[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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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
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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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