    [House Hearing, 112 Congress]
    [From the U.S. Government Publishing Office]

                       REVIEW OF DOE VEHICLE TECHNOLOGIES
                       PROGRAM MANAGEMENT AND ACTIVITIES:
                       ASSURING APPROPRIATE AND EFFECTIVE
                            USE OF TAXPAYER FUNDING

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

                                    HEARING

                                   BEFORE THE

                           SUBCOMMITTEE ON ENERGY AND

                                  ENVIRONMENT

                  COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY

                            HOUSE OF REPRESENTATIVES

                          ONE HUNDRED TWELFTH CONGRESS

                                 SECOND SESSION

                                   __________

                            THURSDAY, JULY 26, 2012

                                   __________

                               Serial No. 112-99

                                   __________

     Printed for the use of the Committee on Science, Space, and Technology

           Available via the World Wide Web: http://science.house.gov

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    75-395                    WASHINGTON : 2012
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                  COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY

                        HON. RALPH M. HALL, Texas, Chair
    F. JAMES SENSENBRENNER, JR.,         EDDIE BERNICE JOHNSON, Texas
        Wisconsin                        JERRY F. COSTELLO, Illinois
    LAMAR S. SMITH, Texas                LYNN C. WOOLSEY, California
    DANA ROHRABACHER, California         ZOE LOFGREN, California
    ROSCOE G. BARTLETT, Maryland         BRAD MILLER, North Carolina
    FRANK D. LUCAS, Oklahoma             DANIEL LIPINSKI, Illinois
    JUDY BIGGERT, Illinois               DONNA F. EDWARDS, Maryland
    W. TODD AKIN, Missouri               BEN R. LUJAN, New Mexico
    RANDY NEUGEBAUER, Texas              PAUL D. TONKO, New York
    MICHAEL T. McCAUL, Texas             JERRY McNERNEY, California
    PAUL C. BROUN, Georgia               TERRI A. SEWELL, Alabama
    SANDY ADAMS, Florida                 FREDERICA S. WILSON, Florida
    BENJAMIN QUAYLE, Arizona             HANSEN CLARKE, Michigan
    CHARLES J. ``CHUCK'' FLEISCHMANN,    SUZANNE BONAMICI, Oregon
        Tennessee                        VACANCY
    E. SCOTT RIGELL, Virginia            VACANCY
    STEVEN M. PALAZZO, Mississippi       VACANCY
    MO BROOKS, Alabama
    ANDY HARRIS, Maryland
    RANDY HULTGREN, Illinois
    CHIP CRAVAACK, Minnesota
    LARRY BUCSHON, Indiana
    DAN BENISHEK, Michigan
    VACANCY
                                     ------

                     Subcommittee on Energy and Environment

                       HON. ANDY HARRIS, Maryland, Chair
    DANA ROHRABACHER, California         BRAD MILLER, North Carolina
    ROSCOE G. BARTLETT, Maryland         LYNN C. WOOLSEY, California
    FRANK D. LUCAS, Oklahoma             BEN R. LUJAN, New Mexico
    JUDY BIGGERT, Illinois               PAUL D. TONKO, New York
    W. TODD AKIN, Missouri               ZOE LOFGREN, California
    RANDY NEUGEBAUER, Texas              JERRY McNERNEY, California
    PAUL C. BROUN, Georgia
    CHARLES J. ``CHUCK'' FLEISCHMANN,
        Tennessee
    RALPH M. HALL, Texas                 EDDIE BERNICE JOHNSON, Texas

                                C O N T E N T S

                            Thursday, July 26, 2012

                                                                       Page
    Witness List.....................................................     2

    Hearing Charter..................................................     3

                               Opening Statements

    Statement by Representative Andy Harris, Chairman, Subcommittee
      on Energy and Environment, Committee on Science, Space, and
      Technology, U.S. House of Representatives......................    13
        Written Statement............................................    15

    Statement by Representative Brad Miller, Ranking Member,
      Subcommittee on Energy and Environment, Committee on Science,
      Space, and Technology, U.S. House of Representatives...........    16
        Written Statement............................................    17

                                   Witnesses:

    Dr. Kathleen Hogan, Deputy Assistant Secretary for Energy
      Efficiency, Department of Energy
        Oral Statement...............................................    18
        Written Statement............................................    21

    Mr. Rickey Hass, Deputy Inspector General for Audits and
      Inspections, U.S. Department of Energy
        Oral Statement...............................................    28
        Written Statement............................................    30

    Mr. Brian Wynne, President, Electric Drive Transportation
      Association
        Oral Statement...............................................    39
        Written Statement............................................    41

                 Appendix I: Answers to Post-Hearing Questions

    Dr. Kathleen Hogan, Deputy Assistant Secretary for Energy
      Efficiency, Department of Energy...............................    62

    Mr. Rickey Hass, Deputy Inspector General for Audits and
      Inspections, U.S. Department of Energy.........................    66

    Mr. Brian Wynne, President, Electric Drive Transportation
      Association....................................................    79

                       REVIEW OF DOE VEHICLE TECHNOLOGIES

                       PROGRAM MANAGEMENT AND ACTIVITIES:

                       ASSURING APPROPRIATE AND EFFECTIVE

                            USE OF TAXPAYER FUNDING

                                  ----------

                            THURSDAY, JULY 26, 2012

                      House of Representatives,
                        Subcommittee on Energy and Environment,
                   Committee on Science, Space, and Technology,
                                                       Washington, D.C.

        The Subcommittee met, pursuant to call, at 9:36 a.m., in
    Room 2318 of the Rayburn House Office Building, Hon. Andy
    Harris [Chairman of the Subcommittee] presiding.

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        Chairman Harris. Good morning. The Subcommittee on Energy
    and Environment will come to order.
        Welcome to today's hearing entitled ``Review of DOE Vehicle
    Technologies Program Management and Activities: Assuring
    Appropriate and Effective Use of Taxpayer Funding.'' In front
    of you are packets containing the written testimony,
    biographies and Truth in Testimony disclosures for today's
    witness panels. And right up front I will say that the hearing
    probably won't be that long because we are going to be voting
    from probably a little after 10:30 until after 1 o'clock, so
    hopefully we can get the information we need before we have to
    go to vote.
        Well, good morning, and I recognize myself for five minutes
    for an opening statement. Good morning, and welcome to today's
    hearing.
        Since President Obama took office in January 2009,
    aggressive spending on green energy programs has been a
    centerpiece of his domestic policy agenda. His stimulus
    legislation spent $33 billion at the Department of Energy,
    mostly devoted to green energy, and his budget requests to
    Congress have repeatedly called for massive increases in these
    same areas. For example, the President's current budget calls
    for over $1.5 billion in new spending at the Office of Energy
    Efficiency and Renewable Energy--an 84 percent year-over-year
    increase. The bulk of this proposed increase-about $1.1
    billion-is for vehicle technology development and deployment
    activities that we will focus on today.
        I would like to state at the outset that I am strongly
    supportive of advanced vehicle technologies if the government
    role is carefully limited, and the market matures through free
    enterprise and American innovation, not through the vast
    spending, mandates and special tax treatment that we have
    today.
        These role-of-government concerns are magnified further by
    the Department of Energy's poor track record in administering
    such programs. As we will hear from the Inspector General's
    office today, DOE's Vehicle Technologies Program has been the
    subject of numerous concerns identified by the IG. These
    include approving cost-share contributions without supporting
    documentation; failing to identify conflicts of interest in the
    Clean Cities program; failing to obtain and review recipient
    audit reports to ensure appropriate accounting of taxpayer
    funds; and, in one instance, agency inspectors were unable to
    locate $500,000 worth of equipment purchased by one grant
    recipient. These are all serious matters that must be
    addressed, and I look forward to hearing more about them today.
        We also hope to gain insight into DOE's management of this
    program through an examination of DOE's oversight of a $115
    million award to an electric vehicle-charging company called
    Ecotality. The questions surrounding DOE judgment and decision-
    making associated with this award are numerous and complex.
    Over the course of the last 4 months, I have been working to
    gather more information on the details of this award and its
    execution. Although first requested on March 26, last Friday
    DOE finally began to provide the Subcommittee basic
    documentation associated with this award, such as the original
    application and assistance agreement with DOE. And I might add,
    this is not something that should have been hard to find over
    at the Department of Energy.
        While much more is needed, and I would note DOE provided
    additional documents yesterday afternoon that we are still
    reviewing, the limited information we have on DOE grants to
    this company is troubling and raises a number of areas of
    concern. These issues have been summarized in a memo, which was
    provided to DOE and the minority Tuesday evening, and to the
    company yesterday for feedback. At this point, we won't make
    any conclusions or comment on the status and potential future
    of EV-related technologies and markets. However, the examples
    we have heard from the IG and have found in our research raise
    numerous questions and concerns regarding the effectiveness of
    the oversight of federal efforts to deploy EVs, as well as
    DOE's management and decision-making in administering these
    taxpayer-funded deployment initiatives.
        Nonetheless, the high-level concerns associated with this
    project exemplify my concerns about the overall program
    including substantial project underperformance and schedule
    delays; troubling audit findings; unusual cost-sharing
    arrangements in which required recipient matching funds are met
    by questionable in-kind data valuations from consumers that
    have purchased EVs for their personal use; and placing other
    companies at a significant competitive disadvantage through the
    subsidization of charging stations purchases and installation
    as well as new product development.
        On top of these concerns, the company's financial and
    political activities add another layer of concern to the issue.
    The company was totally bankrupt, was almost bankrupt before
    the stimulus grant money was awarded by DOE. However, the
    company did disclose in SEC filings that it was bailed out by
    Chinese investors that entered into a joint venture with the
    company to set up a manufacturing subsidiary in China. The same
    Chinese investors agreed to pay Ecotality executives $1 million
    in ``performance bonuses'' if they secured certain amounts of
    stimulus funding. That is worrisome.
        The company hired lobbyists to engage the White House on
    DOE projects, went on to be awarded over $100 million in
    stimulus funding, and the Chinese-funded performance bonuses
    were awarded. Within a few months of the award, the company's
    President was an honored guest of the First Lady at the 2010
    State of the Union. About 9 months after that, the SEC
    initiated an investigation into potential insider trading by
    company executives associated with the award. During the time
    period of this investigation, DOE continued to expand the scope
    of Ecotality's award and even awarded a new $26 million grant
    to the company in July of 2011.
        Now, I hope today that DOE can provide its response to
    Vehicle Technologies Program related management concerns. I
    don't expect we will resolve these questions today, and after
    we hear from DOE and receive additional outstanding documents
    and materials including more communication with the company, we
    will likely have to revisit this issue later this year.
        Last, I want to emphasize that this hearing is not just a
    matter of oversight of current spending. Its importance and
    timeliness is magnified significantly by the fact that the
    President has proposed a new $1 billion mandatory program
    called the National Community Deployment Challenge that would
    dramatically increase spending in the very areas of concern
    that we are examining today.
        [The prepared statement of Mr. Harris follows:]
            Prepared Statement of Subcommittee Chairman Andy Harris
        Good morning and welcome to today's hearing entitled ``Review of
    DOE Vehicle Technologies Program Management and Activities: Assuring
    Appropriate and Effective Use of Taxpayer Funding.''
        Since President Obama took office in January 2009, aggressive
    spending on green energy programs has been a centerpiece of his
    domestic policy agenda.
        His Stimulus legislation spent $33 billion at the Department of
    Energy mostly devoted to green energy, and his budget requests to
    Congress have repeatedly called for massive increases in these same
    areas. For example, the President's current budget calls for over $1.5
    billion in new spending \1\ at the Office of Energy Efficiency and
    Renewable Energy--an 84 percent year-over-year increase. The bulk of
    this proposed increase--about $1.1 billion--is for vehicle technology
    development and deployment activities that we will focus on today.
    ---------------------------------------------------------------------------
        \1\ FY13 EERE budget includes $527 million increase in
    discretionary request and $1 billion in new mandatory spending
    ---------------------------------------------------------------------------
        I would like to state at the outset that I am strongly supportive
    of advanced vehicle technologies if the government role is carefully
    limited, and the market matures through free enterprise and American
    innovation, not through the vast spending, mandates, and special tax
    treatment that we have today.
        These role-of-government concerns are magnified further by the
    Department of Energy's poor track record in administering such
    programs. As we will hear from the Inspector General's office today,
    DOE's Vehicle Technologies Program has been the subject of numerous
    concerns identified by the IG. These include: approving cost-share
    contributions without supporting documentation; failing to identify
    conflicts of interest in the Clean Cities program; failing to obtain
    and review recipient audit reports to ensure appropriate accounting of
    taxpayer funds; and, in one instance, agency inspectors were unable to
    locate $500,000 worth of equipment purchased by one grant recipient.
        These are all serious matters that must be addressed, and I look
    forward to hearing more about them today. We also hope to gain insight
    into DOE's management of this program through an examination of DOE's
    oversight of a $115 million award to an electric vehicle charging
    company called Ecotality.
        The questions surrounding DOE judgment and decision-making
    associated with this award are numerous and complex. Over the course of
    the last four months, I have been working to gather more information on
    the details of the award and its execution.
        Although first requested March 26, last Friday, DOE finally began
    to provide the Subcommittee basic documentation associated with this
    award, such as the original application and assistance agreement with
    DOE. While much more is needed-and I would note DOE provided additional
    documents yesterday afternoon that we are still reviewing-the limited
    information we do have on DOE grants to this company is troubling and
    raises a number of areas of concern. These issues have been summarized
    in a memo, which was provided to DOE and the minority Tuesday evening,
    and to the company yesterday for feedback. At this point, we will not
    make any conclusions, or comment on the status and potential future of
    EV-related technologies and markets. However, the examples we have
    heard from the Inspector General and have found in our research raise
    numerous questions and concerns regarding the effectiveness of the
    oversight of Federal efforts to deploy EVs, as well as DOE's management
    and decision-making in administering these taxpayer-funded deployment
    initiatives.
        Nonetheless, the high level concerns associated with this project
    exemplify my concerns about the overall program including: (1)
    substantial project underperformance and schedule delays; (2) troubling
    audit findings; (3) unusual cost-sharing arrangements in which required
    recipient matching funds are met by questionable in-kind data
    valuations from consumers that have purchased EVs for their personal
    use; and (4) placing other companies at a significant competitive
    disadvantage through the subsidization of charging stations purchases
    and installation as well as new product development.
        On top of these problems, the company's financial and political
    activities add another layer of concern to this issue. Ecotality was
    nearly bankrupt before the stimulus grant money was awarded by DOE.
    However, the company disclosed in SEC filings that it was bailed out by
    Chinese investors that entered into a joint venture with the company to
    set up a manufacturing subsidiary in China. The same Chinese investors
    agreed to pay Ecotality executives $1 million in ``performance
    bonuses'' if they secured certain amounts of Stimulus funding.
        The company hired lobbyists to engage the White House on DOE
    projects, went on to be awarded $100 million in Stimulus funding, and
    the Chinese-funded performance bonuses were awarded. Within a few
    months of the award, the company's President was an honored guest of
    the First Lady at the 2010 State of the Union. About nine months after
    that, the SEC initiated an investigation into potential insider trading
    by company executives associated with the award. During the time period
    of this investigation, DOE continued to expand the scope of Ecotality's
    award and even awarded a new $26 million grant to the company in July
    2011.)
        I hope today that DOE can provide its response to Vehicle
    Technologies Program-related management concerns. I do not expect we
    will resolve these questions today, and after we hear from DOE and
    receive additional outstanding documents and materials, we will likely
    have to revisit this issue later this year.
        Last, I want to emphasize that this hearing is not just a matter of
    oversight of current spending; its importance and timeliness is
    magnified significantly by the fact that the President has proposed a
    new $1 billion mandatory program called the ``National Community
    Deployment Challenge'' that would dramatically increase spending in the
    very areas of concern that we are examining today.
        I now yield to Ranking Member Miller for an opening statement.

        Chairman Harris. I now yield to Ranking Member Miller for
    an opening statement.
        Mr. Miller. Thank you, Mr. Chairman.
        I am grateful that this hearing does appear to be, as the
    title and the charter suggest, focused on gathering information
    about electric vehicles program. Obviously that is an important
    topic, one that is more than worthy of Congressional oversight.
        We face an enormous challenge to reduce our dependence on
    oil, reduce our vulnerability to price shocks, market
    speculation, and we obviously are not going to reduce our
    dependence any time soon on the car. Americans show no
    particular inclination to give up their cars and depend
    entirely upon mass transit, and there are certainly some parts
    of this country including large parts of my district where mass
    transit is not going to work very well. It is not going to be
    possible to get from your house in Roxboro to a factory in
    Reevesville to go to work. It simply is going to be something
    that applies in perhaps inurban areas and many Americans are
    not going to want to do it.
        So electric vehicles are the promise of transforming our
    transportation system. There is certainly no guarantee of
    success. We do have a lot of technology that still needs to be
    developed. We have been investing for 20 years. A lot more
    needs to be done to make electric vehicles a practical reality.
    We have to, for instance, establish fueling stations around the
    country. I visited one in Raleigh that the city installed but
    it's one. Obviously that is not going to make a big dent in the
    number of cars on the road that use the legacy technologies.
        I do want to say today what I will support in my remaining
    time on this Committee, and I think others should support
    whether they are in the majority or in the minority. I do
    support the important role of Congressional oversight, that is,
    it is an important check in our system of checks and balances
    on the Executive Branch of government. I will support our
    requests, our Committee's requests for documents from the
    Department of Energy. I did--actually, I voted against
    referring criminal charges under 1857 statute for Contempt of
    Congress a couple weeks ago but I voted for the resolution to
    authorize a civil action for a declaratory judgment on what
    documents Congress was entitled to. I think that we should not
    just act as partisans in our oversight. We should act as the
    eyes and ears of the American people. A great political
    scientist, Woodrow Wilson, described that as the purpose of
    Congressional oversight. I will support that.
        What I don't support and will not support, and I think
    others should not support, is using Congressional oversight for
    scandal mongering. Obviously some will be embarrassed, justly
    embarrassed, and worse, by Congressional oversight. But we
    should never hide behind, Congress should never hide behind the
    speech and debate clause of the Constitution to say things that
    no one--that other Americans--would put other Americans at risk
    of being sued for defamation. We can't just become a conduit
    for turning scandals into the public domain by having made ill-
    informed insinuations in Congress that can then be picked up by
    the various organs of the media and have it be reported as
    something said in Congress and completely obliviate or evade
    people's rights not to be defamed in that way.
        I hope that that is the purpose of this hearing, and if it
    is genuine oversight, I support it. It if becomes scandal
    mongering without doing the research to show a basis for it, I
    will not support it, and now I yield back.
        [The prepared statement of Mr. Miller follows:]
         Prepared Statement of Subcommittee Ranking Member Brad Miller
        Thank you, Mr. Chairman.
        I am grateful that this hearing does appear to be, as the title and
    the charter suggest, focused on gathering information about electric
    vehicles program. Obviously that is an important topic, one that is
    more than worthy of Congressional oversight.
        We face an enormous challenge to reduce our dependence on oil,
    reduce our vulnerability to price shocks, market speculation, and we
    obviously are not going to reduce our dependence any time soon on the
    car. Americans show no particular inclination to give up their cars and
    depend entirely upon mass transit, and there are certainly some parts
    of this country including large parts of my district where mass transit
    is not going to work very well. It is not going to be possible to get
    from your house in Roxboro to a factory in Reevesville to go to work.
    It simply is going to be something that applies in perhaps inurban
    areas and many Americans are not going to want to do it.
        So electric vehicles are the promise of transforming our
    transportation system. There is certainly no guarantee of success. We
    do have a lot of technology that still needs to be developed. We have
    been investing for 20 years. A lot more needs to be done to make
    electric vehicles a practical reality. We have to, for instance,
    establish fueling stations around the country. I visited one in Raleigh
    that the city installed but it's one. Obviously that is not going to
    make a big dent in the number of cars on the road that use the legacy
    technologies.
        I do want to say today what I will support in my remaining time on
    this Committee, and I think others should support whether they are in
    the majority or in the minority. I do support the important role of
    Congressional oversight, that is, it is an important check in our
    system of checks and balances on the Executive Branch of government. I
    will support our requests, our Committee's requests for documents from
    the Department of Energy. I did--actually, I voted against referring
    criminal charges under 1857 statute for Contempt of Congress a couple
    weeks ago but I voted for the resolution to authorize a civil action
    for a declaratory judgment on what documents Congress was entitled to.
    I think that we should not just act as partisans in our oversight. We
    should act as the eyes and ears of the American people. A great
    political scientist, Woodrow Wilson, described that as the purpose of
    Congressional oversight. I will support that.
        What I don't support and will not support, and I think others
    should not support, is using Congressional oversight for scandal
    mongering. Obviously some will be embarrassed, justly embarrassed, and
    worse, by Congressional oversight. But we should never hide behind,
    Congress should never hide behind the speech and debate clause of the
    Constitution to say things that no one--that other Americans--would put
    other Americans at risk of being sued for defamation. We can't just
    become a conduit for turning scandals into the public domain by having
    made ill-informed insinuations in Congress that can then be picked up
    by the various organs of the media and have it be reported as something
    said in Congress and completely obliviate or evade people's rights not
    to be defamed in that way.
        I hope that that is the purpose of this hearing, and if it is
    genuine oversight, I support it. It if becomes scandal mongering
    without doing the research to show a basis for it, I will not support
    it, and now I yield back.

        Chairman Harris. Thank you very much. I hope that that is
    the sentiment of everyone who sits in Congress, to be honest
    with you, that we don't use Congress for scandal mongering.
        Anyway, if there are Members who wish to submit additional
    opening statements, your statements will be added to the record
    at this point.
        I would like to introduce the witnesses this morning. The
    first witness is Dr. Kathleen Hogan, Deputy Assistant Secretary
    for Energy Efficiency at the U.S. Department of Energy. Dr.
    Hogan oversees a more than $900 million annual energy policy
    program and research portfolio including industrial buildings
    and vehicle technology along with federal energy management. As
    part of EERE's senior leadership, Dr. Hogan helps to oversee
    $16.8 billion in stimulus funding.
        Our next witness is Mr. Rickey Hass, Deputy Inspector
    General for Audits and Inspections at the U.S. Department of
    Energy. Prior to this, he was Deputy Inspector General for
    Audit Services. In his current position, he directs a federal
    workforce of professional auditors and inspectors serving at 13
    major DOE sites across the country. He is responsible for all
    audits, inspections and related reviews of the Department's
    programs and activities.
        Our third and final witness today is Mr. Brian Wynne,
    President of the Electric Drive Transportation Association.
    Appointed in 2004, he acts as Chief Staff Executive of this
    member-based international organization, which promotes battery
    hybrid, plug-in hybrid and fuel cell electric vehicles and
    infrastructure. He previously served as the Senior Vice
    President for Business and Trade at the Intelligent
    Transportation Society of America.
        As each of our witnesses should know, spoken testimony is
    limited to five minutes after which the Members of the
    Committee will have five minutes each to ask questions.
        I now recognize Dr. Hogan to present her testimony.

                    STATEMENT OF DR. KATHLEEN HOGAN,

                     DEPUTY ASSISTANT SECRETARY FOR

                ENERGY EFFICIENCY, DEPARTMENT OF ENERGY

        Dr. Hogan. Thank you, Chairman Harris, Ranking Member
    Miller and Members of the Subcommittee. Thank you for the
    opportunity to discuss the Department of Energy's Vehicle
    Technologies Program.
        As part of the President's all-of-the-above approach to
    American energy, the Department is advancing transportation
    innovations that will reduce our dependence on oil and reduce
    the hundreds of billions of dollars out of the country for oil
    every year as well as to help our vehicle manufacturing
    industry compete in this global industry as well as provide
    consumers with more transportation choices and cost savings, as
    transportation is the second biggest annual household expense.
        The DOE Vehicle Technologies Program supports a broad
    portfolio of efforts spanning light, medium and heavy-duty
    vehicles and including advanced combustion engines, advanced
    fuels and lubricants, lightweight materials and propulsion
    materials, advanced batteries, power electronics and electric
    motors, vehicle systems and enabling technologies as well as to
    systems to communities across the country in their adoption of
    alternative fuel vehicles.
        As part of this vehicles portfolio, electric vehicles, or
    EVs, are an important focus. Electricity is cheaper than
    gasoline at about $1 per gallon equivalence. It can offer
    competitive performance, less pollution and is almost oil-free.
    Other countries are certainly recognizing these benefits and
    making their own investments. We have a critical opportunity
    here to grow U.S. leadership, building upon many past successes
    and the Administration is proposing multiple steps to
    accelerate America's leadership in EV development and
    deployment, and DOE is playing an important role.
        Today, DOE-developed battery technology is in nearly every
    hybrid vehicle on the road, offering savings at the pump. We
    have achieved a 35 percent cost reduction in a next generation
    of batteries and expect an additional 50 percent reduction by
    2014, a key step in making these vehicles cost-competitive with
    current technologies. We are on track to reach a goal of having
    U.S. manufacturing capacity for half a million EV batteries per
    year through Recovery Act investments, and our DOE Clean Cities
    program has helped communities save billions since 1993.
        We are also on track to meet milestones in the
    Transportation Electrification Initiative, or TEI, to deploy
    13,000 grid-connected vehicles and over 20,000 charging points
    and to meet really the primary purpose, one of the primary
    purposes, to collect the data necessary to help state and local
    governments and others better plan their EV investment
    infrastructure for the future.
        It is through TEI that Ecotality, a clean electric
    transportation energy storage company, did compete and win a
    DOE award to deploy a network of charging stations and to
    instrument EVs in major cities nationwide. As of mid-July, they
    had completed 55 percent of their planned charging station
    installations and instrumented 65 percent of their planned
    vehicles, and they have been reimbursed 57 percent of the award
    amount.
        Building upon this work, we have--DOE has announced the EV
    Everywhere Clean Energy Grant Challenge to help U.S. companies
    lead the world in producing plug-in EVs that are as affordable
    and convenient as gasoline-powered vehicles and to further spur
    the United States to additional cost reductions, to extend
    vehicle range and improve performance and convenience.
        Across this entire portfolio, we do work very hard to
    protect taxpayers' investments and serve as careful stewards of
    taxpayer dollars. We have a comprehensive system in place to do
    this. This includes competitive, merit-based awards, onsite
    audits, ongoing monitoring. The Inspector General's efforts are
    an important part of the Department's oversight and we welcome
    the IG's work and will continue to continuously improve our
    programs.
        In conclusion, DOE's Vehicle Technologies Program has and
    will continue to benefit consumers, improve national security
    by advancing the technologies necessary to reduce our
    dependence on oil, and help America lead in what is a globally
    competitive transportation manufacturing effort.
        So I thank you for the opportunity to be here, and will be
    happy to address your questions.
        [The prepared statement of Dr. Hogan follows:]
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        Chairman Harris. Thank you very much, Doctor, for your
    testimony.
        I now recognize Mr. Hass for five minutes to present his
    testimony.

                     STATEMENT OF MR. RICKEY HASS,

                  DEPUTY INSPECTOR GENERAL FOR AUDITS

               AND INSPECTIONS, U.S. DEPARTMENT OF ENERGY

        Mr. Hass. Chairman Harris, Ranking Member Miller and
    Members of the Subcommittee, I appreciate the opportunity to
    testify on the work of the Office of Inspector General
    concerning the Department of Energy's Vehicle Technologies
    Program. As requested by the Subcommittee, my testimony today
    will focus on our May 2012 reports on the Clean Cities and
    Transportation Electrification grants.
        With the enactment of the Recovery Act, the Department
    awarded about $300 million in grants to Clean Cities
    organizations. Using about $400 million additional Recovery Act
    funds, the Department also established the Transportation
    Electrification program. The Department required fund
    recipients under both programs to comply with federal
    regulations governing financial assistance awards. As such,
    they were required to provide up to 50 percent of a project's
    funding--cost share--and use competitive procurement practices
    to the maximum extent practical. As of July 2012, Clean Cities
    grant recipients had expended about $202 million, and
    Transportation Electrification program grantees that spent
    about $204 million.
        Because of the significance, we examined various aspects of
    the Department's management of these programs. For Clean
    Cities, we evaluated whether the initiative had been
    effectively managed. For Transportation Electrification, we
    sought to determine whether the Department obtained and
    reviewed required audits and cost-incurred reports. We
    identified needed improvements in financial management for both
    of these programs.
        With regard to Clean Cities, we found the Department had
    authorized reimbursements and cost-share contributions that
    either did not relate to the grant's purpose or were not
    properly supported. We also identified potential conflicts of
    interest and questionable procurement practices.
        As a result, we questioned about $5 million in direct
    payments and nearly $2 million in cost share. We found these
    problems occurred in part because the Department had not
    reviewed grants for potential conflict of interest and had not
    thoroughly reviewed reimbursement requests. Officials also
    focused on technical issues when visiting grantees and did not
    review compliance with procurement requirements.
        Department officials told us that grant recipients were
    primarily responsible for ensuring compliance with federal
    procurement and conflict-of-interest rules. They also indicated
    that the Department relied on a recipient's vigilance to ensure
    that funds were efficiently managed. As demonstrated by the
    results of our work, however, over-reliance on grantees can
    endanger both the integrity and credibility of the program.
        We also found the Department had not obtained and reviewed
    the required financial and compliance audits for the
    Transportation Electrification for-profit recipients that we
    reviewed. Audits and cost reports provide a window into the
    financial condition of the recipients and aid the Department in
    determining the reasonableness of costs.
        Program officials acknowledge that they were unaware of
    whether recipients had received their required audits or
    submitted cost reports. They also told us they had not
    established a process to track and resolve audit issues.
    Officials explained that in the past, the guidance on our
    requirements for for-profit recipients had been unclear.
        Now, the Department took certain action to address issues
    identified in our report. Specifically, it moved quickly to
    resolve about $2.5 million of the questionable costs we
    identified. Additionally, officials acted to obtain required
    audit and financial reports. The Department has also updated
    its guidance on audits and for-profit recipients and sub-
    recipients. However, the Department disagreed with many of our
    findings and recommendations with regard to the Clean Cities
    program.
        Generally, management did not agree with our conclusion
    that grantees were required to compete procurements. Officials
    also did not believe that certain activities we identified
    represented conflicts of interest. As such, the Department
    concluded that many of the costs we identified were allowable.
        We remain concerned, however, because coalitions are
    comprised of geographically based networks of individuals and
    organization with mutual business interests. In such
    situations, and without $100 million left to be spent in the
    Clean Cities area, heightened departmental awareness of the
    potential for conflicts of interest, we believe, is essential.
        In addition to the two reports just discussed, we also
    recently issued a report on advanced battery and hybrid
    components under the Vehicle Technologies Program. I would be
    happy to provide information on that report as well.
        Mr. Chairman, that concludes my statement and I would be
    pleased to answer any questions the Subcommittee may have.
        [The prepared statement of Mr. Hass follows:]
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        Chairman Harris. Thank you very much, Mr. Hass.
        I now recognize our final witness, Mr. Wynne, to present
    his testimony.

                STATEMENT OF MR. BRIAN WYNNE, PRESIDENT,

                ELECTRIC DRIVE TRANSPORTATION ASSOCIATION

        Mr. Wynne. Chairman Harris, Ranking Member Miller, Members
    of the Subcommittee, good morning. I am Brian Wynne, President
    of the Electric Drive Transportation Association. I thank you
    for the opportunity to make a statement here today.
        EDTA is the cross-industry trade association promoting the
    advancement of electric drive technology and electrified
    transportation. Our members represent the entire value chain of
    electrified transportation including vehicle manufacturers,
    battery and other component manufacturers, utility and energy
    companies, smart grid and charging infrastructure developers.
    Collectively, we are working to realize the economic, national
    security and environmental benefits of displacing oil with
    hybrid, plug-in hybrid, battery and fuel cell electric
    vehicles.
        While I am sure this Committee is well aware of the facts
    surrounding imported oil dependence, it bears repeating that
    there is a strategic and economic imperative to move toward
    domestically generated electricity as an alternative for
    transportation. The Congressional Research Service estimates
    that the United States will pay $451 billion for imported oil
    in 2012. Electricity is ample, affordable and available from
    diverse domestic resources.
        Building an electric drive industry also has competitive
    benefits for the United States. There is a global energy
    technology race, and the United States has the ability to be
    the clear leader in developing and manufacturing the
    transportation solutions and jobs of the future.
        There are more than 40 models of hybrid vehicles currently
    sold in the United States. Plug-in models, which include
    battery electric and plug-in hybrids, are also expanding.
    Manufacturers are planning to increase available offerings of
    plug-in vehicles to more than 20 at multiple price points in
    the next two years.
        Last year, more than a quarter of a million plug-in
    electric and hybrid vehicles were sold in the United States. In
    the first two months of this year alone, Americans bought
    another 62,000. That is more than a thousand vehicles per day,
    a 30 percent increase over the same sales time period in 2011.
    Year-to-date sales for plug-ins through June are 17,350,
    bringing total sales to more than 35,000. Fuel cell vehicles,
    which are also zero-emission vehicles, are being proven on
    roads today and will enter the commercial market in 2015.
    Deutsche Bank has estimated that by 2015, one in ten vehicles
    sold in the United States will be an electric drive vehicle.
        The electric car charging market is also growing. The U.S.
    Department of Energy has documented more than 4,000 public
    charging stations, and there are more private charging stations
    to add to that.
        In the United States, there is a growing foothold for
    electric drive components and vehicle manufacturing with
    attendant growth up the supply chain in materials and equipment
    and employment. A few examples include the expanding production
    of electric drive motors in Maryland, advanced batteries and
    vehicles in Michigan, California, Tennessee, Missouri and North
    Carolina.
        We are making great strides in standing up the electric
    drive supply chain and opening new markets for vehicles that
    use electricity to displace oil. However, transforming the
    fleet won't happen overnight. Our efforts are enhanced by
    federal, state and local entities who are working with the
    industry to speed technology advances and put more vehicles and
    infrastructure to work. For instance, the Vehicle Technologies
    Program has been an effective partner in the industry's effort
    to increase the performance while decreasing the cost of
    batteries. The cost of lithium ion batteries, for example, has
    dropped by a third since 2008. DOE is also working with
    industry in other critical areas including expanding electric
    drive in trucks and the development of fuel cell vehicles.
        Beyond technology advances, federal, state and local
    cooperative development initiatives are helping to establish
    new markets at the end of a new supply chain by making it
    easier for consumers and communities to acquire vehicles and
    infrastructure. At the federal level, programs like Clean
    Cities, which work with more than 100 regional coalitions to
    help deploy alternative fuel vehicles and infrastructure beyond
    electric drive, are effective in addressing initial market
    hurdles.
        To effectively pursue other options for transportation, the
    public and private sectors need to work together to accelerate
    large-scale advances. The return on the public investment is a
    nation that is less dependent on foreign oil, spends its energy
    dollars domestically and competes effectively in the global
    market for advanced technologies.
        I thank you for your attention and I look forward to your
    questions.
        [The prepared statement of Mr. Wynne follows:]
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        Chairman Harris. Thank you very, very much, and thank the
    witnesses for their testimony and being available, reminding
    Committee Members that rules limit questioning to five minutes.
    I will open the round of questions, and I recognize myself for
    five minutes.
        You know, I want to thank you, Dr. Hogan for being here.
    You know, part of the reason that we are here today is that we
    are spending taxpayer money. We should always remember that.
    And to be honest with you, there are a lot of folks who think
    that the stimulus money wasn't spent very well, may have been
    some crony capitalism involved. You know, the President
    recently identified outsourcing and foreign investments as a
    major issue we should be considering.
        So with that, I am going to open the questioning by asking
    you, and I understand that you may not have been in the program
    at the time this award was made on August 5, 2009, but at the
    time the award was made, was DOE aware that a joint venture had
    been signed with the Chinese that committed $2.5 million
    including a million-bonus to be paid if the DOE award was
    greater than $30 million? I just wonder, was DOE aware? Because
    this is public record. I mean, SEC filings have been made. On
    August 5th, was DOE aware that Ecotality had signed a joint
    venture agreement with a company that would require Ecotality
    to buy everything manufactured by the Chinese, and that
    intellectual property would be transferred, the license would
    be transferred free to the Chinese company. That is a simple
    question. Was DOE aware?
        Dr. Hogan. We use a competitive-based process to make our
    award, so----
        Chairman Harris. Dr. Hogan, was DOE aware at the time on
    August 5th when the President announced the award, were they
    aware of this joint venture agreement?
        Dr. Hogan. As you said----
        Chairman Harris. Dr. Hogan, I only have five minutes. It is
    a yes or no. Were they aware or not?
        Dr. Hogan. As you said, I was not at the agency at that
    period of time so I cannot----
        Chairman Harris. Let me tell you something, Dr. Hogan. I am
    upset because I asked this question, we asked this question
    starting back in March and they should have sent us someone
    here who knows.
        Can I have the first slide, please? Since you brag about
    the competitive nature, this is a slide that shows, and I will
    tell you, it is highly redacted. I have dozens of pages of
    where the entire page is redacted as part of the document dump
    we had from DOE this week. If you see, this is the list of the
    top six companies who technically could fulfill this award, and
    appearing in the fourth slot is the one who won the award, not
    the first slot, not the one that had the highest grade, but the
    fourth slot, and tied for third, to be fair to them.
        I could tell you, you know, in the NIH, the way the awards
    are given, they start with the one that gets the highest grade
    and they give that one, then they go down the list and then
    they give these awards. DOE had said they were going to award
    two to ten out of this. That is what the proposal said, we are
    going to award two to ten, our intent. They awarded one. It was
    for $100 million above the $30 million threshold for its
    executives to get a million-dollar Chinese-funded bonus, and it
    was given to the company that didn't get the highest ranking.
        Dr. Hogan, we asked for an explanation of how they were
    chosen. This is what we get back. Could you enlighten me as to
    why the highest-ranked submission didn't get any funding?
        Dr. Hogan. First, we awarded more than one grant under this
    award. We awarded a number. I would actually have to go back
    and look at what the actual firms are that are----
        Chairman Harris. Excuse me, Doctor. Just to make clear, we
    are talking about area of interest one, and we believe there
    was just one award to area of interest one, because if there
    were more awards, actually this shouldn't be redacted because
    of course if an award was given, there is no reason to redact
    an award. Is that correct, Dr. Hogan? Were you responsible for
    submission of any of this information and redaction?
        Dr. Hogan. We had a team of people working to provide the
    information.
        Chairman Harris. Were you part of the team, Dr. Hogan?
        Dr. Hogan. I was not part of the team doing the redaction.
        Chairman Harris. Okay. So I guess you didn't even know what
    is underneath the redacted areas. Okay. What is the reason why
    the number one-scored recipient wasn't, I mean, did they just
    not spend as much, because we know we have lobbying documents.
    We know that Ecotality spent money on lobbying the DOE to get
    an award. You know, their CEO bragged on a conference call that
    at some point we are going to have to play the political card.
    Why wasn't the number one-scored company awarded a grant?
        Dr. Hogan. They were a top score----
        Chairman Harris. They were the top score. Why----
        Dr. Hogan. They were a top-scoring, you know, award
    proposer and they----
        Chairman Harris. Okay. You have no answer. I understand
    that. I understand. I wish the DOE could be more forthcoming in
    their answer.
        Let me just ask about the cost sharing. The idea is under
    this program, a company gets the money not as a fiscal bailout
    and this company as you may or may not have been aware in their
    SEC filings had alerted their shareholders that they were about
    to have major fiscal problems if they didn't get an award. The
    cost sharing is supposed to be 50 percent from the government,
    50 percent from the company, and most people think cost sharing
    is actually you put something of hard value down, could be
    money, could be something of easily determined value. And we
    can't figure out from the documents that the DOE has provided
    exactly what, but the IG has identified cost sharing as a
    potential issue.
        Is it true that the cost sharing for the personal owners of
    the Volt--in other words, when they go and install an electric
    station at no cost to a personal owner, a personal purchaser of
    a Volt, that the cost share is a number made up somewhere, we
    can't figure out where because, you know, we are still looking
    through the documents, assigning some value to the data that
    will be gathered from the charging history of that car and that
    is the company's ``cost share.'' That is their skin in the
    game. Is that a correct assessment of what was going on and is
    this what they think is a real cost share? Is this what they
    expect taxpayers understand is a real 50 percent cost share is
    the federal government taxpayer puts up a dollar and the
    company says yeah, there is this data that we think is worth a
    dollar. Is that pretty much more or less what the cost-share
    arrangement was for those personally installed chargers?
        Dr. Hogan. The cost-share arrangement with Ecotality had a
    number of components to it. One of the components was something
    that you can liken to sort of leasing arrangement for the data
    that we were getting from the vehicle owners, and the
    arrangements that were--that aspect of it is consistent with
    the cost-share principles that are in the federal acquisition
    regulations. So, you know, for-profit organizations.
        Chairman Harris. Well, I do hope DOE eventually provides us
    with those details, and I now recognize Mr. Miller for his
    questions.
        Mr. Miller. Thank you. Well, it appears that this hearing
    is not about electric vehicles after all. It does appear that
    this hearing is about scandal mongering, and not a week goes by
    that we don't hear another scandal involving American business
    and not technical violations of the law but knowing violations
    of the law that suggest a failure of a moral compass.
        But I don't know anything about Ecotality. I had not heard
    of them before yesterday in preparing for this hearing. I do
    not know their executives. I do not know anything about them.
    But I know that lightly substantiated charges like what we have
    heard now in this public setting can do real damage to an
    innocent company. There can be real collateral damage in
    companies upon which innocent depend for their livelihoods and
    in which investors have put some of their life savings, and
    before we make such thinly--before we make allegations like
    what we have heard today, there should be real substance to
    them. They should be well resourced; and if this hearing is
    about Ecotality, they should be there. They should have the
    chance to know what is being alleged about them and they should
    have a chance to respond, to tell their side of the story.
    Fundamental fairness requires that. Common decency requires
    that. The failure to do it is an abuse of power.
        Now, there have been suggestions about Ecotality's
    political influence. They hired a lobbyist. Small towns in my
    district hire lobbyists to get grants to expand their water and
    sewer system. Hiring a lobbyist is not an unusual practice by
    anyone trying to get a grant.
        Dr. Hogan, what do you know of the politics or political
    connections in Ecotality's or any other companies getting an
    award under this DOE program?
        Dr. Hogan. The Department of Energy uses a rigorous,
    competitive, merit-based process for each and every award.
        Mr. Miller. Did any--was there any political influence by
    Ecotality in getting the award?
        Dr. Hogan. There is not political influence in any
    organization getting an award through any of these programs.
        Mr. Miller. And I don't know anything about the SEC
    inquiry. It has been reported that there is a pending inquiry.
    There was a subpoena issued at one point. When your office--I
    assume your office did learn of the SEC inquiry, and what did
    you do when you learned there was an SEC inquiry?
        Dr. Hogan. So the timing of the SEC inquiry was well after
    this award was in place and underway. So it is important for us
    to have that information but there is no proper action for us
    to be taking based on an SEC inquiry.
        Mr. Miller. Alright. Actually, Mr. Hass, I think I should
    have directed that question at you. When you learned that there
    was an SEC inquiry, what did you do?
        Mr. Hass. Well, sir, I must preface my question by saying
    that we have done some limited testing with regard to this
    company and this particular grant. However, we haven't done an
    in-depth audit of it. It is--we have something scheduled in the
    coming fiscal year. However, we haven't done in-depth testing.
        Mr. Miller. To any of the witnesses, did any inquiry into
    your own investigation into the SEC's inquiry into insider
    trading suggest that it was related to any DOE issues, any DOE
    grant issues?
        Dr. Hogan. All we know is that there is an SEC inquiry, and
    again, what we understand is that there is any number of SEC
    inquiries across any number of companies, and at the point we
    are at with an SEC inquiry there is no action that DOE should
    be taking.
        Mr. Miller. And in fact, there were 735 enforcement actions
    in 2011 alone, and no telling how many subpoenas were issued as
    part of those actions.
        Do you think a company should be disqualified from applying
    for a contract with the government, a grant from the government
    because they have received a subpoena?
        Dr. Hogan. We believe it is actually improper for the
    Department of Energy to take the presence of an SEC subpoena
    into account at the point of running a competitive award
    process.
        Mr. Miller. Mr. Chairman, my time has expired.
        Chairman Harris. Thank you very much.
        I now recognize the gentlelady from Illinois, Ms. Biggert,
    for five minutes.
        Mrs. Biggert. Thank you, Mr. Chairman, and thank you for
    holding this hearing.
        I wanted to ask about prioritization within DOE's vehicle
    technologies portfolio. The Administration focus seems to be on
    deployment of electric vehicles. That was the case in the
    stimulus funding as well as the President's recent request to
    create a new $1 billion EV deployment challenge.
        So my question would be to Dr. Hogan and Mr. Wynne and Mr.
    Hass if he has anything. Are these the right priorities? That
    is obviously a lot of money, and I wonder if the market
    viability of electric vehicles would be better served if this
    funding was spent on research and development to make EVs more
    competitive with gas-powered vehicles instead of focusing on
    buying and installing charging stations. So what are you
    thoughts on this? Let us start with you, Mr. Wynne.
        Mr. Wynne. Well, thank you very much for the question,
    ma'am. I think the way I look at this is that to electrify
    transportation, there are many, many different elements to it,
    and frankly, there is an important--one of the important
    elements is understanding how people will charge cars that plug
    into the grid. We will understand that better and better as we
    get more vehicles on the road. But that was indeed the primary
    justification for this program was to understand, let us put
    some charging out there, let us see how people use them. That
    is the data-gathering element of the program, and that data has
    yet to be parsed.
        But what we do know is that we are learning that some
    people charge their cars based on how much range the vehicle
    has. For example, I drive a Chevrolet Volt, which has give or
    take a 40-mile range. I can drive in. My commute one direction
    is 23 miles. I have the opportunity to charge at work and at
    home. I could do either one of those with plugging into that
    outlet right there because it sits in my driveway all night
    long at home and it sits in the garage all day. If I am driving
    a pure battery electric vehicle, and some people are, they
    might need the opportunity to charge somewhere when they are
    shopping, and that might give them enough range to do a couple
    more chores and so forth. We are learning how this is going to
    work, and I think this is a good use of the public purse in
    conjunction with the research and development in conjunction
    with other R&D elements including manufacturing of batteries
    and so forth.
        Mrs. Biggert. If I might ask you then, it just seems from
    what I have heard in that first question that, you know, I
    think we believe in competition and there was competition for
    this grant but it sounds like the one company got to do the
    five areas, six areas across the country, and it would seem to
    me, and I had a green car several months ago and there was
    several that came in with their charging stations, not only for
    people that drive the electric cars but they could also see how
    the charging works, and it is very important. But it troubles
    me that there is not any competition. What about these
    companies that have been developing the charging stations and
    they can't compete with a company that has now been given a
    grant and they can provide free charging to so many people that
    are driving the electric cars? Do you think that really takes
    away that competition we should have?
        Mr. Wynne. I don't think so, and I am basing my answer on
    the fact that we have so many companies in the charging
    business, not just providing chargers and selling them directly
    in the marketplace through companies such as Best Buy, for
    example, but also companies like NRG through their EV Go
    program, which is offering subscription-based opportunities for
    consumers where they can charge--get something installed at
    their home but also use a network that is being provided. Those
    are being built out city by city. I would be more than happy to
    provide a list of all the different players from small startups
    to large companies like Siemens, General Electric and Eaton
    Corporation for the record just so----
        Mrs. Biggert. I would appreciate that.
        Dr. Hogan, I don't have too much time, if you just have a
    comment.
        Dr. Hogan. As you know, we think electric vehicles are just
    so important because of providing consumers additional choice
    as we bring down the costs of these vehicles, really having the
    opportunity for a dollar-per-gallon equivalent fuel is, you
    know, in the coming years is just such an important opportunity
    for consumers as well as meeting our national security
    objectives.
        Mrs. Biggert. Yield back.
        Chairman Harris. Thank you very much.
        I now recognize the gentleman from California, Mr.
    McNerney, for five minutes.
        Mr. McNerney. Thank you, Mr. Chairman.
        Mr. Wynne, do you believe that the grant program that ended
    up awarding Ecotality was rigged or ended up picking winners
    and losers, thereby producing market competitiveness?
        Mr. Wynne. No, sir, I don't but that would be based on my
    personal view of the DOE systems. I would really be much more
    comfortable deferring that question to our DOE colleagues.
        Mr. McNerney. Okay. Do you think that the DOD grant--the
    DOE grant program is beneficial to the industry?
        Mr. Wynne. Extremely so, yes, sir. It has been very, very
    beneficial in leveraging a much larger investment from private
    industry for many sectors of private industry.
        Mr. McNerney. So that effect of getting private companies
    from around to participate under a banner company is a
    beneficial aspect of this program?
        Mr. Wynne. Well, I think the program has many, many
    different elements, and the ARRA programs ended up in RDD&D,
    they ended up in research and development. Those are--some of
    those programs are ongoing. The charging elements are extremely
    important as we understand as more vehicles enter the market.
        So all of these fit into a broader understanding of how to
    create a transportation system that frankly is different than
    the one we built so far, which was built on cheap gas.
        Mr. McNerney. It is going to take a huge investment in
    infrastructure from the private sector to get there.
        Mr. Wynne. And that has been ongoing.
        Mr. McNerney. Thank you.
        Mr. Hass, as you know, there is an SEC inquiry regarding
    insider trading at Ecotality. When your office learned of the
    inquiry, what did your office do?
        Mr. Hass. Proactively, our investigative staff contacted
    the SEC, and we did initiate an investigation into that matter,
    the results of which I would be glad to share in private
    session. But the investigation was closed. We did not establish
    any wrongdoing.
        Mr. McNerney. So the investigation has been closed at this
    point?
        Mr. Hass. Yes, sir.
        Mr. McNerney. Thank you.
        Dr. Hogan, you said that the--and I am going into some of
    the positive aspects of your presentation, that there is one-
    dollar-gallon equivalent for electricity. Could you explain
    what that means a little bit, please?
        Dr. Hogan. Sure. Clearly, we are spending, you know, $3, $4
    per gallon on gasoline. If you actually look at the cost of the
    electricity that you need to get the same type of performance
    activity out of an electric car, you can--the equivalent price
    in electricity maps out to be about a dollar-per-gallon
    equivalent based on electricity.
        Mr. McNerney. So you also expect a 50 percent cost
    reduction in EV batteries within the next few years. How does
    the U.S. industry stack up to other countries regarding EV
    battery potential for our manufacturing sector?
        Dr. Hogan. We think we are in a great place right now as we
    look at the growing capacity in the United States for electric
    vehicles. I think we are very excited about some of the new
    entrants into the electric vehicle space by a variety of
    manufacturers as well as our growing manufacturing capacity for
    electric vehicle batteries. As I said, we are on pace to have
    manufacturing capacity by 2015 for about a half a million
    vehicles a year through the Recovery Act investments. So I
    think right now the United States is very well positioned for
    what is a very quickly growing marketplace.
        Mr. McNerney. So you see EV battery manufacturers in this
    country taking off. What size of market--do you care to
    speculate on how big that market might be in terms of billions
    of dollars or----
        Dr. Hogan. Well, I think some of the recent market research
    reports that are out there are putting the battery market in
    the $15 billion or so space in four, five, six years.
        Mr. McNerney. That is pretty significant.
        Do you share that assessment, Mr. Wynne?
        Mr. Wynne. I do, and to add to that, large-format lithium
    ion batteries, it is energy storage like any other energy
    storage. It can also be utilized in stationary storage for the
    grid and for cell towers and for all manner of things that we
    need backup for. So most of my companies in the battery
    business have two lines of business: they have a transportation
    line of business and a stationary storage line of business. So
    we are seeing growth across that spectrum.
        Mr. McNerney. Thank you. I yield back, Mr. Chairman.
        Chairman Harris. Thank you very much.
        I now recognize the doctor from Georgia, Dr. Broun, for
    five minutes.
        Mr. Broun. Mr. Chairman, before my time starts, I
    understand you have a question or two, and I would be glad to
    yield a little time.
        Chairman Harris. If you can yield me a little time, I would
    appreciate it.
        Mr. Broun. I will be glad to.
        Chairman Harris. Sure, and it is a single question and it
    should be pretty simple.
        Dr. Hogan, you said that, you know, DOE objectively awards
    these funds under area of interest one under this program, but
    on June 17, 2010, the DOE awarded $15 million to Coulomb
    Technologies for charging, and you were there then, for
    charging installation, right? I know you weren't there in 2009,
    but June 17, 2010, so did you sign off on the award to Coulomb,
    $15 million for charging infrastructure installation?
        Dr. Hogan. I am aware of that award.
        Chairman Harris. Okay. And where was the objective? Were
    there proposals submitted and did they undergo this kind of
    scrutiny? Because we requested those documents and we don't
    have them. This is the only document we have about area one
    interest awards.
        Dr. Hogan. So the Transportation Electrification Initiative
    had, as you have indicated, a number of areas to it, and those
    were evaluated through a merit-based approach, a robust
    technical review. What we did was select a number of potential
    awardees across this entire initiative and then as can happen,
    when we went to do the awards, one of the selected grantees
    decided to withdraw. What that did was give us the opportunity
    to go back and look at the list of those----
        Chairman Harris. This list?
        Dr. Hogan. That list.
        Chairman Harris. But Coulomb is not on this list.
        Dr. Hogan. Coulomb was an applicant to the Transportation
    Electrification Initiative area.
        Chairman Harris. But I don't see its name on this list.
    Now, that could be because everything is redacted on this list.
    Is that true, Dr. Hogan? Did Coulomb undergo an objective----
        Dr. Hogan. Yes, Coulomb did.
        Chairman Harris. Were they the highest-rated in their
    field?
        Dr. Hogan. Coulomb was the next ranked award based on the
    merit review process that we did for all the applicants.
        Chairman Harris. Could I tell that from this sheet?
        Dr. Hogan. We can certainly help you find that information
    and walk you through it.
        Chairman Harris. But we already asked for the information.
    Do we have to ask be walked through every single piece of
    information or is the Department going to be forthcoming at
    some point?
        Dr. Hogan. We----
        Chairman Harris. That was a rhetorical question.
        I yield back to Dr. Broun.
        Mr. Broun. Thank you, Mr. Chairman.
        These electric vehicles have very poor performance in the
    marketplace today. They are extremely expensive, and without
    government mandates and government subsidies, I think very few
    people would even want to buy these cars. Today only very rich
    people can afford to buy these cars, and it seems to me that
    the only marketplace that is out there is due to government
    mandates on the automobile industry as well as government
    subsidies, taxpayers' money that has been put into subsidizing
    the purchase of the car, subsidizing the charging stations.
        Mr. Wynne, I would like to ask you, if we did not have all
    these government subsidies and mandates, how many of your
    companies do you think would still be in business and how many
    people do you think would actually buy these very expensive
    automobiles that very few people want without subsidies?
        Mr. Wynne. Congressman, thank you very much for the
    question. I disagree that the vehicles are too expensive. What
    we are after here basically is the opportunity for consumers to
    have more choice, and as I indicated, we will have 20 vehicles
    in the marketplace over the next two years.
        Mr. Braun. Yeah, that is because--Mr. Wynne, that is
    because of the government mandates.
        Mr. Wynne. I disagree with that.
        Mr. Broun. And the marketplace has already shown that these
    electric vehicles are just not things that most people can
    afford and most people want, and this government, particularly
    this Administration, and even somewhat the previous
    Administration, has put in place mandates and subsidies that
    are--how much is it per vehicle, the subsidy now per vehicle
    for your Chevy Volt? How much subsidy did you get when you
    purchased that vehicle?
        Mr. Wynne. The Chevy Volt is a $7,500 tax credit. That is
    based on a sliding scale. That is the largest battery size on
    that sliding scale. The credits start actually at $2,500.
        Mr. Broun. Okay. And it is my understanding that this
    Administration is actually considering going up to $10,000 tax
    credit. Is that correct? Is that your understanding?
        Mr. Wynne. That is a proposal, yes.
        Mr. Broun. That is correct, because nobody wants to buy
    these things.
        Mr. Wynne. I disagree, sir.
        Mr. Broun. Well, very few people do. That is not nobody.
    That is an absolute. Very few people want to buy these cars.
        How much was your Chevy Volt when you purchased it?
        Mr. Wynne. About $40,000.
        Mr. Broun. And how much would an equivalent car that is run
    by gasoline cost?
        Mr. Wynne. I wouldn't buy an equivalent car. It wouldn't be
    fair to compare those two.
        Mr. Broun. Well, you are in the business. How about
    somebody else that wanted to buy an equivalent automobile? How
    much would it cost?
        Mr. Wynne. Well, that is just what I am saying. This is a
    fundamentally different car. I think the only thing you really
    can fundamentally----
        Mr. Broun. Well, a car drives from one place to another,
    and you yourself said you cannot drive to work and drive home
    without recharging it, and that electricity has to come from
    somewhere.
        Mr. Wynne. No, sir, I didn't--let me clarify that. I could
    easily drive from home to the office and back without
    recharging.
        Mr. Broun. Well, you said that it is a 40-mile range on
    your vehicle and it is 23 miles to work. I assume it is another
    23 miles back home, correct? You have got a deficit of 6 miles
    there. You are going to run out of juice before you get home if
    you don't charge it.
        Mr. Wynne. I could run out of electricity. The Chevrolet
    Volt is actually configured in such a way--and this is the
    beauty of electric drive, sir, is, you can configure it for
    different driving needs. It can actually--it has what we call a
    range extender engine, which uses gasoline.
        Mr. Broun. Well, but we were talking about electricity, not
    gasoline.
        Mr. Wynne. It can get me to New York City.
        Mr. Broun. But you are running on gas at that point,
    correct?
        Mr. Wynne. That is correct.
        Mr. Broun. Okay. So your whole object is not to run on gas,
    correct?
        Mr. Wynne. It is to displace petroleum.
        Mr. Braun. Well, the point is, without government
    subsidies, without government mandates, these electric vehicles
    would not--would fail in the marketplace and I think that the
    marketplace should be dictating what we are doing here.
        I will yield back.
        Chairman Harris. Thank you very much, and the Chair
    recognizes the gentleman from California, Mr. Rohrabacher, for
    five minutes.
        Mr. Rohrabacher. Thank you very much, Mr. Chairman.
        And let me just note, I drive a hybrid car, and I certainly
    agree with the witness that perhaps this is a good thing for
    America to be heading towards using electricity for our
    transportation needs where it is possible. But I also agree
    with my colleague, Dr. Broun, that this should be a market-
    driven decision and not something where the high and mighty who
    can take money out of the pockets of some people and put it in
    the pockets of others will decide what their transportation
    decisions will be.
        One question on this. Does this actually save us oil in
    terms of our foreign market situation where we are buying oil
    from overseas? Are you taking into consideration what produces
    the electricity?
        Mr. Wynne. That is the best part of the story, Congressman,
    and thank you for the question. All of our electricity
    generation in this country is domestically produced but for a
    tiny fraction of oil, some of which may come from overseas.
        Mr. Rohrabacher. Right.
        Mr. Wynne. That being places like Hawaii and----
        Mr. Rohrabacher. And it is mainly coal, isn't it? Isn't
    that actually more polluting than the oil that we are talking
    about?
        Mr. Wynne. Well, I beg to differ. We have multiple studies
    which indicate that plugging your car in, even using coal for
    the energy distribution--I beg your pardon--for the electricity
    generation is cleaner than using gasoline. We have an
    environmental benefit.
        Mr. Rohrabacher. Let me ask you, does the study that you
    are talking about and the studies that you are talking about
    include the costs and the pollution levels that are accumulated
    by disposal of the batteries?
        Mr. Wynne. The disposal of the batteries is----
        Mr. Rohrabacher. Is that included in the analysis that you
    just mentioned?
        Mr. Wynne. But the batteries will be recycled because they
    are extremely valuable batteries, and when we are done with
    them in a car and we are not even actually looking at baking
    this into the price yet, but once we have, we will have a
    secondary market for those batteries and we will be able to
    amortize the cost of those batteries over a longer lifecycle.
    They will be recycled. They will be reused.
        Mr. Rohrabacher. That is ``will'' but aren't.
        Mr. Wynne. Well, we have just begun the process.
        Mr. Rohrabacher. And it is a process that is developing and
    that is why perhaps at times it is best to leave it to the
    market because things mature as the technology matures rather
    than jumping out ahead of something that then causes serious
    problems including the problem of taking money out of
    somebody's pocket who doesn't want to buy your product and
    giving it to somebody else in order to get them to buy your
    product.
        Let me go back to Dr. Hogan. You know, I have been here 24
    years. I have been in an administration and outside. Were you
    asked for this information beforehand by the Committee and you
    have come here and not been able to explain these things that
    the chairman was quizzing you on as to why a company had a
    lower rating but ended up with the grant? It doesn't sound like
    you were prepared to answer the question. Were you alerted that
    these questions would be asked?
        Dr. Hogan. I was asked to explain how we, I think, you
    know, do our work at the Department of Energy relative to these
    grants, and I can tell you we run a robust, competitive, merit-
    based process and make the top awards to meet the objectives of
    the proposals. So I can certainly explain that.
        Mr. Rohrabacher. Well, I was sitting here listening and
    frankly, when the chairman asked you about why a company with a
    lower rating ended up with the grant rather than the company
    with the higher rating and that company then ended up with so
    many problems, you didn't seem to have an answer for him. Maybe
    you would like to answer now.
        Dr. Hogan. We can certainly work and certainly--you know,
    we are trying very hard to get you the information that you are
    interested in. There are, as you may understand, a number of
    requests to the Department for pretty voluminous pieces of
    information. We have a dedicated team put together to----
        Mr. Rohrabacher. I only have a couple more seconds. Let me
    just note, Mr. Chairman, this is a pattern. I am sorry, it is a
    pattern for this Administration, and I have been around for a
    while and this is a pattern of this Administration, and another
    pattern is, a series of grants given in the field of energy to
    companies that go bankrupt, and that is another pattern that we
    see. This is a very disturbing pattern both in the private
    sector part of it for people who are getting grants, not being
    able to fulfill the obligation that they set and also a
    disturbing pattern that you are not catching it, that this
    Administration isn't catching this beforehand, and that is what
    the Inspector General I think has pointed out is, you are not
    doing your job.
        Thank you very much, Mr. Chairman.
        Chairman Harris. Thank you very much.
        And I would like to welcome the gentlelady from Oregon to
    the Subcommittee, and we did not forget you over there. We
    alternate from majority to minority until all the Subcommittee
    Members have had a chance, so now we will offer you a chance
    and recognize Ms. Bonamici for five minutes for her
    questioning.
        Ms. Bonamici. Thank you very much, Mr. Chairman Harris and
    Ranking Member Miller. I did understand that.
        I want to thank you all for being here today to speak about
    this topic. It is important not only to the district I
    represent and to the state I am from but also to our country,
    and in my home State of Oregon, we have seen a tremendous
    growth in electric-vehicle infrastructure and use. As part of
    the EV project we now have more than 350 charging stations in
    our state, more than 200 additional charging stations
    forecasted. Cities like the city of Beaverton in my district,
    city of Hillsboro have taken the lead and have charging
    stations at their city halls and other public places.
    Commercial partners like Walmart, Kohl's, Fred Meyer are home
    to electric charging stations as well. Portland State
    University has Electric Avenue, which is a multi-vehicle block
    with many charging stations right in the heart of downtown
    Portland, and in fact, our professional basketball team, the
    Portland Trailblazers, gives free parking to the first electric
    vehicle to arrive at a game.
        Many partners participated in this work, and Ecotality had
    a part, but so did Eaton and General Electric and Conamatsu and
    North Right OpConnect, Shore Power and SPX. Many partners have
    come together to build this infrastructure, and the
    advancements in deployment of charging station technology, it
    is not just restricted to the Portland metropolitan area, and
    here is an example. Senator Merkley really put this to the
    test. He drove the 300 miles from the northern border of our
    state to the southern border of our state recently in a Nissan
    Leaf. Importantly, investments that have been made by the
    Department of Energy's Vehicle Technologies Program have
    resulted in significant progress in developing electric-vehicle
    infrastructure but that also helps to attract diverse
    industries and jobs to our region.
        So in considering those accomplishments that Oregon has
    made in this area, I would like to ask the witnesses, would you
    please discuss why the initiative has worked so well in Oregon
    and how might we replicate these successes across the country?
        Dr. Hogan. Certainly, it is great to hear those great
    results in Oregon. I think you are pointing out exactly the
    reason we are doing many of these projects is that you need to
    build, you know, some awareness. You know, what we are trying
    to do is spur the greater adoption of these vehicles but you
    can only do that in combination with people being aware of them
    and working to buy them and continuing to speed that adoption.
    So we are--it is important, you know, to work with the market
    trends that are there and to keep sort of pushing forward with
    the information and continue that growth, and that is exactly
    what efforts like Ecotality are doing but it doesn't happen as
    quickly everywhere so you have to sort of just keep sort of the
    key elements of the project together and keep building that,
    and I think what we are seeing right now with Ecotality, even
    though they are not quite where we had thought they might be at
    this point in time, they are moving steadily ahead month by
    month by month, faster in some places than others, but we are
    moving ahead on pace and are ready and expecting to meet the
    major milestones of the project. So a lot of good news there.
        Ms. Bonamici. Mr. Wynne, your thoughts?
        Mr. Wynne. Well, first, to begin, congratulations. Oregon
    truly is, I think, a model that others are looking to and not
    surprising, we recognized your former Governor with our E-
    Visionary Award not too long ago for that reason. I think it is
    a perfect example of the federal, state and local partnerships
    that we were talking about with industry, which will be needed,
    and I agree with the sentiment that this cannot go on forever
    as a federal program. We cannot--Mr. Rohrabacher, if he was
    here and he could tell us what year he had gotten his hybrid,
    it was very likely that he got a tax credit for that hybrid.
    Those tax credits have expired, much as these tax credits for
    the existing vehicles will expire. We expect this program to
    have been successful in providing us with some insights that
    private industry can then utilize to anticipate where people's
    needs are going to be in changing and build business models
    around them.
        So I think this is a perfect example of the collaboration
    between industry and government that is going to help us to
    move to the next level of transportation, and I don't think it
    is lost on anyone in the room that we need to be evolving our
    transportation, providing our consumers and our fleet operators
    with new options.
        Ms. Bonamici. Thank you very much.
        My time is about to expire, but it is my understanding
    there is still a pretty significant wait list in Oregon to get
    a Leaf.
        So thank you for your testimony and I yield back.
        Chairman Harris. Thank you very much.
        We have a couple minutes before we have to go. Mr. Miller,
    if you have any closing statements or any comments?
        Mr. Miller. Mr. Chairman, I take from that you intend to
    make some closing statements or comments.
        I would encourage the Department of Energy to provide
    documents. Also to understand if the Members of the majority
    think the Bush Administration cheerfully provided all
    information requested by Congress, their information--their
    recollection is incorrect. I was the chairman of the Oversight
    Subcommittee for four years, and I have got to say, there was
    not a big improvement when the Obama Administration came in,
    largely because the same people were doing it. It wasn't the
    political appointees, it was the permanent staff. And there is
    a tendency to treat requests from Congress like FOIA requests.
    They are not FOIA requests.
        I would also urge the majority to consider in requesting
    documents if you want a needle, don't ask for a haystack, and I
    urge the Administration if they have asked for a needle, don't
    provide a haystack. If there is a valid reason to redact
    documents, if there is proprietary information, information
    that could be commercially damaging, tell us that, and I urge
    the majority to try to make arrangements to review the
    documents to satisfy yourself that there is some valid reason
    for not providing the information requested for public
    distribution to see if there is in fact an invalid reason for
    decisions that are the proper subject of Congressional
    oversight.
        Chairman Harris. Thank you very much, Mr. Miller, and I
    couldn't agree with you more. You know, we will try to be as
    specific as possible, but again, you know, the hearing was to
    see about management. You know, we got a letter back from May
    1st. We wrote the letter March 26th, got a letter back May 1st
    talking about the open and transparent process through which
    Ecotality was granted this award and then we get back
    subsequently two months later, let me see, May to June to July,
    2-1/2 months later. We get this back, which is redacted for
    everything except the name of the company, which is not the
    top--and just to remind you, Doctor, the score is 823 for the
    top company, was 748 for Ecotality, and 505 is kind of the
    cutoff for acceptable grants. I got to tell you, this is not
    open and transparent. I am astounded that, you know, we can't
    get a simple answer to the question like gee, why wasn't the
    top rated given the award, especially since just one award was
    given under area of interest one, just one, but we will ask a
    series of questions.
        I want to thank the witnesses for their valuable testimony
    and Members for their questions. The Members of the Committee
    may have additional questions. We will have additional
    questions for you, much more specific, and we will ask you to
    respond to them in writing. That was 4-1/2 months from my
    initial request to this week when I get this back. I would just
    ask the Department to be a little more timely and perhaps a
    little less redaction, you know, in further inquiries.
        The record will remain open for two weeks for additional
    comments from Members. The witnesses are excused. Thank you all
    for coming. The hearing is now adjourned.
        [Whereupon, at 10:48 a.m., the Subcommittee was adjourned.]
                                   Appendix I

                                  ----------

                       Answers to Post-Hearing Questions

                       Answers to Post-Hearing Questions
    Responses by Dr. Kathleen Hogan
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    Responses by Mr. Rickey Hass
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    Responses by Mr. Brian Wynne
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