[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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              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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    [GRAPHIC] [TIFF OMITTED] 75395.018
    
    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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