Act has absolutely created jobs. We have been extremely pleased 
to work with the administration on the advance battery 
manufacturing dollars, which are opening plants and putting 
people back to work, as well as the 48C, the advance 
manufacturing credit, which I was pleased to partner with 
Senator Bingaman in championing in the Recovery Act, as well. 
Retooling loans are bringing back, literally, cars that were 
made in Mexico to being made in the United States, because 
we're helping retool plants for smaller energy-efficient 
electric vehicle and so on. So, I appreciate that.
    I guess, to add my voice to this, though, we, in my 
judgment, need to have an advanced manufacturing strategy in 
this country. We have bits--we have bits and pieces of it that 
we've put into the Recovery Act. But, we are in this dilemma, 
in my judgment, of creating new industry when we don't yet have 
full capacity.
    I think of the Advanced Battery Initiatives. We have 
companies--our auto companies partnering with Korean companies, 
who make the battery cell, because they can do the battery 
pack, and assemble it, but they don't yet have the technology 
for the cell. On the other hand, I guess what I would challenge 
us, is we do have a company--A123 Batteries--in this country, 
that is doing all of it. So, how do we prioritize, when we do 
have companies that are beginning to focus on, you know, 
bringing that technology--and they actually came back from 
Asia. They were in Asia, and came back. It's a wonderful story; 
an American company producing in Asia came back to the United 
States.
    So, one of my questions relates to, How do we make sure we 
are giving priority to those that are developing here, the 
complete package here in the United States? I would suggest 
that, while I share the concerns of colleaguea that--in terms 
of, ``How do we make sure these jobs are all happening here?'' 
it is not just section 1603 that's the problem; it's the fact--
if it's a--if it's by itself, that's the problem. So, expanding 
in--and we are, you know, working together to--and support the 
President in his call for additional moneys for the 
manufacturing tax credit in 48C, and the retooling programs, 
and so on. Because, I think we have to have a strategy that, in 
my judgment, also includes things like trade; opening up 
markets, as the President has called for; trade enforcement, 
when they steal our patents overseas. I mean, we need a whole 
strategy.
    Right now, on wind turbines, there are 8,000 parts in a big 
wind turbine. Mr. Chairman, we could make every one of those in 
Michigan, if given the opportunity. But, we know right now 
that--I think we have one American company that makes gear 
boxes, and, you know, the first supplier of generators just 
came online last year.
    So, I would just ask you to--as we look at all these 
programs that we're putting together, what is DOE doing to take 
into account the fact that we have to create the capacity--and 
I know that--I know you've spoken to that, but it seems to me, 
we have to be laser focused on how we create that capacity 
here. We need to do our part, as well, to make sure that we are 
not in a situation that we have been in with other industries, 
where--never forget the President going to England and--Great 
Britain--presenting to the Queen a great American ingenuity, 
the iPod, developed in America, made in China. So, we don't 
want that to happen with clean energy, there is absolutely no 
reason for that to happen on clean energy.
    So, I guess I would just ask you to--your thinking, more 
broadly, on what we ought to doing, what DOE's doing to, as 
quickly as possible, fill in these gaps.
    Mr. Rogers. I think it's exactly the right question. This 
is something that is deeply important to the Secretary. If you 
take the specific examples of the battery grants, where 
companies like A123, which started as a small-business 
innovative research program under DOE, with $100,000, and now 
is the largest recipient under the battery program, was going 
to build their plants in China, now A123 is going to build them 
here in the United States.
    I think we draw 2 pieces. First, under the selection 
criteria you had to have a domestic demand source to go with 
the domestic manufacturing, in order to actually move up the 
chain in the reviews. So, one of the things that we clearly 
recognize is the need to manage a supply and demand together. 
Because if we do one without the other, all of a sudden we 
could end up with factories that are empty, or we end up 
importing, because we're buying really high quality stuff, but 
we don't have the manufacturing capacity. So, we have to think 
about supply and demand together.
    The other thing that I think the A123 story illustrates is 
the need to link R&D and manufacturing. One of the things that 
the Secretary is doing is having a national conversation about 
the notion of accelerating innovation. How do we accelerate 
innovation in this country? One of the clear messages back is 
that, when I do R&D, I actually want my factory next-door, 
because that's where the innovation actually takes place. 
Because I can take the R&D and I can turn it into money in the 
factory by innovating the way that I'm actually producing the 
product. If I don't have the manufacturing here, all of the 
sudden it's harder actually to keep the R&D here. Right?
    So, we have to think about supply and manufacturing and R&D 
together to make that work. This is an enormously important 
theme for the Secretary. He's working a lot of time, on a 
national basis, really trying to understand, ``How do we 
articulate this in a comprehensive way?'' Because if we're 
going to be successful competing on a global basis, we've got 
to think about that whole value chain together.
    Senator Stabenow. Thank you, Mr. Chairman.
    The Chairman. Senator Wyden.
    Senator Wyden. Thank you, Mr. Chairman.
    Thank you all for your service.
    Mr. Rogers, I want to ask you about the Energy Efficiency 
Block Grants. I will tell you, the process, obviously, has been 
long and drawn out. But, I am just baffled about how the 
Department is going about making some of its decisions in this 
area. I want to walk you through an example that has been very 
frustrating to my constituents.
    I was recently having a townhall meeting in Condon. It's 
Condon, Oregon, population 600. The city received a grant of 
$244,000 to make repairs and upgrade its water system and save 
thousands of kilowatt hours of electricity that are now used to 
pump water through an out-of-date, leaky water system. The 
project that they proposed clearly would save energy, it would 
save money, and it would save water.
    Your Department told them that their project was 
ineligible. So, I have written to the Secretary about this. We 
haven't yet gotten an answer. The committee has worked hard to 
figure out how they can save energy, make their own 
contribution to creating some jobs and advancing our national 
energy goals. We are just baffled as to why the Department 
doesn't think they should get the grant. I think there's also 
some indications that, initially, they thought they were going 
to get the grant. So, anything you can do to shed some light on 
this, this morning, and give us your thought?
    Mr. Rogers. The overarching observation I'd make is, one of 
the exciting parts about the Energy Efficiency Conservation 
Block Grant Program is the innovation that is going on at the 
local level and giving the localities the ability to prioritize 
projects, because they know, actually, where the best place is 
to spend the money locally. So, that's why we're quite excited 
about that program.
    With respect to the city of Condon issue, this is an issue 
where--my understanding, at least, is that, in the initial 
application, the energy savings were unclear. One of the clear 
mandates that we have is to make sure that the energy savings 
are there.
    We've gone back--Secretary's gone back, and I've gone 
back--to investigate that we will, in fact, re-review that 
application and make sure that--if the energy benefits are 
there, we will make sure that that grant can actually move 
forward.
    I think this is one of those challenges, as both--one of 
the things that we did under the Conservation Block Grant 
Program is, we asked a whole set--2350 new recipients to 
develop energy efficiency plans at the local level, if they 
hadn't done before. As they developed those plans, we and the 
communities actually had to learn how to talk to each other 
about what energy savings looked like, how to measure that. I 
think we're getting much more articulate in that conversation 
now. We'll be more than happy to take a look at that one and 
get back to you promptly.
    Senator Wyden. Would you? Because it--again, I think--we're 
pleased to hear that it's going to be reviewed, but the State 
did the original evaluation for it. Apparently, they scored 4 
out of 5 in all of the relevant criteria--being shovel-ready, 
ability to implement the project, the benefits to the 
community.
    I'll just tell you, this, to me, is the real world. I mean, 
these are tiny communities. I have open meetings every county, 
every year. I'm concerned that they walk away and think that 
the Federal Government is going to have policies that turn them 
into a sacrifice zone that basically say, ``What goes on in a 
community, like Condon, really isn't all that important.''
    I've seen the pictures they show, with respect to the 
problems they have in these pipes. They're just big old 
enormous holes. I mean, this is not rocket-science stuff, and I 
just hope that we can get, to the good people of Condon, some 
positive news here, because, on every count, the evidence, 
whether it's assembled by the State--or the pictures that they 
walked me, you know, through--it seems to me this should have 
been resolved a long time ago.
    When can you get back to me with respect to the timetable 
for re-reviewing and when a decision's going to get made?
    Mr. Rogers. We can get back to you in the next couple weeks 
on that topic. This is not that complicated.
    [The information referred to follows:]

                                       Department of Energy
                                     Washington, DC, March 9, 2010.
Hon. Ron Wyden,
U.S. Senate, Washington, DC.
    Dear Senator Wyden: Thank you for your February 19, 2010, letter to 
Secretary Chu regarding the Energy Efficiency and Conservation Block 
Grant (EECBG) funding for the City of Condon, Oregon.
    The EECBG project submitted by the City of Condon called for the 
replacement of 2,000 feet of aged water pipeline and the installation 
of new water meters. The Department of Energy's (DOE) review suggested 
that the project would have limited energy savings over its lifetime 
and as a result, the project would require a long payback period. Thus, 
we initially did not approve the project.
    On March 5, 2010, we discussed the merits of the City of Condon's 
project with the Oregon State Energy Office. The State of Oregon 
conducted a comprehensive merit-based review of the application. Within 
that review, the State considered not only the energy saved, but the 
project's ``shovel-readiness'' and its ability togenerate jobs. In 
addition, the State considered the demographic diversity of each 
project, its contribution to conserving water, and the synergies 
between projects. Based on this, and other new information, the DOE 
approves the City of Condon's pipeline project.
    Thank you for bringing this matter to my attention and for your 
commitment to energy efficiency and renewable energy. If you need 
additional information, please contact me or Mr. Jonathan Levy, Office 
of Congressional and Intergovernmental Affairs, at (202) 586-5450.
            Sincerely,
                                                 Cathy Zoi,
                                               Assistant Secretary.

    Mr. Rogers. One of the things we discovered in this process 
was, when we got in the initial applications from so many 
communities--right? This is part of the learning process--we 
ended up putting about 100 people down in the basement of the 
Department of Energy to call people. Because one of the things 
we found was, the traditional bureaucratic processes, where we 
go and toss things back and forth over the transom, those don't 
work. Right? The key thing is to actually pick up the phone, 
call the city, really understand what they're trying to do, and 
make sure that we can do the translation function into the 
necessary forms to make that work. So, we'll get to the get to 
the bottom of that. I'll be happy, personally, to get back to 
you----
    Senator Wyden. Thank----
    Mr. Rogers [continuing]. On that.
    Senator Wyden. Thank you. There's no question that you and 
the folks at your Department are well intentioned. I am 
absolutely convinced there is nobody at the Department of 
Energy who got up that morning and said, ``I want to spend my 
day being rotten to the people of Condon, Oregon.'' That is not 
at issue. Your folks are well intentioned, trying to do the 
right thing. But, these places are falling between the cracks, 
Mr. Rogers. We can't have that. I'm going to just assume we're 
going to get this resolved within the next 2 weeks.
    Thank you, Mr. Chairman.
    The Chairman. Thank you very much.
    Senator Burr.
    Senator Burr. Thank you, Mr. Chairman.
    Mr. Rogers, in a report to Secretary Chu the inspector 
general, Gregory Friedman, said that, as of February 16th, only 
$368 million, or 8 percent, of the $4.73 billion targeted for 
weatherization programs had been tapped by State and local 
governments. Now, that computes to only 30,297 homes, when the 
target was 586,000. In North Carolina, if I break that down, 
it's 197 homes, with a target of 22,000.
    Now, on the surface, it seems to me that we rushed to put 
together a spending program, to put together items that we 
thought were attractive, that would generate economic activity, 
and that we gave very little thought to the challenges of how 
quickly you could stand these programs up.
    My question's really to the entire panel. How can you 
effectively and efficiently put this money to work?
    Mr. Rogers. Maybe I'll start, and others have good views on 
this program, as well.
    So, that what--the data that you cited from Greg Friedman 
was actually end-of-the-year data, that we'd done 30,000 homes 
with Recovery Act funds by the end of the year. Actually, the 
Weatherization Program, overall, did 125,000 homes last year, 
which was a 70-percent increase on the year prior. So, big step 
up in the program, good execution on that. We slowed up, for a 
variety of Davis- Bacon related reasons, in terms of spending 
Recovery Act funds, but they actually got a lot of homes 
weatherized.
    We're on pace to do 250,000 homes this year. In the month 
of January, we were operating at about a 17,000-homes-a-month 
rate. We believe we were up on that in February. We're 
targeting a 30,000-homes-a-month rate by the end of March. This 
is about making sure that each of the recipients understands 
what their targets are and understands that we can help if 
they're behind with training and technical assistance to make 
sure that they're successful.
    As of this morning, we've actually outlaid $590 million of 
the Weatherization Program, so almost double the number that we 
were at--just at the end of December. So, we're making good 
progress, and accelerating progress, under this program.
    Senator Burr. Let me sort of expand the scope, and I'll let 
everybody comment on it. During a DOE budget hearing, February 
4, Secretary Chu suggested that the delay in stimulus 
expenditures was at the State and local levels. But, both the 
inspector general's report and the GAO report suggests it's the 
Federal requirements that have hindered the expenditure of 
funds.
    Now, you're telling me there's nothing that's been 
hindered, based upon your comments, that you're right on 
schedule, you're doing exactly--and, I would love to know, 
especially from the Governors Association, Is that accurate? 
GAO suggested that it was the Federal Government, and not the 
State or local governments. I think maybe we need to sort 
through this and find out what's the right thing.
    Ms. Nellenbach. Thank you for the opportunity, Senator. We 
don't--we would generally agree with the GAO's findings that it 
was the Federal requirements and the unfamiliarity of some of 
agencies that were now supposed to implement Davis-Bacon, who 
had not had to do so before. So, unfortunately, it took until 
July for the Department of Energy to ask Department of Labor to 
help with the wage determination. To the Department of Labor's 
credit, it took them 3 months, which I guess is very, very 
quick for this type of work. But, they, within 3 months, had a 
wage determination.
    So, really no weatherization money, or very limited numbers 
of weatherization money, could go out the door until September 
2009. So, at that point, then, States really got into doing 
some training and getting workers in place. So, I think you're 
going to see a ramp up of spending over the next couple months 
on weatherization, but there was definitely a delay at the 
Federal level that hindered State ability to spend those funds.
    I think an important benefit--well, an important side story 
to this is, you know, weatherization preceded ARRA by 30 years. 
A lot of States, and North Carolina included, took the infusion 
of the ARRA money as an opportunity to make sure that problem 
can live another 30 years. So, they reformed their programs. 
North Carolina worked with its community colleges to update its 
training programs. So, it's--a lot of things were done so that, 
when the ARRA money runs out, you have more sustainable 
programs over the long run. But, certainly a lot of that was 
delayed because of delays at the Federal level.
    Senator Burr. OK.
    Ms. Dalton.
    Mr. Woolf. If I could respond----
    Senator Burr. Sure.
    Mr. Woolf [continuing]. To that, as well. Sorry. On behalf 
of the NASEO, the State energy officials, progress certainly 
has been slower than anyone would hope. But, I think some of 
the data that is being cast about paints an incomplete picture. 
You don't pay for the work that's been done until it's been 
satisfactorily completed. So, it's always a lagging indicator.
    The work is being done now, businesses are hiring workers, 
buying more insulation, making purchases, and that's not 
showing up in GAO's data of money spent, because we don't pay 
those workers until the job's actually been completed. To 
prevent waste, fraud, and abuse, we're doing a huge amount of 
quality control before we're paying them, as well. So, a lot of 
work has been done, both on weatherization as well as the rest 
of the programs, that we're not seeing in the Federal costing 
numbers, but it--are real jobs being created. There's success 
stories in every State to back that up.
    Senator Burr. Ms. Dalton.
    Ms. Dalton. I would actually agree with all of my 
colleagues, but try to put a picture on what was happening. 
There was an awful lot of effort that was put in, last year, in 
building the infrastructure of this program. I grew by 
twentyfold from the original program. But, there certainly were 
things, like the Davis-Bacon requirements, that did cause some 
delays, and I think they still are causing some concerns at the 
State level.
    The Davis-Bacon, wage determination came out in September. 
The government really didn't start action on it until June. It 
was something that probably could have been foreseen a little 
bit earlier and moved along faster. States rightly, I think, 
decided to wait until that final wage determination came out 
before they started actually implementing the Recovery Act.
    In the meantime, as was pointed out by the Department of 
Energy, they did start weatherization activities using their 
base program that comes through their annual appropriation, and 
about 100,000 homes were weatherized through that program.
    But, as problems come up, it's important to quickly react 
to them. As I said, on Davis-Bacon, we probably could have 
reacted a little bit sooner. There are continuing concerns with 
it. For example, the wage determination that came out in 
September applies to residential housing units. There's 
continuing concerns on larger housing units, those that are 5 
floors or higher, and what wage rates should be applied there. 
It's difficult for the contractors that are actually doing the 
weatherizing to figure out, ``Well, which wage rate should I be 
using here?'' and paying, potentially, the same workers 
different rates because of what work they're doing.
    These are things I think we need to be proactive about and 
try to get resolution so that the States aren't--and the local 
governments--aren't having to deal with this issue.
    The Chairman. Senator Menendez.
    Senator Menendez. Thank you, Mr. Chairman.
    Mr. Rogers, I was proud to support the President in the 
passage of the Recovery Act. When he signed it, he declared 
that the plan would, quote, ``be implemented with an 
unprecedented level of transparency and accountability.'' 
However, my staff has made several inquiries to your offices to 
find out how many New Jersey companies applied for the Advanced 
Energy Manufacturing Tax Credit, 48C. They were told that this 
information could not be shared. We didn't ask for names of any 
applicants, we asked for how many companies applied.
    Now, as we look to extend this program, information like 
this is critically important. So, is it truly information that 
is so secret that I can't know how many people from my State 
applied for this program?
    Mr. Rogers. One of the things we've tried to do under this 
program is to create a high degree of transparency. You go to 
our Web site, you can see every recipient of our funds. You 
go--you see our financials every day. So, we are trying to make 
sure we drive more transparency.
    On this--on the particular issue of the tax credit program, 
the 48C program, the challenge we have there is, we're working 
on behalf of the Department of Treasury and the IRS. We're 
act--and we--under those conditions, we actually have to 
operate under IRS rules, not under DOE regulations. IRS rules 
specifically prohibit the sharing of that data. We've actually 
gone--
    Senator Menendez. Sharing of----
    Mr. Rogers. Our general----
    Senator Menendez [continuing]. Data to know how many 
entities applied. Not who they are----
    Mr. Rogers. Correct.
    Senator Menendez [continuing]. But how many entities 
applied. You're telling me the--if I get the IRS, that's what 
they're going to tell me?
    Mr. Rogers. That--we went back to--our general counsel went 
to the IRS general counsel to ask that question, and that was 
the answer that came back, was that we were legally prohibited 
from sharing that information. I'm not an expert, by any means, 
in IRS rules. So----
    Senator Menendez. All right.
    Mr. Rogers [continuing]. I take the----
    Senator Menendez. So, we will----
    Mr. Rogers [continuing]. IRS----
    Senator Menendez [continuing]. We will get the IRS and get 
to the bottom of it, because I don't know how Congress is 
supposed to determine whether there is a sufficient demand for 
a program in order to make a determination whether it is worthy 
of extension and producing the results. It's--I mean, somewhat 
asinine, at the end of the day, that--I'm not looking for who 
they are, I'm simply looking to know the quantity of demands on 
something. It's pretty incredible.
    Let me ask you something else. We asked how many New Jersey 
communities have applied for the competitive portion of the 
Energy Efficiency Block Grant Program, which I authored, and we 
were stonewalled again. Are these national secrets, as well?
    Mr. Rogers. So, the Energy Efficiency Conservation Block 
Grant Program, the competitive portion, is a--a very exciting 
program. So, we applaud your authoring of that--of the--over 
all the EECBG. The competitive portion, I think, is going to be 
a very exciting piece to roll out.
    One of the things that we've had to be careful with, 
throughout this process, is on the people that we have turned 
down for applications. This is broad-based. So, we've--we're 
oversubscribed, 5 to 1, on average, for all of the competitive 
activities that we've had underway. We've run through very 
competitive peer-review processes, with an emphasis on making 
very high quality decisions as we work through there.
    What we worry about is that we've had to turn down some 
great companies, we've had to turn down some great projects.
    Senator Menendez. Let me----
    Mr. Rogers. What we----
    Senator Menendez. Let me----
    Mr. Rogers [continuing]. Don't want to do--no----
    Senator Menendez. Let----
    Mr. Rogers [continuing]. What we----
    Senator Menendez [continuing]. Let me----
    Mr. Rogers [continuing]. Don't want to do----
    Senator Menendez [continuing]. Interrupt you, because 
that's not my question.
    Mr. Rogers. I'm sorry.
    Senator Menendez. That's not my question. Let's listen to 
my question. I asked a simple question. How many New--I didn't 
ask even who they were--how many New Jersey communities applied 
for the Energy Efficiency Block Grant? What is the State 
secret, that I can't get that number?
    Mr. Rogers. So, what we don't want to do is make--is 
diminish the value of any company that is not awarded funds, 
even though they're a great project. That--that's the principle 
that we're operating with. So, there are a whole set of 
procurement rules that say we cannot disclose things about 
applicants who are not awarded. That limits our ability----
    Senator Menendez. I won't know----
    Mr. Rogers [continuing]. To have conversations--
    Senator Menendez [continuing]. Who the applicant wasn't 
awarded. I'll just know that 100 entities--New Jersey 
communities--I'm not even talking about companies--100 New 
Jersey communities applied, and we got 20 of 100. I mean, I--
what is--what is wrong with getting this--this is transparency? 
That I can't know the macro number of communities that--public 
entities that applied? How can you sit there and tell me that? 
It's ridiculous. Ridiculous.
    Let me ask you one last question. You know, we--I have 
worked with the U.S. Conference of Mayors, which was one of the 
instigators of the Energy Efficiency Block Grants, and--as we 
devised it--and, you know, based on the testimony today, it 
seems that States have managed to clear away many of the 
roadblocks hampering the program. Based on my conversations 
that my staff has had, with the Conference of Mayors and with 
mayors in my home State, it seems that working through these 
issues on the local level has been less successful.
    What's DOE doing to get Block Grants actually spent--not 
committed--on the local level? How are we breaking through? It 
seems I've done fairly well with the States. Why can we not do 
this with municipalities?
    Mr. Rogers. The level of innovation going on at the local 
level is absolutely terrific. One of the things that we're 
trying to do is to do is to expedite that. One of the things 
that we found was, with 2350 new recipients of DOE funds, that 
some traditional processes didn't work. So, what we did was, we 
made a set of changes. What we're effectively doing now is 
working this on a SWAT team basis. We've got a group of folks 
who are designed to knock down each of the barriers in the way.
    One of the key challenges right now is making sure that 
each of the communities has described what it is that they're 
going to spend the money on, and that we can categorically 
clear that through things like NEPA reviews. What we've created 
are a whole set of very streamlined 1-page things, that 
basically you can check off and say, you know, ``Therefore, 
we--therefore, we're ready to move forward.'' So, we've created 
a whole new set of ways to get this done. Basically what we're 
doing is calling communities one by one to make sure that that 
happens, with a group of about 80 folks in our offices, because 
what we've discovered is, again, it doesn't work very well with 
mail coming in, or even emails; it works really well when we 
can get on the phone with people and actually work through it, 
and just clear them. Because what we're trying to do with each 
of those--the mantra that we've put in place there is, ``Move a 
set of communities across the line, get them spending every 
day.''
    Senator Menendez. I look forward to following up with you. 
You know, as one Senator who has been supportive, you're not 
going to get my support if I can't simply get information. I 
can't make decisions that are intelligent, I can't act as a 
fiduciary for the 9 million New Jersians I represent here, I 
can't make intelligent budget decisions on your requests, if I 
can't get information. So, either we're going to change the 
paradigm on how we get information, or you're going to lose one 
Senator's vote here, at the end of the day.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Mr. Woolf, let me ask you--you and Ms. Dalton have both 
made reference to this problem with the wage rates, saying that 
the wage rates were decided, as I understand it, and 
established by the Department of Labor in September for 
residential construction, but they have not yet been fully 
established, I guess, with regard to other types of 
construction. Could you elaborate on what that problem is and 
what is needed to get that problem fixed?
    Mr. Woolf. I think we were talking about 2 different 
aspects of the same type of problem. What the Department of 
Labor has done, in a very expedited manner, is create, for the 
first time, a wage classification for weatherization retrofits. 
It's never been subject to that, to Davis-Bacon, before. Now, 
that we know that a wage rate for a contractor who's 
retrofitting a low-income home, we want to apply that same wage 
rate for the same contractor who's doing the non-low-income 
home outside of the Weatherization Program.
    So, if you're doing--if your community, using EECBG funds, 
are retrofitting buildings, it's the same work, it's often 
simply the same--literally, the same contractor. The Department 
of Labor has not allowed that wage classification to be 
extended beyond weatherization to other categories; so 
communities have to guess; contractors who are applying have to 
guess what wage classification to use; one contractor may make 
one assumption another may make another; gives them a 
competitive advantage, because of the uncertainty. It is 
impacting how quickly jobs are getting done.
    The Chairman. So, you're suggesting that Department of 
Labor needs to clarify that the wage rates they've established 
for this weatherization activity should be applicable for any 
weatherization activity, whether it's federally subsidized or 
not?
    Mr. Woolf. Regardless of which Federal program it's----
    The Chairman. Regardless of which----
    Mr. Woolf [continuing]. Coming from.
    The Chairman [continuing]. Which program is subsidizing it. 
Is that your understanding of the problem, as well, Ms. Dalton, 
or not?
    Ms. Dalton. I think there's just one other aspect of the 
problem, and that was what I was referring to, where the 
Department of Labor has said that a different class of worker 
and wage rate should be applied to, as I said, buildings that 
are more than 4 floors high. What they haven't looked at is 
what, exactly, is the work that's going to be done, and setting 
a wage rate for that.
    So, what they've said is that, for those larger buildings, 
you should be applying a wage rate that's for a different class 
of construction work--for plumbers or electricians, as opposed 
to weatherization workers. What they really need to look at is 
weatherization workers, and what types of work are going to be 
done, and what the wage rate should be for them, so that there 
is a determination that people can go to, to say, ``All right, 
this is the class of worker; this is what we're doing,'' and 
not bringing in electricians and plumbers and all of these 
other types of activities.
    I think--some of this has been just because, as there's a 
better understanding of the Weatherization Program, there's 
clear understanding of the types of work, but I think the 
Department of Energy and the Department of Labor really need to 
talk to each other and reach, as I said, some consistent 
guidance and determinations that State, local governments, and 
contractors can use. It's really unclear. We keep running 
across different problems----
    The Chairman. Mr. Rogers, do you know of anything going on 
that will clarify this, or is this something that we should 
contact the Department of Labor about? What's your thinking?
    Mr. Rogers. So, this is a topic that we talk to the 
Department of Labor about just about every day. This is 
something where--I would note the collaboration with our 
partners at NASEO and other--and with some of the other 
national agencies have been very, very helpful. because what it 
allows us to do is identify the confusion on the front line, 
and then see if we can solve it at the top level, here.
    So, we've been working with Labor on this issue. I think 
there are 2 different pieces:
    In terms of the commercial wage rates, I think that's 
simply a question of guidance, making sure that, for large 
buildings, there's clear guidance on which categories you use. 
The wage rates are clearly established; it's just making sure 
people are consistent in doing that. That's something that we 
can do reasonably directly.
    In terms of the application of weatherization rates, it's a 
Department of Labor decision as to what happens there. We've 
made our views on that known to Labor, and we expect to have 
that resolved relatively promptly.
    The Chairman. OK. Mr. Woolf, did you want to add anything?
    Mr. Woolf. I did. I know that there are proposals floating 
on Capitol Hill for further efforts to accelerate clean energy 
innovation. I would encourage Congress to think about our 
experiences with Davis-Bacon before they apply that requirement 
to new programs, because it has been an impediment to getting 
dollars spent quickly.
    The Chairman. OK.
    Senator Murkowski.
    Senator Murkowski. Thank you, Mr. Chairman.
    You know, I am still as fuzzy on this as before the line of 
questioning started. The comment was made, I don't remember who 
made it, but, weatherization programs have been going on in the 
States for decades now. If we have a State weatherization 
program in Alaska, and we've been working with our auditors and 
moving the State level, and then we now have stimulus funds 
that come in to supplement what we're doing, is the State 
weatherization program somehow or other snarled up in the wage 
resolution issues that we have been discussing? It causes me to 
wonder whether our good intentions, in advancing these stimulus 
funds, has actually even slowed some of our efforts with our 
own State weatherization programs.
    Mr. Woolf, you look like you're going----
    Mr. Woolf. Yes.
    Senator Murkowski [continuing]. To jump in.
    Mr. Woolf. I think what the Davis-Bacon--the application of 
Davis-Bacon to State weatherization programs has delayed the 
ability to use the stimulus funds. So, what Maryland and, I 
think, other States have done is use their other State money, 
and they've exhausted that money first----
    Senator Murkowski. Right.
    Mr. Woolf [continuing]. While the Federal Government has 
worked out Davis-Bacon. The success story here is that the 
States, working with the Department of Energy and the 
Department of Labor, now do have a wage classification for most 
weatherization activities. That was made in September. It's now 
kicked up--in Maryland, at least. We've been able to ramp up 
our production, so we are now about on track to do as many 
homes as we hoped to, to reach our ultimate goal. What I'm 
asking for is that be extended----
    Senator Murkowski. Sure.
    Mr. Woolf [continuing]. Beyond weatherization, to the other 
areas.
    Senator Murkowski. Let me ask you a question, Mr. Rogers, 
about Smart Grid. We haven't had a lot of discussion about 
this. But, you know, that was a big chunk of change, $4 billion 
in Smart Grid grants authorized under the stimulus last year. 
Now there's this issue about whether or not they're subject to 
Federal taxation. It's my understanding that, while DOE has 
awarded these Smart Grid grants, the Department hasn't 
completed the terms and conditions, and so, we haven't seen any 
funds actually go out and then be distributed to the grant 
recipients.
    There is great expectation as to what we could see from 
this program, but we haven't had the immediate impact. Given 
where we are right now, and the fact that we've had this delay 
on funding distribution, this open question as to whether or 
not these funds are going to be subject to tax, do you 
anticipate that we're going to see any of the recipients 
declining the awards and backing off? Are we seeing any 
layoffs, for instance, at the smart metering companies, because 
the work has stopped with the distribution of these Federal 
funds? What's our status there?
    Mr. Rogers. So, the status--we're making good progress on 
that front. We worked very closely with our colleagues at the 
IRS to get a determination under section 118A. The IRS has 
actually completed their analysis and will be publishing 
guidance here shortly that will actually provide clarity on 
that question.
    Senator Murkowski. Do we know what ``shortly'' is? 
``Shortly,'' in my mind, is different than the IRS's mind.
    Mr. Rogers. Yes. I--I'm--that is--that's a fair 
observation. So, we--our expectation is, it will be in the next 
2 weeks, that they will have formal guidance issued on that. We 
do not anticipate anyone turning back the--turning back the 
funds, and we've been very pleased with the collaboration with 
the IRS on this topic.
    Senator Murkowski. You don't think we're going to see any 
retraction on----
    Mr. Rogers. We--I do not expect that.
    Senator Murkowski. OK. Then my final question. This is 
actually directed to you, Mr. Woolf. I appreciated the 
summaries that you attached for the committee that shows the 
amount of funding that's been obligated or awarded to selected 
States. I noticed that you have everybody on the committee, 
except Alaska. Is there a reason that we don't have Alaska of 
course, we're very special, but I'm wondering if there was any 
reason, or if perhaps you could supply that to me.
    Mr. Woolf. We would be happy to supply that.
    Senator Murkowski. OK. So, there really wasn't a reason.
    Mr. Woolf. Didn't get it to us in time for the hearing. 
We'll get it to you as soon as we get it.
    Senator Murkowski. OK. I appreciate that. Your organization 
does keep track of the actual expenditures, in each of these 
States.
    Mr. Woolf. We do. As States are our members, and we report 
so that we can keep track of what's happening nationally.
    Senator Murkowski. I'm assuming Alaska's a member.
    Mr. Woolf. Absolutely.
    Senator Murkowski. OK. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. Let me just ask one additional question. I 
think you referred to this, Matt, in your testimony. One of our 
big challenges, going forward, is this--this Recovery Act money 
is such a big infusion of resources into a lot of programs that 
had no resources before, and into activities that had no 
funding before. You were saying that one of the keys to really 
transforming our economy to a clean energy economy is 
predictability, and where we're headed in the future for--so 
that folks will know when to--whether they can build their 
factory here, or do whatever.
    It's going to be difficult, I think, to be sure that we 
properly transition from this high level of funding that we 
currently have through the Recovery Act to a more normalized 
budget situation. I guess I'm just anxious that--any insights 
that you can give us, not necessarily today, but as we go 
forward, as to how we ensure the predictability of these 
funding levels as best we can, at whatever level they're going 
to be. I mean, obviously we can't maintain the high funding 
level once the Recovery Act funds go away, but we can certainly 
try to be sure that the tax provisions that are helpful are 
still in place, that the funding programs that are helpful are 
still in place; that the Weatherization Program not go back to 
being a sort of a neglected stepchild as it perhaps was prior 
to this Recovery Act infusion of funds. Any thoughts you've 
got, I'd be anxious to hear.
    Mr. Rogers. I'd make 2 simple observations. One is that 
we're asking companies to make long-lived asset decisions. So, 
we actually have to have a clear set of incentives over the 
long term. If I'm going to make a 30-year asset investment, I 
actually have to have a reasonable confidence about what the 
rules of the road are over an extended period of time.
    One of the things that we've tried to do under the Recovery 
Act is to use this as an opportunity to demonstrate to the 
private sector that these are some very high-return 
investments. Senator Murkowski was asking about the Smart Grid 
program. One of the things that we're encouraged by is seeing 
this play out in so many different States, and seeing the rate 
of return that each of those States is going to see on those 
kind of investments. All of the sudden then, the private sector 
can take on a set of these funding levels if we have the tax 
provisions clear and if we have the long-term pricing 
provisions in the market clear. I think those are the 
opportunities for this committee over the next year. You are at 
the center of defining what the playing field looks like for 
investments in clean energy for the long term.
    Mr. Woolf. If I could jump in on that.
    The Chairman. Yes. Go ahead.
    Mr. Woolf. Sure. The question of, ``How do we keep the 
success from stimulus going after stimulus?'' is something that 
States have given a lot of thought to. I think we've--certainly 
the level of activity from stimulus has been a huge boost, and 
we want to keep that going. Most States have invested at least 
a portion of the stimulus funds in revolving loan programs so 
that after--even after stimulus when those loans are repaid, 
it'll keep providing dividends on clean energy.
    We are very excited about our Property-Assessed Clean 
Energy Program, where we're going to use the Federal money to 
kind of leverage private capital into a revolving loan program 
to keep that going. Even in a standard program like our 
Renewable Energy Grant Program, we're intentionally giving out 
a certain number of grants, each and every month, so that solar 
companies know they can hire new crews to do the work, and 
there will be stimulus money available for the next month and 
the month after that. Keeps the--gets their crews trained; 
reduces their costs, so that, post-stimulus, the jobs will 
still be there. So, every State is thinking about, ``How do we 
keep this going after stimulus?'' We've got some great 
successes.
    Ms. Nellenbach. Yes, and, Chairman Bingaman, I would also--
echo what Malcolm said, but also, as I had mentioned to Senator 
Burr, a lot of the States looked at this as an opportunity to 
really fix some problems with some of their programs. 
Pennsylvania, for instance, redid its computer system that 
connects all the community action programs that do 
weatherization so that when the ARRA money does run out, they 
have a new more efficient system in place.
    In terms of the funding window, again, we've been given 
through March 2012, from the Department of Energy, to spend all 
the money in those 3 programs. So, most States have in place a 
plan to gradually spend it over time, so that hopefully that, 
when March 2012 comes, there's more of a network in place, 
there's people in place, that it's not a sudden drop off. So, 
they are looking at the long-term future of those programs.
    The Chairman. Very good.
    Did you have a comment, Ms. Dalton.
    Ms. Dalton. I would just add one thing looking at the 
Recovery Act money knowing where we've had some successes and 
where, maybe, we want to do additional investments post-
Recovery Act, and being sure that we've got a plan, moving 
forward, of, ``Do we want to keep the funding at a certain 
level? Do we want to ramp down and not have any kind of cliff 
effect?''
    The Chairman. Very good.
    Senator Murkowski, did you have additional questions?
    Senator Murkowski. Yes. I don't have anymore questions, 
just a comment at this point.
    I really appreciate the last few minutes that we've had, 
here, because I think there have been some positive comments 
coming from the State, from the Governors, and that's important 
to hear. Your final comment, Ms. Dalton, is exceptionally 
important, because right now there's a lot of pressure on us: 
create jobs; make things happen now, spend money to make 
something happen. My fear is that so much of it will be 
continued--I'll use the phrase, ``a knee-jerk response''--we 
have to do something now. I think we do need to take some 
lessons learned from what we're seeing, last year and now, as 
we are into the more full-on implementation. I appreciate the 
process and the difficulty of moving things through, but you 
hate to be sitting back and saying, ``Well, I told you so. I 
knew we couldn't get it out the door that fast, and that we 
were going to see this.''
    I am hopeful that there is more of a vision plan. How do we 
continue the good things that came from this, rather than, as 
we work to put together yet another jobs bill, well let's put 
in another energy piece that maybe DOE is not ready to, or not 
the best suited to, be advancing. I think we need to be working 
in a far more coordinated manner. I think we recognize that, 
when we're talking about our taxpayer dollars going out to 
create jobs, that not all jobs are created equal. I don't think 
most of my constituents in Alaska think that creating jobs in 
China is going to be the best thing for them.
    We want to make sure that, as we talk about how we create 
the jobs, that we're not making our country less competitive by 
helping to build out the infrastructures and all that is 
happening overseas. There has to be a very solid piece of this 
where we're doing exactly what Senator Stabenow has talked 
about, and what you mentioned, Matt. We have to build that 
manufacturing base here, but, I think, in an effort to 
jumpstart some things. We're seeing the criticisms coming out 
of some of these reports, and we're living with them.
    I appreciate the discussion here this morning and, Mr. 
Chairman, your great willingness to put this on the agenda.
    The Chairman. Thank you all very much. This has been very 
useful testimony.
    [Whereupon, at 11:35 a.m., the hearing was adjourned.]
                                APPENDIX

                   Responses to Additional Questions

                              ----------                              

   Responses of Patricia A. Dalton to Questions From Senator Bingaman
    Question 1. In your testimony you cite the National Historic 
Preservation Act as one area that states have reported as a problem. I 
understand that in some states the local historic preservation laws 
themselves present issues for weatherization or new clean energy 
installations. Were you able to separate out issues created by the need 
to comply with the federal mandate from issues that likely would have 
already been present under local law?
    Answer. No, we did not separate out these issues; we focused only 
on federal requirements. Federal and state officials told us that the 
National Historic Preservation Act affected the selection and start of 
Recovery Act projects, but they did not discuss local laws or 
requirements nor did we specifically ask about local laws and 
requirements.
    Question 2. In your bi-monthly audits of Recovery Act spending, do 
you have sufficient data so we can see acceleration of spending, and 
thus tell if problems have been addressed?
    Answer. GAO's bimonthly audits discuss changes in Recovery Act 
spending and the progress being made in addressing implementation 
issues for selected programs, including the Department of Energy's 
Weatherization Assistance Program, though our tracking of Recovery Act 
spending does not make a causal link between an increased rate of 
spending and the resolution of problems related to federal 
requirements. We selected programs for review based primarily on 
whether they have begun disbursing funds to states or have known or 
potential risks, such as an existing program receiving significant 
amounts of Recovery Act funds or new programs. In the case of the 
Weatherization Assistance Program, GAO's bimonthly audits have tracked 
the program's obligation and spending status and have discussed the 
reasons for the program's slow spending rate and the steps being taken 
to address those issues. Specifically, we reported that states used 
only a small percentage of their available funds in 2009 primarily 
because state and local agencies needed time to develop the 
infrastructures required for managing the significant increase in 
weatherization funding and for ensuring compliance with Recovery Act 
requirements. For further information, see our latest bimonthly audit 
issued on March 3, 2010 (Recovery Act: One Year Later, States' and 
Localities' Uses of Funds and Opportunities to Strengthen 
Accountability, GAO-10-437).
  Responses of Patricia A. Dalton to Questions From Senator Murkowski
    Question 1. NHPA--You state in your testimony that the Michigan 
Department of Human Services told you that 90 percent of the homes 
scheduled to be weatherized under the Weatherization Assistance Program 
would need a historic review under the National Historic Preservation 
Act. Do you have similar statistics for any other states?
    Answer. Other states did not provide estimates for the percentage 
of homes that would require historic reviews, and we did not 
specifically ask for this data. Michigan made particular mention of the 
percentage of homes affected because the requirements of the act 
affected such a large number of homes there.
    Question 2. Status of Funds--According to your testimony, DOE has 
obligated approximately 70 percent of its funds, while expenditures 
amount to about 7 percent. How do those figures compare to the 
obligation and spendout rates at other federal agencies that GAO is 
tracking?
    Answer. As of December 31, 2009, DOE's obligation rate for Recovery 
Act funds was in the bottom third of 27 federal agencies GAO is 
tracking, while its spending rate was next to last among those same 
agencies. However, the 54 percent of its funds that DOE had obligated 
at that time was just below the overall obligation rate of 63 percent 
for all 27 federal agencies. In contrast, DOE had only spent 4 percent 
of its Recovery Act funds at that time compared to an overall Recovery 
Act spending rate of 20 percent. The table below shows the percentage 
of Recovery Act appropriations obligated and spent by federal agencies 
as of December 31, 2009.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Question 3. Weatherization--In your written testimony, you noted 
that GAO is currently working on a report that will detail 
weatherization-related jobs and energy savings. When will that report 
be released? Can you share anything about what you've found so far, and 
some of the difficulties that are apparently manifesting with regard to 
measuring energy savings?
    Answer. The report-titled Recovery Act: One Year Later, States' and 
Localities' Uses of Funds and Opportunities to Strengthen 
Accountability (GAO-10-437)-was issued on March 3, 2010. It is the 
fifth in a series of reports by GAO on the use of and accountability 
for Recovery Act funds in selected states and localities; the next 
report in that series will be issued in May 2010.
    As part of the March report, we examined recipient reporting 
associated with the Weatherization Assistance Program. We found that 
state reporting about impacts, especially energy savings, was still 
somewhat limited for the program's Recovery Act efforts. Available data 
showed that about 8,500 jobs had been created through the use of 
Recovery Act weatherization funds. However, while many local officials 
had collected data about new hires, none could provide us with data on 
energy savings.
    Contributing to the lack of information about impacts is that most 
state and local agencies either were just beginning to use Recovery Act 
funds to weatherize homes or had not yet begun to do so. Some states 
told us they planned to use performance measures developed by DOE, 
while others had developed their own measures. For example, Florida 
officials told us they planned to measure energy savings by tracking 
kilowatts used before and after weatherization, primarily with 
information from utility companies.
    Question 4. Wind Energy Grants--Just this week, four Democratic 
Senators sent a letter to the Obama Administration asking it to suspend 
the Treasury/Energy wind energy grant program until it can be amended. 
Has GAO looked at, or do you plan to look at, what's happening with 
this program and where its funds are going?
    Answer. GAO has not previously and is not currently conducting work 
in this area.
                                 ______
                                 
     Responses of Malcolm Woolf to Questions From Senator Bingaman
    Question 1. You indicate you believe the problems that have led to 
delays have been largely overcome. Do you have an estimate of when you 
believe the current funding can be spent out?
    Answer. We believe that the funding under the State Energy Program 
(SEP) and the other major grant programs impacting the states and local 
governments should be spent within the statutory deadlines created in 
the ARRA statute and the implementing rules from the Department of 
Energy.
    Question 2. Now that capacity is built up and the state and federal 
levels, what are you seeing with regard to demand? Are there programs 
that you see as being particularly oversubscribed?
    Answer. In general, the states have utilized a bidding process to 
determine what projects to fund within allowable categories. In the 
vast majority of cases all these categories have been over-subscribed. 
According to the survey prepared by the National Association of State 
Energy Officials (NASEO) in December 2009, some examples of this level 
of over-subscription are striking: a) AZ--104 school retrofit project 
applications totaling $87 million were submitted, with funding for only 
one-half that amount; b) GA--$226 million in requests were received for 
state facility retrofits, with only $63 million in available funds and 
under SEP they received competitive proposals of $122 million with only 
$14.5 million available; c) IL--526 applications totaling $525 million 
were received for only $100 million in available funds (total project 
value was $3.2 billion); d) MD--in my own state, the Clean Energy 
Economic Development Initiative received $36.5 million in applications 
for only $7 million in funding; e) MI--for projects in energy 
efficiency, wind, solar and local government energy efficiency, the 
state had $39 million available and received applications totaling $219 
million; and f) WI--$53 million in projects have been funded from 
approximately $100 million in proposals. These activities include, but 
are not limited to, building retrofit projects in all sectors, 
industrial energy efficiency projects, renewable energy projects, local 
government energy projects, etc.
     Responses of Malcolm Woolf to Questions From Senator Murkowski
    Question 1. State Energy Programs--I appreciate the attachment you 
included with your testimony, which shows the amount of funding 
obligated or awarded to selected states. You testified that NASEO also 
keeps track of the actual expenditures in each state. Would you please 
provide those figures to the Committee?
    Answer. State Energy Programs--We have generally tracked the funds 
committed by the states and the funds contracted by the states. We 
believe that DOE is tracking the actual expenditures by state. At this 
point, over $1.1 billion is actually under contract and over $2 billion 
is committed (i.e., obligated for specific projects and programs) by 
the states under the State Energy Program. As I explained in my 
testimony, the key statistics under SEP are not the federal ``costing'' 
numbers but the commitments and contracted numbers. This is important 
because when states commit and contract to implement projects with the 
private sector, the private sector hires the employees and conducts the 
work. States pay only when the project is completed (``accepted'') and 
shown to be implemented correctly, and when milestones are achieved. 
Neither the states nor the federal government generally pay for 
projects in advance of work being satisfactorily completed, for obvious 
reasons. As I stated in my testimony, the federal ``costing'' number is 
a lagging indicator and not reflective of the economic benefit of these 
projects. Further, if the ``costing'' number had escalated well in 
advance of projects being completed, this would be a sign that prudent 
procurement procedures are not being followed.
    Question 2. Federal Guidance--Mr. Woolf, you stated in your written 
testimony that you were waiting on a determination by the Department of 
Labor on whether the wage rates for the Weatherization Assistance 
Program can be utilized for the residential efficiency programs planned 
under the State Energy Program and the Energy Efficiency Conservation 
Block Grants. Ms. Nellenbach stated that DOE has just received final 
word from the Department of Labor that this same rate wage in fact can 
NOT be used for EECBG and SEP. How much longer do you expect these wage 
rate determinations to take?
    Answer. Federal Guidance--We hope that the guidance from the 
Department of Labor will be forthcoming as soon as possible. We believe 
that the Weatherization wage rate should be applied to residential 
energy efficiency retrofit projects under SEP and the Energy Efficiency 
and Conservation Block Grant (EECBG). Designated residential energy 
efficiency retrofit projects under SEP and EECBG total over $800 
million. We understand that DOE has been working with DOL to resolve 
this critical issue.
    Question 3. State Energy Office: Part of the reason that it has 
taken so long to spend the money is that state energy offices have had 
to ``ramp up''--find office space, get new operations going, and of 
course, hire new staff. What will happen to these jobs when the 
Recovery Act expires in March 2012, or when the money runs out?
    Answer. State Energy Office: Energy offices and states have 
utilized a variety of mechanisms to respond to the flow of new and 
expanded responsibilities under ARRA. New hires in many states have 
been on a contract or term basis, so that if the work is no longer 
there, the jobs will be eliminated. In light of state budget crises 
across the country, states have been reluctant to hire new people on a 
permanent basis. States are working very closely with the private 
sector to ensure that as the economy grows a trained energy work force 
is in place to respond. In addition, many states are utilizing 
revolving loan funds to ensure that the ARRA funds will be stretched to 
help more people and to help people over an extended period of time. 
Many of the proposals being considered by Congress in a possible Jobs 
Bill (Home Star, Building Star, Manufactured Housing, industrial energy 
efficiency, etc.) and other provisions included in S. 1462 (Bingaman-
Murkowski energy bill, approved by the Energy and Natural Resources 
Committee in June 2009) as well as other comparable legislation, if 
funded, would provide resources to continue important work started 
utilizing ARRA funds.
    Question 4. Maryland Weatherization--In Maryland, only 4 percent of 
homes selected for improvement have been finished. What is the outlook 
for spending the rest of this money? When do you expect all of 
Maryland's Weatherization funds will be spent?
    Answer. Maryland Weatherization--As of the end of March, Maryland 
has completed 10.5% of its 3-year ARRA weatherization production goal. 
Maryland has been building its capacity to do weatherization and has 
therefore been accelerating its pace of work and its spending of 
weatherization funds. Maryland expects to fully utilize the funding and 
anticipates completing production with this funding at the end of the 
grant period in March 2012.
    Question 5. Weatherization--Has it been problematic that stimulus 
funds for Weatherization projects are not disbursed up front, but 
instead reimbursed after 45 days? Have there been problems obtaining 
credit to start any of these projects?
    Answer. Weatherization--We are unaware of any widespread problems 
associated with the delay in reimbursements or the lack of available 
credit. The Low-Income Weatherization Assistance Program has 
historically operated on a reimbursement basis. The local community 
action agencies (CAAs) or other providers generally perform the work 
directly or contract out the work. Once the work is completed then the 
reimbursement from the state is requested. Obviously, there has been a 
significant ramp-up of funding under ARRA and some CAAs or other local 
providers might have had difficulty providing up-front funding. States 
have the authority under the program to provide cash advances to the 
CAAs and the other local providers.
                                 ______
                                 
   Responses of Michele Nellenbach to Questions From Senator Bingaman
    Question 1. Despite the initial setbacks, it seems from your 
testimony that states see great potential for job creation this year. 
Many programs seem to be oversubscribed already. Do you have any sense 
of how the overall demand at the state level compares with amounts 
available?
    Answer. The National Association of State Energy Officials 
conducted a brief survey in December 2009 and found that of the states 
that responded, all are oversubscribed. For instance, AZ received 104 
applications worth $87 million for school energy efficiency retrofits 
but can only fund half of the projects. Georgia received $226 million 
worth of requests for just $63 million in state facility retrofit 
funds. Further, Georgia has available $13.3 million in EECBG funds but 
received applications totaling $24 million. Illinois had only $100 
million to cover 526 SEP applications totaling over $525 million. 
Finally, Wisconsin reports that it has over $100 million worth of 
applications but can fund only $53 million.
    Question 2. Is your concern about reporting requirements more about 
the possibility that other agencies will require more or inconsistent 
reporting, or are the current requirements overly burdensome? Would a 
standardized reporting system across agencies solve the problem?
    Answer. The NGA is concerned about both burden of the current 
requirements and the threat of future requirements. The current 1512 
reporting requirements have proven quite difficult to implement. While 
1512 reporting is becoming less onerous as states become accustomed to 
it that will quickly change if every federal agency requires granular 
detail on each program. Specifically, such a development would further 
stress limited state resources and call into question whether the value 
of any additional information justifies the burdens placed on states.
    NGA has advocated for universal reporting criteria along the lines 
of those contained in OMB's jobs guidance. If other federal agencies 
follow DOE's lead, NGA would support shared definitions and metrics. 
However, NGA is uncertain that such a commonality can be achieved. For 
instance, DOE's required metrics include square footage of buildings 
with new wind energy and the kilowatt hours saved in a home 
weatherization project. It seems unlikely that other Agencies will find 
value in such metrics. If common metrics were defined, NGA would 
recommend that any requirements for individual agency metrics not 
included in these common definitions be eliminated.
  Responses of Michele Nellenbach to Questions From Senator Murkowski
    Question 1. State Energy Offices: Part of the reason that it has 
taken so long to spend the money is that state energy offices have had 
to ``ramp up''--find office space, get new operations going, and of 
course, hire new staff. What will happen to these jobs when the 
Recovery Act expires in March 2012, or when the money runs out?
    Answer. If funding levels return to their historical appropriations 
levels, as expected, then there will be a significant drop-off of 
services, and employment opportunities, by March 2012. This drop-off 
was documented by the Congressional Budget Office in a presentation to 
the Lieutenant Governors Association during which the CBO estimated 
that job growth will peak towards the middle of 2010 followed by a 
significant jobs drop-off in 2011 and subsequent years. (http://
www.cbo.gov/ftpdocs/113xx/doc11353/3-17-10-NLGA.pdf)
    Question 2. Weatherization--Has it been problematic that stimulus 
funds for Weatherization projects are not disbursed up front, but 
instead reimbursed after 45 days? Have there been problems obtaining 
credit to start any of these projects?
    Answer. While the Ranking Member may be aware of anecdotal 
instances, NGA is unaware of either the wait for reimbursement or a 
lack of available credit as having created any widespread problems with 
the expenditure of ARRA Weatherization funds. As you know, the 
weatherization program has historically functioned on a reimbursement 
basis such that the local community action agency (LCAA) either 
performs the weatherization work itself or contracts for the work. Once 
the work is completed, the LCAA seeks reimbursement from the state for 
its expenditures. The only reason this system may be of concern under 
ARRA is because of the significant ramp-up in funding. Some community 
action agencies have not been able to front the costs without 
reimbursement. However in these instances, most states have used their 
authority under the weatherization program to provide cash advances to 
the LCAAs. Typically, the LCAAs are not using credit on the open market 
to fund their work and therefore, the tightness in the credit market 
has not been a factor in weatherization financing.
    Question 3. Wage Rates--You stated that DOE has just received final 
word from the Department of Labor that this same rate wage in fact can 
NOT be used for EECBG and SEP. Have you received any indication of when 
states will receive guidance for those programs?
    Answer. As of April 7, 2010, the DOE is continuing to negotiate 
with the DOL on allowing the wage rate for WAP to be used for 
residential projects funded through EECBG and SEP. I have been told an 
official announcement is imminent.
                                 ______
                                 
      Responses of Matt Rogers to Questions From Senator Bingaman
    Question 1. Your testimony indicates a fairly dramatic acceleration 
in obligations and spending in recent months. Are you on target to have 
the Recovery Act funds obligated by the end of this fiscal year? Are 
there any specific programs where you have seen demand from quality 
applicants beyond the funds available, such that you could reasonably 
expect to spend additional funds well?
    Answer. By the end of September, the Department of Energy plans to 
have obligated 100 percent of its $32.7 billion in appropriated 
Recovery Act contract and grant authority. We are currently on track to 
hit this target. The Fossil Energy Programs will be the last to meet 
their target. DOE officials are working closely with these applicants 
to review all technical, financial and management plans and to take 
action early if intervention is needed. A decision will likely be made 
in May if funds should be re-allocated to other projects. DOE 
anticipates that the remaining loan credit subsidy funding will be 
obligated as loans close before September 30th, 2011, when the ARRA 
budget authority expires.
    The selection process for DOE Recovery Act funds was highly 
competitive. High demand from quality applicants in some programs 
allowed us to select consistently strong projects, ensuring the 
American public receives solid returns on the investment of hard earned 
taxpayer funds. We saw especially high demand from quality applicants 
in the following programs: ARPA-e, Small Business Innovation Research, 
Smart Grid, and Industrial Energy Efficiency.
    We have the greatest opportunity to use further funds in the 48c 
manufacturing tax credits program, and the FY2011 Budget includes a 
request for an additional $5 billion for this program. Recovery Act 
manufacturing tax credits were awarded to 183 projects in 43 states, 
(though numbers are being revised based on the March 15 IRS contracting 
deadline). Facilities must manufacture: equipment or components 
designed for use in projects that produce energy from the sun, wind, 
geothermal deposits or other renewable resources; nuclear power; fuel 
cells, microturbines, energy storage systems for EVs or HEVs; electric 
grids, grid storage; property designed to capture and sequester carbon 
dioxide; property designed to refine or blend renewable fuels; property 
designed to produce energy conservation technologies; plug-in electric 
drive motor vehicles or components or; other property designed to 
reduce greenhouse gas emissions as may be determined by Treasury. The 
48C tax credits do not apply to production of electricity or fuel.
    Despite a narrow time frame to apply for the program, the 48c 
program saw many high quality applicants, indicating the importance and 
relevance of such a tax credit. The additional $5 billion requested in 
the Budget will provide the opportunity to fund those quality projects 
that were not selected in the initial $2.3 billion, as well as reaching 
out to new applicants with a broader technology representation.
    The higher than expected response of applications indicates that 
the stimulus has provided confidence for American manufacturers to plan 
capital expenditures in FY10 and to anticipate a tax liability.
    Question 2. I understand the Southern Company has returned nearly 
$300 million in committed funds for CCS. Do you have a process in place 
or a schedule for awarding those funds to a new applicant?
    Answer. Yes, on March 9th, Secretary Chu announced that a project 
with NRG Energy has been selected to receive up to $154 million, 
including funding from the American Recovery and Reinvestment Act. 
Located in Thompsons, TX, the post-combustion capture and sequestration 
project will demonstrate advanced technology to reduce emissions of the 
greenhouse gas carbon dioxide. It will also assist with enhanced oil 
recovery efforts from a nearby oil field.
    The NRG Energy project was selected under the third round of the 
Clean Coal Power Initiative (CCPI), a cost-shared collaboration between 
the federal government and private industry to demonstrate low-emission 
carbon capture and storage technologies in advanced coal-based, power 
generation. The goal of CCPI is to accelerate the readiness of advanced 
coal technologies for commercial deployment, ensuring that the United 
States has clean, reliable, and affordable electricity and power.
    NRG will construct a 60 megawatt carbon capture demonstration 
facility at the company's W.A. Parish Unit 7 in Thompsons, Texas. The 
6-year project will demonstrate an innovative integration of several 
important advances in carbon capture and sequestration technologies, 
including-

   Fluor's advanced Econamine FG PlusSM carbon capture process, 
        using several different novel amine solvents.
   Ramgen's advanced carbon dioxide compression system.
   The integration of highly efficient co-generation to provide 
        the necessary steam and electricity.
   Enhanced oil recovery sequestration in one of the Texas Gulf 
        Coast oilfields near the Parish plant.

    The project will demonstrate post-combustion carbon capture 
technology applied to an existing plant that could significantly reduce 
the cost of mitigating greenhouse gas emissions.
      Responses of Matt Rogers to Questions From Senator Murkowski
    Question 1. Cash-for-Appliances.--Why has the appliance rebate 
program been delayed for so long? The President is advocating a new 
rebate program called Home Star with a similar objective--to encourage 
people to upgrade the efficiency in their homes and receive rebates. If 
it took a year for the appliance rebate program to get up and running, 
why should we think it would be any different for Home Star, which is 
arguably a more complicated program?
    Answer. The State Energy Efficiency Appliance Rebate Program 
provides funds to states and territories who then design, and 
administer their own state rebate programs. This leads to different 
state programs offering appliance rebates at different times in the 
year. April is the peak month for appliance rebates so we should see 
costing soon. HOMESTAR would provide rebates directly to consumers at 
the point of sale through a federally administered program.
    The State Energy Efficiency Appliance Rebate Program provided 
nearly $300 million in funding from the American Recovery and 
Reinvestment Act for state-run rebate programs for consumer purchases 
of new ENERGY STAR qualified home appliances. Congress specified that 
the funding was to be awarded to states and territories, through their 
energy offices, using a formula set forth in the Energy Policy Act of 
2005. Each state or territory was required to submit a plan that 
specifies which ENERGY STAR appliance categories will be included in 
their rebate program, the rebate level for each product type, how the 
rebates will be processed, and their plan for recycling old appliances. 
Many states had no experience launching an appliance rebate program. It 
took time for the states to design and develop individual plans and 
start the programs within their states.
    In contrast, consumers would be eligible for direct HOMESTAR 
rebates at the point of sale for a variety of energy-saving investments 
in their homes, like the Cash for Clunkers program. A broad array of 
vendors, from small independent building material dealers, large 
national home improvement chains, energy efficiency installation 
professionals and utility energy efficiency programs (including rural 
utilities) would market the rebates, provide them directly to consumers 
and, then the vendors would be reimbursed by the federal government. 
Unlike the State Energy Efficiency Appliance Rebate Program, the broad 
array of vendors would be able to offer these point-of-sale rebates 30-
days after the legislation is passed.
    Question 2. Spend-Out: DOE has spent just over seven percent of its 
stimulus funding in the past twelve and a half months, and in your 
testimony, you note that spending will accelerate this year.
    a. What do you expect the spend out rate will be six months from 
now?
    Answer. DOE has selected recipients for $32 billion of is $32.7 
billion in grant and contract authority and we have obligated $26.5 
billion to our recipients. At the DOE level the money has been spent 
through the obligation process allowing hiring to begin and projects to 
start. We will reimburse recipients as they spend out the money. We 
have now outlaid almost $4 billion. By the end of this fiscal year, DOE 
currently expects to reach an average spend rate of $800-900 million 
per month. This spring, Program Offices developed updated payment plans 
based on recipient, and project level spend projections to improve our 
accuracy on spend rate projections. Based on this updated information 
we should be at a total of $8 billion in payments by the end of this 
fiscal year.
    Question 2b. How about the end of calendar year 2010?
    Answer. By the end of this calendar year, DOE expects to be 
incurring outlays an average of $1 billion a month. Based on revised 
spend plans we should be at over $11 billion in payments by the end of 
the calendar year.
    Question 2c. How long do you think it will take for 100 percent of 
DOE's ARRA funds to be spent?
    Answer. DOE Recovery Act appropriations are funding 144 projects in 
10 different program offices (e.g., Energy Efficiency, Fossil Energy, 
Science, etc.). Each of these projects has a unique structure and time 
horizon for the deployment of these funds (i.e., R&D vs. infrastructure 
investment). For example, DOE's Office of Environmental Management has 
allocated nearly $6 billion in Recovery Act funding to 17 sites with a 
goal to complete their work by the end of FY11. Large scale, heavy 
infrastructure projects in the Fossil Energy program require extensive 
design and construction stages that will take their Recovery Act 
spending out until FY14. As an agency, DOE expects to spend 70 percent 
of its ARRA funds by the end of CY2011, nearly 90 percent by CY2012, 
and 100 percent by CY2015.
    Question 3. PACE.--You state that you are ``ahead of where we 
expected to be on selection, obligations, and job creation.'' Can you 
tell us where you expected to be, or what benchmarks the Department had 
set for itself, that you based that statement on?
    Answer. By December 31, 2009, we had selected projects to receive 
$31 billion of DOE's $32.7 billion in ARRA contract and grant authority 
and obligated $23.3 billion. This surpassed our CY 2009 targets of $30 
billion in selections and $22.8 billion in obligations. As of the end 
of the calendar year, our recipients had outlaid nearly $1.8 billion in 
ARRA funds (falling short of our target of $3 billion). Based on 
recipient reporting, DOE funded over 20,000 jobs\1\ between October-
December 2009. This is ahead of pace based on the Council of Economic 
Advisers' estimate that $92,136 in spending creates one job-year as 
$1.8 billion dollars outlaid would result in 19,500 jobs created or 
saved.
---------------------------------------------------------------------------
    \1\ Over 16,300 full-time equivalents (FTEs) were reported to 
Federalreporting.gov by recipient. Contractors reported another 4,000 
FTEs at the subcontractor level (not required to report to 
FederalReporting.gov).
---------------------------------------------------------------------------
    Question 4. Alaska Spending.--According to the data on DOE's 
website, which is dated November 20, 2009, a total of $93 million had 
been announced for my home state of Alaska, but just $50,000 had 
actually been spent. Over the course of the first nine months of the 
stimulus, that amounts to less than $200 per day.
    a. Can you provide any updated figures for DOE's spendout in 
Alaska?
    Answer.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Question 4b. Can you explain why it is taking so long for funds 
announced for, and awarded to, communities in Alaska to be spent?
    Answer. The following will address spending for individual projects 
in Alaska:

    State Energy Program (SEP).--The State of Alaska submitted a SEP 
plan under the previous gubernatorial leadership in May 2009. After a 
change in gubernatorial leadership and a re-commitment to Recovery Act 
programs, Alaska modified and resubmitted their SEP plan in October 
2009. Over the next 2 months DOE worked very closely with Alaska to 
develop a plan that could expeditiously navigate the DOE procurement 
process. Alaska's plan was approved and they were awarded the SEP grant 
on January 12, 2010. The state used a DOE-created NEPA template in 
designing their programs which allowed DOE to also categorically 
exclude all project activites from further NEPA review in early January 
2010, clearing a major hurdle that could have potentially slowed 
spending.
    The majority of project activities that Alaska is pursuing with SEP 
Recovery Act funds are an expansion of existing programs and/or 
programs that will be receiving significantly more state funds should 
Alaska Senate Bill 220 (Omnibus Energy Bill) be passed in the state 
legislature. It is our understanding that over the past couple months 
Alaska has been in the process of negotiating memorandums of 
understanding with other agencies. However, it is our understanding 
that much of the SEP funded programs are awaiting passage of SB 220 to 
become operational and formalized. SB 220 was recently referred out of 
the state Energy committee to the Finance committee, but will continue 
to cause a delay for some of the SEP funded programs (approx. $19.1mm 
or 68% of SEP funds are tied to SB 220).
    DOE is holding weekly calls between state energy offices and DOE 
project officers. In addition, DOE Assistant Secretary Zoi, Mike Nizich 
(AK Chief of Staff) and Susan Bell (Special Assistant to the Governor) 
spoke on January 19th to discuss measures for increasing Alaska's 
spending of SEP funds.
    Energy Efficient Conservation Block Grants (EECBG).--With over 
2,300 recipients, no two grantees have had the exact same issues to 
resolve with the EECBG process. The entire program was set up this year 
and most grantees had not worked with DOE before and many had never 
developed comprehensive energy efficiency plans in the past. There have 
been several common issues which have led to delays in processing EECBG 
funds including NEPA reviews, Davis-Bacon, Historic Preservation, and 
Buy American.
    Alaska has presented a unique challenge for the processing of EECBG 
grant funds. Of the 255 grant recipients, 10 are cities and towns, 9 
are counties and 236 are tribal grantees. The two largest recipients 
were the State Energy Office which received $9 million in order to 
provide grants and the City of Anchorage which received $2.6 million. 
Many of the tribes have opted to pool their resources in order to 
provide wider-ranging benefits since many of the grants are in the 
$50,000.00 range. DOE has committed resources to work directly with the 
Tribal Community to address these needs.
    Weatherization Assistance Program (WAP).--Alaska usually plans work 
a year ahead. Due to the extreme climate, most production takes place 
during the short summer season. Home assessments are done in the summer 
so that materials can be ordered over the winter months. Materials need 
to be barged or flown to rural villages after the spring thaw, and work 
is completed during the following summer. State has been training local 
public housing authority staff over the past several months to perform 
weatherization services. State and local agencies already staffed up in 
2008-2009 utilizing the influx of State funds for Weatherization. In 
November, Alaska trained 40 staff to be EPA Certified Renovators (a new 
program requirement), and two agencies are in the process of being 
designated as EPA training entities. Alaska network already has the 
capacity to complete 1,700 homes per year. This was accomplished in the 
2008-2009 program year combining State, DOE, and HHS funds. Alaska 
plans to exceed that number in the current year and next year, but is 
waiting for the summer to being work.
    Appliance Rebate Program.--AK's State Energy Efficient Appliance 
Rebate Program (SEEARP) went live on March 15th. Of the 56 SEEARP 
programs, it was the 17th to launch. Alaska's program is unique in that 
it targets disabled residents while providing higher rebates to such 
residents in rural areas. This program targets the funds at a small 
percentage of the population to lower the price-premium on efficient 
appliances that otherwise may be too expensive for them but will 
provide them ongoing savings on their energy bills. As of March 31St, 
86 vouchers have been requested but no vouchers have been redeemed as 
residents have 120 days to make their purchase and submit the paperwork 
after having received a voucher. Now that the program has begun in 
earnest we expect outlays to ramp up over the course of the spring and 
summer.
    Grid Formula Grants.--The State of Alaska has received two formula 
grants under the Recovery Act program managed by the Office of 
Electricity Reliability and Energy Assurance. Under both grants the 
State of Alaska is responsible for the expenditure of the funds 
consistent with the programs objectives. No grant funds have been spent 
by the State as of this date.
    On December 7, 2009, the Alaska Department of Commerce, Community & 
Economic Develoment, received $767,493 in discretionary grant funding 
under the State Assistance on Electricity Policy program.
    On August 14, 2009 the Alaska Housing and Finance Corporation 
received $262,969 in discretionary grant funding under the Enhancing 
State and Local Governments Energy Assurance program.
    Competitive Grants.--Nearly $19.5 million was awarded through a 
competitive selection process that took place in late Fall/early Winter 
2009. Alaska received four competitive Recovery Act grants for 
geothermal and fossil energy projects. These projects have faced a 
series of reviews before reaching full award, ranging from NEPA 
determination to property right negotiations.
    Question 5. Smart Grid.--Recently, DOE reversed its position on the 
applicability of Buy American requirements for smart meters, and now 
have ruled that smart meters are not ``Manufactured Products''--meaning 
Buy American provisions don't apply. At the same time, EPA has ruled 
that water meters are ``Manufactured Products'' so Buy American does 
apply. Why is the Administration treating these products 
inconsistently? What happened to promoting the manufacturing of smart 
meters in the U.S.?
    Answer. After an extensive legal analysis taking into account the 
specific facts presented by DOE's Office of Electricity Delivery and 
Reliability, DOE's Office of the General Counsel concluded in early 
February 2010 that smart meters were not subject to the Buy American 
requirements of the Recovery Act. This was the only determination by 
the Department regarding the applicability of Buy American to smart 
meters and did not reverse a previous finding.
    The Department's analysis considered the context of an upgrade of a 
mechanical electricity meter with a smart meter by a utility on a pre-
existing privately-owned property, and determined neither the 
``manufactured good'' nor the ``construction, alteration, maintenance 
or repair'' prongs of the three-part test under Section 1605 of the 
Recovery Act were met. Even though all three prongs must be met for 
applicability of the Buy American requirements, DOE lawyers also 
considered the third prong, ``public building or public work,'' and 
determined it too would not be implicated unless the installation was 
performed on government-owned ``public buildings'' or possibly on 
buildings/structures that, although privately owned, had a governmental 
use or significant governmental involvement. Consequently, without any 
additional governmental ties to a particular building/structure, DOE 
determined that the ``Buy American'' statutory requirements were not 
generally applicable to public utilities when installing smart meters 
on privately-owned buildings.
    Three weeks after DOE reached its legal conclusion, EPA published 
notice that it had issued a waiver of the Buy American requirements of 
the Recovery Act for certain water meters to be purchased by a 
governmental entity for installation in heated spaces, on the grounds 
that American meters were unavailable for this specific purpose. The 
consequence of this waiver is that the Buy American requirements of the 
Recovery Act do not apply so both DOE and EPA actions have the same 
result. We are not aware of EPA's internal analysis of this question or 
of the specific facts underlying its decision, and thus are not in a 
position to compare the two actions.
    Question 6. Smart Grid--How is the Energy Department coordinating 
with its contracting offices on smart grid monies? We've heard 
complaints that the different contract offices lack consistent policies 
making it difficult for industry to understand the rules.
    Answer. The two largest programs associated with smart grid are the 
Investment Grant ($3.4B) and Demonstration Grant ($620M) programs. As 
the program office responsible for both programs, the Office of 
Electricity's oversight has ensured consistent application of policies 
while respecting the difference between the programs.
    Each program has unique requirements which were set out in the 
Funding Opportunity Announcements. In addition the timing of the two 
programs has been different. The Investment Grant selections were 
announced on October 27, 2009, and the Demonstration Grant selections 
were announced on November 24, 2009, which has resulted in schedule 
differences which may account for perceived inconsistencies. Also the 
investment grants are focused on technology deployment while the 
demonstrations are focused on a technical demonstration.
    Question 7. Loan Guarantees--According to DOE's website, you've so 
far closed one loan under the temporary loan guarantee program, and 
made a few small conditional commitments. More than $32 billion in 
additional authority for renewable energy projects remains under that 
program. DOE has also requested credit subsidy for an additional $3-5 
billion in loan guarantees in this year's budget request.
    a. Can you shed any light on how you expect loan guarantees to be 
distributed over the next year?
    Answer. Since issuing its first conditional commitment in March 
2009 to an innovative photovoltaic manufacturing company, the Loan 
Guarantee Program has closed that loan guarantee and issued conditional 
commitments for seven additional projects, four of which are eligible 
to receive appropriated credit subsidy under the Recovery Act. The Loan 
Guarantee Program has offered commitments to a diverse portfolio of 
alternative energy projects including wind turbine manufacturing, solar 
generation and manufacturing, electricity storage, nuclear power, and 
energy efficiency. In the next year, new conditional commitments and 
closings will continue to reflect this diversity of projects. The 
Department's 2011 budget request for $500 million in appropriated 
credit subsidy is important to the program's ability to support 
innovative energy efficiency and renewable energy projects.
    b. How long do you think it will take DOE to exhaust its current 
authority for the 1705 program?
    Answer. The Loan Guarantee Program has a robust pipeline of 
projects eligible for both appropriated credit subsidy under the 
Recovery Act and able to meet the Recovery Act requirement to begin 
construction by September 30, 2011. In addition, the Loan Guarantee 
Program has two open solicitations and continues to receive 
applications from eligible projects. These solicitations will remain 
open to new applications until August 24, 2010, and January 6, 2011, 
respectively. These efforts, in addition to potential future 
solicitations, are aimed at exhausting the current authority by 
September 30, 2011.
    Question 8. Weatherization--According to a memo released last month 
by DOE's Inspector General, ``it appears likely that pressure will 
increase to accelerate the weatherization of residences in the 
compressed statutory timeframe available under the Recovery Act. In a 
situation like this, our concern is that the understandable desire to 
spend the Weatherization funds on a catch-up basis may lead to an 
environment conducive to wasteful, inefficient, and, perhaps even 
abusive practices.''
    a. Do you agree with the IG's assessment?
    Answer. We are working with each community to reach a target run 
rate to ensure each can deliver on their full authority with consistent 
quality. Good operations tend to perform consistently in a target 
performance band--not too hot and not too cold. We are watching closely 
to make sure that each recipient remains within appropriate target 
performance band. Quality control has always been a strong component of 
the Weatherization Assistance Program; measured against the level of 
funding and number of homes being weatherized, the proportion of 
problems found on an annual basis has always been insignificant. DOE 
expects this record of compliance and achievement to continue under the 
Recovery Act.
    b. What steps is DOE taking to ensure this does not come to pass?
    Answer. Increased monitoring, quality assurance, and desk 
monitoring have been and continue to be implemented by DOE. Several 
staff persons have been added and the engagement of additional 
contractors to conduct oversight activities is being, considered. 
Furthermore, beginning in April for the month of March we will move 
from quarterly to monthly reporting for this program. This will greatly 
support our efforts to ensure that these funds are both spent quickly 
and wisely as will be ability to provide states that are struggling to 
meet their goals with training and technical assistance.
    Question 9. Weatherization--The Weatherization program has 
indicated that there are over 38 million households whose income levels 
make them eligible for Weatherization services, The Department 
estimates that approximately 15 million homes are good candidates for 
cost-effective Weatherization. How many of these 15 million homes have 
been weatherized? What is the process to determine how to address the 
remaining eligible homes?
    Answer. More than 6.3 million homes have been weatherized since the 
program's inception. The process to determine how to address the 
remaining eligible homes allows for grantees and local agencies to 
target their services to maximize program effectiveness. In 
prioritizing weatherization assistance grantees are to include 
consideration of ``high residential energy users'' and ``households 
with a high energy burden.'' However, the weatherization of such units 
is not mandatory. Consideration of such units may be used in lieu of, 
or in any combination with, the other priority categories of elderly, 
persons with disabilities, or families with children. By considering 
``high residential energy users'' and ``households with a high energy 
burden,'' grantees and local agencies should be better able to partner 
with utilities and other programs to leverage additional resources into 
their programs.
    Question 10. Weatherization--I've seen several different numbers, 
so I'll ask you to state for the record: how many homes were 
retrofitted during the first year of the stimulus, and what was the 
average federal cost to weatherize each of those homes? How do you 
determine what type of retrofit is needed with each home?
    Answer. Weatherization Assistance Program grantees weatherized 
30,252 homes with Recovery Act funds through December 31st, 2009. 
Information about weatherization production in the first quarter of 
2010 is still forthcoming as the reporting deadline for performance 
figures in the first quarter is not until April 30th. DOE projects, 
when reported, weatherization performance in the first quarter of 2010 
will represent a significant increase in production rate. While some 
reports are still being verified, recipient data shows that 13,053 
units were completed in January, 18,234 units were completed in 
February, and 22,311 units were completed in March.
    In 2009, states weatherized more than 125,000 homes in total 
(including both recovery and non-recovery work). As states ramped up 
and prepared to spend Recovery Act funding--by hiring and training 
workers, purchasing equipment, and putting in place strong 
accountability and transparency measures--they accelerated the number 
of homes weatherized with Fiscal Year 2009 funding; making the combined 
total the best indicator of progress in the program. Nevertheless, the 
pace of Recovery Act funded weatherization tripled in the last three 
months of the year.
    The average estimated federal cost to weatherize a home during the 
Recovery Act, as estimated by grantees, is $5600. The average actual 
federal cost to date is artificially inflated as most grantees have 
made large upfront outlays on equipment that will be used over the next 
few several years.
    To determine the most cost-effective measures appropriate for each 
home, weatherization crews use computerized energy audits and 
diagnostic equipment, such as a blower door, manometer, or infrared 
camera. Typical measures include installing insulation in walls, 
floors, and attics; reducing air infiltration and pressure imbalances; 
sealing and repairing ducts; and, tuning and repairing heating and 
cooling units.
    Crews use DOE funds to install only those energy-efficiency 
measures that meet a savings-to-investment ratio of 1:1 and above. DOE 
funds can be used to address energy-related health and safety problems, 
or to perform incidental repairs. This approach ensures the program's 
cost effectiveness.
    Weatherization crews also perform health and safety tests that may 
include: testing heating units and appliances for combustion safety, 
carbon monoxide, and gas leaks; assessing moisture damage; checking 
electrical system safety; replacing unsafe heating and cooling systems; 
and installing smoke and carbon monoxide detectors.
    Question 11. Staff Capacity--Will you provide the Committee with 
the number of new employees that DOE has hired in order to administer 
ARRA funds? Can you comment on what will happen to those individuals' 
jobs after the stimulus' obligation deadline passes?
    Answer. According to the Office of Human Capital Management, DOE 
currently has 354 employees who have been hired to focus specifically 
on implementing the Recovery Act, with many more existing staff working 
hard to implement Recovery Act funding alongside their standard duties. 
Many of these employees are working in one of DOE's many field offices 
including states such as OH, PA, CO, TN, and WA, with over 150 at NETL 
and Golden. Some of these employees are on term appointments set to 
expire by September 30th, 2012, at the very latest. Others were hired 
to permanent positions whose employment will be terminated by September 
30th, 2012, at the very latest if their positions are funded by the 
Recovery Act. Depending on the program in which they work, we expect 
many Recovery Act dedicated employees to begin to leave the federal 
workforce in the fall of 2010 continuing through September 30th, 2012.
    Question 12. Solar Energy--According to a recent news report, the 
solar industry is worried that its ``large-scale projects will miss a 
2010 construction deadline to receive cash grants'' available under the 
stimulus.
    a. Are any of these projects being held up due to requirements 
imposed through the stimulus bill?
    Answer. The 1603 program does not impose NEPA or Buy America 
requirements. However, all need to meet state permitting and zoning 
requirements and many need Bureau of Land Management permits. The 
volume of permit request is straining state resources. We do not 
believe there is anything in the program that is delaying or holding up 
projects. The program is funding grant requests within the 60-day 
window from receiving a completed application as mandated by the 
statute.
    b. Given that this funding was intended as stimulus spending, is it 
still the Department's position that the 2010 deadline should remain in 
place, instead of being extended to a later date?
    Answer. The Department is aware of interest in extending the 
deadline for commencing construction (by the end of 2010) and is 
considering the pros and cons of an extension. It is certainly possible 
that, due to factors outside the ambit of the 1603 program and the 
Recovery Act, large-scale solar projects may not be able to commence 
construction by the end of this year, but given the stimulative focus 
this deadline can press the projects to get the shovels in the ground.
    Question 13. Solar Energy: Exactly how much federal funding has the 
solar industry received from the stimulus? How many domestic jobs has 
that created? Are those jobs manufacturing jobs or temporary 
construction work? How many overseas jobs did solar funding from the 
stimulus bill create?
    Answer. More than $1.5 billion in Recovery Act funding has been 
provided to support solar energy, along with over $1.9 billion in 
closed loan guarantees and conditional commitments for loan guarantees. 
That includes:

    48C manufacturing tax credits: Solar was by far the largest 
category of applications received for the Section 48C advanced energy 
manufacturing tax credits and was the largest category of awards 
announced, followed by wind, Out of the 183 projects receiving $2.3 
billion of tax credits, 62 solar projects were selected to receive 
nearly $1.2 billion of tax credits, meaning solar received one-third of 
the awards for more than half the total dollar amount of tax credits. 
The high level of solar applications is one leading indicator that U.S. 
solar manufacturing is poised to grow dramatically in the coming years.
    1603 renewables grants: To date, this program has funded over $140 
million to more than 350 rooftop solar PV and solar thermal 
installations. That is more than three-quarters of the projects 
receiving funding under the 1603 program, although because they are 
small projects it amounts to only 5% of the $2.75 billion funded 
overall under the 1603 program.
    Loan guarantees: $535M loan guarantee for Solyndra's CIGS thin-film 
manufacturing facility in Freemont, CA, now under construction. 
Solyndra estimates the new plant is creating 3,000 U.S. construction 
and supply chain jobs, and may lead to as many as 1,000 U.S. jobs once 
the facility opens. Solyndra also estimates that more jobs will be 
created installing Solyndra's solar modules on rooftops around the 
country. In addition, DOE has approved a $1.37B conditional loan 
guarantee to BrightSource Energy to build a 392 MW solar thermal power 
plant in Ivanpah, California. BrightSource estimates that this project 
will create 1,000 construction jobs and 86 ongoing operating and 
maintenance jobs.
    R&D grants: DOE is providing $168 million of ARRA funds for basic 
R&D funding for solar and $74 million for advanced R&D or pilot funding 
for solar.
    Question 14. Buy American--GAO's recent reports indicate that DOE 
believes the ``Buy American'' requirements of the stimulus could hamper 
the agency's efforts to spend their ARRA funds.
    a. Which programs would these requirements affect?
    Answer. The Buy American requirements of the Recovery Act affect 
all DOE Recovery Act-funded programs. However, to date, the Office of 
Energy Efficiency & Renewable Energy (EERE) programs have generated the 
majority of issues and questions concerning compliance with the Buy 
American requirements. In particular, Energy Efficiency and 
Conservation Block Grants (EECBG) and the State Energy Program (SEP) 
have been the source of many inquiries.
    b. Has DOE issued guidance for the ``Buy American'' requirements so 
far?
    Answer. Yes. DOE has issued agency-wide guidance for the Recovery 
Act, including the Buy American requirements, in its ``Department of 
Energy Acquisition and Financial Assistance Guide for the American 
Recovery and Reinvestment Act of 2009,'' http://management.energy.gov/
policyguidance/1672.htm. Section 3.9 (p. 3-7) explains the Recovery Act 
Buy American requirements in general. Additional, specific information 
is provided in two attachments to that guidance document, Attachment 
10--``Buy American Issues in the Recovery Act for Financial Assistance 
Agreements,'' and Attachment 13--''.ecovery Act Buy American Act 
Requirements for Information Needed From Financial Assistance 
Applicants/Recipients for Waiver Requests Based on Unreasonable Cost or 
Non-Availability.'' These are detailed explanations of what the Buy 
American requirements mean, how they apply, and how to request waivers 
of the Buy American requirements based on unreasonable cost or non-
availability.
    EERE also has created a web page entitled, ``Buy American 
Guidance,'' http://wwwl:eere.energ.gov/recovery/buy_american 
provision.html. This web page explains the Buy American requirements, 
contains the waivers EERE has issued to date (Nationwide Limited Public 
Interest Waiver for LED Lighting and HVAC Units; and Nationwide 
Categorical Waivers for Electronic Ballasts, LED Traffic Lights, and 
Compact Fluorescent Lights) as well as additional information including 
``Guidance on the Buy American Provisions as Applied to EERE Projects 
funded by ARRA,'' ``Instructions for Waiver Requests,'' and 
``Frequently Asked Questions about the Buy American Provision.''
    Also on the EERE ``Buy American Guidance'' web page is EERE's 
Request for Information (RFI) on questions pertaining to the Buy 
American Provisions of the Recovery Act that was published in the 
Federal Register. 75 Fed. Reg. 5783, 5784 (Feb. 4, 2010). The RFI 
requests two categories of information from stakeholders. Part 1 
requests technical information from stakeholders seeking to ascertain 
the availability of manufactured goods produced in the United States 
that are needed to carry out projects funded by EERE. Part 2 requests 
information on questions pertaining to the application and 
implementation (programmatic questions) of the Buy American provisions 
in Recovery Act projects funded by EERE. The products and technical 
specifications submitted in response to Part 1 will be catalogued and 
disseminated to the domestic manufacturing community in order to 
ascertain the domestic manufacturing capacity for these products before 
EERE considers issuing any waivers based on non-availability. 
Submissions in response to Part 2 (programmatic questions) are 
addressed by designated program staff.
    c. What is your agency doing to make sure those delays are 
minimized?
    Answer. EERE has designated a Buy American Coordinator whose 
responsibilities are to disseminate information to stakeholders, obtain 
feedback, and work with various program and staff and support offices 
within DOE to resolve issues. EERE also has established an e-mail box, 
[email protected], to receive inquiries and issue responses.
    The DOE General Counsel's office operates an email hotline for 
legal questions related to the Recovery Act, including the State Energy 
Program, (SEP), Energy Efficiency Conservation Block Grant (EECBG) and 
Weatherization Assistance Program (WAP), GCHotline FAQ Answers to Legal 
Questions Related to the Recovery Act, http://wvvw.gc.energy.gov/
GCHotlineFAQ. Typically, Recipients who submit questions to the 
GCHotline are given individual responses tailored to their factual 
descriptions. Responses that are of general interest are posted as 
FAQs. The FAQ section includes a ``Buy American'' category. In 
addition, the Office of General Counsel holds a monthly call with state 
energy offices to answer questions concerning the EECBG, SEP, and WAP 
programs; some of the questions raised initially concerned Buy 
American. In the two most recent monthly calls, no questions concerning 
Buy America have been raised.
    DOE's Recovery Act website, http://www.eergy,gov/recovery/
index.htm, has a link to the Buy American Guidance on the EERE web 
page. It also features the DOE Recovery Act Clearinghouse, with a toll 
free number that operates Monday through Friday, 9 am. to 7 p.m. EDT, 
which provides information on popular topics, including the Buy 
American requirements, and a link to the web address that accepts email 
inquiries.
    Question 15. Job Creation--You state that 2 million jobs have been 
created or saved thanks to ARRA' s impact on hiring in the private 
sector, by local and state governments and by non-profits. How many 
jobs has the stimulus created in the private sector, as compared to 
within government?
    Answer. On April 14, 2010, the Council of Economic Advisers 
estimated that by the end of the fourth quarter 2009 ARRA had raised 
employment by 1Y2--2 million jobs relative to what it otherwise would 
have been. This figure was based on a macroeconomic model and a 
statistical model computed by the CEA. Specific data on the number of 
jobs created by the stimulus in the private vs. public sector would be 
available through CEA. These approaches do not allow a detailed 
breakdown by industry. Source: http://www.whitehouse.gov/sites/default/
files/microsites/CEA-3rd-arra-report.pdf
       Response of Matt Rogers to Questions From Senator Shaheen
    We're very proud of the investments made in clean energy under the 
ARRA bill. These funds are helping to make efficiency improvements and 
deploy clean energy technologies across the country, including New 
Hampshire. I believe the ARRA bill was an important down payment in 
helping to get our country running on clean energy.
    As you may know, NH's electric cooperative, like many of our 
country's electric cooperatives, was awarded two smart grid grants by 
DOE. I had the opportunity to visit the NH electric co-op last month 
and learn first-hand about their efforts to modernize their electricity 
system. The DOE smart grid grants are a critical part of that larger 
effort.
    However, concerns have been raised by New Hampshire's Electric 
Cooperative and other electric cooperatives through the National Rural 
Electric Cooperative Association (NRECA) regarding possible tax issues 
surrounding the acceptance of DOE smart grid grants under ARRA.
    It's my understanding that the Treasury Department may view these 
grants as taxable income; which, if accepted, could affect the tax 
status of many of the country's rural electric status, including the 
New Hampshire electric cooperative. This is having a chilling effect on 
many of the clean energy projects our countries electric co-operatives 
are working on. It could result in our co-ops having to turn down the 
ARRA grants.
    This was clearly not the intent of Congress, in my view, to prevent 
our electric cooperatives from participating in these important DOE 
programs funded through ARRA.
    Question 1. I am told that progress is being made between DOE and 
Treasury to address this issue. Can you provide me with an update on 
that status of DOE and Treasury to address this issue?
    Question 2. Do you believe that you will be able to address this 
issue in a timely manner in order to address the concerns that the 
electric co-ops have raised?
    Question 3. When do you think a resolution to this issue will be 
made?
    Question 4. What would happen to the DOE Smart Grid program should 
these grants become taxable?
    Question 5. Is there anything Congress needs to do to address this 
issue, or do you think Treasury and DOE can work it out?
    Answer. On March 10th, The Department of Treasury and the 
Department of Energy announced new guidance on the tax treatment for 
grantees receiving Recovery Act funding under the $3.4 billion Smart 
Grid Investment Grant program. Under the guidance released, the 
Internal Revenue Service is providing a safe harbor under section 
118(a) of the Internal Revenue Code for corporations receiving funding 
under the program.
    With the determination that Smart Grid Investment Grants to 
corporations are nontaxable, corporate utilities will be able to launch 
their investments with a clear indication of the tax status for their 
projects. This decision has allowed the Department of Energy to move 
forward quickly to finalize many grant agreements in the past several 
weeks. We continue to work with Treasury to evaluate the Smart Grid 
Demonstration Program grants.
        Responses of Matt Rogers to Questions From Senator Wyden
    Question 1. Wave Energy--Europe has spent upwards of $100 million 
developing a wave energy research facility in Scotland, while the U.S. 
Government has committed just a few million dollars to developing a 
similar capacity at two Marine Energy Centers in Hawaii and Oregon. The 
U.S. is literally being left high and dry in developing this 
technology. The President's FY2010 budget stated that FY2010 funding 
for the Water Power Program ``complement funds provided by the Recovery 
Act.'' Despite the commitment in the President's budget and requests 
from both the House and the Senate, the Department hasn't provided any 
funds for these technologies under the Recovery Act. To add insult to 
injury, the FY2011 budget would cut funding in the marine-hydrokinetic 
research program from the amount that Congress gave you to spend in FY 
2010 to less than $20 million dollars a year. What is the justification 
for ignoring the President's FY2010 budget and refusing to provide ARRA 
funding for this research area, especially in light of the significant 
sums being devoted to these technologies by other countries?
    Answer. Based on Marine Hydrokinetic (MHK) technology development 
levels and the amounts of open water testing and demonstration that 
have taken place thus far, it was determined that no devices were 
immediately suitable for commercial-scale deployment, and could best 
meet the Recovery Act's goals of increased energy generation and rapid 
economic stimulus. The FY 2011 request is $40 million, a $10 million 
(19 percent) decrease from FY 2010 enacted levels. This amount will be 
sufficient to continue and build upon activities started in FY 2010, as 
well as to begin to support the development of cost-effective 
incremental hydropower opportunities identified in 2010. FY 2011 is a 
critical year for the Water Power program to test marine and 
hydrokinetic devices and conduct feasibility studies at hydroelectric 
facilities and dams not currently producing electricity. The program 
plans to invest $10 million in public-private partnerships for the 
development and testing of innovative device designs to support 
establishing baseline costs of energy and performance for different 
marine and hydrokinetic technologies. Of the $19.5 million for 
conventional hydropower, the program's main investment in FY 2011 will 
be $10.4 million in feasibility studies to identify opportunities for 
increased incremental power generation utilizing efficiency 
improvements, capacity upgrades, and powering existing non-powered 
dams.
    Question 2. Alternative Transportation Funding--I support the 
programs that you have put in place such as the SuperTruck grants to 
improve the energy efficiency of vehicles, but there are other 
transportation technologies that can save energy also. There are 
companies in Oregon that are developing state-of-the-art plug-in 
motorcycles and streetcars, that not only can reduce our dependence on 
imported oil here at home, they can help us preserve American jobs here 
at home and create products that could be exported around the world--a 
goal the President just highlighted in his State of the Union Message. 
The motorcycle company would like to export their products to China as 
well as market them here at home. The street car company--United 
Streetcar--is the only U.S. manufacturer left. And they have to import 
key components like traction motors which they would rather build here 
in the U.S. Unfortunately, there is no U.S. Government support for 
these technologies. During Under Secretary Kristina Johnson's testimony 
before the Committee last December, she indicated that the Department 
would not be opposed to expanding the Department's advanced vehicle 
program to include a broader range of technologies such as the plug-in 
motorcycle. As I told Under Secretary Johnson, not being opposed is not 
the same as being supportive. Why isn't the Department supporting a 
broader range of vehicle technologies? Why can't DOE use Recovery Act 
funding to develop these energy saving products here in the U.S.?
    Answer. The Department supports a wide range of advanced 
transportation technologies: electric-drive, advanced combustion, 
advanced biofuels, natural gas, and fuel cells. The plug-in motorcycles 
described above benefit from the DOE's investments in electrification. 
In electrification--the Department is addressing several of the largest 
barriers to deploying plug-in vehicles: the high cost of batteries, the 
need for charging infrastructure, and the need to build consumer 
confidence by supporting the largest electric car demonstrations in the 
world. Success in these areas will also help to ensure that electric 
motorcycles are more affordable, easier to charge, and--as a result--
more likely to be embraced by the public.
    The Advanced Technology Vehicle Manufacturer (ATVM) Loan Program is 
not part of the Recovery Act. It has, however, announced four 
conditional commitments for loans supporting advanced technology 
vehicle manufacturing facilities in the United States since issuing the 
program's Interim Final Rule in November 2008. The ATVM loan program 
was recently expanded to include a broader range of vehicles that 
qualify. The original authorizing legislation limited the program to 
light duty vehicles that meet emission standards and achieve an 
improvement of 125% of base year combined fuel economy for similar 
vehicles.\1\ Due to the statutes reliance on corporate average fuel 
economy (CAFE) metrics, DOE's implementing regulations restricted the 
program to those vehicles subject to the CAFE standards. Motorcycles 
are not subject to CAFE standards.
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    \1\ This was established by Section 136 of the Energy Independence 
and Security Act of 2007.
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    The amended authorizing legislation includes ``ultra efficient 
vehicles'' in addition to ATVs.\2\ Ultra-efficient vehicles achieve 75 
miles per gallon-equivalent, in gasoline or electric mode. Vehicles 
must have closed compartments and be designed for at least 2-
passengers.
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    \2\ Amended in the Energy and Water Development and Related 
Agencies Appropriations Act of 2010.

                                    

      
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