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56–571 PDF 2010

S. HRG. 111–478 

AMERICAN RECOVERY AND REINVESTMENT ACT 

OF 2009 

HEARING 

BEFORE THE

COMMITTEE ON 

ENERGY AND NATURAL RESOURCES 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

TO

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

MARCH 4, 2010 

( 

Printed for the use of the 

Committee on Energy and Natural Resources 
(II) 

COMMITTEE ON ENERGY AND NATURAL RESOURCES 

JEFF BINGAMAN, New Mexico, Chairman 

BYRON L. DORGAN, North Dakota 

RON WYDEN, Oregon 

TIM JOHNSON, South Dakota 

MARY L. LANDRIEU, Louisiana 

MARIA CANTWELL, Washington 

ROBERT MENENDEZ, New Jersey 

BLANCHE L. LINCOLN, Arkansas 

BERNARD SANDERS, Vermont 

EVAN BAYH, Indiana 

DEBBIE STABENOW, Michigan 

MARK UDALL, Colorado 

JEANNE SHAHEEN, New Hampshire 

LISA MURKOWSKI, Alaska 

RICHARD BURR, North Carolina 

JOHN BARRASSO, Wyoming 

SAM BROWNBACK, Kansas 

JAMES E. RISCH, Idaho 

JOHN MCCAIN, Arizona 

ROBERT F. BENNETT, Utah 

JIM BUNNING, Kentucky 

JEFF SESSIONS, Alabama 

BOB CORKER, Tennessee 

ROBERT M. SIMON, Staff Director 

SAM E. FOWLER, Chief Counsel 

MCKIE CAMPBELL, Republican Staff Director 

KAREN K. BILLUPS, Republican Chief Counsel 
(III) 

C O N T E N T S 

STATEMENTS 

Page 

Bingaman, Hon. Jeff, U.S. Senator From New Mexico ........................................ 1 

Dalton, Patricia, Managing Director, Natural Resources and Environment, 

Government Accountability Office ...................................................................... 11 

Murkowski, Hon. Lisa, U.S. Senator From Alaska ............................................... 2 

Nellenbach, Michele, Director, Natural Resources Committee, National Governors Association ................................................................................................ 20 

Rogers, Matthew, Senior Advisor to the Secretary for Recovery Act Implementation, Department of Energy ............................................................................. 4 

Woolf, Malcolm, Director, Maryland Energy Administration, and Vice Chair, 

National Association of State Energy Officials, Annapolis, MD ...................... 26 

APPENDIX 

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

(1) 

AMERICAN RECOVERY AND REINVESTMENT 

ACT OF 2009 

THURSDAY, MARCH 4, 2010 

U.S. SENATE, COMMITTEE ON ENERGY AND NATURAL RESOURCES, Washington, DC. 

The committee met, pursuant to notice, at 10:03 a.m. in room 

SD–366, Dirksen Senate Office Building, Hon. Jeff Bingaman, 

chairman, presiding. 

OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. 

SENATOR FROM NEW MEXICO 

The CHAIRMAN. OK, why don’t we get started. Thank you all for 

being here. 

The purpose of this hearing is to focus on the progress that the 

Department of Energy has made in implementing the Recovery Act 

in the year that has elapsed since it was passed. This is an important effort, both to create high quality jobs in the near term and 

also to begin to reverse the course that we’ve been on of under investing in our country’s competitiveness in clean energy technology. 

While we all feel the urgency to get these programs moving and 

to generate jobs, I’m glad to see that there’s been some real 

progress in recent months on that front. It’s also important that we 

be sure these investments are the right investments. So, I look forward to hearing the testimony today on both of those issues. 

The scale of the investment that the Department has been asked 

to manage is very substantial. In many cases, programs were either never funded before or were funded at a level that is a fraction 

of what was provided in the Recovery Act. This was a particular 

challenge for State and local officials who faced constrained local 

budgets even as they tried to scale up their management of new 

Federal funds, and the reporting and accountability requirements 

that went with those new Federal funds. 

I believe the care that the Department and its partners in the 

States have exercised in setting up these programs will pay great 

dividends over the long term. The energy infrastructure needs of 

the country are so substantial that I think we can only regard 

these investments as a downpayment. If we can get the market incentives as they should be and provide some of the initial support 

that’s needed, I believe there are substantial private-sector funds 

ready to be invested in these areas. 

We’ve heard testimony before here in the committee that the 

scale of potential for investments in the energy sector dwarfs previous investments that were made in the information sector or in 
2 

biotechnology. Those are 2 areas where the United States has led 

the world. So, if we’re to similarly lead in clean energy and reap 

the associated benefits in economic and energy security, it will take 

a sustained commitment and a urgency of purpose to do that. I 

think the Recovery Act has had that as one of its purposes, and 

we’re anxious to hear how that’s coming and what to expect in the 

future. 

So, let me defer to Senator Murkowski for her comments, and 

then I’ll introduce our witnesses. 

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

FROM ALASKA 

Senator MURKOWSKI. Thank you, Mr. Chairman. 

Welcome, to all of our witnesses this morning. I appreciate you 

being here and your expertise in this area. 

As many of you know, I did not support the American Recovery 

and Reinvestment Act last year. During the debate on it I detailed 

some of the concerns that I had at that time, including those that 

are related to the energy sector, that it was not timely, targeted, 

and temporary, as we had hoped, that green jobs, that shovel-ready 

projects would not materialize as promised, and that unprecedented Federal spending was not the only way to overcome our economic challenges. I had some criticism. 

That criticism remains, as recently as just 2 weeks ago, when we 

came to that first anniversary marker. I think it’s fair to say that 

there’s still some pretty wide division over whether the bill is intending what we had hoped it would accomplish. 

But, we’re not here to debate that. That’s a good thing. We’re 

here to review just one part of it, and that is a focus on the Department of Energy. The DOE received nearly $37 billion. I think this hearing gives 

us an opportunity to determine whether those funds are being disbursed in a timely and in an effective manner. 

I will have say though, that I have been disappointed, with the 

Department’s record, as we understand that DOE has just spent 

out just over 7 percent of its funding in the past year. The Web 

page ProPublica developed this information. You have to look all 

the way down to the bottom of the page to get to the DOE, because 

it’s in next-to-last place amongst the Federal agencies. 

Now, I’m sure we’ll hear this morning that it’s bureaucratic 

delays that have hampered spending. To no one’s surprise, it appears that much of that delay can be pointed back to those of us 

here and the decisions made in Congress. The joke that, ‘‘Congress 

does cut the red tape, but it cuts it sideways.’’ 

With regard to weatherization, we had a tried-and-true program 

that already exists within DOE. We haven’t seen the splash that 

we anticipated. Some areas where spending is occurring, of course, 

have come under fire. There’s an article, in this morning’s Post, 

where several of my Democratic colleagues have sided specifically 

to these wind energy projects and the funds going overseas or to 

foreign countries. 

Researchers have found that 80 percent of the renewable energy 

grants have been awarded to foreign companies, including nearly 

200 million awarded to a bankrupt Australian company that built 
3 

a Texas wind farm using turbines made by a Japanese company. 

It’s things like this, of course, that get people agitated, excited, and 

clearly very emotional about it. 

The CBO’s estimated spend-out rates, which projected a very low 

spend-out last year, increases to just 22 percent this fiscal year. I’m 

also very mindful that the stimulus effectiveness depends not only 

how much money is spent, but when it’s spent. Some of our Nation’s best economists have told us, over and over and over, that 

time is of the essence. They’re right. We’ve seen the cost of last 

year’s stimulus balloon by 75 billion, and I believe that is at least 

partially because of the slow pace of the expenditures that we see, 

and maybe more particularly in agencies like DOE. 

As we move forward with jobs, agenda packages here in the Congress, unemployment right near 10 percent, we’re seeing new legislation that attempts to further create jobs. Here in this committee, 

this is going to be an interesting debate. We’re more than a year 

into a program that was pitched as capable of getting the economy 

back on track, but only 7 percent of the timely, targeted, temporary 

funding given to the Department of Energy has actually been 

spent. 

So, Mr. Chairman, I really appreciate the hearing this morning. 

I think it comes at a very critical juncture in our discussions. I 

really do hope that we will hear some good news from folks today, 

because, before Congress commits to new spending, even greater 

deficits, we need to make sure that we’ve learned from our recent 

experiences in order to make the best possible decisions for our 

country and for our constituents. 

With that, again I thank the witnesses, and I look forward to the 

opportunity for questions. 

The CHAIRMAN. Thank you very much. 

Let me just introduce our witnesses briefly. 

Matthew Rogers is the senior advisor to the Secretary of Energy 

for Recovery Act Implementation. We very much welcome Matt 

here. He’s been a witness several times before our committee in the 

past, and we welcome him back. 

Patricia Dalton is the managing director of the Natural Resources and Environment section at the Government Accountability 

Office. 

Thank you for being here. 

Michele Nellenbach is director of the Natural Resources Committee with the National Governors Association. 

Thank you for being here. 

Malcolm Woolf is the director of the Maryland Energy Administration. Also, he is vice chair of the National Association of State 

Energy Officials, in Annapolis. His location is in Annapolis. 

All right. So, why don’t we start, and just go across the table 

there. If each of you could take 5 or 6 minutes and tell us the main 

points you think we need to understand, that would be most helpful. Then we will, of course, put your entire statements in the 

record. 

Matt, please go right ahead. 
4 

STATEMENT OF MATT ROGERS, SENIOR ADVISOR TO THE 

SECRETARY, DEPARTMENT OF ENERGY 

Mr. ROGERS. Thank you very much. Chairman Bingaman, Ranking Member Murkowski, members of the committee, thank you for 

the opportunity to appear before you today to report on the 

progress of the American Recovery and Reinvestment Act within 

the Department of Energy. I’ll make my opening remarks brief. I 

have submitted a more detailed statement for the record. 

As this committee knows, the Department of Energy’s recovery 

program focuses both on creating high quality jobs quickly and accelerating the pace of innovation to lay the foundation for longterm economic growth and prosperity. To support this work, Congress entrusted the Department with $36.7 billion in appropriations. The Recovery Act also directed DOE to work with Treasury 

to underwrite more than $5 billion in clean energy tax credits and 

grants. These funds, combined with cost share and leverage, will 

support more than $100 billion in projects. 

During the last full recipient reporting period, the October 

through December 2009 period, DOE Recovery Act programs directly created or saved 16,300 jobs. Beyond those jobs reported in 

FederalReporting.gov, subcontractors generated more than 4,000 

additional jobs and grant recipients reported an additional 12,000 

jobs. As spending accelerates this year, we expect that tens of thousands of additional jobs will be created or saved under DOE Recovery Act programs. 

DOE has been focused on moving the money out the door quickly 

to create jobs and spur economic recovery. We have used competitive processes to select exceptional projects. We have increased 

transparency. We are building a culture of accountability within 

DOE, based on the mantra, ‘‘Accountability Every Day.’’ 

DOE’s $36.7 billion in appropriations came in 4 different categories, each with a different time horizon and a different contracting vehicle. DOE received $7.5 billion in contracts, largely for 

the Office of Science and the Office of Environmental Management, 

to accelerate a set of projects, many of which were already underway. Today, we’ve obligated $6.8 billion of these funds and outlaid 

$1.6 billion. 

We also received $11.2 billion in formula grants for States, counties, cities, and tribes through the Recovery Act. We’ve obligated 

$10.6 billion of these funds, and we are now supporting our partners as they spend these funds through local contracting processes. 

The State weatherization programs have contracted more than half 

of their funds and have outlaid more than $590 million as of this 

morning. 

The more project-based State Energy programs have contracted more the $770 million of their funds, and we have reimbursed $64 

million for completed projects under the State Energy programs. The third block of funds includes $14 billion in competitive 

grants. Congress asked us to compete these funds to find the very 

best projects in the country. This required us to work through the 

funding opportunity, to application review, to merit selection process. These were very highly competitive processes, where we were 

heavily oversubscribed—5 to 1, on average. So, we were only able 

to select the best 20 percent of the projects who applied. We’ve 
5 

made over 90 percent of the selections under the competitive grant 

areas, and we’ve obligated $8 billion of these funds to date. 

The loan and borrowing authority take the longest to move, because in those contexts we have to underwrite the full value of the 

project, not just the credit subsidy that shows up in the appropriations. In our loan programs, we’ve issues more than $2 billion in 

conditional loan commitments to renewables, out of more than $18 

billion in total loans that the Department has made in the last 

year. 

In addition, we supported Treasury in selecting 183 projects in 

43 States to receive $2.3 billion in renewable energy manufacturing 

tax credits, a really important program to build clean-energy, hightechnology manufacturing in the United States. We’ve also evaluated over $2.6 billion in grants in lieu of tax credits for 393 renewable generation projects that have been finished thus far. 

We are ahead of where we expected to be on selections, on obligations, and on job creation. We are on track with where we expected 

to be in contracting. We are slightly behind where we planned to 

be on an outlays basis, based on the master plan that we developed 

at the beginning of this program. 

Over the next 6 months, we expect to see an accelerating rate of 

job creation, contracting, and reimbursements. We are working 

with more than 5,000 individual recipients now to ensure that each 

delivers on their commitments to create jobs and meet their project 

milestones on time and on budget. 

As we put people back to work, DOE’s Recovery Act programs 

are making our homes and buildings more energy efficient. We’re 

expanding U.S. high technology, clean-energy manufacturing and 

generation. We’re modernizing our electric grid. We’re transforming 

the transportation sector. We’re accelerating the cleanup of legacy 

cold-war nuclear sites. We’re laying the foundation for the United 

States to take a leadership role in a global clean energy economy. 

I thank you for the opportunity to testify today, and I look forward to answering your questions. 

[The prepared statement of Mr. Rogers follows:] 

PREPARED STATEMENT OF MATT ROGERS, SENIOR ADVISOR TO THE SECRETARY

DEPARTMENT OF ENERGY

Chairman Bingaman, Ranking Member Murkowski, and Members of the Committee, thank you for the opportunity to appear before you today to report on the 

progress of ‘‘The American Recovery and Reinvestment Act’’ (Recovery Act). 

RECOVERY ACT IMPACT

One year after the passage of the Recovery Act, approximately 2 million jobs have 

been created or saved thanks to the Act’s impact on hiring in the private sector, 

by local and state governments and by non-profits. The Recovery Act’s $787 billion 

came in three pieces: roughly a third in tax cuts directly to the American people, 

another third in emergency relief for hard-hit families, businesses, and state governments, and a third in investments in the infrastructure and technology, creating 

platforms for economic growth. 

The Department of Energy’s Recovery program focuses on the third leg, accelerating innovation to lay the foundation for long term economic growth. To support 

this work, Congress entrusted the Department of Energy with $36.7 billion in appropriations and $6.5 billion in power marketing administration borrowing authority. The Recovery Act also directed DOE to work with Treasury to provide more 

than $5 billion in clean energy manufacturing tax credits and generation tax grants. 
6 

These funds combined with private cost share and leverage will support more than 

$100 billion in projects. 

The Recovery Act investments in energy are putting Americans to work, helping 

to build a clean energy economy, accelerating energy innovation, and reducing our 

dependence on oil. During the last full recipient reporting period (Oct-Dec 2009), 

DOE Recovery Act programs directly created or saved over 16,300 full-time equivalents (FTEs) as reported by recipients. Contractors have reported another 4,000 

FTEs have been created or saved at the subcontractor level (not required to report 

to FederalReporting.Gov) and more still down the supply chain. Meanwhile, Section 

1603 programs which provide grants in lieu of tax credits for renewable energy 

projects are creating a self-reported 12,633 jobs. As spending accelerates this year, 

we expect that tens of thousands of additional jobs will be created or saved under 

DOE Recovery Act programs. 

As we put people back to work, DOE’s Recovery Act is making our homes and 

buildings more energy efficient, expanding US high technology clean energy manufacturing and generation, modernizing our power infrastructure, transforming the 

transportation sector, accelerating the clean-up of legacy cold war nuclear sites, and 

laying the foundation for the next generation of technological and scientific innovation. 

Our programs are providing benefits across sectors and across the country. DOE’s 

formula grant selections include over 2,300 state and local governments in all fifty 

states and territories to receive nearly $11 billion of Recovery Act funds. Native 

American tribes in over 575 towns have been selected for nearly $55 million in energy efficiency conservation block grants and an additional $27.5 million for a combination of Smart Grid, Weatherization and renewable energy projects. 200 small 

businesses have received nearly $1 billion in grants and $2 billion in loans. Educational institutions in 43 states have been selected for over $600 million to support 

200 projects focused on innovation. 

DOE IMPLEMENTATION STATUS

From the first day after the Recovery Act was signed into law, DOE has been focused on moving the money out the door quickly to create jobs and spur economic 

recovery. We have used competitive processes to select exceptional projects. We have 

streamlined DOE operating processes across the board. We are providing unprecedented transparency and insist on clear accountability every day. We are partnering 

with the private sector to make a meaningful down-payment on the nation’s clean 

energy future. 

DOE’s $36.7 billion in appropriations came in four different categories each with 

a different time horizon. DOE received $7.5 billion in the form of contracts for the 

expansion and acceleration of Office of Science and the Office of Environmental 

Management projects. To date, $6.8 billion of contract funds have been obligated. 

Through the Recovery Act, we also received $11.2 billion in formula grants for 

states, counties, cities, territories, and tribes through the Recovery Act. We have obligated $10.6 billion of the $11.2 billion and have accelerated full obligation of these 

formula awards, using an unprecedented SWAT team process, to enable the recipients to work through their local competitive selection processes quickly. The third 

block of funds includes $14 billion in competitive grants. We have obligated $8 billion of these funds to date. These highly competitive processes were over-subscribed 

with strong projects, 5:1 on average, presenting us with the challenge and the opportunity to select the best 20%, using over 4,500 reviewers. Finally, the loans and 

borrowing authority take the longest to move as we finance a large portion of the 

value of the project in the loan guarantee program and the power marketing administration borrowing programs. 

In addition, we are providing support to the Treasury in allocating $2.3 billion in 

renewable energy manufacturing tax credits. We have also been continuously reviewing renewable energy generation grant in-lieu of tax credit applications for 

Treasury, recommending over $2.5 billion in grants for finished projects thus far. 

Working across these funding categories we have made substantial progress over 

the last year. We are working with more than 3,500 recipients who have been selected to receive over $31.4 billion in DOE-funded contract and grant funds. We 

have obligated $25.7 billion of the $31.4 billion in funds awarded, and supported 

Treasury in awarding $4.9 billion in tax credits and payments in lieu of tax credits. 

In our loan program, we have issued more than $2.1 billion in conditional loan commitments. We have paid out $2.5 billion to recipients of DOE’s appropriated ARRA 

funds, while Treasury has provided recipients an additional $2.6B in the form of 

Section 1603 payments in-lieu of tax credits. These funds are being matched with 

nearly $25 billion in private capital. We are ahead of where we expected to be on 
7 

selections, obligations, and job creation. We are slightly behind where we expected 

to be on payments based on our plans from last spring. 

We plan to announce the remaining contract and grant selections before the end 

of June. We are now working actively with our more than 3,500 recipients to accelerate costing and ensure each delivers on project goals and commitments, on time 

and on budget. We are confident that the next six months will be the period of most 

rapid job creation for Department of Energy Recovery Act programs. 

The remainder of this statement provides detail on each energy Recovery Act investment area in turn. 

SAVING CONSUMERS MONEY AND IMPROVING THE ENVIRONMENT THROUGH ENERGY

EFFICIENCY

Under the Recovery Act, we are making the largest single investment in home energy efficiency in U.S history. For low-income families that are hit hardest by high 

utility bills, the Recovery Act provides $5 billion for the Weatherization Assistance 

Program, which funds local agencies to perform home energy audits and weatherization services. We are working closely with our partners to deliver this vital program. 

Each state has made clear performance commitments and we have worked directly 

with the Governor’s office in every state towards a shared plan to reach these performance targets. We have taken steps to address barriers that we have identified, 

as well as issues raised by GAO and the DOE Inspector General. During January, 

states significantly increased their spending and the number of homes weatherized 

under the Recovery Act, moving monthly output to a preliminary estimate of 17,000 

units and we are working with the community action agencies towards meeting 

their full run rate commitments by the end of March. The Department undertook 

a broad-based restructuring program to address the initial challenges in program 

implementation. As a result of these efforts, states reported that they weatherized 

more than 125,000 homes in 2009, including over 25,000 with Recovery Act funds 

and based on this reporting are on pace to deliver at least 250,000 homes with Recovery Act funds this year. In fact, since September 2009, we have tripled the pace 

of Recovery Act-funded home weatherization. Still, our goal is to improve further, 

reaching run rate performance goals by the end of March 2010 and we are moving 

forward with additional new measures that should increase our pace of weatherization. The Department will remain focused on providing each of the states and local 

agencies with the resources they need to quickly and effectively implement this program. We expect to weatherize nearly 600,000 homes with Recovery Act funds by 

March of 2012. 

The Recovery Act also includes $3.1 billion for DOE’s State Energy Program and 

$300 million to states for energy efficient appliance rebates, showcasing cooperation 

between federal and state governments. The state energy programs are sponsoring 

very innovative projects. Ohio is using some of their state energy grant money to 

increase industrial energy efficiency, helping companies reduce cost and become 

more competitive in the market. Idaho is improving energy efficiency in 210 K-12 

schools across the state, putting money back into school budgets. The state energy 

programs appear to be ahead of their plan to ensure more than $1 billion of their 

$3.2 billion is contracted by the end of March. All of the states already have their 

appliance rebate funds and most have completed their program offerings, helping 

consumers improve appliance efficiency significantly. 

The Recovery Act provided $3.2 billion to fund the Energy Efficiency and Conservation Block Grant program for the first time, which this committe was instrumental in creating. This program will help over 2,300 cities, counties, states, territories and Indian tribes to develop their own efficiency programs, including: building 

code development, energy audits and retrofits, efficient public lighting and landfill 

gas capture. Standing up a new program always takes a little more effort-it took 

a dedicated 125 person SWAT team in the basement of DOE to process all the new 

EECBG applications, working with recipients directly on the phone to ensure each 

application met the statutory requirements and to minimize bureaucratic back and 

forth. This hard work will pay dividends in the coming months, as states and communities bring innovative projects on line. We are particularly excited about the 

competitive portion of the energy conservation block grant program, known as Retrofit Ramp up. The leading projects under this program will define new approaches 

to make energy efficiency services available to all Americans at significantly lower 

cost. 

These formula grant programs have created opportunities for innovation in how 

the Department of Energy works. Our expanded call center has handled almost 

10,000 calls from formula grant recipients, guiding people through the process. We 

now have dedicated account representatives for each state, providing service con-
8 

1Manufacturers Ford, Nissan, Tesla and Fisker are funded by the Advanced Technology Vehicle Manufacturing Program, which is not part of the Recovery Act. 

tinuity. We collaborate with the national weatherization and state energy organizations weekly, building a shared view on performance. Each innovation not only 

moves this program faster every day, but better positions DOE for long-term base 

performance as well. 

DEVELOPING THE STRONGEST RENEWABLE ENERGY INDUSTRY IN THE WORLD

Recovery Act investments and incentives totaling $23 billion combined with more 

than $40B in private capital are putting us on track to meeting our goal of doubling 

both renewable electricity generating capacity (excluding conventional hydropower) 

and advanced energy manufacturing by 2012. Recovery Act programs are also quickly expanding high technology, clean energy manufacturing in the U.S. 

We are funding a range of renewable energy generation technologies, including 

wind, solar, and geothermal. DOE has supported Treasury in implementing the 

1603 program, which has provided $2.6 billion in 1603 payments to 392 renewable 

energy generation projects across the country. By partnering with private industry, 

Treasury and DOE have already funded enough new renewable energy projects 

through these payments to power over one million homes, enough clean energy to 

power the homes of everyone living in Boston, Seattle, Atlanta, Kansas City, and 

Cincinnati combined. These projects have already been completed. 

DOE has also supported Treasury in awarding $2.3 billion in tax credits for 183 

clean energy manufacturing projects in 43 states under the 48C program. The manufacturing capacity supported by these grants will produce solar panels, wind turbines, geothermal equipment, nuclear plant components, and energy efficient building products, putting the US on track to double our capacity to manufacture these 

high technology, clean energy components by 2012. These facilities represent some 

of the premier companies in renewable manufacturing. These projects will generate 

more than 17,000 jobs. This investment will be matched by as much as $5.4 billion 

in private sector funding likely supporting up to 41,000 additional jobs.The interest 

was extraordinary and the program was oversubscribed by a ratio of more than 3 

to 1. The Administration has called on Congress to provide an additional $5 billion 

to expand the program. Because there is already a deep pipeline of projects, these 

funds could be deployed quickly to create jobs and support economic activity. 

We have announced more than $2 billion in conditional commitments to build renewable energy and grid electrification projects in the US under the Recovery Act 

including Solyndra (CA), Nordic (ID), and Beacon (NY), and Brightsource (CA). 

These conditional commitments have proven very effective in bringing private capital off the sidelines and into the market at scale. Solyndra, Nordic, and Beacon are 

all in construction. 

We’re also investing over $600 million in grants in the research, development and 

deployment of renewable energy. For example, $24 million in Recovery Act funding 

has gone to three universities (in IL, ME, and SC) around the country to improve 

wind turbine performance and reliability. The Solar Incubator is providing $10 million in Recovery Act funds to help 4 companies in North Carolina and California 

lower the cost and improve performance of promising PV technologies. We are 

awarding up to $81 million to 45 geothermal projects in 20 states developing innovative approaches to enhanced geothermal systems, potentially unlocking vast 

amounts of baseload power. 

TRANSFORMING THE TRANSPORTATION SECTOR

The Recovery Act provided $3.4 billion to help develop the next generation of vehicles and the fueling infrastructure to support these innovative new technologies. 

This is in addition to $8.4 billion so far from our Advanced Technology Vehicle Manufacturing loan program outside the Recovery Act. These projects aim to transform 

the transportation sector by creating competition among electrification, natural gas 

vehicles, advanced biofuels, hydrogen and improvements in internal combustion engine efficiency. 

Over the next six years, we expect to make three new electric vehicle plants— 

the first ever in the United States—and 30 new battery and other electric-vehicle 

component manufacturing plants fully operational. We’ve made investments in battery and component suppliers like A123, Enerdel and Cellgard, as well as manufacturers1 like Nissan, Tesla, Fisker and Ford to make advanced vehicles in the United 

States. By 2015, these plants will be expected to have capacity to produce 250,000 

electric-drive cars and batteries to power 500,000 plug-in hybrid electric vehicles. 
9 

We are also building the infrastructure to support these vehicles, including more 

than 10,000 charging locations in a dozen cities. We’ve selected $300 million in Recovery Act grants to 25 Clean City coalitions of public and private fleets, of which $260 million has been obligated to date. These 

grants significantly expand city-and county-led efforts to reduce petroleum consumption and deploy high-efficiency cars, trucks and buses that run on alternative fuels. 

The 25 projects support over 9,000 alternative-fuel vehicles, 70 percent of which will 

run on natural gas, mainly for heavy-duty trucks. 

At the same time, Recovery Act investments will support the development and de- ployment of the next generation of biofuels. Over $600 million in Recovery Act 

grants will support 19 pilot, demonstration, and commercial-scale bio-refineries. 

These facilities will convert biomass into fuels and chemicals that otherwise would 

be produced from oil, while creating jobs and raising farm incomes in rural communities across the country. Before these investments, the development of an advanced 

biofuels industry was at a virtual standstill as numerous facilities at the pilot stage 

had faltered during the economic downturn. More than $100 million from the Recovery Act, plus an additional $87 million in 

base budget funding, will go to improving the efficiency of heavy-duty trucks and 

passenger vehicles. With private sector cost-sharing, this will support nearly $375 

million in total investment, positioning the US as a leader in heavy duty fuel efficiency and reducing transportation costs across the country. 

INVESTING IN A 21ST-CENTURY GRID INFRASTRUCTURE

Our electrical grid is a critical piece of infrastructure, but today it uses centuryold technology. It wastes too much energy, it costs us too much money, and it’s too 

susceptible to outages and blackouts. Just as President Eisenhower’s investment in 

an interstate highway system revolutionzed the way Americans travel, our Recovery 

Act investments in the smart grid and new transmission lines is revolutionizing how 

we produce, transport and use energy. The more than $4 billion in Recovery Act smart grid investments are being matched by more than $5.5 billion in private sector funding, supporting 132 projects 

that will reduce electricity costs, increase reliability, and give consumers more 

choice and control over their energy use. By 2015, we expect a combination of public 

and private investment to lead to the deployment of 18 million smart meters nationally (more than double the number currently in service). The Recovery Act is also 

funding the installation of nearly 1,000 sensors on the electric transmission system 

to improve reliability and security, for the first time providing visibility and control 

across the entire U.S. transmission system. 200,000 smart transformers and nearly 

700 automated substations will allow power companies to replace units before they 

fail, and respond more effectively to restore service when bad weather knocks down 

power lines. These are important first steps toward the modernization of our power 

infrastructure. 

SUPPORTING THE GOAL THAT CARBON CAPTURE AND SEQUESTRATION (CCS) CAN BE

ECONOMICAL IN 8-10 YEARS

With $3.4 billion from the Recovery Act ,we are making unprecedented investments in carbon capture and sequestration technologies, attracting approximately 

$7 billion in private capital. Projects we are supporting are projected to capture 

more than 10 million tons of CO2 annually by 2015 and put us on a path to demonstrating that carbon capture and sequestration can be economical by 2020. Realizing the promise of low-carbon electricity from coal requires an economical solution 

to capturing CO2. The leading processes today are amine and ammonia-based proc- esses that cost $60 per ton and have a very significant energy penalty, which has 

prevented them from reaching widespread commercial implementation. New CO2

capture technologies, using different solvents, adsorbents and absorbents, hold the 

promise to significantly reduce the energy penalty, cut capital costs and reduce the 

cost per ton by more than half. Our innovative grants are funding entirely new approaches such as synthetic enzymes or conversion of CO2 into valuable fuels or 

chemicals, that could reduce the cost even more. 

CLEANING UP THE LEGACY COLD WAR NUCLEAR SITES

DOE also has the important role of cleaning up sites across the country associated 

with the legacy of our nation’s nuclear weapons program. DOE’s Office of Environmental Management has allocated $6 billion in Recovery Act funding to ongoing 

cleanup work at 17 sites. The stimulus funding is being used to accelerate cleanup 

work to reduce the lifecycle cost of EM’s cleanup effort. These projects have permanently disposed of over 1,300 cubic meters of transuranic waste and nearly 11,000 
10 

cubic meters of low-level waste, and over 400,000 square feet of contaminated facility demolition. The EM program’s Recovery Act goal is to help reduce the footprint 

of land and structures requiring cleanup by 40 percent by 2011. 

EM and site prime contractors have obligated approximately $700M in Recovery 

Act Small Business contracts. In fiscal ear 2009 EM Prime Small Business contractors were awarded about $396 million which exceeded EM’s goal of 4.8 percent 

($288M) of EM Recovery Act funds by achieving 136 percent of the goal. In fiscal 

year 2010, EM anticipates additional Small Business contracts to both prime contractors and subcontractors. 

These projects have already created nearly 8,000 direct jobs as of December 31, 

2009 at the prime and sub-contractor level, in communities like Hanford Washington, Savannah River South Carolina and Oak Ridge Tennessee. The Environmental Management projects were among the first to start and more than 90% of 

the funds have been obligated and almost 25% has been spent. 

MAINTAINING U.S. LEADERSHIP IN SCIENCE AND TECHNOLOGY

The Recovery Act is accelerating the pace of scientific and technological innovation in the energy sector, laying the foundation for sustained future economic 

growth. There is widespread agreement in the economic community that innovation 

is a primary driver of long-term economic growth and prosperity. Historically, however, energy has been one of the slowest sectors to innovate, taking decades to 

change. Nevertheless, when it occurs, the economic impact from energy innovation 

has been significant. Energy innovation in production and in end-use technologies 

has been a key ingredient in US economic growth for the last century. Energy innovation is essential to address global energy security and climate change concerns on 

time and on budget. Innovation also drives job creation. Long term, high quality jobs 

stay in industries where there is a high degree of innovative content. 

For instance, the Recovery Act included $400 million for the Advanced Research 

Projects Agency—Energy (ARPA-E), modeled after the Defense Department’s famed 

DARPA. DARPA is widely credited for inventing, among other things, the Internet. 

ARPA-E will fund high-risk, high-reward energy technology research. Not every 

project will succeed, but those that do have the potential to radically transform our 

energy system. 

Potentially game-changing research funded through ARPA-E so far includes: Gridscale liquid metal batteries that could cut battery costs by 90% while doubling energy density; Direct solar fuels—photosynthetic organisms that produce hydrocarbons instead of carbohydrates, combining CO2, sun and water to produce ultraclean gasoline; and Super-high-efficiency small wind turbines, leveraging advanced 

aerospace designs and materials to reduce the cost, improve the reliability and expand the range of wind energy. The projects we have funded under the Recovery 

Act—and the many great projects we have not been able to fund—highlight the opportunity for the United States to accelerate clean energy innovation and take a 

global leadership position in clean energy industries globally. 

The Office of Science has invested $1.6 billion to advance basic research (e.g. 17 

new energy frontier research centers, the world’s fastest super computer at Oak 

Ridge), to expansion science infrastructure (e.g. national synchrotron light source at 

Brookhaven, a new Continuous Beam facility at TJ lab, new battery user facilities 

at Argonne) and to increase funding for promising early career scientists. Science 

is almost 90% obligated and is expected to disburse over 20% of their funds when 

the next set of data is reported. 

The next six months will expect to see an accelerating rate of job creation, contracting, and reimbursements. We are working with more than 5,000 recipients to 

deliver on their commitments to job creation and meet their agreed project milestones, on time and on budget. Our task remains to knock down barriers to ensure 

each recipient can perform and to hold our funding partners accountable to deliver 

on their commitments. We have great projects at every level that are contributing 

to job creation and economic growth now and laying the foundation for long-term 

US leadership in these industries. 

The CHAIRMAN. Thank you very much. 

Ms. Dalton, go right ahead. 
11 

STATEMENT OF PATRICIA A. DALTON, MANAGING DIRECTOR, 

NATURAL RESOURCES AND ENVIRONMENT, GOVERNMENT 

ACCOUNTABILITY OFFICE 

Ms. DALTON. Thank you, Mr. Chairman, Ranking Member Murkowski, members of the committee. 

I’m pleased to be here today to discuss the status of DOE’s implementation of programs under the Recovery Act. My statement 

today is based on 2 recent GAO reports, and will focus on the extent to which DOE has obligated and spent Recovery Act funds and 

the factors that have affected its ability to select and start Recovery Act projects. The Recovery Act provided DOE more than $43 billion, including 

6.5 billion in borrowing authority. As of February 28, DOE reported 

it had obligated $25.7 billion, or 70 percent of its spending authority; and had reported expenditures of $2.5 billion, 7 percent of its 

expenditure authority. 

The percentage of Recovery Act funds obligated varied widely 

across DOE offices. Several program offices had obligated more 

than 85 percent of the Recovery Act funds, as of February 28, while 

other program offices had obligated less than a third of their funds. 

It should be noted that, in some of these cases, awards and obligations were not expected until at least 2010. The percentage of Recovery Act funds spent also varied across DOE offices, but to a lesser extent than the funds obligated. None of the offices reported expenditures of more than a third of their Recovery Act funds, and 

some reported zero. 

The Federal requirements and other factors affected the timing 

of project selection and starts. In particular, DOE reported that the 

Davis-Bacon and environmental requirements slowed some project 

selection and starts, while State officials also reported to us that 

the National Historic Preservation Act had an impact. 

DOE’s Weatherization Assistance Program became subject to 

Davis-Bacon requirements for the first time under the Recovery 

Act. In general, the States we reviewed used only small percentage 

of their available Recovery Act funds in 2009. Davis-Bacon requirements contributed to this low spend rate. Many States chose to use 

funds from their annual appropriation, which were not subject to 

Davis-Bacon, before beginning using their Recovery Act funds. The 

Department of Labor issued its wage determinations for residential 

weatherization workers in early September. Many States also waited for these determinations before beginning to use Recovery Act 

funds. 

DOE officials told us that the timing of certain projects may also 

be slowed by environmental requirements. DOE has taken steps to 

mitigate potential delays; nevertheless, they told us that several offices, including the Loan Guarantee and Fossil Energy Offices, will 

likely have projects that have a significant environmental impact, 

and therefore will require environmental assessments or impact 

statements. 

Several State officials told us that historic preservation requirements also affect Recovery Act project selection and starts. For example, in Michigan, officials estimated that 90 percent of the home 

units scheduled to be weatherized were going to need an historic 

review. In November, they did sign an agreement with the State 
12 

Historic Preservation Office that is designed to expedite the review 

process. 

Officials also told us that factors other than Federal requirements have affected the timing of project selection and starts, including the newness of programs, staff capacity, and State and 

local issues. Because some Recovery Act programs were newly created, in some cases officials needed to establish procedures and 

provide guidance before implementing projects. Officials from DOE 

stated that they needed to hire an additional 550 people both permanent and temporary—to carry out Recovery Act project work. 

Some State officials told us that they experienced heavy workloads 

as a result of the Recovery Act, which impaired their ability to implement programs. Smaller localities, which are often rural, told us 

that they faced challenges because of the lack of staff to understand, apply for, and comply with the Recovery Act requirements. 

Officials from the National Association of Counties have told us 

that some localities turned down Recovery Act funds to avoid the 

administrative burdens associated with the Act’s reporting requirements. The effects of the economic recession on States’ budgets, 

also had an effect, in that, for example, State hiring freezes and 

furloughs their ability to implement new programs. 

GAO is continuing to review energy programs, including the reporting systems. With respect to recipient reporting, DOE has established a data quality assurance plan to assist in identifying reporting errors, and we are reviewing that system. In addition, we 

have several ongoing engagements that are looking at other Energy 

Department programs, including the Loan Guarantee Program, and 

environmental management for nuclear waste cleanup. 

Mr. Chairman, that concludes my statement. I’d be happy to take 

any questions. 

[The prepared statement of Ms. Dalton follows:] 

PREPARED STATEMENT OF PATRICIA A. DALTON, MANAGING DIRECTOR, NATURAL

RESOURCES AND ENVIRONMENT, GOVERNMENT ACCOUNTABILITY OFFICE

WHY GAO DID THIS STUDY

The American Recovery and Reinvestment Act of 2009 (Recovery Act)-initially estimated to cost $787 billion in spending and tax provisions-aims to promote economic recovery, make investments, and minimize or avoid reductions in state and 

local government services. The Recovery Act provided the Department of Energy 

(DOE) more than $43.2 billion, including $36.7 billion for projects and activities and 

$6.5 billion in borrowing authority, in areas such as energy efficiency and renewable 

energy, nuclear waste clean-up, and electric grid modernization. 

This testimony discusses (1) the extent to which DOE has obligated and spent its 

Recovery Act funds, and (2) the factors that have affected DOE’s ability to select 

and start Recovery Act projects. In addition, GAO includes information on ongoing 

work related to DOE Recovery Act programs. This testimony is based on prior work 

and updated with data from DOE. 

RECOVERY ACT

Factors Affecting the Department of Energy’s Program Implementation 

What GAO Found 

As of February 28, 2010, DOE reported it had obligated $25.7 billion (70 percent) 

and reported expenditures of $2.5 billion (7 percent) of the $36.7 billion it received 

under the Recovery Act for projects and activities. For context, as of December 31, 

2009, DOE reported that it had obligated $23.2 billion (54 percent) and reported expenditures of $1.8 billion (4 percent). The percentage of Recovery Act funds obligated varied widely across DOE program offices and ranged from a high of 98 per-
13 

cent in the Energy Information Administration to a low of 1 percent for the Loan 

Guarantee Program Office. None of DOE’s program offices reported expenditures of 

more than a third of their Recovery Act funds as of February 28, 2010. 

Officials from DOE and states that received Recovery Act funding from DOE cited 

certain federal requirements that had affected their ability to implement some Recovery Act projects. For example: 

• Davis Bacon Requirements.—Officials reported that Davis-Bacon requirements 

had affected the start of projects in the Weatherization Assistance Program because the program had previously been exempt from these requirements. • National Environmental Policy Act (NEPA)—. DOE officials told us that NEPA 

may affect certain projects that are likely to significantly impact the environment, thereby requiring environmental assessments or environmental impact 

statements. • National Historic Preservation Act (NHPA).— Officials from the Michigan Department of Human Services told us that about 90 percent of the homes scheduled to be weatherized under the Weatherization Assistance Program would 

need a historic review. 

Additionally, DOE and state officials told us that other factors also affected their 

ability to quickly select or start projects. For example: 

• Newness of programs.—In some cases, because some Recovery Act programs 

were newly created, officials needed time to establish procedures and provide 

guidance before implementing projects. • Staff capacity.—DOE officials also told us that they experienced challenges in 

hiring new staff to carry out Recovery Act work. Also, District of Columbia officials told us they needed to hire 6 new staff members to oversee and manage 

the weatherization program. • State, local, or tribal issues.—The economic recession affected some states’ 

budgets, which also affected states’ ability to use some Recovery Act funds, such 

as difficulty providing matching funds. The American Recovery and Reinvestment Act of 2009 (Recovery Act)-initially estimated to cost $787 billion in spending and tax provisions-aims to promote economic recovery, make investments, 

and minimize or avoid reductions in state and local government services. The 

Recovery Act provided the Department of Energy (DOE) more than $43.2 billion, including $36.7 billion for projects and activities and $6.5 billion in borrowing authority, in areas such as energy efficiency and renewable energy, nuclear waste clean-up, and electric grid modernization. 

Mr. Chairman and Members of the Committee: 

I am pleased to be here today to discuss the status of the Department of Energy’s 

(DOE) implementation of programs funded under the American Recovery and Reinvestment Act of 2009 (Recovery Act). Congress and the administration have fashioned a significant response to what is generally considered to be the nation’s most 

serious economic crisis since the Great Depression. The Recovery Act is intended to 

promote economic recovery, make investments, and minimize or avoid reductions in 

state and local government services. Enacted on February 17, 2009, the act was a 

response to the economic recession at a time when the jobless rate was approaching 

8 percent. In early 2009, the Congressional Budget Office estimated that the Recovery Act’s combined spending and tax provisions would cost approximately $787 billion. On January 26, 2010, CBO updated its estimate of the cost of the Recovery 

Act. It now estimates that the Recovery Act will cost $75 billion more than originally estimated-or a total of $862 billion from 2009 through 2019. That amount includes more than $43.2 billion for DOE efforts in areas such as energy efficiency 

and renewable energy, nuclear waste cleanup, and electric grid modernization. 

The Recovery Act specifies several roles for GAO, including conducting ongoing reviews of selected states’ and localities’ use of funds made available under the act. 

We recently completed our fifth review, issued yesterday, which examined a core 
14 

1GAO, Recovery Act: One Year Later, States’ and Localities’ Uses of Funds and Opportunities 

to Strengthen Accountability, GAO-10-437 (Washington, D.C.: Mar. 3, 2010). 2GAO, Recovery Act: Project Selection and Starts Are Influenced by Certain Federal Requirements and Other Factors, GAO-10-383 (Washington, D.C.: Feb. 10, 2010). 3DOE was initially appropriated $45.2 billion in the Recovery Act; however, $2 billion for the 

Loan Guarantee Program was transferred from DOE’s Recovery Act appropriation. As a result, 

DOE’s appropriations under the Recovery Act now total $43.2 billion. 

group of 16 states, the District of Columbia, and selected localities.1 We also recently completed a review on the impact of certain federal requirements and other 

factors on Recovery Act project selection and starts.2

My statement today is based largely on these two prior reviews and updated with 

data from DOE and focuses on (1) the extent to which DOE has obligated and spent 

its Recovery Act funds, and (2) the factors that have affected DOE’s ability to select 

and start Recovery Act projects. In addition, we include information on ongoing 

GAO work on DOE Recovery Act programs. We obtained financial data from DOE 

on its obligations and expenditures for Recovery Act projects and also asked DOEand 26 other federal agencies-which federal requirements, if any, affected the timing 

of project selection and start dates, as well as whether any requirements at the 

state and local levels, or any other factors, affected project selection and start dates. 

To supplement the federal agencies’ responses, we spoke with officials in 16 states 

and the District of Columbia who are responsible for implementing Recovery Act 

projects. We are reviewing these 16 states and the District of Columbia for our bimonthly reviews on Recovery Act implementation. The states selected contain about 

65 percent of the U.S. population and are estimated to receive collectively about 

two-thirds of the intergovernmental federal assistance funds available through the 

Recovery Act. We selected these states and the District of Columbia on the basis 

of federal outlay projections; percentage of the U.S. population represented; unemployment rates and changes; and a mix of states’ poverty levels, geographic coverage, and representation of both urban and rural areas. We also spoke with representatives from the National Governors Association; the National Association of 

State Auditors, Comptrollers, and Treasurers; and the National Association of Counties. 

Our prior work was conducted in accordance with generally accepted government 

auditing standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for our findings 

and conclusions based on our audit objectives. We believe that the evidence obtained 

provides a reasonable basis for our findings and conclusions based on our audit objectives. 

Background 

The Recovery Act provided DOE more than $43.2 billion, including $36.7 billion 

for projects and activities and $6.5 billion in borrowing authority.3 Of the $36.7 billion for projects and activities, almost half-$16.8 billion-was provided to the Office 

of Energy Efficiency and Renewable Energy for projects intended to improve energy 

efficiency, build the domestic renewable energy industry, and restructure the transportation industry to increase global competitiveness. The Recovery Act also provided $6 billion to the Office of Environmental Management for nuclear waste cleanup projects, $4.5 billion to the Office of Electricity Delivery and Energy Reliability 

for electric grid modernization, $4 billion to the Loan Guarantee Program Office to 

support loan guarantees for renewable energy and electric power transmission 

projects, $3.4 billion to the Office of Fossil Energy for carbon capture and sequestration efforts, and $2 billion to the Office of Science and the Advanced Research 

Projects Agency-Energy for advanced energy technology research. 

DOE Obligated 70 Percent and Reported Expenditures of 7 Percent of its Recovery 

Act Funds as of February 28, 2010 

As of February 28, 2010, DOE reported that it had obligated $25.7 billion (70 percent) and reported expenditures of $2.5 billion (7 percent) of the $36.7 billion it received under the Recovery Act for projects and activities (see table 1). By comparison, as of December 31, 2009, the department reported it had obligated $23.2 billion 

(54 percent) and reported expenditures of $1.8 billion (4 percent). 
15 

The percentage of Recovery Act funds obligated varied widely across DOE program offices. Several program offices-Energy Efficiency and Renewable Energy, the 

Energy Information Administration, Environmental Management, and Science-had 

obligated more than 85 percent of their Recovery Act funds by February 28, 2010, 

while other program offices-Fossil Energy, the Loan Guarantee Program, and the 

Western Area Power Administration-had obligated less than a third of their Recovery Act funds by that time. 

The percentage of Recovery Act funds spent also varied across DOE program offices, though to a lesser degree than the percentage obligated. None of the program 

offices reported expenditures of more than a third of their Recovery Act funds as 

of February 28, 2010. The percentage of funds spent ranged from a high of 31 percent for Departmental Administration to a low of zero percent for the Electricity Delivery and Energy Reliability, Energy Information Administration, and Fossil Energy offices. 

Federal Requirements and Other Factors Affected the Timing of Project Selection and 

Starts 

Officials from DOE and states that received Recovery Act funding from DOE cited 

certain federal requirements and other factors that had affected their ability to implement some Recovery Act projects. In particular, DOE officials reported that 

Davis-Bacon requirements and the National Environmental Policy Act affected the 

timing of some project selection and starts, while state officials reported that the 

National Historic Preservation Act affected their ability to select and start Recovery 

Act projects. Other factors unrelated to federal requirements-including the newness 

of programs, staff capacity, and state and local issues-also affected the timing of 

some projects, according to federal and state officials. 

DOE and State Officials Reported that Certain Federal Requirements Affected 

Project Selection and Starts 

Officials from DOE and states that received DOE funding cited certain federal requirements that had affected their ability to select or start some Recovery Act 

projects. For example: 
16 

4The Davis-Bacon Act requires that contractors and subcontractors pay workers the locally 

prevailing wages on most federally funded construction projects, and it imposes several administrative requirements relating to the payment of workers on qualifying projects. The Recovery 

Act generally applies Davis-Bacon requirements to all Recovery Act-funded projects, requiring 

contractors and subcontractors to pay all laborers and mechanics at least the prevailing wage 

rates in the local area where they are employed, as determined by the Secretary of Labor. In 

addition, contractors are required to pay these workers weekly and submit weekly certified payroll records, generally to the contracting federal agency. 5The Recovery Act appropriated $5 billion for the Weatherization Assistance Program, which 

DOE is distributing to each of the states, the District of Columbia, and seven territories and 

Indian tribes. The program seeks to assist low-income families by making such long-term energy 

efficiency improvements to their homes as installing insulation; sealing leaks; and modernizing 

heating equipment, air circulation fans, and air conditioning equipment. 6GAO, Recovery Act: Funds Continue to Provide Fiscal Relief to States and Localities, While 

Accountability and Reporting Challenges Need to Be Fully Addressed, GAO-09-1016 (Washington, D.C., Sept. 23, 2009). 7DOE collects data reported by states and territories on the number of homes weatherized 

and on state and territory expenditures of funds on a quarterly basis. The data reported by 

states as of a certain date (such as for the quarter ending December 31, 2009) can change as 

states finalize figures for homes weatherized and funds spent. DOE originally planned to weatherize 593,000 homes with Recovery Act funding by March 31, 2012. A DOE report issued on 

February 24, 2010, indicated that 30,252 homes had been weatherized nationwide as of December 31, 2009, though numbers are not yet finalized. 8 NEPA established national environmental policies and goals to ensure that federal agencies 

properly consider environmental factors before deciding on a project. Under NEPA, federal agencies evaluate the potential environmental effects of projects they are proposing using an environmental assessment or, if projects may significantly affect the environment, a more detailed environmental impact statement. 

• Davis-Bacon requirements.4 DOE’s Weatherization Assistance Program became 

subject to the Davis-Bacon requirements for the first time under the Recovery 

Act after having been previously exempt from those requirements.5 Thus, the 

Department of Labor (Labor) had to determine the prevailing wage rates for 

weatherization workers in each county in the United States. In July 2009, DOE 

and Labor issued a joint memorandum to Weatherization Assistance Program 

grantees authorizing them to begin weatherizing homes using Recovery Act 

funds, provided they paid construction workers at least Labor’s wage rates for 

residential construction, or an appropriate alternative category, and compensated workers for any differences if Labor established a higher local prevailing wage rate for weatherization activities. On September 3, 2009, Labor 

completed its determinations; later that month, we reported that Davis-Bacon 

requirements were a reason why some states had not started weatherizing 

homes.6 Specifically, we reported that 7 out of 16 states and the District of Columbia decided to wait to begin weatherizing homes until Labor had determined 

county-by-county prevailing wage rates for their state. Officials in these states 

explained that they wanted to avoid having to pay back wages to weatherization 

workers who started working before the prevailing wage rates were known. In 

general, the states we reviewed used only a small percentage of their available 

funds in 2009, mostly because state and local agencies needed time to develop 

the infrastructures required for managing the significant increase in weatherization funding and for ensuring compliance with Recovery Act requirements, 

including Davis-Bacon requirements. According to available DOE data, as of December 31, 2009, 30,252 homes had been weatherized with Recovery Act funds, 

or about 5 percent of the approximately 593,000 total homes that DOE originally planned to weatherize using Recovery Act funds.7

• National Environmental Policy Act (NEPA).8 DOE officials told us that while 

NEPA is unlikely to impose a greater burden on Recovery Act projects than on 

similar projects receiving federal funds, the timing of certain projects may be 

slowed by these requirements. However, DOE officials reported that the agency 

had taken steps to expedite the NEPA review process and said that the agency’s 

funding opportunity announcements specified that projects must be sufficiently 

developed to meet the Recovery Act’s timetable for commitment of funds. Nevertheless, DOE officials also told us that several program offices-including Loan 

Guarantee, Fossil Energy, Electricity Delivery and Energy Reliability, and the 

Power Marketing Administrations-will likely have projects that significantly impact the environment and will therefore require environmental assessments or 

environmental impact statements. DOE officials told us that they plan to concurrently complete NEPA reviews with other aspects of the project selection and 

start process. State officials in California and Mississippi also told us that 

NEPA had caused delays in DOE Recovery Act projects. For example, California 
17 

9 If an agency determines that activities of a proposed project fall within a category of activities the agency has already determined has no significant environmental impact-called a categorical exclusion-then the agency generally does not need to prepare an environmental assessment or environmental impact statement. 10 NHPA declares that the federal government has a responsibility to expand and accelerate 

historic preservation programs and activities in order to preserve the nation’s historical and cultural foundations. The act requires that for all projects receiving federal funding or a federal 

permit, federal agencies must take into account the project’s effect on any historic site, building, 

structure, or other object that is or can be listed on the National Historic Register. Under the 

act and its implementing regulations, the agency must consult with relevant federal, state, and 

tribal officials with regard to such a project. 11DOE officials told us in January 2010 that they were in the process of developing an agreement with the Advisory Council on Historic Preservation and the National Conference of State 

Historic Preservation Officers to create a manageable framework for streamlining DOE’s compliance with NHPA requirements. 12The Energy Efficiency and Conservation Block Grants program, administered by DOE, provides funds through competitive and formula grants to units of local and state government and 

Indian tribes to develop and implement projects to improve energy efficiency and reduce energy 

use and fossil fuel emissions in their communities. The Recovery Act includes $3.2 billion for 

the program. 13The Buy American Act generally requires that raw materials and manufactured goods acquired for public use be made or produced in the United States, subject to limited exceptions. 

Federal agencies may issue waivers for certain projects under specified conditions, for example, 

if using American-made goods is inconsistent with the public interest or the cost of those goods 

is unreasonable. Agencies also need not use American-made goods if they are not sufficiently 

available or of satisfactory quality. The Recovery Act has similar provisions, including one limiting the ‘‘unreasonable cost’’ exception to those instances when inclusion of American-made 

Continued 

officials said that the State Energy Commission must submit some of its Recovery Act projects to DOE for NEPA review because they are not covered by 

DOE’s existing categorical exclusions.9 State officials said that such reviews can 

take up to 6 or more weeks. Both California and Mississippi officials told us 

that activities that are categorically excluded under NEPA (e.g., road repaving 

or energyefficient upgrades to existing buildings) still require clearance before 

the state can award funds. Staff must spend time filling out forms and supplying information to DOE on projects that may qualify for a categorical exclusion. 

• National Historic Preservation Act (NHPA).10 State officials told us that NHPA 

had also affected DOE Recovery Act project selection and starts.11 Mississippi 

officials, in particular, cited NHPA’s clearance requirements as one of the biggest potential delays to project selection in energy programs. Many of the cityand county-owned facilities that could benefit from the Energy Efficiency and 

Conservation Block Grant program could be subject to historic preservation requirements, which mandate that projects must be identified within 180 days of 

award.12 In part because of this requirement, the state had to adjust program 

plans and limit the scope of eligible recipients and projects to avoid historic 

preservation issues. Likewise, officials from the Michigan Department of 

Human Services told us that NHPA requires that weatherization projects receiving federal funds undergo a state historic preservation review. According to 

Michigan officials, this requirement means that the State Historic Preservation 

Office may review every home over 50 years of age if any work is to be conducted, regardless of whether the home is in a historic district or on a national 

registry. These officials estimated that 90 percent of the homes scheduled to be 

weatherized would need a historic review. These reviews are a departure from 

Michigan’s previous experience; the State Historic Preservation Office had never 

considered weatherization work to trigger a review. Furthermore, Michigan officials told us that their State Historic Preservation Office’s policy is to review 

weatherization applications for these homes within 30 days after receiving the 

application and advise the Michigan Department of Human Services on whether 

the work can proceed. However, as of October 29, 2009, the State Historic Preservation Office had only two employees, so state officials were concerned that 

this process could cause a significant delay. To avoid further delays, Michigan 

officials told us that in November 2009, they signed an agreement with the 

State Historic Preservation Office that is designed to expedite the review process. They also told us that with the agreement in place, they expect to meet 

their weatherization goals. 

• Buy American provisions.13 DOE officials told us that Buy American provisions 

could cause delays in implementing Recovery Act projects. Officials from other 
18 

iron, steel, or other manufactured goods would increase the overall project cost by more than 

25 percent. 14GAO, Recovery Act: Status of States’ and Localities’ Use of Funds and Efforts to Ensure 

Accountability, GAO-10-231 (Washington, D.C.: Dec. 10, 2009). 

federal agencies said those provisions have affected or may affect their ability 

to select or start some Recovery Act projects. In some cases, those agencies had 

to develop guidance for compliance with Buy American provisions, including 

guidance on issuing waivers to recipients that were unable to comply. For example, according to Environmental Protection Agency officials, developing Buy 

American guidance was particularly challenging because of the need to establish a waiver process for Recovery Act projects. At the local level, officials from 

the Chicago Housing Authority (CHA) reported that the only security cameras 

that are compatible with the existing CHA system and City of Chicago police 

systems are not made in the United States. CHA worked with the Department 

of Housing and Urban Development to determine how to seek a waiver for this 

particular project. Moreover, an industry representative told us that the Buy 

American provisions could interrupt contractors’ supply chains, requiring them 

to find alternate suppliers and sometimes change the design of their projects, 

which could delay project starts. 

DOE and State Officials Reported that Other Factors Have Also Affected the 

Timing of Project Selection and Starts 

Officials from DOE and states also told us that factors other than federal requirements have affected the timing of project selection or starts. For example: 

• Newness of programs.—Because some Recovery Act programs were newly created, in some cases, officials needed time to establish procedures and provide 

guidance before implementing projects. In particular, the DOE Inspector General noted that the awards process for the Energy Efficiency and Conservation 

Block Grant program, newly funded under the Recovery Act, was challenging 

to implement because there was no existing infrastructure. Hence, Recovery Act 

funds were not awarded and distributed to recipients in a timely manner. • Staff capacity.—Officials from DOE stated that they would need to hire a total 

of 550 staff-both permanent and temporary-to carry out Recovery Act-related 

work. However, several issues affected DOE’s ability to staff these federal positions, including the temporary nature and funding of the Recovery Act and limited resources for financial management and oversight. To address those issues, 

DOE was granted a special direct hire authority as part of the Recovery Act 

for certain areas and program offices. The authority allowed DOE to expedite 

the hiring process for various energy efficiency, renewable energy, electricity delivery, and energy reliability programs and helped DOE fill longer term temporary (more than 1 year, but not more than 4 years) and permanent positions. 

However, according to DOE officials, government-wide temporary appointment 

authority does not qualify an employee for health benefits, and thus few candidates have been attracted to these temporary positions. According to DOE officials, the Office of Management and Budget recently approved direct-hire authority for DOE, which officials believe will alleviate issues related to health 

care benefits. 

Some officials told us that they experienced heavy workloads as a result of the 

Recovery Act, which impaired their ability to implement programs. As we reported in December 2009, smaller localities, which are often rural, told us that 

they faced challenges because of a lack of staff to understand, apply for, and 

comply with requirements for federal Recovery Act grants.14 For example, some 

local government officials reported that they did not employ a staff person to 

handle grants and therefore did not have the capacity to understand which 

grants they were eligible for and how to apply for them. In the District of Columbia, Department of the Environment officials explained that weatherization 

funds had not been spent as quickly as anticipated because officials needed to 

develop the infrastructure to administer the program. For example, the department needed to hire 6 new staff members to oversee and manage the program. 

Officials reported that, as of late January 2010, the department had still not 

hired any of the six new staff required. Officials from the National Association 

of Counties said that some localities had turned down Recovery Act funding to 

avoid the administrative burdens associated with the act’s numerous reporting 

requirements. • State, Local, or Tribal Issues.—In our recently issued report on factors affecting 

the implementation of Recovery Act projects, we noted that the economic recession affected some states’ budgets, which, in turn, affected states’ ability to use 
19 

15GAO-10-383. 16DOE Office of Inspector General, OAS-RA-10-04, Special Report: Progress in Implementing 

the Department of Energy’s Weatherization Assistance Program Under the American Recovery 

and Reinvestment Act (February 19, 2010). 17GAO-10-437. 18GAO, Department of Energy: New Loan Guarantee Program Should Complete Activities 

Necessary for Effective and Accountable Program Management, GAO-08-750 (Washington, D.C., 

July 7, 2008). 

some Recovery Act funds.15 For example, according to a recent report by DOE’s 

Office of Inspector General, implementation of the Weatherization Assistance 

Program’s Recovery Act efforts was delayed in part by state hiring freezes, problems resolving local budget shortfalls, and state-wide furloughs.16 State-level 

budget challenges have affected the implementation of Recovery Act projects. 

For example, officials from the Department of Defense told us that because 

states were experiencing difficulties in passing their current-year budgets, some 

were unable to provide matching funds for certain Army National Guard programs. As a result, the Department of Defense had to revise its Recovery Act 

project plan to cancel or reduce the number of Army National Guard projects 

with state matchingfunds and replace them with other projects that did not require matching funds. Officials from the Department of Housing and Urban Development also told us that project starts in some instances were affected by 

the need for state and local governments to furlough employees as a result of 

the economic downturn. 

GAO Has Ongoing Work on DOE Recovery Act Programs 

In a report issued yesterday, we discussed recipient reporting in DOE’s Weatherization Assistance Program.17 Specifically, we noted that reporting about impacts to 

energy savings and jobs created and retained at both the state and local agency 

level is still somewhat limited. Although many local officials that we interviewed for 

that review have collected data about new hires, none could provide us with data 

on energy savings. Some states told us they plan to use performance measures developed by DOE, while others have developed their own measures. For example, 

Florida officials told us they plan to measure energy savings by tracking kilowatts 

used before and after weatherization, primarily with information from utility companies. In addition, local agencies in some states either collect or plan to collect information about other aspects of program operations. For example, local agencies in 

both California and Michigan collect data about customer satisfaction. In addition, 

a local agency in California plans to report about obstacles, while an agency in New 

York will track and report the number of units on the waiting list. 

As we reported, DOE made several outreach efforts to their program recipients 

to ensure timely reporting. These efforts included e-mail reminders for registration 

and Webinars that provided guidance on reporting requirements. For the first round 

of reporting, DOE developed a quality assurance plan to ensure all prime recipients 

filed quarterly reports, while assisting in identifying errors in reports. The methodology for the quality assurance review included several phases and provided details 

on the role and responsibilities for DOE officials. According to DOE officials, the 

data quality assurance plan was also designed to emphasize the avoidance of material omissions and significant reporting errors. 

In addition to our reviews of states’ and localities’ use of Recovery Act funds, GAO 

is also conducting ongoing work on several DOE efforts that received Recovery Act 

funding, including the Loan Guarantee Program and the Office of Environmental 

Management’s activities. 

As I noted earlier, Congress made nearly $4 billion in Recovery Act funding available to DOE to support what the agency has estimated will be about $32 billion in 

new loan guarantees under its innovative technology loan guarantee program. However, we reported in July 2008 that DOE was not well positioned to manage the 

loan guarantee program effectively and maintain accountability because it had not 

completed a number of key management and internal control activities.18 To improve the implementation of the loan guarantee program and to help mitigate risk 

to the federal government and American taxpayers, we recommended that, among 

other things, DOE complete internal loan selection policies and procedures that lay 

out roles and responsibilities and criteria and requirements for conducting and documenting analyses and decision making, and develop and define performance measures and metrics to monitor and evaluate program efficiency, effectiveness, and outcomes. We are currently engaged in ongoing work to determine the current state 

of the Loan Guarantee Program and what progress DOE has made since our last 

report, and we expect to report on that work this summer. 
20 

19DOE estimates that the total cost to complete this work will come to about $300 billion and 

that it will take several more decades. 

Ongoing work also focuses on DOE’s Office of Environmental Management, which 

also received Recovery Act funding. The Office of Environmental Management oversees cleanup efforts related to decades of nuclear weapons production.19 The Recovery Act provided DOE with $6 billion-in addition to annual appropriations of $6 billion-for cleanup activities including packaging and disposing of wastes, decontaminating and decommissioning facilities, and removing contamination from soil. DOE 

has begun work on the majority of its more than 85 Recovery Act projects at 17 sites 

in 12 states and has spent nearly $1.4 billion (about 23 percent of its total Recovery 

Act funding) on these projects. We are currently conducting work to evaluate the 

implementation of these projects, including the number of jobs that have been created and retained, performance metrics being used to measure progress, DOE’s 

oversight of the work, and any challenges that DOE may be facing. We expect to 

report on that work this summer. 

Mr. Chairman, this completes my prepared statement. We will continue to monitor DOE’s use of Recovery Act funds and implementation of programs. I would be 

happy to respond to any questions you or other Members of the Committee may 

have at this time. 

The CHAIRMAN. Thank you very much. 

Ms. Nellenbach, go right ahead. 

STATEMENT OF MICHELE NELLENBACH, DIRECTOR, NATURAL 

RESOURCES COMMITTEE, NATIONAL GOVERNORS ASSOCIATION 

Ms. NELLENBACH. Thank you Chairman, Ranking Member Murkowski. 

My name is Michele Nellenbach. I’m the director of the Natural 

Resources Committee for the National Governors Association. On 

behalf of the Governors, thank you for this opportunity to talk with 

you about what they’ve experienced, over the last year, implementing DOE’s ARRA-related programs. 

In October 2008, the Governor sent a letter to the Hill and also 

met with then Governor—then President-elect Obama to talk about 

stimulus funding and what they would like to see in a bill. They 

had identified 4 items. One was FMAP; the second was infrastructure funding; the third was accountability provisions—the Governors wanted the tough questions about how they’re going to 

spend this money, they wanted the use-it-or-lose-it provisions, they 

asked for those things in the bill; and finally, they asked for no 

new red tape. They got 3 of the 4. As you just heard from GAO, 

I think the fourth is the reason we’re here today, is because of 

some of the obstacles encountered dealing with that red tape. 

Now, the Governors do believe most of that is behind us now. So, 

I’d like to focus, sort of, on what we see as the path forward. There 

are a few issues that are still out there that we need to address. 

DOE is working tirelessly to do NEPA reviews, but they are still 

taking a—they’re still taking some time. We had one State that 

had its EECBG grant approved in September 2009. They are still 

waiting for that NEPA determination, and they cannot spend that 

money until they have it. So, that’s still an issue. Again, DOE has 

got SWAT teams on it now, and they’re working tirelessly to get 

those reviews done. They’ve established a pretty aggressive agenda 

for when they want to do that, but it is a concern, moving forward. 

One issue that hasn’t been talked very much about, and is a very 

big issue for the Governors, is reporting requirements. The Gov-
21 

ernors don’t just oversee the Energy Program, they—we have— 

$240 billion worth of the Recovery Act money is going through the 

States or to the States. That’s a lot of money to manage. While 

we’re happy—they’re happy to do it, and committed to meeting the 

goals of the Recovery Act, there is some concern that some recent 

actions by the Department, if others pile on, it’s really going to 

overwhelm the programs with administrative requirements. 

The DOE finalized, this week, a requirement that we—that the 

States report monthly on the State energy program and the weatherization program. We expect, very soon, to get notification that the 

same monthly requirements will kick in for EECBG. 

So, putting this in the context of State budgets, as you all know, 

talking to your States, they are not hiring; they are laying off 

workers; they’re furloughing workers; programs that previously 

were untouchable, like K–12 education, unfortunately are very 

much touchable now. 

So, we need—they need every possible man-hour committed to 

approving applications and getting that money out the door so that 

we can be weatherizing homes and doing energy audits and getting 

people back to work. That’s what the Governors want to be doing. 

Instead, they’re going to have to devote more man-hours to sending 

reports to Washington that are not going to affect the year-long 

delay we’ve encountered, they’re not going to increase the number 

of homes we weatherize just because we’re reporting more often. 

So, that’s a very big concern for the Governors. 

A recent development from last week: As you all know, with each 

Weatherization Program in a State, there’s an approved weatherization plan that indicates the exact number of homes that State 

believes it has the money and the time and the staff to weatherize. 

Last week, the Department sent out letters to all the energy officials in the country—in each State, giving them a new target for 

homes to be weatherized that is above and beyond what is in those 

plans. Now, I understand from the—Mr. Rogers’ written statement 

that they’re still committed to the 600,000 home weatherized goal, 

which we’re really happy to hear about, because that’s the goal 

that we can meet, based on the numbers in those plans. So, we’re 

just concerned about what the expectations are, moving forward, 

and want to work with the agency to clarify exactly what number 

the States are supposed to be striving for. 

So, those are just a few of the issues that are moving forward. 

Again, the major issues, the big problems, we think are largely behind us, and States are having a great deal of success. What it’s 

important to remember is that ARRA gave the States until September 10, 2010, to obligate the money. The Governors will meet 

that number. Then we have until March 2012 to spend the money. 

So, for all 3 of these programs—EECBG, Weatherization, and 

SEP—they have plans in place to spend that money over the course 

of the next 2 years. 

We’re already seeing a lot of successes. For instance, in the State 

of Kansas, they have a—they’ve trained 45 new energy auditors. 

That’s up 15 from a year ago. Most of those auditors have gone out 

and started their own new businesses. So, that’s job growth, right 

there in Kansas, and its promoting the green energy economy 

through energy audits. 
22 

In New York State, they’re on their third request for proposals 

for $74 million of its State energy program. They’re going to fund 

energy conservation projects, energy efficiency, and renewable energy programs. We’ve heard from State after State that they’re 

oversubscribed for a lot of these programs, there’s a huge demand 

for them. 

Puerto Rico estimates that 15—5,500 families will benefit from 

their weatherization program. They have set up a hotline, of 

sorts—a call center; and in the first month of the call center they 

set up, 11,000 appointments were scheduled. 

So, there are some great things happening in the States. Again, 

I just would like to close with stating that the Governors are committed to meeting the goals that Congress laid out for them. They 

have 2 years to do that. They have through March 2012. So, I think 

you’ll see a significant ramp up, and particularly in weatherization, 

in the coming weeks and months, now that the Davis-Bacon issue 

has been resolved on that program. 

With that, I’ll close and would be happy to take any questions. 

[The prepared statement of Ms. Nellenbach follows:] 

PREPARED STATEMENT OF MICHELE NELLENBACH, DIRECTOR, NATURAL RESOURCES

COMMITTEE, NATIONAL GOVERNORS ASSOCIATION

Chairman Bingaman, Senator Murkowski and Committee Members, on behalf of 

the National Governors Association, thank you for the opportunity to testify on implementation of the American Recovery and Reinvestment Act’s (ARRA) energy-related provisions. 

As you know, ARRA outlined three basic goals: spend the money quickly, create 

jobs, and maintain full transparency and accountability in spending taxpayer dollars. Governors have worked diligently since passage of the Act on February 17, 

2009 to efficiently and transparently manage and spend over $240 billion in ARRA 

funds flowing to or through states. While there have been delays at the federal and 

state levels in fully implementing some of ARRA’s energy-related programs, those 

delays are mostly behind us and states are focused on meeting the Act’s September 

30, 2010 deadline to obligate and expend all funds by the Department of Energy’s 

(DOE) deadline of spring 2012. 

Background 

On October 27, 2008, the National Governors Association (NGA) joined with five 

other associations that represent state and local elected officials to urge congressional leaders to provide countercyclical assistance to state and local governments 

to help offset declining tax revenues and growing safety net expenditures. NGA 

asked that Congress provide a two-year increase in the Federal Medical Assistance 

Percentages, a Medicaid component that would provide immediate fiscal relief to 

states. NGA also asked that the stimulus package include funding for infrastructure, including funds for airports, highways, transit, clean water, drinking water 

and schools. While NGA did not take a position on the inclusion of state energy and 

weatherization programs in the stimulus bill, governors are committed to efficiently 

using these funds to create jobs, reduce energy costs including for low-income citizens and small businesses and promote renewable energy. 

State Energy Program; Weatherization Assistance Program; Energy Efficiency and 

Conservation Block Grant 

ARRA provided significant increases for three energy programs administered by 

state and local governments: the State Energy Program (SEP) received $3.1 billion; 

the Weatherization Assistance Program (WAP) received $5 billion and the newlycreated Energy Efficiency and Conservation Block Grant (EECBG) received $3.2 billion. In the cases of SEP and WAP, these amounts represented significant increases 

above the programs’ annual appropriations of $50 million in fiscal year 2009 and 

$200 million respectively. EECBG, as a new program, had never received an appropriation nor had any existing infrastructure or regulations to guide its implementation. 
23 

ARRA also continued several existing program requirements and imposed new restrictions on the programs. For example, ARRA continued requirements that the 

programs comply with the National Environmental Policy Act (NEPA) and the National Historic Preservation Acts (NHPA); laws requiring sometimes lengthy processes to ensure the projects have a minimal environmental impact and protect historic buildings. In addition, although SEP and WAP had always been exempt from 

Davis Bacon prevailing wage requirements and Buy American procurement provisions, ARRA required recipients of SEP, WAP and EECBG funds to comply with 

both provisions. These new and existing requirements, especially when combined 

with unprecedented levels of funding and ARRA’s objectives of accountability and 

transparency, required the Department of Energy (DOE) to establish new 

programguidelines before states could fully implement the programs. 

Federal Delays 

In December 2009, NGA sent Secretary Chu a letter along with its colleagues in 

the other ‘‘Big 7’’ associations (the National Conference of State Legislatures, the 

National League of Cities, the U.S. Conference of Mayors, the National Association 

of Counties, the Council of State Government and the International City Managers 

Association) articulating frustration with the slowness in which federal guidance 

was issued. This frustration was subsequently underscored by both the Government 

Accountability Office and DOE’s own Inspector General (OIG) in reports detailing 

some of the obstacles the Department encountered in 2009. The OIG summed up 

the situation by stating ‘‘ . . . as straight forward as [the Weatherization Assistance Program] may have seemed and despite the best efforts of the Department, any 

program with so many moving parts was extraordinarily difficult to synchronize.’’ 

The following paragraphs outline federal obstacles identified by states and articulated by GAO and OIG as having slowed spending for the SEP, WAP and EECBG 

programs. 

NEPA/Historic Preservation: Despite having experience with NEPA and the 

NHPA, ARRA’s significant increase in funding for SEP and WAP generated significantly more projects subject to NEPA and NHPA review. In hindsight, increasing 

the capacity of the NEPA and historic preservation processes would have helped 

avoid delays caused by the sheer volume of projects subject to review. We very much 

appreciate that DOE has developed a model programmatic agreement for states to 

use that will speed historic preservation reviews, but note that the model was just 

released in February of this year. In contrast, NEPA reviews continue to be a problem. For instance, DOE is still conducting its NEPA review for one state’s EECBG 

plan that was approved in September 2009. Until the NEPA review is completed, 

the state cannot use its EECBG funds. 

Davis Bacon—While the Secretaries of Energy and Labor issued a joint memorandum in July 2009 encouraging recipients to spend the money while the Department of Labor conducted the wage survey necessary to determine the prevailing 

wage for weatherization projects, many states did not proceed with awarding grants 

out of fear of future liability. States were concerned they would have to later divert 

funds from one project to retroactively pay workers on another project that were unintentionally paid less than the prevailing wage or would have to take money away 

from workers who were paid more than the contractually-mandated prevailing wage. 

While the new wage determination is now in place for the WAP, DOE just received final word from the Department of Labor stating that this same wage rate 

cannot be used for residential projects funded through EECBG and SEP. This delay, 

through no fault of DOE, tied up millions of dollars from these programs. 

Inconsistent messages: DOE encouraged states to establish loan loss reserves, a 

credit enhancement mechanism through SEP and EECBG. However, it has recently 

come to light that such credit enhancements may be disallowed under an OMB circular. Several states are holding funding until this issue is resolved. 

Reporting 

Since December, communication between DOE, NGA and the other Big 7 organizations has improved. Representatives of the seven associations now have weekly 

calls with the department to review issues and receive updates. However, there is 

one remaining issue over which the Governors are at odds with the department: 

DOE’s new monthly reporting requirements. 

While states share the DOE’s interest in tracking spending and job creation, the 

additional reporting sought by the department will do nothing to speed the expenditure of funds or hasten the creation of jobs through these programs. States have 

made it clear that from a capacity standpoint, their personnel are already fully dedicated to implementing ARRA programs and meeting quarterly reporting requirements. Any additional requirements or responsibilities will diminish the amount of 
24 

time state officials can spend implementing the programs and meeting existing requirements. 

States were particularly dismayed that OMB gave DOE emergency information 

collection authority for the SEP and WAP programs and required that DOE seek 

public comment only on how to implement the reporting authority and whether to 

proceed with monthly reporting for the EECBG program. I have attached the comments submitted by the NGA, the Council of State Governments and the National 

Conference of State Legislators expressing our concerns with the monthly reporting 

requirements, and ask that the letter be included in the hearing record. 

NGA maintains that the quarterly reports DOE already receives and the OMB 

jobs reporting guidance issued on December 18, 2009 are sufficient to meet federal 

data collection needs, and that DOE’s additional job counting requirements are inconsistent with existing job calculations. While OMB requires all recipients report 

on full time equivalent (FTE) jobs created by ARRA funding, DOE will also now require the collection of non-federally funded FTEs. NGA believes this invites criticism that recipients are using subjective calculations to ‘inflate the numbers’ to 

make ARRA look better. One of OMB’s goals with its new guidance was to move 

away from subjective criteria to improve the job calculation. As noted by OMB in 

its guidance, ‘‘Previous guidance required recipients to make a subjective judgment 

on whether a given job would have existed were it not for the Recovery Act. The 

updated guidance eliminates this subjective assessment and defines jobs created or 

retained as those funded in the quarter by the Recovery Act.’’ 

Further, DOE has added to its requirement that states report quarterly on more 

than 100 SEP metrics, a requirement that states report monthly on over 40 metrics. 

States are awaiting a final determination as to whether similar reporting requirements will be placed on EECBG. 

Even if there is some value in having the information the Department is seeking 

on a monthly basis, NGA disagrees that the value of that information exceeds the 

level of burden it places on state and local recipients. States have designed new 

computer programs and systems to automate the unprecedented reporting requirements of ARRA. If DOE proceeds with its proposals for new data points on a monthly timeframe, state systems will have to be reprogrammed or changed increasing the 

initial burden of the requirements beyond what DOE has projected. 

More importantly, DOE’s proposed requirements must be viewed as part of the 

comprehensive reporting process required by ARRA. Over half of the states are central reporting states for Section 1512 reporting purposes, meaning that reports flow 

through a central system with its own level of verification and validation. Adding 

reporting requirements on recipients therefore translates into additional hours at 

each level of government responsible for collecting information. These additional reporting requirements were not included in the states’ original estimates of personnel 

costs which will now have to be recalculated potentially affecting overall grant 

amounts. 

Governors are very concerned that other departments will follow DOE’s lead and 

institute their own monthly reporting requirements. For states charged with administering more than $240 billion worth of recovery funding on thousands of projects, 

any further reporting requirements threaten to quickly overwhelm recipients and 

slow implementation. 

Fiscal Condition of the States 

A final critical factor in the expediency with which funds are being spent is capacity and the financial crisis affecting nearly all state and local governments. According to a fiscal survey conducted by NGA with the National Association of State 

Budget Officers in February, states experienced historic drops in revenues in fiscal 

years 2009 and 2010, which resulted in a 3.4 percent decline in general fund spending for fiscal 2009 and a 5.4 percent decline in fiscal 2010. Moreover, between now 

and the end of fiscal 1012, state balanced budget requirements will force states to 

close budget gaps in excess of $136 billion. These gaps translate into spending cuts, 

hiring freezes and furloughs that hinder the ability of states to implement new programs or administer the explosive growth in programs like SEP and WAP. As the 

OIG noted: 

Ironically, given the anticipated stimulus effect of the program, economic 

problems in many states adversely impacted their ability to ensure that 

weatherization activities were performed. State hiring freezes, problems 

with resolving significant local budget shortfalls, and state-wide planned 

furloughs delayed various aspects of the program and contributed to problems with meeting spending and home weatherization targets. 
25 

While the OIG was speaking of the WAP program, its comments could just as easily be applied to the SEP and to a lesser extent, the EECBG, which had to be created from the ground-up. ARRA itself did not provide administrative funding for the 

states. The Weatherization program does authorize states to use 5% for administrative expenses and EECBG and SEP authorize the use of 10%, but most state hiringfreezes apply across the board, making it extremely difficult for states and local governments to rapidly increase capacity to the level proportionate with the amount of 

funding provided. 

State Implementation 

Despite federal delays and state and local fiscal constraints, states are focused on 

using ARRA money to create jobs and promote energy conservation. Governors believe that most of the obstacles to implementation are now behind us and are confident states can fully and efficiently spend SEP, WAP and EECBG funds. Here are 

just a few examples of the successes Governors are having throughout the country 

with their energy programs: 

1. The State of Minnesota typically provides about 4,000 Minnesota households per year with weatherization services, but with ARRA the state expects 

to weatherize 17,000 homes by March 2012. Minnesota estimates that the enhanced weatherization program has created over 340 new jobs through December 31, 2009. 

2. OH was one of the few states that proceeded with weatherization projects 

without having the final wage determination from DOL and as a result, has 

weatherized 7,289 homes and created job activity equivalent to 2,485 FTE jobs. 

DOE estimates that for every $1 invested in OH’s weatherization program returns $2.73 to the household and society. Further, since January 2009, OH has 

trained over 350 weatherization workers, 100 inspectors, 130 existing heating 

contractors and completed 40 inspector and 10 heat tech re-certifications. 

3. California has obligated $195.4 million of its $226 million SEP grant, including $25 million for a low interest loan program that is currently oversubscribed and $20 million for green jobs workforce training through the state. The 

state expects to begin in April or May of this year a clean energy business loan 

program that would use up the remainder of its grant. 

4. Pennsylvania also saw the infusion of ARRA money as a prime opportunity 

to update and reform its program establishing new standards and monitoring 

requirements for weatherization work. The state also hired eight new program 

monitors to ensure the quality of weatherization activities. While much of the 

work in Pennsylvania was delayed by protracted budget negotiations, weatherization efforts took off in November and December. The state has already met 

its goal of weatherizing 1,500 homes per month. 

5. Michigan’s State Energy Program’s funding opportunities are oversubscribed by a range from 2:1 to 10:1. Among the projects Michigan has funded 

is $15.5 million in grants to support Clean Energy Advanced Manufacturing of 

renewable energy systems and components in Michigan and the installation of 

anemometers to assist in the collection of data to support wind development in 

the state. Michigan plans to use $10 million for its revolving loan program but 

is awaiting final DOE determination regarding the loan loss reserve issue. 

6. Michigan expects to have 100% of its EECBG funds under contract by 

March 2012. Projects funded through EECBG will include a mobile recycle center program and tire and electronic recycling collections in Montcalm County; 

conducting building audits and retrofits and developing energy conservation 

strategies for several towns. 

7. North Carolina used some of its ARRA SEP money to provide technical assistance to applicants prior to the issuance of its EECBG RFP. The Energy Office provided nearly 300 local governments and education units with strategic 

energy plans. The state will soon issue an RFP for the SEP program, following 

on one already done for the EECBG program, providing funds to its Main Street 

Programs which fund preliminary and detailed energy surveys of private businesses. Grants are provided on a dollar-for-dollar match. 

8. North Carolina, like several other states, also saw the infusion of ARRA 

money as an opportunity to update its weatherization program to ensure timely 

and efficient expenditure of federal funds. In particular, NC, through its community colleges, redesigned its training programs for both local nonprofits and 

vendors. 

9. The State of Kentucky has established the Green Bank of Kentucky Revolving Loan Program to promote energy efficiency in state buildings with its first 

loan going to the Kentucky Department of Education (KDE). KDE will use the 
26 

loan to make improvements and implement Energy Conservation Measures 

(ECM) for a total savings of $2.15 million over the life of the project. 

10. Beginning in June, Kentucky will begin its Kentucky Home Performance 

program leveraging ARRA funds at a 3:1 ratio with private capital to make 

loans for home energy retrofits. The state hopes to make available $20 million 

in loans. 

11. The State of Mississippi has weatherized over 1,500 homes using ARRA 

funding and anticipates weatherizing 5,468 homes by March 2012. 12. The State of Nevada will use $7.9 million of its SEP grant for energy effi- ciency and renewable energy projects in state buildings and $10 million of its 

grant to provide energy efficient lighting in each of Nevada’s 17 school districts. 13. In Oklahoma, the Governor has committed $11million from the state’s 

SEP funding for compressed natural gas vehicle and infrastructure development. 

14. Pennsylvania has allocated $10 million from its SEP grant for the deployment of innovative alternative and renewable energy generation, efficiency and 

demand side reduction projects. Another $12 million of its SEP grant will fund 

a competitive grant program for combine heat and power projects. 

Conclusion 

Thank you again for the opportunity to talk with the Committee regarding state 

implementation of DOE’s ARRA-funded energy programs. Governors are committed 

to the successful implementation of these programs over the next two years and are 

optimistic about their potential to create jobs and energy savings. 

The CHAIRMAN. Thank you very much for your testimony. 

Mr. Woolf, go right ahead. 

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

Mr. WOOLF. Thank you, Mr. Chairman. 

My name is Malcolm Woolf. I am appearing today on behalf of 

the National Association of State Energy Officials. I’m vice chair of 

NASEO, as well as serving as—on behalf of Governor O’Malley as 

director of the Maryland Energy Administration. 

From NASEO’s perspective, the energy portion of the stimulus 

funds has been a success. Clean energy investments are being 

made, in every State, that address the Nation’s short-term needs 

to boost job creation with our long-term needs to reduce household 

bills, promote energy independence, and preserve our environment. 

I have 3 messages that I’d like to share with the committee 

today: 

First, over half of the State Energy program funds have already been committed—over $1.8 billion—which enables the companies to 

hire workers, purchase new products, even though that money has 

not yet been spent, by the way that the Federal Government and 

DOE tracks it. So, real jobs are being created today, even if it’s not 

showing up in GAO’s numbers yet. 

Second, the initial delays have been largely overcome. 

Third, the ARRA energy investments are beginning to pay significant dividends. 

Let me briefly elaborate on each of these issues: 

First, a survey of NASEO members last week indicated that well 

over one-half, 1.8 billion, of the SEP funds are actually committed 

and approximately $777 million is actually under contract. This is 

critically important because, unlike other programs, States generally pay for energy retrofits or renewable installations only after 

the work has been satisfactorily performed. However, businesses 

hire new workers and purchase extra supplies many months ear-
27 

lier, when the contracts are awarded. In other words, to evaluate 

how well stimulus is doing in creating new jobs, it’s more important to look at the pipeline of projects and the work that’s actually 

committed than it is to look at the money actually being spent, because the money isn’t spent until all the work has been completed. 

Moreover, States are leveraging the Federal funds to attract significant additional resources toward projects, a fact that’s ignored 

under Federal guidelines for calculating job creation. In addition to 

the SEP program, States have made considerable progress in implementing the other ARRA programs. Spending under the EECBG 

program, which—over 2,000 grant recipients—is accelerating in accordance with the statutorily required local government plans. The 

ENERGY STAR Appliance Rebate Program has been very popular 

with consumers and retailers alike; in many States, it’s oversubscribed. Spending should generally be completed by the first half 

of 2010. In addition, spending for weatherization funds has accelerated significantly in recent years—in recent months—excuse me— 

despite the initial delays caused by Davis-Bacon. We’re confident 

that the national target of 600,000 weatherized homes by March 

2012 will be achieved. 

Progress under ARRA has certainly been slower than anyone 

would’ve hoped. Much of the initial delays were caused by the need 

of DOE and the States to ramp up and to comply with a host of 

newly applicable requirements. For example, the NEPA statute for 

States to look for shovel-ready projects that literally didn’t involve 

shovels because physical construction would take too long and trigger the lengthy NEPA review. A year later, DOE has now issued 

over 5,000 NEPA determinations, which equates to $1.8 billion of 

spending. 

ARRA has also applied Davis-Bacon to the State weatherization 

activities for the first time. We had to wait for the establishment 

of wage-class rates from the Department of Labor, which didn’t 

occur until September 2009. Contracts were issued immediately 

thereafter, and the work has ramped up dramatically as a result. 

We’re still waiting for wage determinations in 5 States. In addition, 

we understand that the Department of Labor recently declined to 

allow the wage rates for residential energy efficiency retrofits 

under the Weatherization Program to be applied to the exact same 

activities under the EECBG or SEP programs. With approximately 

$800 million in residential energy efficiency retrofits planned in the 

EECBG and SEP programs, we need a rapid resolution to that 

problem. There’s no reason why a contractor doing energy retrofits 

in a low-income home on Monday doesn’t get paid the same wage 

rate if they’re doing it in a private home on Wednesday. 

I’ve heard it said that ‘‘statistics lie, but stories tell the truth.’’ 

I’ve included, in my written testimony, stories from the States represented on the committee showing how the clean energy investments are paying dividends in your State. In Maryland, I could 

share stories about the over 1300 low-income residents who are 

having their apartments retrofitted to reduce their bills or the 

roughly 1,000 homeowners who are trying to take control of their 

own energy future by installing solar, geothermal, or even backyard wind systems in their homes. 
28 

But, the one story that I’d like to highlight today is our innovative effort to tackle one of the fundamental barriers preventing further investment in clean energy by homeowners, and that’s the upfront cost. We—the emPOWER Financing Initiative in Maryland 

seeks to leverage the public money from stimulus with private capitol to provide homeowners low-cost loans voluntarily secured 

through their property. Both Annapolis and Montgomery County 

have enacted local enabling jurisdiction, and we should be issuing 

loans shortly. 

In sum, the ARRA clean energy investments are working to promote—are working to create jobs and reduce household bills in the 

short run, as well promote American energy independence, economic competitiveness, and the environment in the long run. 

I thank you for the opportunity to share our experiences. I look 

forward to your questions. 

[The prepared statement of Mr. Woolf follows:] 

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

ANNAPOLIS, MD 

Mr. Chairman, my name is Malcolm Woolf and I am appearing today on behalf 

of the National Association of State Energy Officials (NASEO). I am Vice-Chair of 

NASEO and the Director of the Maryland Energy Administration. I am also pleased 

to be here today alongside the National Governors Association, where I previously 

served as the Staff Director of the Natural Resources Committee. I also previously 

worked as a staff counsel for the Senate Environment and Public Works Committee. 

NASEO represents the energy offices in the states, territories and the District of 

Columbia. We are focused on a balanced national energy policy. At the present time, 

the Association is focused on working with the states in ensuring that the energy 

portion of the stimulus funds directed to state activities is effectively distributed. 

The short answer is that the energy portion of the stimulus funds operated by 

the state governments has been a success. Clean energy investments are being 

made in every state that are creating jobs, reducing household bills and promoting 

renewable power sources to accelerate our energy independence. We are seeing a 

significant ramp-up in spending across the United States and we are certainly observing a flood of innovative activities by state and local governments. 

During NASEO’s recent winter meeting here in Washington, D.C., I discussed 

with my colleagues a wide variety of creative solutions being implemented by my 

fellow energy directors. The dynamism and progress was palpable. In my own state 

of Maryland, we have instituted energy programs in all sectors of the economy that 

are retaining and producing jobs. 

Today, I will focus on describing our activities under the State Energy Program 

(SEP) and the Energy Efficiency and Conservation Block Grant (EECBG). I will also 

discuss the Weatherization Assistance Program (WAP) and the Energy Star Appliance Rebate Program. SEP received $3.1 billion under ARRA, EECBG received $3.2 

billion under ARRA, WAP received $5 billion under ARRA and the Appliance Rebate 

Program received $300 million under ARRA. 

SEP and WAP have been funded since the 1970s and have a strong track record 

of success. ARRA funds were added to base funding with an existing infrastructure. 

Congress was wise to build on existing programs and existing authorizations. 

EECBG was authorized in the Energy Independence and Security Act of 2007 

(EISA) and the Appliance Program was authorized in the Energy Policy Act of 2005 

(EPACT 2005). Neither of these programs received funding until ARRA was passed. 

There is no doubt that the ramp-up of existing programs and the implementation 

of new programs has been a challenge, both at the federal and state levels. The federal government has been adding and training new employees . The state governments are suffering through the worst cutbacks since the Great Depression, which 

has led to difficulties, but we are adding energy jobs and persevering to effectively 

invest the federal funds. 
29 

OVER HALF OF SEP FUNDS ARE ALREADY COMMITTED, WHICH ENABLES COMPANIES TO

HIRE EMPLOYEES AND BEGIN WORK LONG BEFORE FUNDS ARE FORMALLY ‘‘SPENT’’ 

In the case of SEP and EECBG, the present reporting mechanisms under ARRA 

do not reflect the whole picture. With respect to SEP, our recent survey from last 

week indicates that well over one-half ($1.8b. +) of the SEP funds are committed 

(grantees selected and awards made) and approximately $777 million is actually 

under contract. This is very important, because the actual rate of ‘‘costing’’ or federal spending does not accurately reflect the jobs created or the impact on the economy. I should also note that DOE NEPA reviews have been completed for $1.86 billion in projects. 

For illustrative purposes, the vast majority of the states utilize private sector companies to conduct the energy efficiency activities. In the case of an energy service 

company (ESCO) that has received a contract to undertake energy efficiency upgrades in a school building, the contract generally provides that payments are not 

made until the work is actually completed or milestones under the contract are satisfied. In general, the ESCO begins hiring upon contract execution and conducts the 

work. The economy is directly and indirectly impacted. However, the spending or 

‘‘costing’’ (in federal parlance) does not occur until the work is completed, the state 

is satisfied that the work is done properly and then the payment is made. Payments 

are not generally made up-front in order to protect the public against waste, fraud 

and abuse. Our ability to enforce the terms of these agreements are greatly enhanced if the state is holding the money, not the contractor. So, while the ‘‘costing’’ 

figure is low, the work conducted and jobs created is accelerating. We will not waste 

federal or state dollars by changing these contract terms. However, businesses can 

add employees and receive financing once the binding contracts are executed, with 

appropriate performance guarantees. 

The state energy director in Arizona recently reflected on this example, when he 

described being in his office one day in January when two contractors appeared 

looking at lighting and examining the facility in great detail—they were hired by 

the state’s contractor—and they were doing a technical energy audit as the precursor to implementing the energy efficiency measures. The state had not yet paid 

them, thus the federal money was not yet ‘‘costed’’ but the work was surely being 

done and these individuals were surely being paid. 

Moreover, the federal tally of jobs created does not reflect the substantial leverage 

states are achieving with excellent program design. In the case of state and local 

government building retrofits, states typically obtain 4-to-1 private capital leverage 

for projects. The federal guidelines for jobs created does not allow for the counting 

of any of the jobs directly created by this leverage. Given states’ use of at least one 

third of SEP funding for these types of retrofits the jobs count provided by DOE 

is far lower than reality. 

Spending of WAP funds has accelerated this quarter, despite the delays caused 

by Davis-Bacon compliance. The National Association of State Community Service 

Programs (NASCSP) and the National Community Action Foundation (NCAF) have 

been working closely with DOE to accelerate program delivery. We are confident 

that the target of 600,000 weatherized homes by March of 2012 will be achieved. 

For example, in New York the WAP program will dramatically exceed its goal by 

weatherizing 15,000 low-income houses and apartments in 2010, with an ultimate 

goal of 45,000 units by March of 2012. 550 housing units have now been completed 

and more than 17,400 units are in process. As of December 31, 2009, 226 jobs were 

directly created with many more subcontractor jobs and more than 720 people have 

been trained. In New York, $60 million from ARRA has been targeted for multi-family dwellings. 

In Arizona, 110 homes received weatherization services in September and October 

2009 with ARRA funds and an additional 369 houses were weatherized with regular 

appropriated dollars (an increase of 50% above normal rates). 

EECBG funds have been provided to well over 2000 cities, towns and tribes, many 

of which have not operated energy programs previously. In addition, the authorizing 

legislation also requires the development of an energy strategy. We have been impressed with the types of projects that are being implemented. The states are also 

tasked to work with the smaller communities directly. This has led to more coordinated energy programs and the use of ‘‘best practices.’’ We are also working closely 

with the U.S. Conference of Mayors, National League of Cities and the National Association of Counties to share information and assist the local and state governments. 

The State Energy Efficient Appliance Rebate Program (SEEARP), totaling $300 

million, is being rolled out across the country, generally in the first two quarters 

of 2010. The states are working with retailers to identify target time frames for pro-
30 

gram initiation, e.g., President’s Day sales or Earth Day. The program is over-subscribed and has had an immediate impact. The DOE Energy Savers web site has 

updated information (www.energysavers.gov/rebates). 

We are also trying to use these funds to transform energy markets and produce 

long-term, sustainable jobs. Thus, it is critical to plan our programs so that projects 

are conducted over time rather than over 1-3 months. This will help more effectively 

train workers, allow the demand to increase and allow a ‘‘green’’ workforce to develop. SEP ARRA funds are leveraging almost an additional $5 billion in investments, beyond the ARRA dollars. 

INITIAL DELAYS ARE NOW LARGELY OVERCOME

The most significant problems in ramping-up these programs have simply been 

in the processing of the paperwork and the need for federal, state and local employees to gear-up. This was an enormous job. SEP went from $50 million to $3.1 billion 

(though state-administered funding was in the hundreds of millions). WAP went 

from a DOE funding level of $450 million (though much more when considering 

other sources of funds) to $5 billion. EECBG went from $0 to $3.2 billion, with over 

2,300 direct grantees. The Appliance Rebates went from $0 to $300 million. 

With that said, the work completed thus far has been extraordinary. While there 

are, and there will be, examples of problems that are slowing us down, the results 

have been very positive. While there have been frustrations, the federal, state and 

local governments are working together—we are sharing successful approaches and 

looking at ways to streamline the systems. 

To step up to the challenge, NASEO hired on a part-time basis (with DOE support), 7 former state energy officials to help coordinate on a regional basis to ensure 

that every time a problem was solved we would not have to solve that exact problem 

again. DOE has also assembled a remarkable team. Matt Rogers has been extremely 

helpful in moving the ball forward. Cathy Zoi, as the Assistant Secretary for Energy 

Efficiency and Renewable Energy, has been tremendously accessible and moved 

quickly to find creative solutions. Gil Sperling first and now Claire Johnson, as the 

heads of the Office of Weatherization and Intergovernmental Programs (managing 

SEP, WAP and EECBG), and their staff, have been critical in addressing problems. 

Scott Blake Harris, the DOE General Counsel, recommended holding monthly calls 

with the state energy officials and the appropriate legal officials in the states to address problems. These calls have produced positive results. General Counsel Harris 

has also imposed a 48-hour rule—he attempts to solve problems in 48 hours. They 

have also set up a hotline (gchotline@hq.doe.gov) to respond to state and local legal 

problems. Sky Gallegos, the Principal Deputy Assistant Secretary for Congressional 

and Intergovernmental Affairs, has also been a key problem-solver for the Department. The National Energy Technology Laboratory (NETL) and the Golden Field Office (GO) are the key procurement arms for the Energy Efficiency and Renewable 

Energy Division (EERE) and they have been staffing up and improving their response times. Have there been issues—absolutely. Do we wish that problems were 

solved earlier—absolutely. However, we all recognize that the personnel are trying 

hard to get the job done and are more rapidly processing the paperwork. 

The greatest burdens have been in five areas: 1) general ramp-up issues; 2) the 

National Environmental Policy Act (NEPA); 3) Davis-Bacon; 4) Buy-American; and 

5) Historic Preservation. In each case, spending has been delayed but the laws are 

being complied with and the programs are being implemented. DOE’s efforts to address these issues resulted in the issuance of multiple guidance documents by the 

Department in November and December 2009. With this guidance in hand, states 

were then able to rapidly move funds to grantees. This process is accelerating. 

Ramp-up issues:—DOE has been faced with quickly building the capacity to manage massive new responsibilities. In addition to huge paperwork increases, DOE 

also needed to hire and train new personnel. The rapid expansion at DOE has led 

to some inconsistent decisions where one DOE program manager approves a state 

program while the identical program is rejected by another DOE official. 

To minimize the risk of waste, fraud or abuse, states also have detailed procurement processes that hindered rapid ramp-up. In Maryland, for example, any contract over $200,000 goes before a three member Public Works Commission, consisting of the Governor, Comptroller and Treasurer. While such procurement procedures take time, they help ensure that taxpayers receive the maximum value for 

their dollar. 

NEPA—NEPA posed a variety of challenges. First was simple logistics—there 

were simply not enough trained DOE personnel to evaluate these projects and programs. DOE has acted on over 5,000 NEPA actions, though there are thousands 

more. 
31 

Second, NEPA forced states to look for ‘‘shovel-ready’’ projects that didn’t involve 

shovels, since physical construction would likely trigger a lengthy NEPA review 

process. Maryland, for example, submitted its SEP application in June 2009 with 

programs designed to qualify for so-called ‘‘Categorical Exclusions’’ under NEPA. In 

early November 2009, DOE created ‘‘templates’’ for SEP and EECBG to make it 

easier for state and local governments to get ‘‘Categorical Exclusions.’’ Once we revised our application to fit the new DOE templates, DOE finally approved Maryland’s categorical exclusions in January 2010. For example, NEPA reviews for solar 

activities in Tennessee has slowed spending in that state. Nationwide, NEPA determinations have been completed on over $1.8 billion of SEP projects. 

Davis-Bacon—ARRA applied the Davis-Bacon statute to state energy activities for 

the very first time, creating a series of issues. In the WAP program we had to wait 

for the establishment of the wage rate for WAP workers by the Department of Labor 

before issuing contracts for WAP work. This wage rate was not established until 

September 2009, after the survey was completed in late August. Contracts were 

issued within a couple of months and work has ramped-up. 

In the recent IG report (OAS-RA-10-04) regarding the WAP program, the IG suggests that the states could have initiated these programs without knowing the wage 

rates. Unfortunately, the DOE IG simply has a lack of knowledge about these programs. If the preliminary wage rate was too high, does the IG suggest that we 

should get the money back from the employees? In the case of Ohio, where they did 

move more aggressively, the Department of Labor essentially reprimanded the state 

for moving too quickly. Wage determinations are still required for 5 states. In addition, we are still awaiting a determination by the Department of Labor that the 

WAP wage rates for residential energy efficiency programs can be utilized for the 

approximately $800 million in residential energy efficiency programs planned under 

SEP and EECBG. This determination will be critical and needs to happen quickly. 

Twenty-five percent unemployment in the construction trades and a 38% drop in 

reseidential construction jobs since the recession started, could be partially alleviated by permitting these projects to go forward. 

Another provision of Davis-Bacon requires that employees be paid weekly. In 

Maryland, and I believe elsewhere, many potential recipients of federal stimulus 

funds have declined awards upon learning of the need to reprogram their entire 

payroll system. It simply costs too much to accept the federal grant. 

Buy-American—For Buy-American requirements, three product waivers have been 

issued since the start of 2010 for LED street lighting, CFLs and certain types of 

electronic ballasts. These products are simply not made here. Without more guidance in the Davis-Bacon and Buy-American areas, the state and local governments 

are simply requiring that fund recipients ensure that the laws are complied with. 

We recognize the importance of these legal requirements; we are simply stating that 

it has caused delay. 

Historic Preservation—ARRA has created an avalanche of new work for state historic preservation agencies. Maryland, for example, will issue over a thousand 

ARRA grants and each one will need to be reviewed by our state historic preservation office. We have worked collaboratively to establish a screening process whereby 

grants at newly constructed buildings are approved quickly, whereas work performed at older buildings receive heightened scrutiny. Despite this workable arrangement, it sometimes causes frustrating delays. DOE, the National Conference 

of State Historic Preservation Officers and the Advisory Council on Historic Preservation recently concluded a model agreement that will hopefully speed program implementation. 

ARRA’S ENERGY INVESTMENTS ARE BEGINNING TO PAY SIGNIFICANT DIVIDENDS

It is sometimes said that ‘‘Statistics lie, but stories tell the truth.’’ Let me briefly 

highlight four examples of early successes that Governor O’Malley and the Maryland Energy Administration have achieved thus far. I believe these stories show 

that ARRA’s clean energy investments are beginning to show significant returns. 

First, we announced last week the ‘‘Greens at Liberty Road’’ project, which involves the construction of 105 affordable rental housing units for the elderly in 

northwest Baltimore County. The typical resident will enjoy energy savings of approximately 20%. The savings are particularly significant because low income families pay a disproportionate share of their income on energy. 

Thus far, over 1,300 apartments occupied by low income Marylanders have been 

retrofitted to date with ARRA funds. The Maryland Energy Efficiency Housing Affordability program provides grants for energy audits and the purchase and installation of equipment and materials for energy efficiency and renewable energy measures in affordable multi-family rental housing. The program is an ongoing partner-
32 

* Updates have been retained in committee files. 

ship between the Maryland Department of Housing and Community Development 

and the Maryland Energy Administration and is part of Governor Martin O’Malley’s 

EmPOWER Maryland initiative, which aims to reduce the state’s peak demand and 

overall energy consumption by 15 percent by 2015. 

Governor Martin O’Malley also announced last week a ‘‘Clean Energy Economic 

Development Initiative’’ grant to TDI, a Bethesda based company that manufacturers components of energy efficient lighting. With this funding, TDI will be able to 

transform their production from ‘batch’ to ‘continuous’ and they anticipate hiring 

new employees. TDI was one of four companies receiving the first round of performance-based awards to businesses that will spur clean energy production and create 

jobs in Maryland. Other winners include SWEBO, a Swedish-based biomass company that recently opened its U.S. headquarters in Bowie, Maryland, Competitive 

Power Ventures, which is proposing to build a 10MW solar installation in Charles 

County, and Maryland Environmental Services, which is developing a poultry litterbased biomass facility at the Maryland Eastern Correctional Installation. 

To bring the benefits of clean energy within reach of Main Street Maryland, Governor O’Malley has also invested $4 million of SEP funds into the development of 

an innovative, property-assessed clean energy (PACE) loan program. The EmPOWER Financing initiative seeks to leverage public funds with private capital to 

offer local governments a voluntary, clean energy loan program for their citizens. 

Maryland families and small businesses will benefit from the opportunity to obtain 

loans, which will be assessed on their property, to lower upfront costs for energy 

efficiency improvements and renewable energy installations. In close partnership 

with the Maryland Clean Energy Center, both the City of Annapolis and Montgomery County have enacted implementing local ordinances and several other localities are actively following suit. We hope to issue the first 50 loans over the next 

quarter. 

My final story involves our residential solar grant program. With hundreds of 

Marylanders on our wait-list, the Maryland Energy Administration exhausted its 

annual budget early in the fiscal year. Using ARRA funds, MEA was able to keep 

this program running. In just the last few months, over 100 homeowners have installed systems on their homes. An additional 185 homeowners have been approved 

for grants, while over 400 individuals are on a wait-list. The wait-list ensures a 

steady flow of work and avoids the boom and bust cycle, so solar installers can hire 

new crews with the confidence that the funds will continue through April 2012, the 

end of ARRA. 

Qualified Energy Conservation Bonds—Last week, when the Senate passed the 

first Jobs Bill, it approved a provision to allow Qualified Energy Conservation Bonds 

(QECBs), which are currently structured as tax-credit bonds, to be issued as directsubsidy bonds, which have been far more successful. This is an important change 

for a valuable yet difficult-to-issue Stimulus bond program. I thank the Committee 

for your leadership on this issue and encourage you to work with the House to not 

only keep the Senate language in the final bill but also raise the subsidy level. 

Maryland’s QECB allocation is a little more than $58 million, split among 12 local 

governments and the state. Maryland’s eligible local governments are very interested in issuing QECBs to help finance viable energy projects that will save energy 

and create jobs. Until the change to direct-subsidy bonds and a higher subsidy level 

are enacted, QECBs will continue to be tantalizingly out of reach.’’ 

Smart Grid—We are also concerned about the apparent impasse between the IRS 

and DOE on the taxability of ‘‘Smart Grid’’ grants. These grants should not be subject to federal taxation. This is slowing these projects and will reduce their reach 

and effectiveness. 

PROGRAMS IN OTHER STATES

More complete updates are attached to this testimony.* 

Alabama—This state has focused on a revolving loan program ($25 million), funding for energy efficient school retrofits ($5 million) and $20 million for state building 

energy efficiency retrofits including performance contracting. 

Alaska—The state is working to establish a bond program that would utilize $18 

million in ARRA funds to match $250 million in bonds for revolving loans for state 

and municipal building retrofits. Their appliance rebate program is targeted to 

begin on March 16, and will work with Alaskans with disabilities. 

Arizona—$19 million is being dedicated to school energy efficiency programs, with 

additional innovative activities in the agricultural sector and for non-profits. 
33 

Arkansas—This state has also established a revolving loan fund for K-12 schools, 

job training at technical and community colleges and industrial and agricultural energy efficiency programs. Arkansas has also established a $12 million revolving fund 

for sustainable building design. 

Colorado—$19 million of Colorado’s funds went to revolving loan funds, New Energy Economy Development Grants, renewable energy finance and a cooperative activity on technology commercialization with NREL. Residential energy efficiency 

programs received almost $6 million and a variety of renewable energy activities received almost $10 million. 

Kansas—Over $34 million in ARRA funds have been committed to revolving loans 

for residences and small businesses. The state is providing a $250 rebate to local 

banks to defray the costs for financing energy efficiency improvements. 

Kentucky—Almost $10 million is allocated for energy efficiency programs in 

schools. They have also allocated funds for agricultural energy programs and a 

Home Performance with Energy Star program. 

Louisiana—Almost $26 million was allocated to energy efficiency in state university buildings. They have also expanded their home energy efficiency rebate (HERO) 

program. They have also developed a commercial buildings energy efficiency program. 

Michigan—They allocated $24 million for energy efficiency in small industrial operations and supplier expansion activities for wind, solar, geothermal and biomass. 

New Hampshire—This state has 16 separate SEP programs, including their revolving loan fund and a first-time homebuyer’s energy efficiency program. 

New Jersey—$7 million has been allocated to fund solar installations on multifamily buildings for income-qualified recipients. Residential energy efficiency activities also received $8 million (including single and multi-family residences). 

New Mexico—$24 million under SEP was awarded to schools, colleges, tribes and 

other agencies to improve energy efficiency. Transportation programs and community-based district heating and cooling also received funds. 

North Carolina—Over $11 million was allocated to small businesses and industry 

for energy savings and renewable energy activities. $18 million was used to create 

an energy investment revolving loan fund for businesses, schools and other agencies. 

North Dakota—This state is working with the utilities providing consumer rebates for installation of energy efficiency and renewable energy equipment. Their 

wide variety of projects include extensive work with the agricultural and industrial 

sector and a high efficiency furnace rebate program. 

Pennsylvania—$82 million in SEP ARRA funds have been awarded, with most of 

the contracts executed for wind, biogas, combined heat and power and solar projects. 

Like many states, Pennsylvania has allocated funds for revolving loan programs 

($12 million for the Green Energy Revolving Loan Fund). 

South Dakota—They committed $20 million for a revolving loan for state institutions. They are also targeting on-site generation activities, ground source heat 

pumps and HVAC improvements. 

Tennessee—$24 million has been committed to the Tennessee Solar Institute, and 

additional funds for comprehensive solar programs throughout the state. 

Utah—$3 million has been dedicated to a whole home retrofit initiative with an 

additional $3 million for builder rebates for high performance homes. Public schools 

also received funding directly and through a revolving loan. 

Vermont—In this state they are expanding grants and loans for renewable energy 

through the Clean Energy Development Fund. 

Washington—They established an energy efficiency and renewable energy loan 

and grant program. They also dedicated $14 million for community-wide urban residential and a commercial energy efficiency pilot program. An additional $5 million 

was provided as a credit enhancement to support $50 million in project expenditures. 

Wisconsin—This states’ Energy Independent Communities Program has been on 

excellent example of state-local cooperation. This is complementing efforts under 

EECBG and SEP. Wisconsin has utilized ARRA funds to focus on manufacturing retooling and expanding new energy efficiency and renewable energy efforts. 

Wyoming—$19 million was provided for energy efficiency upgrades for public 

buildings, tribal entities and non-profit organizations. $3.5 million was contributed 

to weatherize homes for individuals above the WAP level, up to 250% of poverty. 

The CHAIRMAN. Thank you very much. Thank you all for your 

testimony. 

Let me start with a few questions. Matt, let me ask you, on this 

issue that Ms. Nellenbach raised about monthly reporting. I’ve 
34 

heard this same concern raised in my home State, where the same 

folks working in State government to get these funds distributed 

and allocated and all are the ones who are being asked to do these 

reports. They’ve been doing quarterly reports, as I understand it, 

and now they’ve been told they need to do monthly reports. I heard 

the same concern that I think Ms. Nellenbach talked about is—if 

this is the Department of Energy’s requirement, then are we going 

to see this all across the Federal Government, that we’ve got to do 

monthly reports for all ARRA spending, going forward? It seems 

like a very major recordkeeping burden. I don’t know if there’s any 

justification that you folks have settled on, that you think causes 

you to require it. 

Mr. ROGERS. So, in terms of the managerial reporting requirements, if you think about the quarterly reporting, that is about 

public accountability, making sure that, every quarter, we talk 

about how many jobs are created and how much money has been 

spent. 

Monthly reporting is what I would refer to as ‘‘managerial oversight.’’ We’re targeting managerial oversight reporting requirements on 12 specific projects that, up front, were identified as potentially high risk areas, weatherization being one of them, because 

what it allows us to do within the Department is to focus resources 

on helping those States and localities that are struggling the most. 

So, if we take weatherization—it’s actually a very simple reporting requirement. We want units weatherized and funds spent every 

month. By getting units weatherized and funds spent every month, 

what it allows us to do, then, is to identify those States and localities that are having the hardest time actually getting the units 

done against the targets that they have set for themselves working 

together with DOE. What that then allows us to do is to focus our 

training, oversight, and technical support resources on those communities that need them the most. 

The challenge is, without that data, we end up having to search 

around and find the areas that are in most need. The paradox is 

that sometimes the communities in most need, because they are 

under water, don’t even know what to ask for. What this does is, 

it gives us the kind of managerial data that, frankly, any business 

has. How much data do we need to have? Just in those programs 

where there is a great risk that we may not be achieving the numbers that we expect. 

The CHAIRMAN. All right. I think, we’ll just have to sort of feel 

our way along and see if the requirement is one that can be accommodated by the States and still get all the rest of what they need 

to do done. 

Let me ask—I think, also, you talked, Matt, about the various 

programs that have been oversubscribed, and the number of folks 

who’ve come forward with good applications that you haven’t been 

able to fund. Are there some particular areas that you folks have 

made funds available in that you think additional funds ought to 

be made available in by the Congress in future budgets, for example, because of the quality and quantity of applications that you’ve 

received? 
35 

Mr. ROGERS. One of the real privileges of this role is to look at 

the pipeline of new innovation going on in the United States right 

now. It is a rich and deep pipeline of very high quality projects. 

The area that I was most excited about, and most disappointed 

in our inability to fund fully, were the 48C manufacturing tax credits. We were oversubscribed in that program, by 3 to 1, with really 

terrific projects. We were able to fund 183 projects, 43 States, for 

$2.3 billion, but we could have easily done double that with 

projects that, as we went through this competitive merit review 

process, were above the line, really good projects that we would 

have been excited to fund. 

What we’re trying to do under that program is rebuild U.S. leadership in high technology, clean energy manufacturing. It’s in wind, 

it’s in solar, it’s in nuclear, it’s in geothermal, it’s in energy efficiency, it’s in the automotive sector, where U.S. manufacturers 

have the potential to produce the most competitive products in the 

world, but need the capital and need the kind of tax breaks to be 

able to make upgrades to their manufacturing facilities. So, that 

was the one that we were most excited about the project pipeline, 

and most disappointed with the quality of the projects that we 

were not able to fund. 

The CHAIRMAN. Let me just ask—this runs over my time, but I’d 

like to ask one followup on that. We’re likely to be debating, on the 

Senate floor, one or more amendments related to foreign-produced 

wind turbines, particularly wind turbines produced in China, and 

whether or not it’s appropriate for us to limit the use of Recovery 

Act funds to—and tax benefits—to projects that produce—or that 

involve the use of wind turbines manufactured here in this country. 

I don’t know if you’ve had a chance to look at these amendments, 

or if you have any thoughts about the issue; if you do, I’d be interested in hearing. 

Mr. ROGERS. We share a common goal, which is creating jobs for 

American workers. That’s clearly the focus of the Recovery Act, it’s 

the focus of every dollar that we spend within the Department of 

Energy. With respect to the 1603 program, in particular, 100 percent of those funds go to U.S. projects. So, the reporting has been 

more than a little misleading in this area. 

Vestas is a foreign company that has invested in the United 

States, in Colorado, to build a facility. Those are the kind of jobs 

that we actually want. We’ve seen, as a result of 1603 and 48C, $10 

billion of foreign investment in the United States in the last year. 

When Nissan builds an auto factory in Smyrna, Tennessee, we are 

really excited about that, because that’s jobs for American workers. 

Frankly, whereever the headquarters are, what we want are the 

jobs here. 

The other issue which is important in this discussion is, today 

about 63 percent of the value-added of a wind turbine, as a simple 

example, is made in the United States; the rest is imported. The 

biggest problem we have is not enough manufacturing capacity in 

the United States. So, things like the 48C program, where we’re 

trying to expand the manufacturing capacity, are essential. The 

most important thing we could do to fix the—make sure we get 

more jobs in America is to expand the manufacturing capacity here 

in the United States. 
36 

What we’ve done with the 1603 program—this is a program that 

is really working. We were going to see about a 50-percent drop in 

employment in the wind sector last year if we hadn’t done that. So, 

these were jobs that were saved. Instead, we saw a 3-percent increase in wind energy capacity in the United States, and an increase—we’ve more than doubled the American content of wind 

turbines in the last 5 years. This is a program that’s working. 

What we need to do is build more manufacturing. 

So, we are very excited about working with Congress to develop 

programs that make sure more and more of that is U.S. content. 

That, we can work with Congress and, I think, develop—while I 

have not seen the current language. I think the challenge is—what 

we don’t want to do is stop a program that’s really, really working 

well and putting Americans to work today. 

The CHAIRMAN. Thank you. 

Senator MURKOWSKI. 

Senator MURKOWSKI. Thank you, Mr. Chairman. 

Mr. Rogers, would like to follow up. I absolutely agree with you 

that we need to be looking to the number of jobs that are created 

here. Oftentimes you look at the name of the corporation and 

where it’s based, and you say, ‘‘Ah, there’s the issue’’ It oftentimes 

turns out to be a red herring. I would like your comments on this 

American University report, because in that report they indicate 

that almost 80 percent of the money has gone to foreign manufacturers of wind turbines. It may be that it’s explained, as you have 

said, that they were foreign-based. But, they go further to state 

that, ‘‘The stimulus bill created approximately 6,000 jobs overseas 

and maybe a couple hundred in the United States.’’ I am not sure 

if this was necessarily part of the American University report, but 

there are some press accounts that there is a Chinese company 

called A-Power, which is helping to build a wind farm in Texas. 

They expect to receive 450 million in stimulus. dollars. The American partner on that project, which allows the American base, estimates that it could create about 300 temporary construction jobs 

in this country, but it’s creating 2,000 manufacturing jobs in China. 

I agree with you, we have to do more to build our manufacturing 

base here. But, can you comment on, first, the American University 

report. How do we balance this out to ensure that we really get the 

bulk of the jobs here in this country, and not 6,000 overseas and 

a couple hundred here, and then we then claim that this is a jobsproducing bill for us? I would also like you, in this vein, to comment on the request from our colleagues Senators Schumer, Casey, 

Brown, and Tester, on their call for an immediate suspension of the 

Wind Energy Grant Program, until we can sort all this out. If you 

can address that, I would appreciate it. 

Mr. ROGERS. Over the last decade, one of the challenges that the 

United States faced is that we did not have a set of incentives, either for clean energy development or for clean energy manufacturing, that were competitive on a global basis. So, some of the 

most successful companies in the world decided to startup elsewhere; they started in Spain, they started in Denmark, they started in Germany. One of the things that we are trying to do is to 

change that landscape. 
37 

So when we now have created a set of incentives, both on the 

manufacturing side and on the development side, that are attractive, these companies, the best companies in the world in clean energy, are investing in the United States, because the United States 

has actually created the most attractive market for investment and 

job creation in the world. That’s actually what we want to be doing. 

The 1603 program is doing that, and bringing those jobs here. So, 

when the American University says that—I forget the number—80 

percent, 79 percent of the companies were headquartered abroad, 

that’s probably a true statement. The fact that those jobs are here 

in the United States is somehow missed in the report. 

What we’re seeing is investment in manufacturing. Gamesa is a 

Spanish company. They took a U.S. steel facility and turned it into 

a wind facility in Pennsylvania. They are now bringing people back 

to work. Over the last month, they actually just brought back 2 full 

shifts of operation because of the demand that they saw under the 

1603 program. 

If we lead to an immediate cessation, the problem is that what 

Gamesa will have to do is lay those folks off, because all of the sudden the project can’t continue going forward, because the project 

somehow doesn’t meet a requirement or because we create such 

regulatory uncertainty that people say, ‘‘You know, I really don’t 

want to move ahead.’’ 

The last piece is with respect to the Texas project. There is no 

project. We have no application. They haven’t broken ground on 

anything. One of the challenges that we face in clean energy development—I’m sure you see this all time—is, lots of people announce 

projects on paper, because they really, really would like to attract 

investors, and they’d like to position themselves well for other 

things. Until we have a project, we have nothing that we can actually evaluate. If we have a project, what we see is, in the vast majority of projects in the United States, the vast majority of the content is domestically based. So, we can only evaluate what we actually have. There is no Texas wind project, other than on a press 

release. So, until we see that application, it’s really hard to evaluate it. 

Senator MURKOWSKI. Would you dispute, the American University report, when it says that some 6,000 jobs have been created 

overseas and maybe a couple hundred is what—— 

Mr. ROGERS. I would—— 

Senator MURKOWSKI [continuing]. The terminology—— 

Mr. ROGERS [continuing]. I would say that—— 

Senator MURKOWSKI [continuing]. That they used. 

Mr. ROGERS [continuing]. That was factually false. 

Senator MURKOWSKI. Factually false. I will have to check back 

on this, because we’ve looked at the situation with the Spanish 

firm Iberdrola, and the manufacturer Gamesa. It was my understanding within the Pennsylvania facilities, that they had to lay off 

about 100 workers, and I’m understanding it’s temporary but, 

based on what’s going on within the market, they had to lay off 

their workers as well. 

Mr. ROGERS. With respect—— 

Senator MURKOWSKI. So—— 
38 

Mr. ROGERS [continuing]. Specifically, to the Gamesa facility, 

they called them back, about 3 weeks ago, to full strength—again, 

based on the demand that they were seeing in the marketplace. So, 

again, this is—these are the things that we find very reassuring 

and very confidence- building. One of the things that we don’t—one 

of the challenges that we’ve faced in—particularly in clean energy 

regulation, is we’ve been inconsistent with what we were doing, 

and so, people freeze and then, you know, don’t invest the capital. 

We’re actually seeing the capital investing, we’re seeing rapid 

growth in the market, we’re seeing people called back to work. So, 

what we don’t want to do is disrupt that. At the same time, I do 

think we need to work to make sure that we’re maximizing the jobs 

here in the United States. 

Senator MURKOWSKI. I understand, based on what you said, you 

would disagree with our democratic colleagues, with their request 

to halt the funding to the wind grant programs. 

Mr. ROGERS. We are looking forward to working with Congress 

to make sure that we have appropriate provisions. Halting a program at this point would not be helpful for jobs. 

Senator MURKOWSKI. Thank you, Mr. Chairman. 

The CHAIRMAN. Senator Stabenow. 

Senator STABENOW. Thank you very much, Mr. Chairman. 

Welcome, to each of you. I would just like to follow along this discussion, which I think is so very important. 

First, coming from Michigan, I can say that the Recovery Act has 

absolutely created jobs. We have been extremely pleased to work 

with the administration on the advance battery manufacturing dollars, which are opening plants and putting people back to work, as 

well as the 48C, the advance manufacturing credit, which I was 

pleased to partner with Senator Bingaman in championing in the 

Recovery Act, as well. Retooling loans are bringing back, literally, 

cars that were made in Mexico to being made in the United States, 

because we’re helping retool plants for smaller energy-efficient electric vehicle and so on. So, I appreciate that. 

I guess, to add my voice to this, though, we, in my judgment, 

need to have an advanced manufacturing strategy in this country. 

We have bits—we have bits and pieces of it that we’ve put into the 

Recovery Act. But, we are in this dilemma, in my judgment, of creating new industry when we don’t yet have full capacity. 

I think of the Advanced Battery Initiatives. We have companies—our auto companies partnering with Korean companies, who 

make the battery cell, because they can do the battery pack, and 

assemble it, but they don’t yet have the technology for the cell. On 

the other hand, I guess what I would challenge us, is we do have 

a company—A123 Batteries—in this country, that is doing all of it. 

So, how do we prioritize, when we do have companies that are beginning to focus on, you know, bringing that technology—and they 

actually came back from Asia. They were in Asia, and came back. 

It’s a wonderful story; an American company producing in Asia 

came back to the United States. 

So, one of my questions relates to, How do we make sure we are 

giving priority to those that are developing here, the complete 

package here in the United States? I would suggest that, while I 

share the concerns of colleaguea that—in terms of, ‘‘How do we 
39 

make sure these jobs are all happening here?’’ it is not just section 

1603 that’s the problem; it’s the fact—if it’s a—if it’s by itself, 

that’s the problem. So, expanding in—and we are, you know, working together to—and support the President in his call for additional 

moneys for the manufacturing tax credit in 48C, and the retooling 

programs, and so on. Because, I think we have to have a strategy 

that, in my judgment, also includes things like trade; opening up 

markets, as the President has called for; trade enforcement, when 

they steal our patents overseas. I mean, we need a whole strategy. 

Right now, on wind turbines, there are 8,000 parts in a big wind 

turbine. Mr. Chairman, we could make every one of those in Michigan, if given the opportunity. But, we know right now that—I think 

we have one American company that makes gear boxes, and, you 

know, the first supplier of generators just came online last year. 

So, I would just ask you to—as we look at all these programs 

that we’re putting together, what is DOE doing to take into account 

the fact that we have to create the capacity—and I know that—I 

know you’ve spoken to that, but it seems to me, we have to be laser 

focused on how we create that capacity here. We need to do our 

part, as well, to make sure that we are not in a situation that we 

have been in with other industries, where—never forget the President going to England and—Great Britain—presenting to the 

Queen a great American ingenuity, the iPod, developed in America, 

made in China. So, we don’t want that to happen with clean energy, there is absolutely no reason for that to happen on clean energy. 

So, I guess I would just ask you to—your thinking, more broadly, 

on what we ought to doing, what DOE’s doing to, as quickly as possible, fill in these gaps. 

Mr. ROGERS. I think it’s exactly the right question. This is something that is deeply important to the Secretary. If you take the specific examples of the battery grants, where companies like A123, 

which started as a small-business innovative research program 

under DOE, with $100,000, and now is the largest recipient under 

the battery program, was going to build their plants in China, now 

A123 is going to build them here in the United States. 

I think we draw 2 pieces. First, under the selection criteria you 

had to have a domestic demand source to go with the domestic 

manufacturing, in order to actually move up the chain in the reviews. So, one of the things that we clearly recognize is the need 

to manage a supply and demand together. Because if we do one 

without the other, all of a sudden we could end up with factories 

that are empty, or we end up importing, because we’re buying really high quality stuff, but we don’t have the manufacturing capacity. 

So, we have to think about supply and demand together. 

The other thing that I think the A123 story illustrates is the 

need to link R&D and manufacturing. One of the things that the 

Secretary is doing is having a national conversation about the notion of accelerating innovation. How do we accelerate innovation in 

this country? One of the clear messages back is that, when I do 

R&D, I actually want my factory next-door, because that’s where 

the innovation actually takes place. Because I can take the R&D 

and I can turn it into money in the factory by innovating the way 

that I’m actually producing the product. If I don’t have the manu-
40 

facturing here, all of the sudden it’s harder actually to keep the 

R&D here. Right? 

So, we have to think about supply and manufacturing and R&D 

together to make that work. This is an enormously important 

theme for the Secretary. He’s working a lot of time, on a national 

basis, really trying to understand, ‘‘How do we articulate this in a 

comprehensive way?’’ Because if we’re going to be successful competing on a global basis, we’ve got to think about that whole value 

chain together. 

Senator STABENOW. Thank you, Mr. Chairman. 

The CHAIRMAN. Senator Wyden. 

Senator WYDEN. Thank you, Mr. Chairman. 

Thank you all for your service. 

Mr. Rogers, I want to ask you about the Energy Efficiency Block 

Grants. I will tell you, the process, obviously, has been long and 

drawn out. But, I am just baffled about how the Department is 

going about making some of its decisions in this area. I want to 

walk you through an example that has been very frustrating to my 

constituents. 

I was recently having a townhall meeting in Condon. It’s Condon, 

Oregon, population 600. The city received a grant of $244,000 to 

make repairs and upgrade its water system and save thousands of 

kilowatt hours of electricity that are now used to pump water 

through an out-of-date, leaky water system. The project that they 

proposed clearly would save energy, it would save money, and it 

would save water. 

Your Department told them that their project was ineligible. So, 

I have written to the Secretary about this. We haven’t yet gotten 

an answer. The committee has worked hard to figure out how they 

can save energy, make their own contribution to creating some jobs 

and advancing our national energy goals. We are just baffled as to 

why the Department doesn’t think they should get the grant. I 

think there’s also some indications that, initially, they thought they 

were going to get the grant. So, anything you can do to shed some 

light on this, this morning, and give us your thought? 

Mr. ROGERS. The overarching observation I’d make is, one of the 

exciting parts about the Energy Efficiency Conservation Block 

Grant Program is the innovation that is going on at the local level 

and giving the localities the ability to prioritize projects, because 

they know, actually, where the best place is to spend the money locally. So, that’s why we’re quite excited about that program. 

With respect to the city of Condon issue, this is an issue where— 

my understanding, at least, is that, in the initial application, the 

energy savings were unclear. One of the clear mandates that we 

have is to make sure that the energy savings are there. 

We’ve gone back—Secretary’s gone back, and I’ve gone back—to 

investigate that we will, in fact, re-review that application and 

make sure that—if the energy benefits are there, we will make 

sure that that grant can actually move forward. 

I think this is one of those challenges, as both—one of the things 

that we did under the Conservation Block Grant Program is, we 

asked a whole set—2350 new recipients to develop energy efficiency 

plans at the local level, if they hadn’t done before. As they developed those plans, we and the communities actually had to learn 
41 

how to talk to each other about what energy savings looked like, 

how to measure that. I think we’re getting much more articulate 

in that conversation now. We’ll be more than happy to take a look 

at that one and get back to you promptly. 

Senator WYDEN. Would you? Because it—again, I think—we’re 

pleased to hear that it’s going to be reviewed, but the State did the 

original evaluation for it. Apparently, they scored 4 out of 5 in all 

of the relevant criteria—being shovel-ready, ability to implement 

the project, the benefits to the community. 

I’ll just tell you, this, to me, is the real world. I mean, these are 

tiny communities. I have open meetings every county, every year. 

I’m concerned that they walk away and think that the Federal 

Government is going to have policies that turn them into a sacrifice 

zone that basically say, ‘‘What goes on in a community, like 

Condon, really isn’t all that important.’’ 

I’ve seen the pictures they show, with respect to the problems 

they have in these pipes. They’re just big old enormous holes. I 

mean, this is not rocket-science stuff, and I just hope that we can 

get, to the good people of Condon, some positive news here, because, on every count, the evidence, whether it’s assembled by the 

State—or the pictures that they walked me, you know, through— 

it seems to me this should have been resolved a long time ago. 

When can you get back to me with respect to the timetable for 

re-reviewing and when a decision’s going to get made? 

Mr. ROGERS. We can get back to you in the next couple weeks 

on that topic. This is not that complicated. 

[The information referred to follows:] 

DEPARTMENT OF ENERGY

Washington, DC, March 9, 2010. 

Hon. RON WYDEN, 

U.S. Senate, Washington, DC. 

DEAR SENATOR WYDEN: Thank you for your February 19, 2010, letter to Secretary 

Chu regarding the Energy Efficiency and Conservation Block Grant (EECBG) funding for the City of Condon, Oregon. 

The EECBG project submitted by the City of Condon called for the replacement 

of 2,000 feet of aged water pipeline and the installation of new water meters. The 

Department of Energy’s (DOE) review suggested that the project would have limited 

energy savings over its lifetime and as a result, the project would require a long 

payback period. Thus, we initially did not approve the project. 

On March 5, 2010, we discussed the merits of the City of Condon’s project with 

the Oregon State Energy Office. The State of Oregon conducted a comprehensive 

merit-based review of the application. Within that review, the State considered not 

only the energy saved, but the project’s ‘‘shovel-readiness’’ and its ability togenerate 

jobs. In addition, the State considered the demographic diversity of each project, its 

contribution to conserving water, and the synergies between projects. Based on this, 

and other new information, the DOE approves the City of Condon’s pipeline project. 

Thank you for bringing this matter to my attention and for your commitment to 

energy efficiency and renewable energy. If you need additional information, please 

contact me or Mr. Jonathan Levy, Office of Congressional and Intergovernmental 

Affairs, at (202) 586-5450. 

Sincerely, 

CATHY ZOI, 

Assistant Secretary. 

Mr. ROGERS. One of the things we discovered in this process was, 

when we got in the initial applications from so many communities—right? This is part of the learning process—we ended up 

putting about 100 people down in the basement of the Department 

of Energy to call people. Because one of the things we found was, 
42 

the traditional bureaucratic processes, where we go and toss things 

back and forth over the transom, those don’t work. Right? The key 

thing is to actually pick up the phone, call the city, really understand what they’re trying to do, and make sure that we can do the 

translation function into the necessary forms to make that work. 

So, we’ll get to the get to the bottom of that. I’ll be happy, personally, to get back to you—— 

Senator WYDEN. Thank—— 

Mr. ROGERS [continuing]. On that. 

Senator WYDEN. Thank you. There’s no question that you and 

the folks at your Department are well intentioned. I am absolutely 

convinced there is nobody at the Department of Energy who got up 

that morning and said, ‘‘I want to spend my day being rotten to the 

people of Condon, Oregon.’’ That is not at issue. Your folks are well 

intentioned, trying to do the right thing. But, these places are falling between the cracks, Mr. Rogers. We can’t have that. I’m going 

to just assume we’re going to get this resolved within the next 2 

weeks. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you very much. 

Senator BURR. Senator BURR. Thank you, Mr. Chairman. 

Mr. Rogers, in a report to Secretary Chu the inspector general, Gregory Friedman, said that, as of February 16th, only $368 million, or 8 percent, of the $4.73 billion targeted for weatherization 

programs had been tapped by State and local governments. Now, 

that computes to only 30,297 homes, when the target was 586,000. 

In North Carolina, if I break that down, it’s 197 homes, with a target of 22,000. 

Now, on the surface, it seems to me that we rushed to put together a spending program, to put together items that we thought 

were attractive, that would generate economic activity, and that we 

gave very little thought to the challenges of how quickly you could 

stand these programs up. 

My question’s really to the entire panel. How can you effectively 

and efficiently put this money to work? 

Mr. ROGERS. Maybe I’ll start, and others have good views on this 

program, as well. 

So, that what—the data that you cited from Greg Friedman was 

actually end-of-the-year data, that we’d done 30,000 homes with 

Recovery Act funds by the end of the year. Actually, the Weatherization Program, overall, did 125,000 homes last year, which was 

a 70-percent increase on the year prior. So, big step up in the program, good execution on that. We slowed up, for a variety of DavisBacon related reasons, in terms of spending Recovery Act funds, 

but they actually got a lot of homes weatherized. 

We’re on pace to do 250,000 homes this year. In the month of 

January, we were operating at about a 17,000-homes-a-month rate. 

We believe we were up on that in February. We’re targeting a 

30,000-homes-a-month rate by the end of March. This is about 

making sure that each of the recipients understands what their 

targets are and understands that we can help if they’re behind 

with training and technical assistance to make sure that they’re 

successful. 
43 

As of this morning, we’ve actually outlaid $590 million of the 

Weatherization Program, so almost double the number that we 

were at—just at the end of December. So, we’re making good 

progress, and accelerating progress, under this program. 

Senator BURR. Let me sort of expand the scope, and I’ll let everybody comment on it. During a DOE budget hearing, February 4, 

Secretary Chu suggested that the delay in stimulus expenditures 

was at the State and local levels. But, both the inspector general’s 

report and the GAO report suggests it’s the Federal requirements 

that have hindered the expenditure of funds. 

Now, you’re telling me there’s nothing that’s been hindered, 

based upon your comments, that you’re right on schedule, you’re 

doing exactly—and, I would love to know, especially from the Governors Association, Is that accurate? GAO suggested that it was 

the Federal Government, and not the State or local governments. 

I think maybe we need to sort through this and find out what’s the 

right thing. 

Ms. NELLENBACH. Thank you for the opportunity, Senator. We 

don’t—we would generally agree with the GAO’s findings that it 

was the Federal requirements and the unfamiliarity of some of 

agencies that were now supposed to implement Davis-Bacon, who 

had not had to do so before. So, unfortunately, it took until July 

for the Department of Energy to ask Department of Labor to help 

with the wage determination. To the Department of Labor’s credit, 

it took them 3 months, which I guess is very, very quick for this 

type of work. But, they, within 3 months, had a wage determination. 

So, really no weatherization money, or very limited numbers of 

weatherization money, could go out the door until September 2009. 

So, at that point, then, States really got into doing some training 

and getting workers in place. So, I think you’re going to see a ramp 

up of spending over the next couple months on weatherization, but 

there was definitely a delay at the Federal level that hindered 

State ability to spend those funds. 

I think an important benefit—well, an important side story to 

this is, you know, weatherization preceded ARRA by 30 years. A 

lot of States, and North Carolina included, took the infusion of the 

ARRA money as an opportunity to make sure that problem can live 

another 30 years. So, they reformed their programs. North Carolina worked with its community colleges to update its training programs. So, it’s—a lot of things were done so that, when the ARRA 

money runs out, you have more sustainable programs over the long 

run. But, certainly a lot of that was delayed because of delays at 

the Federal level. 

Senator BURR. OK. 

Ms. Dalton. 

Mr. WOOLF. If I could respond—— 

Senator BURR. Sure. 

Mr. WOOLF [continuing]. To that, as well. Sorry. On behalf of the 

NASEO, the State energy officials, progress certainly has been 

slower than anyone would hope. But, I think some of the data that 

is being cast about paints an incomplete picture. You don’t pay for 

the work that’s been done until it’s been satisfactorily completed. 

So, it’s always a lagging indicator. 
44 

The work is being done now, businesses are hiring workers, buying more insulation, making purchases, and that’s not showing up 

in GAO’s data of money spent, because we don’t pay those workers 

until the job’s actually been completed. To prevent waste, fraud, 

and abuse, we’re doing a huge amount of quality control before 

we’re paying them, as well. So, a lot of work has been done, both 

on weatherization as well as the rest of the programs, that we’re 

not seeing in the Federal costing numbers, but it—are real jobs 

being created. There’s success stories in every State to back that 

up. 

Senator BURR. Ms. Dalton. 

Ms. DALTON. I would actually agree with all of my colleagues, 

but try to put a picture on what was happening. There was an 

awful lot of effort that was put in, last year, in building the infrastructure of this program. I grew by twentyfold from the original 

program. But, there certainly were things, like the Davis-Bacon requirements, that did cause some delays, and I think they still are 

causing some concerns at the State level. 

The Davis-Bacon, wage determination came out in September. 

The government really didn’t start action on it until June. It was 

something that probably could have been foreseen a little bit earlier and moved along faster. States rightly, I think, decided to wait 

until that final wage determination came out before they started 

actually implementing the Recovery Act. 

In the meantime, as was pointed out by the Department of Energy, they did start weatherization activities using their base program that comes through their annual appropriation, and about 

100,000 homes were weatherized through that program. 

But, as problems come up, it’s important to quickly react to 

them. As I said, on Davis-Bacon, we probably could have reacted 

a little bit sooner. There are continuing concerns with it. For example, the wage determination that came out in September applies to 

residential housing units. There’s continuing concerns on larger 

housing units, those that are 5 floors or higher, and what wage 

rates should be applied there. It’s difficult for the contractors that 

are actually doing the weatherizing to figure out, ‘‘Well, which 

wage rate should I be using here?’’ and paying, potentially, the 

same workers different rates because of what work they’re doing. 

These are things I think we need to be proactive about and try 

to get resolution so that the States aren’t—and the local governments—aren’t having to deal with this issue. 

The CHAIRMAN. Senator Menendez. 

Senator MENENDEZ. Thank you, Mr. Chairman. 

Mr. Rogers, I was proud to support the President in the passage 

of the Recovery Act. When he signed it, he declared that the plan 

would, quote, ‘‘be implemented with an unprecedented level of 

transparency and accountability.’’ However, my staff has made several inquiries to your offices to find out how many New Jersey companies applied for the Advanced Energy Manufacturing Tax Credit, 

48C. They were told that this information could not be shared. We 

didn’t ask for names of any applicants, we asked for how many 

companies applied. 

Now, as we look to extend this program, information like this is 

critically important. So, is it truly information that is so secret that 
45 

I can’t know how many people from my State applied for this program? 

Mr. ROGERS. One of the things we’ve tried to do under this program is to create a high degree of transparency. You go to our Web 

site, you can see every recipient of our funds. You go—you see our 

financials every day. So, we are trying to make sure we drive more 

transparency. 

On this—on the particular issue of the tax credit program, the 

48C program, the challenge we have there is, we’re working on behalf of the Department of Treasury and the IRS. We’re act—and 

we—under those conditions, we actually have to operate under IRS 

rules, not under DOE regulations. IRS rules specifically prohibit 

the sharing of that data. We’ve actually gone— 

Senator MENENDEZ. Sharing of—— 

Mr. ROGERS. Our general—— 

Senator MENENDEZ [continuing]. Data to know how many entities applied. Not who they are—— 

Mr. ROGERS. Correct. 

Senator MENENDEZ [continuing]. But how many entities applied. 

You’re telling me the—if I get the IRS, that’s what they’re going 

to tell me? 

Mr. ROGERS. That—we went back to—our general counsel went 

to the IRS general counsel to ask that question, and that was the 

answer that came back, was that we were legally prohibited from 

sharing that information. I’m not an expert, by any means, in IRS 

rules. So—— 

Senator MENENDEZ. All right. 

Mr. ROGERS [continuing]. I take the—— 

Senator MENENDEZ. So, we will—— 

Mr. ROGERS [continuing]. IRS—— 

Senator MENENDEZ [continuing]. We will get the IRS and get to 

the bottom of it, because I don’t know how Congress is supposed 

to determine whether there is a sufficient demand for a program 

in order to make a determination whether it is worthy of extension 

and producing the results. It’s—I mean, somewhat asinine, at the 

end of the day, that—I’m not looking for who they are, I’m simply 

looking to know the quantity of demands on something. It’s pretty 

incredible. 

Let me ask you something else. We asked how many New Jersey 

communities have applied for the competitive portion of the Energy 

Efficiency Block Grant Program, which I authored, and we were 

stonewalled again. Are these national secrets, as well? 

Mr. ROGERS. So, the Energy Efficiency Conservation Block Grant 

Program, the competitive portion, is a—a very exciting program. 

So, we applaud your authoring of that—of the—over all the 

EECBG. The competitive portion, I think, is going to be a very exciting piece to roll out. 

One of the things that we’ve had to be careful with, throughout 

this process, is on the people that we have turned down for applications. This is broad-based. So, we’ve—we’re oversubscribed, 5 to 1, 

on average, for all of the competitive activities that we’ve had underway. We’ve run through very competitive peer-review processes, 

with an emphasis on making very high quality decisions as we 

work through there. 
46 

What we worry about is that we’ve had to turn down some great 

companies, we’ve had to turn down some great projects. 

Senator MENENDEZ. Let me—— 

Mr. ROGERS. What we—— 

Senator MENENDEZ. Let me—— 

Mr. ROGERS [continuing]. Don’t want to do—no—— 

Senator MENENDEZ. Let—— 

Mr. ROGERS [continuing]. What we—— 

Senator MENENDEZ [continuing]. Let me—— 

Mr. ROGERS [continuing]. Don’t want to do—— 

Senator MENENDEZ [continuing]. Interrupt you, because that’s 

not my question. 

Mr. ROGERS. I’m sorry. 

Senator MENENDEZ. That’s not my question. Let’s listen to my 

question. I asked a simple question. How many New—I didn’t ask 

even who they were—how many New Jersey communities applied 

for the Energy Efficiency Block Grant? What is the State secret, 

that I can’t get that number? 

Mr. ROGERS. So, what we don’t want to do is make—is diminish 

the value of any company that is not awarded funds, even though 

they’re a great project. That—that’s the principle that we’re operating with. So, there are a whole set of procurement rules that say 

we cannot disclose things about applicants who are not awarded. 

That limits our ability—— 

Senator MENENDEZ. I won’t know—— 

Mr. ROGERS [continuing]. To have conversations— 

Senator MENENDEZ [continuing]. Who the applicant wasn’t 

awarded. I’ll just know that 100 entities—New Jersey communities—I’m not even talking about companies—100 New Jersey 

communities applied, and we got 20 of 100. I mean, I—what is— 

what is wrong with getting this—this is transparency? That I can’t 

know the macro number of communities that—public entities that 

applied? How can you sit there and tell me that? It’s ridiculous. Ridiculous. 

Let me ask you one last question. You know, we—I have worked 

with the U.S. Conference of Mayors, which was one of the instigators of the Energy Efficiency Block Grants, and—as we devised it— 

and, you know, based on the testimony today, it seems that States 

have managed to clear away many of the roadblocks hampering the 

program. Based on my conversations that my staff has had, with 

the Conference of Mayors and with mayors in my home State, it 

seems that working through these issues on the local level has 

been less successful. 

What’s DOE doing to get Block Grants actually spent—not committed—on the local level? How are we breaking through? It seems 

I’ve done fairly well with the States. Why can we not do this with 

municipalities? 

Mr. ROGERS. The level of innovation going on at the local level 

is absolutely terrific. One of the things that we’re trying to do is 

to do is to expedite that. One of the things that we found was, with 

2350 new recipients of DOE funds, that some traditional processes 

didn’t work. So, what we did was, we made a set of changes. What 

we’re effectively doing now is working this on a SWAT team basis. 
47 

We’ve got a group of folks who are designed to knock down each 

of the barriers in the way. 

One of the key challenges right now is making sure that each of 

the communities has described what it is that they’re going to 

spend the money on, and that we can categorically clear that 

through things like NEPA reviews. What we’ve created are a whole 

set of very streamlined 1-page things, that basically you can check 

off and say, you know, ‘‘Therefore, we—therefore, we’re ready to 

move forward.’’ So, we’ve created a whole new set of ways to get 

this done. Basically what we’re doing is calling communities one by 

one to make sure that that happens, with a group of about 80 folks 

in our offices, because what we’ve discovered is, again, it doesn’t 

work very well with mail coming in, or even emails; it works really 

well when we can get on the phone with people and actually work 

through it, and just clear them. Because what we’re trying to do 

with each of those—the mantra that we’ve put in place there is, 

‘‘Move a set of communities across the line, get them spending 

every day.’’ 

Senator MENENDEZ. I look forward to following up with you. You 

know, as one Senator who has been supportive, you’re not going to 

get my support if I can’t simply get information. I can’t make decisions that are intelligent, I can’t act as a fiduciary for the 9 million 

New Jersians I represent here, I can’t make intelligent budget decisions on your requests, if I can’t get information. So, either we’re 

going to change the paradigm on how we get information, or you’re 

going to lose one Senator’s vote here, at the end of the day. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you. 

Mr. Woolf, let me ask you—you and Ms. Dalton have both made 

reference to this problem with the wage rates, saying that the wage 

rates were decided, as I understand it, and established by the Department of Labor in September for residential construction, but 

they have not yet been fully established, I guess, with regard to 

other types of construction. Could you elaborate on what that problem is and what is needed to get that problem fixed? 

Mr. WOOLF. I think we were talking about 2 different aspects of 

the same type of problem. What the Department of Labor has done, 

in a very expedited manner, is create, for the first time, a wage 

classification for weatherization retrofits. It’s never been subject to 

that, to Davis-Bacon, before. Now, that we know that a wage rate 

for a contractor who’s retrofitting a low-income home, we want to 

apply that same wage rate for the same contractor who’s doing the 

non-low-income home outside of the Weatherization Program. 

So, if you’re doing—if your community, using EECBG funds, are 

retrofitting buildings, it’s the same work, it’s often simply the 

same—literally, the same contractor. The Department of Labor has 

not allowed that wage classification to be extended beyond weatherization to other categories; so communities have to guess; contractors who are applying have to guess what wage classification 

to use; one contractor may make one assumption another may 

make another; gives them a competitive advantage, because of the 

uncertainty. It is impacting how quickly jobs are getting done. 

The CHAIRMAN. So, you’re suggesting that Department of Labor 

needs to clarify that the wage rates they’ve established for this 
48 

weatherization activity should be applicable for any weatherization 

activity, whether it’s federally subsidized or not? 

Mr. WOOLF. Regardless of which Federal program it’s—— 

The CHAIRMAN. Regardless of which—— 

Mr. WOOLF [continuing]. Coming from. 

The CHAIRMAN [continuing]. Which program is subsidizing it. Is 

that your understanding of the problem, as well, Ms. Dalton, or 

not? 

Ms. DALTON. I think there’s just one other aspect of the problem, 

and that was what I was referring to, where the Department of 

Labor has said that a different class of worker and wage rate 

should be applied to, as I said, buildings that are more than 4 

floors high. What they haven’t looked at is what, exactly, is the 

work that’s going to be done, and setting a wage rate for that. 

So, what they’ve said is that, for those larger buildings, you 

should be applying a wage rate that’s for a different class of construction work—for plumbers or electricians, as opposed to weatherization workers. What they really need to look at is weatherization workers, and what types of work are going to be done, and 

what the wage rate should be for them, so that there is a determination that people can go to, to say, ‘‘All right, this is the class 

of worker; this is what we’re doing,’’ and not bringing in electricians and plumbers and all of these other types of activities. 

I think—some of this has been just because, as there’s a better 

understanding of the Weatherization Program, there’s clear understanding of the types of work, but I think the Department of Energy and the Department of Labor really need to talk to each other 

and reach, as I said, some consistent guidance and determinations 

that State, local governments, and contractors can use. It’s really 

unclear. We keep running across different problems—— 

The CHAIRMAN. Mr. Rogers, do you know of anything going on 

that will clarify this, or is this something that we should contact 

the Department of Labor about? What’s your thinking? 

Mr. ROGERS. So, this is a topic that we talk to the Department 

of Labor about just about every day. This is something where—I 

would note the collaboration with our partners at NASEO and 

other—and with some of the other national agencies have been 

very, very helpful. because what it allows us to do is identify the 

confusion on the front line, and then see if we can solve it at the 

top level, here. 

So, we’ve been working with Labor on this issue. I think there 

are 2 different pieces: 

In terms of the commercial wage rates, I think that’s simply a 

question of guidance, making sure that, for large buildings, there’s 

clear guidance on which categories you use. The wage rates are 

clearly established; it’s just making sure people are consistent in 

doing that. That’s something that we can do reasonably directly. 

In terms of the application of weatherization rates, it’s a Department of Labor decision as to what happens there. We’ve made our 

views on that known to Labor, and we expect to have that resolved 

relatively promptly. 

The CHAIRMAN. OK. Mr. Woolf, did you want to add anything? 

Mr. WOOLF. I did. I know that there are proposals floating on 

Capitol Hill for further efforts to accelerate clean energy innova-
49 

tion. I would encourage Congress to think about our experiences 

with Davis-Bacon before they apply that requirement to new programs, because it has been an impediment to getting dollars spent 

quickly. 

The CHAIRMAN. OK. 

Senator MURKOWSKI. Senator MURKOWSKI. Thank you, Mr. Chairman. 

You know, I am still as fuzzy on this as before the line of questioning started. The comment was made, I don’t remember who 

made it, but, weatherization programs have been going on in the 

States for decades now. If we have a State weatherization program 

in Alaska, and we’ve been working with our auditors and moving 

the State level, and then we now have stimulus funds that come 

in to supplement what we’re doing, is the State weatherization program somehow or other snarled up in the wage resolution issues 

that we have been discussing? It causes me to wonder whether our 

good intentions, in advancing these stimulus funds, has actually 

even slowed some of our efforts with our own State weatherization 

programs. 

Mr. Woolf, you look like you’re going—— 

Mr. WOOLF. Yes. 

Senator MURKOWSKI [continuing]. To jump in. 

Mr. WOOLF. I think what the Davis-Bacon—the application of 

Davis-Bacon to State weatherization programs has delayed the 

ability to use the stimulus funds. So, what Maryland and, I think, 

other States have done is use their other State money, and they’ve 

exhausted that money first—— 

Senator MURKOWSKI. Right. 

Mr. WOOLF [continuing]. While the Federal Government has 

worked out Davis-Bacon. The success story here is that the States, 

working with the Department of Energy and the Department of 

Labor, now do have a wage classification for most weatherization 

activities. That was made in September. It’s now kicked up—in 

Maryland, at least. We’ve been able to ramp up our production, so 

we are now about on track to do as many homes as we hoped to, 

to reach our ultimate goal. What I’m asking for is that be extended—— 

Senator MURKOWSKI. Sure. 

Mr. WOOLF [continuing]. Beyond weatherization, to the other 

areas. 

Senator MURKOWSKI. Let me ask you a question, Mr. Rogers, 

about Smart Grid. We haven’t had a lot of discussion about this. 

But, you know, that was a big chunk of change, $4 billion in Smart 

Grid grants authorized under the stimulus last year. Now there’s 

this issue about whether or not they’re subject to Federal taxation. 

It’s my understanding that, while DOE has awarded these Smart 

Grid grants, the Department hasn’t completed the terms and conditions, and so, we haven’t seen any funds actually go out and then 

be distributed to the grant recipients. 

There is great expectation as to what we could see from this program, but we haven’t had the immediate impact. Given where we 

are right now, and the fact that we’ve had this delay on funding 

distribution, this open question as to whether or not these funds 

are going to be subject to tax, do you anticipate that we’re going 
50 

to see any of the recipients declining the awards and backing off? 

Are we seeing any layoffs, for instance, at the smart metering companies, because the work has stopped with the distribution of these 

Federal funds? What’s our status there? 

Mr. ROGERS. So, the status—we’re making good progress on that 

front. We worked very closely with our colleagues at the IRS to get 

a determination under section 118A. The IRS has actually completed their analysis and will be publishing guidance here shortly 

that will actually provide clarity on that question. 

Senator MURKOWSKI. Do we know what ‘‘shortly’’ is? ‘‘Shortly,’’ in 

my mind, is different than the IRS’s mind. 

Mr. ROGERS. Yes. I—I’m—that is—that’s a fair observation. So, 

we—our expectation is, it will be in the next 2 weeks, that they 

will have formal guidance issued on that. We do not anticipate anyone turning back the—turning back the funds, and we’ve been very 

pleased with the collaboration with the IRS on this topic. 

Senator MURKOWSKI. You don’t think we’re going to see any retraction on—— 

Mr. ROGERS. We—I do not expect that. 

Senator MURKOWSKI. OK. Then my final question. This is actually directed to you, Mr. Woolf. I appreciated the summaries that 

you attached for the committee that shows the amount of funding 

that’s been obligated or awarded to selected States. I noticed that 

you have everybody on the committee, except Alaska. Is there a 

reason that we don’t have Alaska of course, we’re very special, but 

I’m wondering if there was any reason, or if perhaps you could supply that to me. 

Mr. WOOLF. We would be happy to supply that. 

Senator MURKOWSKI. OK. So, there really wasn’t a reason. 

Mr. WOOLF. Didn’t get it to us in time for the hearing. We’ll get 

it to you as soon as we get it. 

Senator MURKOWSKI. OK. I appreciate that. Your organization 

does keep track of the actual expenditures, in each of these States. 

Mr. WOOLF. We do. As States are our members, and we report 

so that we can keep track of what’s happening nationally. 

Senator MURKOWSKI. I’m assuming Alaska’s a member. 

Mr. WOOLF. Absolutely. 

Senator MURKOWSKI. OK. Thank you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Let me just ask one additional question. I think 

you referred to this, Matt, in your testimony. One of our big challenges, going forward, is this—this Recovery Act money is such a 

big infusion of resources into a lot of programs that had no resources before, and into activities that had no funding before. You 

were saying that one of the keys to really transforming our economy to a clean energy economy is predictability, and where we’re 

headed in the future for—so that folks will know when to—whether 

they can build their factory here, or do whatever. 

It’s going to be difficult, I think, to be sure that we properly transition from this high level of funding that we currently have 

through the Recovery Act to a more normalized budget situation. 

I guess I’m just anxious that—any insights that you can give us, 

not necessarily today, but as we go forward, as to how we ensure 

the predictability of these funding levels as best we can, at what-
51 

ever level they’re going to be. I mean, obviously we can’t maintain 

the high funding level once the Recovery Act funds go away, but 

we can certainly try to be sure that the tax provisions that are 

helpful are still in place, that the funding programs that are helpful are still in place; that the Weatherization Program not go back 

to being a sort of a neglected stepchild as it perhaps was prior to 

this Recovery Act infusion of funds. Any thoughts you’ve got, I’d be 

anxious to hear. 

Mr. ROGERS. I’d make 2 simple observations. One is that we’re 

asking companies to make long-lived asset decisions. So, we actually have to have a clear set of incentives over the long term. If 

I’m going to make a 30-year asset investment, I actually have to 

have a reasonable confidence about what the rules of the road are 

over an extended period of time. 

One of the things that we’ve tried to do under the Recovery Act 

is to use this as an opportunity to demonstrate to the private sector 

that these are some very high-return investments. Senator Murkowski was asking about the Smart Grid program. One of the 

things that we’re encouraged by is seeing this play out in so many 

different States, and seeing the rate of return that each of those 

States is going to see on those kind of investments. All of the sudden then, the private sector can take on a set of these funding levels if we have the tax provisions clear and if we have the long-term 

pricing provisions in the market clear. I think those are the opportunities for this committee over the next year. You are at the center of defining what the playing field looks like for investments in 

clean energy for the long term. 

Mr. WOOLF. If I could jump in on that. 

The CHAIRMAN. Yes. Go ahead. 

Mr. WOOLF. Sure. The question of, ‘‘How do we keep the success 

from stimulus going after stimulus?’’ is something that States have 

given a lot of thought to. I think we’ve—certainly the level of activity from stimulus has been a huge boost, and we want to keep that 

going. Most States have invested at least a portion of the stimulus 

funds in revolving loan programs so that after—even after stimulus 

when those loans are repaid, it’ll keep providing dividends on clean 

energy. 

We are very excited about our Property-Assessed Clean Energy 

Program, where we’re going to use the Federal money to kind of 

leverage private capital into a revolving loan program to keep that 

going. Even in a standard program like our Renewable Energy 

Grant Program, we’re intentionally giving out a certain number of 

grants, each and every month, so that solar companies know they 

can hire new crews to do the work, and there will be stimulus 

money available for the next month and the month after that. 

Keeps the—gets their crews trained; reduces their costs, so that, 

post-stimulus, the jobs will still be there. So, every State is thinking about, ‘‘How do we keep this going after stimulus?’’ We’ve got 

some great successes. 

Ms. NELLENBACH. Yes, and, Chairman Bingaman, I would also— 

echo what Malcolm said, but also, as I had mentioned to Senator 

Burr, a lot of the States looked at this as an opportunity to really 

fix some problems with some of their programs. Pennsylvania, for 

instance, redid its computer system that connects all the commu-
52 

nity action programs that do weatherization so that when the 

ARRA money does run out, they have a new more efficient system 

in place. 

In terms of the funding window, again, we’ve been given through 

March 2012, from the Department of Energy, to spend all the 

money in those 3 programs. So, most States have in place a plan 

to gradually spend it over time, so that hopefully that, when March 

2012 comes, there’s more of a network in place, there’s people in 

place, that it’s not a sudden drop off. So, they are looking at the 

long-term future of those programs. 

The CHAIRMAN. Very good. 

Did you have a comment, Ms. Dalton. 

Ms. DALTON. I would just add one thing looking at the Recovery 

Act money knowing where we’ve had some successes and where, 

maybe, we want to do additional investments post-Recovery Act, 

and being sure that we’ve got a plan, moving forward, of, ‘‘Do we 

want to keep the funding at a certain level? Do we want to ramp 

down and not have any kind of cliff effect?’’ 

The CHAIRMAN. Very good. 

Senator Murkowski, did you have additional questions? 

Senator MURKOWSKI. Yes. I don’t have anymore questions, just 

a comment at this point. 

I really appreciate the last few minutes that we’ve had, here, because I think there have been some positive comments coming from 

the State, from the Governors, and that’s important to hear. Your 

final comment, Ms. Dalton, is exceptionally important, because 

right now there’s a lot of pressure on us: create jobs; make things 

happen now, spend money to make something happen. My fear is 

that so much of it will be continued—I’ll use the phrase, ‘‘a kneejerk response’’—we have to do something now. I think we do need 

to take some lessons learned from what we’re seeing, last year and 

now, as we are into the more full-on implementation. I appreciate 

the process and the difficulty of moving things through, but you 

hate to be sitting back and saying, ‘‘Well, I told you so. I knew we 

couldn’t get it out the door that fast, and that we were going to see 

this.’’ 

I am hopeful that there is more of a vision plan. How do we continue the good things that came from this, rather than, as we work 

to put together yet another jobs bill, well let’s put in another energy piece that maybe DOE is not ready to, or not the best suited 

to, be advancing. I think we need to be working in a far more coordinated manner. I think we recognize that, when we’re talking 

about our taxpayer dollars going out to create jobs, that not all jobs 

are created equal. I don’t think most of my constituents in Alaska 

think that creating jobs in China is going to be the best thing for 

them. 

We want to make sure that, as we talk about how we create the 

jobs, that we’re not making our country less competitive by helping 

to build out the infrastructures and all that is happening overseas. 

There has to be a very solid piece of this where we’re doing exactly 

what Senator Stabenow has talked about, and what you mentioned, 

Matt. We have to build that manufacturing base here, but, I think, 

in an effort to jumpstart some things. We’re seeing the criticisms 

coming out of some of these reports, and we’re living with them. 
53 

I appreciate the discussion here this morning and, Mr. Chairman, your great willingness to put this on the agenda. 

The CHAIRMAN. Thank you all very much. This has been very 

useful testimony. 

[Whereupon, at 11:35 a.m., the hearing was adjourned.] 

(55) 

APPENDIX 

RESPONSES TO ADDITIONAL QUESTIONS

RESPONSES OF PATRICIA A. DALTON TO QUESTIONS FROM SENATOR BINGAMAN

Question 1. In your testimony you cite the National Historic Preservation Act as 

one area that states have reported as a problem. I understand that in some states 

the local historic preservation laws themselves present issues for weatherization or 

new clean energy installations. Were you able to separate out issues created by the 

need to comply with the federal mandate from issues that likely would have already 

been present under local law? 

Answer. No, we did not separate out these issues; we focused only on federal requirements. Federal and state officials told us that the National Historic Preservation Act affected the selection and start of Recovery Act projects, but they did not 

discuss local laws or requirements nor did we specifically ask about local laws and 

requirements. 

Question 2. In your bi-monthly audits of Recovery Act spending, do you have sufficient data so we can see acceleration of spending, and thus tell if problems have 

been addressed? 

Answer. GAO’s bimonthly audits discuss changes in Recovery Act spending and 

the progress being made in addressing implementation issues for selected programs, 

including the Department of Energy’s Weatherization Assistance Program, though 

our tracking of Recovery Act spending does not make a causal link between an increased rate of spending and the resolution of problems related to federal requirements. We selected programs for review based primarily on whether they have 

begun disbursing funds to states or have known or potential risks, such as an existing program receiving significant amounts of Recovery Act funds or new programs. 

In the case of the Weatherization Assistance Program, GAO’s bimonthly audits have 

tracked the program’s obligation and spending status and have discussed the reasons for the program’s slow spending rate and the steps being taken to address 

those issues. Specifically, we reported that states used only a small percentage of 

their available funds in 2009 primarily because state and local agencies needed time 

to develop the infrastructures required for managing the significant increase in 

weatherization funding and for ensuring compliance with Recovery Act requirements. For further information, see our latest bimonthly audit issued on March 3, 

2010 (Recovery Act: One Year Later, States’ and Localities’ Uses of Funds and Opportunities to Strengthen Accountability, GAO-10-437). 

RESPONSES OF PATRICIA A. DALTON TO QUESTIONS FROM SENATOR MURKOWSKI

Question 1. NHPA—You state in your testimony that the Michigan Department 

of Human Services told you that 90 percent of the homes scheduled to be weatherized under the Weatherization Assistance Program would need a historic review 

under the National Historic Preservation Act. Do you have similar statistics for any 

other states? 

Answer. Other states did not provide estimates for the percentage of homes that 

would require historic reviews, and we did not specifically ask for this data. Michigan made particular mention of the percentage of homes affected because the requirements of the act affected such a large number of homes there. 

Question 2. Status of Funds—According to your testimony, DOE has obligated approximately 70 percent of its funds, while expenditures amount to about 7 percent. 

How do those figures compare to the obligation and spendout rates at other federal 

agencies that GAO is tracking? 

Answer. As of December 31, 2009, DOE’s obligation rate for Recovery Act funds 

was in the bottom third of 27 federal agencies GAO is tracking, while its spending 

rate was next to last among those same agencies. However, the 54 percent of its 

funds that DOE had obligated at that time was just below the overall obligation rate 
56 

of 63 percent for all 27 federal agencies. In contrast, DOE had only spent 4 percent 

of its Recovery Act funds at that time compared to an overall Recovery Act spending 

rate of 20 percent. The table below shows the percentage of Recovery Act appropriations obligated and spent by federal agencies as of December 31, 2009. 

Question 3. Weatherization—In your written testimony, you noted that GAO is 

currently working on a report that will detail weatherization-related jobs and energy savings. When will that report be released? Can you share anything about 

what you’ve found so far, and some of the difficulties that are apparently manifesting with regard to measuring energy savings? 

Answer. The report-titled Recovery Act: One Year Later, States’ and Localities’ 

Uses of Funds and Opportunities to Strengthen Accountability (GAO-10-437)-was 

issued on March 3, 2010. It is the fifth in a series of reports by GAO on the use 

of and accountability for Recovery Act funds in selected states and localities; the 

next report in that series will be issued in May 2010. 

As part of the March report, we examined recipient reporting associated with the 

Weatherization Assistance Program. We found that state reporting about impacts, 

especially energy savings, was still somewhat limited for the program’s Recovery Act 

efforts. Available data showed that about 8,500 jobs had been created through the 

use of Recovery Act weatherization funds. However, while many local officials had 

collected data about new hires, none could provide us with data on energy savings. 

Contributing to the lack of information about impacts is that most state and local 

agencies either were just beginning to use Recovery Act funds to weatherize homes 

or had not yet begun to do so. Some states told us they planned to use performance 

measures developed by DOE, while others had developed their own measures. For 

example, Florida officials told us they planned to measure energy savings by tracking kilowatts used before and after weatherization, primarily with information from 

utility companies. 

Question 4. Wind Energy Grants—Just this week, four Democratic Senators sent 

a letter to the Obama Administration asking it to suspend the Treasury/Energy 

wind energy grant program until it can be amended. Has GAO looked at, or do you 

plan to look at, what’s happening with this program and where its funds are going? 
57 

Answer. GAO has not previously and is not currently conducting work in this area. 

RESPONSES OF MALCOLM WOOLF TO QUESTIONS FROM SENATOR BINGAMAN

Question 1. You indicate you believe the problems that have led to delays have 

been largely overcome. Do you have an estimate of when you believe the current 

funding can be spent out? 

Answer. We believe that the funding under the State Energy Program (SEP) and 

the other major grant programs impacting the states and local governments should 

be spent within the statutory deadlines created in the ARRA statute and the implementing rules from the Department of Energy. 

Question 2. Now that capacity is built up and the state and federal levels, what 

are you seeing with regard to demand? Are there programs that you see as being 

particularly oversubscribed? 

Answer. In general, the states have utilized a bidding process to determine what 

projects to fund within allowable categories. In the vast majority of cases all these 

categories have been over-subscribed. According to the survey prepared by the National Association of State Energy Officials (NASEO) in December 2009, some examples of this level of over-subscription are striking: a) AZ—104 school retrofit project 

applications totaling $87 million were submitted, with funding for only one-half that 

amount; b) GA—$226 million in requests were received for state facility retrofits, 

with only $63 million in available funds and under SEP they received competitive 

proposals of $122 million with only $14.5 million available; c) IL—526 applications 

totaling $525 million were received for only $100 million in available funds (total 

project value was $3.2 billion); d) MD—in my own state, the Clean Energy Economic 

Development Initiative received $36.5 million in applications for only $7 million in 

funding; e) MI—for projects in energy efficiency, wind, solar and local government 

energy efficiency, the state had $39 million available and received applications totaling $219 million; and f) WI—$53 million in projects have been funded from approximately $100 million in proposals. These activities include, but are not limited to, 

building retrofit projects in all sectors, industrial energy efficiency projects, renewable energy projects, local government energy projects, etc. 

RESPONSES OF MALCOLM WOOLF TO QUESTIONS FROM SENATOR MURKOWSKI

Question 1. State Energy Programs—I appreciate the attachment you included 

with your testimony, which shows the amount of funding obligated or awarded to 

selected states. You testified that NASEO also keeps track of the actual expenditures in each state. Would you please provide those figures to the Committee? 

Answer. State Energy Programs—We have generally tracked the funds committed 

by the states and the funds contracted by the states. We believe that DOE is tracking the actual expenditures by state. At this point, over $1.1 billion is actually 

under contract and over $2 billion is committed (i.e., obligated for specific projects 

and programs) by the states under the State Energy Program. As I explained in my 

testimony, the key statistics under SEP are not the federal ‘‘costing’’ numbers but 

the commitments and contracted numbers. This is important because when states 

commit and contract to implement projects with the private sector, the private sector hires the employees and conducts the work. States pay only when the project 

is completed (‘‘accepted’’) and shown to be implemented correctly, and when milestones are achieved. Neither the states nor the federal government generally pay 

for projects in advance of work being satisfactorily completed, for obvious reasons. 

As I stated in my testimony, the federal ‘‘costing’’ number is a lagging indicator and 

not reflective of the economic benefit of these projects. Further, if the ‘‘costing’’ number had escalated well in advance of projects being completed, this would be a sign 

that prudent procurement procedures are not being followed. 

Question 2. Federal Guidance—Mr. Woolf, you stated in your written testimony 

that you were waiting on a determination by the Department of Labor on whether 

the wage rates for the Weatherization Assistance Program can be utilized for the 

residential efficiency programs planned under the State Energy Program and the 

Energy Efficiency Conservation Block Grants. Ms. Nellenbach stated that DOE has 

just received final word from the Department of Labor that this same rate wage in 

fact can NOT be used for EECBG and SEP. How much longer do you expect these 

wage rate determinations to take? 

Answer. Federal Guidance—We hope that the guidance from the Department of 

Labor will be forthcoming as soon as possible. We believe that the Weatherization 

wage rate should be applied to residential energy efficiency retrofit projects under 

SEP and the Energy Efficiency and Conservation Block Grant (EECBG). Designated 
58 

residential energy efficiency retrofit projects under SEP and EECBG total over $800 

million. We understand that DOE has been working with DOL to resolve this critical issue. 

Question 3. State Energy Office: Part of the reason that it has taken so long to 

spend the money is that state energy offices have had to ‘‘ramp up’’—find office 

space, get new operations going, and of course, hire new staff. What will happen 

to these jobs when the Recovery Act expires in March 2012, or when the money runs 

out? 

Answer. State Energy Office: Energy offices and states have utilized a variety of 

mechanisms to respond to the flow of new and expanded responsibilities under 

ARRA. New hires in many states have been on a contract or term basis, so that 

if the work is no longer there, the jobs will be eliminated. In light of state budget 

crises across the country, states have been reluctant to hire new people on a permanent basis. States are working very closely with the private sector to ensure that 

as the economy grows a trained energy work force is in place to respond. In addition, many states are utilizing revolving loan funds to ensure that the ARRA funds 

will be stretched to help more people and to help people over an extended period 

of time. Many of the proposals being considered by Congress in a possible Jobs Bill 

(Home Star, Building Star, Manufactured Housing, industrial energy efficiency, etc.) 

and other provisions included in S. 1462 (Bingaman-Murkowski energy bill, approved by the Energy and Natural Resources Committee in June 2009) as well as 

other comparable legislation, if funded, would provide resources to continue important work started utilizing ARRA funds. 

Question 4. Maryland Weatherization—In Maryland, only 4 percent of homes selected for improvement have been finished. What is the outlook for spending the 

rest of this money? When do you expect all of Maryland’s Weatherization funds will 

be spent? 

Answer. Maryland Weatherization—As of the end of March, Maryland has completed 10.5% of its 3-year ARRA weatherization production goal. Maryland has been 

building its capacity to do weatherization and has therefore been accelerating its 

pace of work and its spending of weatherization funds. Maryland expects to fully 

utilize the funding and anticipates completing production with this funding at the 

end of the grant period in March 2012. 

Question 5. Weatherization—Has it been problematic that stimulus funds for 

Weatherization projects are not disbursed up front, but instead reimbursed after 45 

days? Have there been problems obtaining credit to start any of these projects? 

Answer. Weatherization—We are unaware of any widespread problems associated 

with the delay in reimbursements or the lack of available credit. The Low-Income 

Weatherization Assistance Program has historically operated on a reimbursement 

basis. The local community action agencies (CAAs) or other providers generally perform the work directly or contract out the work. Once the work is completed then 

the reimbursement from the state is requested. Obviously, there has been a significant ramp-up of funding under ARRA and some CAAs or other local providers might 

have had difficulty providing up-front funding. States have the authority under the 

program to provide cash advances to the CAAs and the other local providers. 

RESPONSES OF MICHELE NELLENBACH TO QUESTIONS FROM SENATOR BINGAMAN

Question 1. Despite the initial setbacks, it seems from your testimony that states 

see great potential for job creation this year. Many programs seem to be oversubscribed already. Do you have any sense of how the overall demand at the state level 

compares with amounts available? 

Answer. The National Association of State Energy Officials conducted a brief survey in December 2009 and found that of the states that responded, all are oversubscribed. For instance, AZ received 104 applications worth $87 million for school energy efficiency retrofits but can only fund half of the projects. Georgia received $226 

million worth of requests for just $63 million in state facility retrofit funds. Further, 

Georgia has available $13.3 million in EECBG funds but received applications totaling $24 million. Illinois had only $100 million to cover 526 SEP applications totaling 

over $525 million. Finally, Wisconsin reports that it has over $100 million worth of 

applications but can fund only $53 million. 

Question 2. Is your concern about reporting requirements more about the possibility that other agencies will require more or inconsistent reporting, or are the current requirements overly burdensome? Would a standardized reporting system 

across agencies solve the problem? 

Answer. The NGA is concerned about both burden of the current requirements 

and the threat of future requirements. The current 1512 reporting requirements 
59 

have proven quite difficult to implement. While 1512 reporting is becoming less onerous as states become accustomed to it that will quickly change if every federal 

agency requires granular detail on each program. Specifically, such a development 

would further stress limited state resources and call into question whether the value 

of any additional information justifies the burdens placed on states. 

NGA has advocated for universal reporting criteria along the lines of those contained in OMB’s jobs guidance. If other federal agencies follow DOE’s lead, NGA 

would support shared definitions and metrics. However, NGA is uncertain that such 

a commonality can be achieved. For instance, DOE’s required metrics include square 

footage of buildings with new wind energy and the kilowatt hours saved in a home 

weatherization project. It seems unlikely that other Agencies will find value in such 

metrics. If common metrics were defined, NGA would recommend that any requirements for individual agency metrics not included in these common definitions be 

eliminated. 

RESPONSES OF MICHELE NELLENBACH TO QUESTIONS FROM SENATOR MURKOWSKI

Question 1. State Energy Offices: Part of the reason that it has taken so long to 

spend the money is that state energy offices have had to ‘‘ramp up’’—find office 

space, get new operations going, and of course, hire new staff. What will happen 

to these jobs when the Recovery Act expires in March 2012, or when the money runs 

out? 

Answer. If funding levels return to their historical appropriations levels, as expected, then there will be a significant drop-off of services, and employment opportunities, by March 2012. This drop-off was documented by the Congressional Budget 

Office in a presentation to the Lieutenant Governors Association during which the 

CBO estimated that job growth will peak towards the middle of 2010 followed by 

a significant jobs drop-off in 2011 and subsequent years. (http://www.cbo.gov/ftpdocs/ 

113xx/doc11353/3-17-10-NLGA.pdf) 

Question 2. Weatherization—Has it been problematic that stimulus funds for 

Weatherization projects are not disbursed up front, but instead reimbursed after 45 

days? Have there been problems obtaining credit to start any of these projects? 

Answer. While the Ranking Member may be aware of anecdotal instances, NGA 

is unaware of either the wait for reimbursement or a lack of available credit as having created any widespread problems with the expenditure of ARRA Weatherization 

funds. As you know, the weatherization program has historically functioned on a reimbursement basis such that the local community action agency (LCAA) either performs the weatherization work itself or contracts for the work. Once the work is 

completed, the LCAA seeks reimbursement from the state for its expenditures. The 

only reason this system may be of concern under ARRA is because of the significant 

ramp-up in funding. Some community action agencies have not been able to front 

the costs without reimbursement. However in these instances, most states have 

used their authority under the weatherization program to provide cash advances to 

the LCAAs. Typically, the LCAAs are not using credit on the open market to fund 

their work and therefore, the tightness in the credit market has not been a factor 

in weatherization financing. 

Question 3. Wage Rates—You stated that DOE has just received final word from 

the Department of Labor that this same rate wage in fact can NOT be used for 

EECBG and SEP. Have you received any indication of when states will receive guidance for those programs? 

Answer. As of April 7, 2010, the DOE is continuing to negotiate with the DOL 

on allowing the wage rate for WAP to be used for residential projects funded 

through EECBG and SEP. I have been told an official announcement is imminent. 

RESPONSES OF MATT ROGERS TO QUESTIONS FROM SENATOR BINGAMAN

Question 1. Your testimony indicates a fairly dramatic acceleration in obligations 

and spending in recent months. Are you on target to have the Recovery Act funds 

obligated by the end of this fiscal year? Are there any specific programs where you 

have seen demand from quality applicants beyond the funds available, such that you 

could reasonably expect to spend additional funds well? 

Answer. By the end of September, the Department of Energy plans to have obligated 100 percent of its $32.7 billion in appropriated Recovery Act contract and 

grant authority. We are currently on track to hit this target. The Fossil Energy Programs will be the last to meet their target. DOE officials are working closely with 

these applicants to review all technical, financial and management plans and to 

take action early if intervention is needed. A decision will likely be made in May 

if funds should be re-allocated to other projects. DOE anticipates that the remaining 
60 

loan credit subsidy funding will be obligated as loans close before September 30th, 

2011, when the ARRA budget authority expires. 

The selection process for DOE Recovery Act funds was highly competitive. High 

demand from quality applicants in some programs allowed us to select consistently 

strong projects, ensuring the American public receives solid returns on the investment of hard earned taxpayer funds. We saw especially high demand from quality 

applicants in the following programs: ARPA-e, Small Business Innovation Research, 

Smart Grid, and Industrial Energy Efficiency. 

We have the greatest opportunity to use further funds in the 48c manufacturing 

tax credits program, and the FY2011 Budget includes a request for an additional 

$5 billion for this program. Recovery Act manufacturing tax credits were awarded 

to 183 projects in 43 states, (though numbers are being revised based on the March 

15 IRS contracting deadline). Facilities must manufacture: equipment or components designed for use in projects that produce energy from the sun, wind, geothermal deposits or other renewable resources; nuclear power; fuel cells, microturbines, energy storage systems for EVs or HEVs; electric grids, grid storage; property 

designed to capture and sequester carbon dioxide; property designed to refine or 

blend renewable fuels; property designed to produce energy conservation technologies; plug-in electric drive motor vehicles or components or; other property designed to reduce greenhouse gas emissions as may be determined by Treasury. The 

48C tax credits do not apply to production of electricity or fuel. 

Despite a narrow time frame to apply for the program, the 48c program saw many 

high quality applicants, indicating the importance and relevance of such a tax credit. The additional $5 billion requested in the Budget will provide the opportunity 

to fund those quality projects that were not selected in the initial $2.3 billion, as 

well as reaching out to new applicants with a broader technology representation. 

The higher than expected response of applications indicates that the stimulus has 

provided confidence for American manufacturers to plan capital expenditures in 

FY10 and to anticipate a tax liability. 

Question 2. I understand the Southern Company has returned nearly $300 million 

in committed funds for CCS. Do you have a process in place or a schedule for awarding those funds to a new applicant? 

Answer. Yes, on March 9th, Secretary Chu announced that a project with NRG 

Energy has been selected to receive up to $154 million, including funding from the 

American Recovery and Reinvestment Act. Located in Thompsons, TX, the post-combustion capture and sequestration project will demonstrate advanced technology to 

reduce emissions of the greenhouse gas carbon dioxide. It will also assist with enhanced oil recovery efforts from a nearby oil field. 

The NRG Energy project was selected under the third round of the Clean Coal 

Power Initiative (CCPI), a cost-shared collaboration between the federal government 

and private industry to demonstrate low-emission carbon capture and storage technologies in advanced coal-based, power generation. The goal of CCPI is to accelerate 

the readiness of advanced coal technologies for commercial deployment, ensuring 

that the United States has clean, reliable, and affordable electricity and power. 

NRG will construct a 60 megawatt carbon capture demonstration facility at the 

company’s W.A. Parish Unit 7 in Thompsons, Texas. The 6-year project will demonstrate an innovative integration of several important advances in carbon capture 

and sequestration technologies, including- 

• Fluor’s advanced Econamine FG PlusSM carbon capture process, using several 

different novel amine solvents. 

• Ramgen’s advanced carbon dioxide compression system. 

• The integration of highly efficient co-generation to provide the necessary steam 

and electricity. 

• Enhanced oil recovery sequestration in one of the Texas Gulf Coast oilfields 

near the Parish plant. 

The project will demonstrate post-combustion carbon capture technology applied 

to an existing plant that could significantly reduce the cost of mitigating greenhouse 

gas emissions. 

RESPONSES OF MATT ROGERS TO QUESTIONS FROM SENATOR MURKOWSKI

Question 1. Cash-for-Appliances.—Why has the appliance rebate program been delayed for so long? The President is advocating a new rebate program called Home 

Star with a similar objective—to encourage people to upgrade the efficiency in their 

homes and receive rebates. If it took a year for the appliance rebate program to get 

up and running, why should we think it would be any different for Home Star, 

which is arguably a more complicated program? 
61 

Answer. The State Energy Efficiency Appliance Rebate Program provides funds 

to states and territories who then design, and administer their own state rebate programs. This leads to different state programs offering appliance rebates at different 

times in the year. April is the peak month for appliance rebates so we should see 

costing soon. HOMESTAR would provide rebates directly to consumers at the point 

of sale through a federally administered program. 

The State Energy Efficiency Appliance Rebate Program provided nearly $300 million in funding from the American Recovery and Reinvestment Act for state-run rebate programs for consumer purchases of new ENERGY STAR® qualified home appliances. Congress specified that the funding was to be awarded to states and territories, through their energy offices, using a formula set forth in the Energy Policy 

Act of 2005. Each state or territory was required to submit a plan that specifies 

which ENERGY STAR® appliance categories will be included in their rebate program, the rebate level for each product type, how the rebates will be processed, and 

their plan for recycling old appliances. Many states had no experience launching an 

appliance rebate program. It took time for the states to design and develop individual plans and start the programs within their states. 

In contrast, consumers would be eligible for direct HOMESTAR rebates at the 

point of sale for a variety of energy-saving investments in their homes, like the Cash 

for Clunkers program. A broad array of vendors, from small independent building 

material dealers, large national home improvement chains, energy efficiency installation professionals and utility energy efficiency programs (including rural utilities) 

would market the rebates, provide them directly to consumers and, then the vendors 

would be reimbursed by the federal government. Unlike the State Energy Efficiency 

Appliance Rebate Program, the broad array of vendors would be able to offer these 

point-of-sale rebates 30-days after the legislation is passed. 

Question 2. Spend-Out: DOE has spent just over seven percent of its stimulus 

funding in the past twelve and a half months, and in your testimony, you note that 

spending will accelerate this year. 

a. What do you expect the spend out rate will be six months from now? 

Answer. DOE has selected recipients for $32 billion of is $32.7 billion in grant and 

contract authority and we have obligated $26.5 billion to our recipients. At the DOE 

level the money has been spent through the obligation process allowing hiring to 

begin and projects to start. We will reimburse recipients as they spend out the 

money. We have now outlaid almost $4 billion. By the end of this fiscal year, DOE 

currently expects to reach an average spend rate of $800-900 million per month. 

This spring, Program Offices developed updated payment plans based on recipient, 

and project level spend projections to improve our accuracy on spend rate projections. Based on this updated information we should be at a total of $8 billion in 

payments by the end of this fiscal year. 

Question 2b. How about the end of calendar year 2010? 

Answer. By the end of this calendar year, DOE expects to be incurring outlays 

an average of $1 billion a month. Based on revised spend plans we should be at 

over $11 billion in payments by the end of the calendar year. 

Question 2c. How long do you think it will take for 100 percent of DOE’s ARRA 

funds to be spent? 

Answer. DOE Recovery Act appropriations are funding 144 projects in 10 different 

program offices (e.g., Energy Efficiency, Fossil Energy, Science, etc.). Each of these 

projects has a unique structure and time horizon for the deployment of these funds 

(i.e., R&D vs. infrastructure investment). For example, DOE’s Office of Environmental Management has allocated nearly $6 billion in Recovery Act funding to 17 

sites with a goal to complete their work by the end of FY11. Large scale, heavy infrastructure projects in the Fossil Energy program require extensive design and construction stages that will take their Recovery Act spending out until FY14. As an 

agency, DOE expects to spend 70 percent of its ARRA funds by the end of CY2011, 

nearly 90 percent by CY2012, and 100 percent by CY2015. 

Question 3. PACE.—You state that you are ‘‘ahead of where we expected to be 

on selection, obligations, and job creation.’’ Can you tell us where you expected to 

be, or what benchmarks the Department had set for itself, that you based that 

statement on? 

Answer. By December 31, 2009, we had selected projects to receive $31 billion of 

DOE’s $32.7 billion in ARRA contract and grant authority and obligated $23.3 billion. This surpassed our CY 2009 targets of $30 billion in selections and $22.8 billion in obligations. As of the end of the calendar year, our recipients had outlaid 

nearly $1.8 billion in ARRA funds (falling short of our target of $3 billion). Based 
62 

1Over 16,300 full-time equivalents (FTEs) were reported to Federalreporting.gov by recipient. 

Contractors reported another 4,000 FTEs at the subcontractor level (not required to report to 

FederalReporting.gov). 

on recipient reporting, DOE funded over 20,000 jobs1 between October-December 

2009. This is ahead of pace based on the Council of Economic Advisers’ estimate 

that $92,136 in spending creates one job-year as $1.8 billion dollars outlaid would 

result in 19,500 jobs created or saved. 

Question 4. Alaska Spending.—According to the data on DOE’s website, which is 

dated November 20, 2009, a total of $93 million had been announced for my home 

state of Alaska, but just $50,000 had actually been spent. Over the course of the 

first nine months of the stimulus, that amounts to less than $200 per day. 

a. Can you provide any updated figures for DOE’s spendout in Alaska? 

Answer. 

Question 4b. Can you explain why it is taking so long for funds announced for, 

and awarded to, communities in Alaska to be spent? 

Answer. The following will address spending for individual projects in Alaska: 

State Energy Program (SEP).—The State of Alaska submitted a SEP plan under 

the previous gubernatorial leadership in May 2009. After a change in gubernatorial 

leadership and a re-commitment to Recovery Act programs, Alaska modified and resubmitted their SEP plan in October 2009. Over the next 2 months DOE worked 

very closely with Alaska to develop a plan that could expeditiously navigate the 

DOE procurement process. Alaska’s plan was approved and they were awarded the 

SEP grant on January 12, 2010. The state used a DOE-created NEPA template in 

designing their programs which allowed DOE to also categorically exclude all project 

activites from further NEPA review in early January 2010, clearing a major hurdle 

that could have potentially slowed spending. 

The majority of project activities that Alaska is pursuing with SEP Recovery Act 

funds are an expansion of existing programs and/or programs that will be receiving 

significantly more state funds should Alaska Senate Bill 220 (Omnibus Energy Bill) 

be passed in the state legislature. It is our understanding that over the past couple 

months Alaska has been in the process of negotiating memorandums of understanding with other agencies. However, it is our understanding that much of the 

SEP funded programs are awaiting passage of SB 220 to become operational and 

formalized. SB 220 was recently referred out of the state Energy committee to the 

Finance committee, but will continue to cause a delay for some of the SEP funded 

programs (approx. $19.1mm or 68% of SEP funds are tied to SB 220). 

DOE is holding weekly calls between state energy offices and DOE project officers. 

In addition, DOE Assistant Secretary Zoi, Mike Nizich (AK Chief of Staff) and 
63 

Susan Bell (Special Assistant to the Governor) spoke on January 19th to discuss 

measures for increasing Alaska’s spending of SEP funds. 

Energy Efficient Conservation Block Grants (EECBG).—With over 2,300 recipients, no two grantees have had the exact same issues to resolve with the EECBG 

process. The entire program was set up this year and most grantees had not worked 

with DOE before and many had never developed comprehensive energy efficiency 

plans in the past. There have been several common issues which have led to delays 

in processing EECBG funds including NEPA reviews, Davis-Bacon, Historic Preservation, and Buy American. 

Alaska has presented a unique challenge for the processing of EECBG grant 

funds. Of the 255 grant recipients, 10 are cities and towns, 9 are counties and 236 

are tribal grantees. The two largest recipients were the State Energy Office which 

received $9 million in order to provide grants and the City of Anchorage which received $2.6 million. Many of the tribes have opted to pool their resources in order 

to provide wider-ranging benefits since many of the grants are in the $50,000.00 

range. DOE has committed resources to work directly with the Tribal Community 

to address these needs. 

Weatherization Assistance Program (WAP).—Alaska usually plans work a year 

ahead. Due to the extreme climate, most production takes place during the short 

summer season. Home assessments are done in the summer so that materials can 

be ordered over the winter months. Materials need to be barged or flown to rural 

villages after the spring thaw, and work is completed during the following summer. 

State has been training local public housing authority staff over the past several 

months to perform weatherization services. State and local agencies already staffed 

up in 2008-2009 utilizing the influx of State funds for Weatherization. In November, 

Alaska trained 40 staff to be EPA Certified Renovators (a new program requirement), and two agencies are in the process of being designated as EPA training entities. Alaska network already has the capacity to complete 1,700 homes per year. 

This was accomplished in the 2008-2009 program year combining State, DOE, and 

HHS funds. Alaska plans to exceed that number in the current year and next year, 

but is waiting for the summer to being work. 

Appliance Rebate Program.—AK’s State Energy Efficient Appliance Rebate Program (SEEARP) went live on March 15th. Of the 56 SEEARP programs, it was the 

17th to launch. Alaska’s program is unique in that it targets disabled residents 

while providing higher rebates to such residents in rural areas. This program targets the funds at a small percentage of the population to lower the price-premium 

on efficient appliances that otherwise may be too expensive for them but will provide them ongoing savings on their energy bills. As of March 31St, 86 vouchers have 

been requested but no vouchers have been redeemed as residents have 120 days to 

make their purchase and submit the paperwork after having received a voucher. 

Now that the program has begun in earnest we expect outlays to ramp up over the 

course of the spring and summer. 

Grid Formula Grants.—The State of Alaska has received two formula grants 

under the Recovery Act program managed by the Office of Electricity Reliability and 

Energy Assurance. Under both grants the State of Alaska is responsible for the expenditure of the funds consistent with the programs objectives. No grant funds have 

been spent by the State as of this date. 

On December 7, 2009, the Alaska Department of Commerce, Community & Economic Develoment, received $767,493 in discretionary grant funding under the State 

Assistance on Electricity Policy program. 

On August 14, 2009 the Alaska Housing and Finance Corporation received 

$262,969 in discretionary grant funding under the Enhancing State and Local Governments Energy Assurance program. 

Competitive Grants.—Nearly $19.5 million was awarded through a competitive selection process that took place in late Fall/early Winter 2009. Alaska received four 

competitive Recovery Act grants for geothermal and fossil energy projects. These 

projects have faced a series of reviews before reaching full award, ranging from 

NEPA determination to property right negotiations. 

Question 5. Smart Grid.—Recently, DOE reversed its position on the applicability 

of Buy American requirements for smart meters, and now have ruled that smart 

meters are not ‘‘Manufactured Products’’—meaning Buy American provisions don’t 

apply. At the same time, EPA has ruled that water meters are ‘‘Manufactured Products’’ so Buy American does apply. Why is the Administration treating these products inconsistently? What happened to promoting the manufacturing of smart meters in the U.S.? 

Answer. After an extensive legal analysis taking into account the specific facts 

presented by DOE’s Office of Electricity Delivery and Reliability, DOE’s Office of the 

General Counsel concluded in early February 2010 that smart meters were not sub-
64 

ject to the Buy American requirements of the Recovery Act. This was the only determination by the Department regarding the applicability of Buy American to smart 

meters and did not reverse a previous finding. 

The Department’s analysis considered the context of an upgrade of a mechanical 

electricity meter with a smart meter by a utility on a pre-existing privately-owned 

property, and determined neither the ‘‘manufactured good’’ nor the ‘‘construction, alteration, maintenance or repair’’ prongs of the three-part test under Section 1605 

of the Recovery Act were met. Even though all three prongs must be met for applicability of the Buy American requirements, DOE lawyers also considered the third 

prong, ‘‘public building or public work,’’ and determined it too would not be implicated unless the installation was performed on government-owned ‘‘public buildings’’ 

or possibly on buildings/structures that, although privately owned, had a governmental use or significant governmental involvement. Consequently, without any additional governmental ties to a particular building/structure, DOE determined that 

the ‘‘Buy American’’ statutory requirements were not generally applicable to public 

utilities when installing smart meters on privately-owned buildings. 

Three weeks after DOE reached its legal conclusion, EPA published notice that 

it had issued a waiver of the Buy American requirements of the Recovery Act for 

certain water meters to be purchased by a governmental entity for installation in 

heated spaces, on the grounds that American meters were unavailable for this specific purpose. The consequence of this waiver is that the Buy American requirements of the Recovery Act do not apply so both DOE and EPA actions have the 

same result. We are not aware of EPA’s internal analysis of this question or of the 

specific facts underlying its decision, and thus are not in a position to compare the 

two actions. 

Question 6. Smart Grid—How is the Energy Department coordinating with its 

contracting offices on smart grid monies? We’ve heard complaints that the different 

contract offices lack consistent policies making it difficult for industry to understand 

the rules. 

Answer. The two largest programs associated with smart grid are the Investment Grant ($3.4B) and Demonstration Grant ($620M) programs. As the program office 

responsible for both programs, the Office of Electricity’s oversight has ensured consistent application of policies while respecting the difference between the programs. 

Each program has unique requirements which were set out in the Funding Opportunity Announcements. In addition the timing of the two programs has been different. The Investment Grant selections were announced on October 27, 2009, and 

the Demonstration Grant selections were announced on November 24, 2009, which 

has resulted in schedule differences which may account for perceived inconsistencies. Also the investment grants are focused on technology deployment while the 

demonstrations are focused on a technical demonstration. 

Question 7. Loan Guarantees—According to DOE’s website, you’ve so far closed 

one loan under the temporary loan guarantee program, and made a few small conditional commitments. More than $32 billion in additional authority for renewable energy projects remains under that program. DOE has also requested credit subsidy 

for an additional $3-5 billion in loan guarantees in this year’s budget request. 

a. Can you shed any light on how you expect loan guarantees to be distributed 

over the next year? 

Answer. Since issuing its first conditional commitment in March 2009 to an innovative photovoltaic manufacturing company, the Loan Guarantee Program has 

closed that loan guarantee and issued conditional commitments for seven additional 

projects, four of which are eligible to receive appropriated credit subsidy under the 

Recovery Act. The Loan Guarantee Program has offered commitments to a diverse 

portfolio of alternative energy projects including wind turbine manufacturing, solar 

generation and manufacturing, electricity storage, nuclear power, and energy efficiency. In the next year, new conditional commitments and closings will continue 

to reflect this diversity of projects. The Department’s 2011 budget request for $500 

million in appropriated credit subsidy is important to the program’s ability to support innovative energy efficiency and renewable energy projects. 

b. How long do you think it will take DOE to exhaust its current authority for 

the 1705 program? 

Answer. The Loan Guarantee Program has a robust pipeline of projects eligible 

for both appropriated credit subsidy under the Recovery Act and able to meet the 

Recovery Act requirement to begin construction by September 30, 2011. In addition, 

the Loan Guarantee Program has two open solicitations and continues to receive applications from eligible projects. These solicitations will remain open to new applications until August 24, 2010, and January 6, 2011, respectively. These efforts, in addition to potential future solicitations, are aimed at exhausting the current authority by September 30, 2011. 
65 

Question 8. Weatherization—According to a memo released last month by DOE’s 

Inspector General, ‘‘it appears likely that pressure will increase to accelerate the 

weatherization of residences in the compressed statutory timeframe available under 

the Recovery Act. In a situation like this, our concern is that the understandable 

desire to spend the Weatherization funds on a catch-up basis may lead to an environment conducive to wasteful, inefficient, and, perhaps even abusive practices.’’ 

a. Do you agree with the IG’s assessment? 

Answer. We are working with each community to reach a target run rate to ensure each can deliver on their full authority with consistent quality. Good operations 

tend to perform consistently in a target performance band—not too hot and not too 

cold. We are watching closely to make sure that each recipient remains within appropriate target performance band. Quality control has always been a strong component of the Weatherization Assistance Program; measured against the level of funding and number of homes being weatherized, the proportion of problems found on 

an annual basis has always been insignificant. DOE expects this record of compliance and achievement to continue under the Recovery Act. 

b. What steps is DOE taking to ensure this does not come to pass? 

Answer. Increased monitoring, quality assurance, and desk monitoring have been 

and continue to be implemented by DOE. Several staff persons have been added and 

the engagement of additional contractors to conduct oversight activities is being, 

considered. Furthermore, beginning in April for the month of March we will move 

from quarterly to monthly reporting for this program. This will greatly support our 

efforts to ensure that these funds are both spent quickly and wisely as will be ability to provide states that are struggling to meet their goals with training and technical assistance. 

Question 9. Weatherization—The Weatherization program has indicated that 

there are over 38 million households whose income levels make them eligible for 

Weatherization services, The Department estimates that approximately 15 million 

homes are good candidates for cost-effective Weatherization. How many of these 15 

million homes have been weatherized? What is the process to determine how to address the remaining eligible homes? 

Answer. More than 6.3 million homes have been weatherized since the program’s 

inception. The process to determine how to address the remaining eligible homes allows for grantees and local agencies to target their services to maximize program 

effectiveness. In prioritizing weatherization assistance grantees are to include consideration of ‘‘high residential energy users’’ and ‘‘households with a high energy 

burden.’’ However, the weatherization of such units is not mandatory. Consideration 

of such units may be used in lieu of, or in any combination with, the other priority 

categories of elderly, persons with disabilities, or families with children. By considering ‘‘high residential energy users’’ and ‘‘households with a high energy burden,’’ 

grantees and local agencies should be better able to partner with utilities and other 

programs to leverage additional resources into their programs. 

Question 10. Weatherization—I’ve seen several different numbers, so I’ll ask you 

to state for the record: how many homes were retrofitted during the first year of 

the stimulus, and what was the average federal cost to weatherize each of those 

homes? How do you determine what type of retrofit is needed with each home? 

Answer. Weatherization Assistance Program grantees weatherized 30,252 homes 

with Recovery Act funds through December 31st, 2009. Information about weatherization production in the first quarter of 2010 is still forthcoming as the reporting 

deadline for performance figures in the first quarter is not until April 30th. DOE 

projects, when reported, weatherization performance in the first quarter of 2010 will 

represent a significant increase in production rate. While some reports are still 

being verified, recipient data shows that 13,053 units were completed in January, 

18,234 units were completed in February, and 22,311 units were completed in 

March. 

In 2009, states weatherized more than 125,000 homes in total (including both recovery and non-recovery work). As states ramped up and prepared to spend Recovery Act funding—by hiring and training workers, purchasing equipment, and putting in place strong accountability and transparency measures—they accelerated the 

number of homes weatherized with Fiscal Year 2009 funding; making the combined 

total the best indicator of progress in the program. Nevertheless, the pace of Recovery Act funded weatherization tripled in the last three months of the year. 

The average estimated federal cost to weatherize a home during the Recovery Act, 

as estimated by grantees, is $5600. The average actual federal cost to date is artificially inflated as most grantees have made large upfront outlays on equipment that 

will be used over the next few several years. 

To determine the most cost-effective measures appropriate for each home, weatherization crews use computerized energy audits and diagnostic equipment, such as 
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a blower door, manometer, or infrared camera. Typical measures include installing 

insulation in walls, floors, and attics; reducing air infiltration and pressure imbalances; sealing and repairing ducts; and, tuning and repairing heating and cooling 

units. 

Crews use DOE funds to install only those energy-efficiency measures that meet 

a savings-to-investment ratio of 1:1 and above. DOE funds can be used to address 

energy-related health and safety problems, or to perform incidental repairs. This approach ensures the program’s cost effectiveness. 

Weatherization crews also perform health and safety tests that may include: testing heating units and appliances for combustion safety, carbon monoxide, and gas 

leaks; assessing moisture damage; checking electrical system safety; replacing unsafe heating and cooling systems; and installing smoke and carbon monoxide detectors. 

Question 11. Staff Capacity—Will you provide the Committee with the number of 

new employees that DOE has hired in order to administer ARRA funds? Can you 

comment on what will happen to those individuals’ jobs after the stimulus’ obligation deadline passes? 

Answer. According to the Office of Human Capital Management, DOE currently 

has 354 employees who have been hired to focus specifically on implementing the 

Recovery Act, with many more existing staff working hard to implement Recovery 

Act funding alongside their standard duties. Many of these employees are working 

in one of DOE’s many field offices including states such as OH, PA, CO, TN, and 

WA, with over 150 at NETL and Golden. Some of these employees are on term appointments set to expire by September 30th, 2012, at the very latest. Others were 

hired to permanent positions whose employment will be terminated by September 

30th, 2012, at the very latest if their positions are funded by the Recovery Act. Depending on the program in which they work, we expect many Recovery Act dedicated employees to begin to leave the federal workforce in the fall of 2010 continuing through September 30th, 2012. 

Question 12. Solar Energy—According to a recent news report, the solar industry 

is worried that its ‘‘large-scale projects will miss a 2010 construction deadline to receive cash grants’’ available under the stimulus. 

a. Are any of these projects being held up due to requirements imposed through 

the stimulus bill? 

Answer. The 1603 program does not impose NEPA or Buy America requirements. 

However, all need to meet state permitting and zoning requirements and many need 

Bureau of Land Management permits. The volume of permit request is straining 

state resources. We do not believe there is anything in the program that is delaying 

or holding up projects. The program is funding grant requests within the 60-day 

window from receiving a completed application as mandated by the statute. 

b. Given that this funding was intended as stimulus spending, is it still the Department’s position that the 2010 deadline should remain in place, instead of being 

extended to a later date? 

Answer. The Department is aware of interest in extending the deadline for commencing construction (by the end of 2010) and is considering the pros and cons of 

an extension. It is certainly possible that, due to factors outside the ambit of the 

1603 program and the Recovery Act, large-scale solar projects may not be able to 

commence construction by the end of this year, but given the stimulative focus this 

deadline can press the projects to get the shovels in the ground. 

Question 13. Solar Energy: Exactly how much federal funding has the solar industry received from the stimulus? How many domestic jobs has that created? Are 

those jobs manufacturing jobs or temporary construction work? How many overseas 

jobs did solar funding from the stimulus bill create? 

Answer. More than $1.5 billion in Recovery Act funding has been provided to support solar energy, along with over $1.9 billion in closed loan guarantees and conditional commitments for loan guarantees. That includes: 

48C manufacturing tax credits: Solar was by far the largest category of applications received for the Section 48C advanced energy manufacturing tax credits and 

was the largest category of awards announced, followed by wind, Out of the 183 

projects receiving $2.3 billion of tax credits, 62 solar projects were selected to receive 

nearly $1.2 billion of tax credits, meaning solar received one-third of the awards for 

more than half the total dollar amount of tax credits. The high level of solar applications is one leading indicator that U.S. solar manufacturing is poised to grow dramatically in the coming years. 

1603 renewables grants: To date, this program has funded over $140 million to 

more than 350 rooftop solar PV and solar thermal installations. That is more than 

three-quarters of the projects receiving funding under the 1603 program, although 
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because they are small projects it amounts to only 5% of the $2.75 billion funded 

overall under the 1603 program. Loan guarantees: $535M loan guarantee for Solyndra’s CIGS thin-film manufacturing facility in Freemont, CA, now under construction. Solyndra estimates the 

new plant is creating 3,000 U.S. construction and supply chain jobs, and may lead 

to as many as 1,000 U.S. jobs once the facility opens. Solyndra also estimates that 

more jobs will be created installing Solyndra’s solar modules on rooftops around the 

country. In addition, DOE has approved a $1.37B conditional loan guarantee to 

BrightSource Energy to build a 392 MW solar thermal power plant in Ivanpah, California. BrightSource estimates that this project will create 1,000 construction jobs 

and 86 ongoing operating and maintenance jobs. R&D grants: DOE is providing $168 million of ARRA funds for basic R&D funding for solar and $74 million for advanced R&D or pilot funding for solar. 

Question 14. Buy American—GAO’s recent reports indicate that DOE believes the 

‘‘Buy American’’ requirements of the stimulus could hamper the agency’s efforts to 

spend their ARRA funds. 

a. Which programs would these requirements affect? 

Answer. The Buy American requirements of the Recovery Act affect all DOE Recovery Act-funded programs. However, to date, the Office of Energy Efficiency & Renewable Energy (EERE) programs have generated the majority of issues and questions concerning compliance with the Buy American requirements. In particular, 

Energy Efficiency and Conservation Block Grants (EECBG) and the State Energy 

Program (SEP) have been the source of many inquiries. 

b. Has DOE issued guidance for the ‘‘Buy American’’ requirements so far? 

Answer. Yes. DOE has issued agency-wide guidance for the Recovery Act, including the Buy American requirements, in its ‘‘Department of Energy Acquisition and 

Financial Assistance Guide for the American Recovery and Reinvestment Act of 

2009,’’ http://management.energy.gov/policyguidance/1672.htm. Section 3.9 (p. 3-7) 

explains the Recovery Act Buy American requirements in general. Additional, specific information is provided in two attachments to that guidance document, Attachment 10—‘‘Buy American Issues in the Recovery Act for Financial Assistance Agreements,’’ and Attachment 13—’’.ecovery Act Buy American Act Requirements for Information Needed From Financial Assistance Applicants/Recipients for Waiver Requests Based on Unreasonable Cost or Non-Availability.’’ These are detailed explanations of what the Buy American requirements mean, how they apply, and how 

to request waivers of the Buy American requirements based on unreasonable cost 

or non-availability. 

EERE also has created a web page entitled, ‘‘Buy American Guidance,’’ http:// 

wwwl:eere.energ.gov/recovery/buylamerican provision.html. This web page explains 

the Buy American requirements, contains the waivers EERE has issued to date (Nationwide Limited Public Interest Waiver for LED Lighting and HVAC Units; and 

Nationwide Categorical Waivers for Electronic Ballasts, LED Traffic Lights, and 

Compact Fluorescent Lights) as well as additional information including ‘‘Guidance 

on the Buy American Provisions as Applied to EERE Projects funded by ARRA,’’ 

‘‘Instructions for Waiver Requests,’’ and ‘‘Frequently Asked Questions about the Buy 

American Provision.’’ 

Also on the EERE ‘‘Buy American Guidance’’ web page is EERE’s Request for Information (RFI) on questions pertaining to the Buy American Provisions of the Recovery Act that was published in the Federal Register. 75 Fed. Reg. 5783, 5784 (Feb. 

4, 2010). The RFI requests two categories of information from stakeholders. Part 1 

requests technical information from stakeholders seeking to ascertain the availability of manufactured goods produced in the United States that are needed to 

carry out projects funded by EERE. Part 2 requests information on questions pertaining to the application and implementation (programmatic questions) of the Buy 

American provisions in Recovery Act projects funded by EERE. The products and 

technical specifications submitted in response to Part 1 will be catalogued and disseminated to the domestic manufacturing community in order to ascertain the domestic manufacturing capacity for these products before EERE considers issuing 

any waivers based on non-availability. Submissions in response to Part 2 (programmatic questions) are addressed by designated program staff. 

c. What is your agency doing to make sure those delays are minimized? 

Answer. EERE has designated a Buy American Coordinator whose responsibilities 

are to disseminate information to stakeholders, obtain feedback, and work with various program and staff and support offices within DOE to resolve issues. EERE also 

has established an e-mail box, buyamerican@ee.doe.gov, to receive inquiries and 

issue responses. 

The DOE General Counsel’s office operates an email hotline for legal questions 

related to the Recovery Act, including the State Energy Program, (SEP), Energy Ef-
68 

ficiency Conservation Block Grant (EECBG) and Weatherization Assistance Program (WAP), GCHotline FAQ Answers to Legal Questions Related to the Recovery 

Act, http://wvvw.gc.energy.gov/GCHotlineFAQ. Typically, Recipients who submit 

questions to the GCHotline are given individual responses tailored to their factual 

descriptions. Responses that are of general interest are posted as FAQs. The FAQ 

section includes a ‘‘Buy American’’ category. In addition, the Office of General Counsel holds a monthly call with state energy offices to answer questions concerning 

the EECBG, SEP, and WAP programs; some of the questions raised initially concerned Buy American. In the two most recent monthly calls, no questions concerning 

Buy America have been raised. 

DOE’s Recovery Act website, http://www.eergy,gov/recovery/index.htm, has a link 

to the Buy American Guidance on the EERE web page. It also features the DOE 

Recovery Act Clearinghouse, with a toll free number that operates Monday through 

Friday, 9 am. to 7 p.m. EDT, which provides information on popular topics, including the Buy American requirements, and a link to the web address that accepts 

email inquiries. 

Question 15. Job Creation—You state that 2 million jobs have been created or 

saved thanks to ARRA’ s impact on hiring in the private sector, by local and state 

governments and by non-profits. How many jobs has the stimulus created in the private sector, as compared to within government? 

Answer. On April 14, 2010, the Council of Economic Advisers estimated that by 

the end of the fourth quarter 2009 ARRA had raised employment by 1Y2—2 million 

jobs relative to what it otherwise would have been. This figure was based on a macroeconomic model and a statistical model computed by the CEA. Specific data on 

the number of jobs created by the stimulus in the private vs. public sector would 

be available through CEA. These approaches do not allow a detailed breakdown by 

industry. Source: http://www.whitehouse.gov/sites/default/files/microsites/CEA-3rdarra-report.pdf 

RESPONSE OF MATT ROGERS TO QUESTIONS FROM SENATOR SHAHEEN

We’re very proud of the investments made in clean energy under the ARRA bill. 

These funds are helping to make efficiency improvements and deploy clean energy 

technologies across the country, including New Hampshire. I believe the ARRA bill 

was an important down payment in helping to get our country running on clean energy. 

As you may know, NH’s electric cooperative, like many of our country’s electric 

cooperatives, was awarded two smart grid grants by DOE. I had the opportunity to 

visit the NH electric co-op last month and learn first-hand about their efforts to 

modernize their electricity system. The DOE smart grid grants are a critical part 

of that larger effort. 

However, concerns have been raised by New Hampshire’s Electric Cooperative 

and other electric cooperatives through the National Rural Electric Cooperative Association (NRECA) regarding possible tax issues surrounding the acceptance of DOE 

smart grid grants under ARRA. 

It’s my understanding that the Treasury Department may view these grants as 

taxable income; which, if accepted, could affect the tax status of many of the country’s rural electric status, including the New Hampshire electric cooperative. This 

is having a chilling effect on many of the clean energy projects our countries electric 

co-operatives are working on. It could result in our co-ops having to turn down the 

ARRA grants. 

This was clearly not the intent of Congress, in my view, to prevent our electric 

cooperatives from participating in these important DOE programs funded through 

ARRA. 

Question 1. I am told that progress is being made between DOE and Treasury to 

address this issue. Can you provide me with an update on that status of DOE and 

Treasury to address this issue? 

Question 2. Do you believe that you will be able to address this issue in a timely 

manner in order to address the concerns that the electric co-ops have raised? 

Question 3. When do you think a resolution to this issue will be made? 

Question 4. What would happen to the DOE Smart Grid program should these 

grants become taxable? 

Question 5. Is there anything Congress needs to do to address this issue, or do 

you think Treasury and DOE can work it out? 

Answer. On March 10th, The Department of Treasury and the Department of Energy announced new guidance on the tax treatment for grantees receiving Recovery 

Act funding under the $3.4 billion Smart Grid Investment Grant program. Under 

the guidance released, the Internal Revenue Service is providing a safe harbor 
69 

under section 118(a) of the Internal Revenue Code for corporations receiving funding 

under the program. 

With the determination that Smart Grid Investment Grants to corporations are 

nontaxable, corporate utilities will be able to launch their investments with a clear 

indication of the tax status for their projects. This decision has allowed the Department of Energy to move forward quickly to finalize many grant agreements in the 

past several weeks. We continue to work with Treasury to evaluate the Smart Grid 

Demonstration Program grants. 

RESPONSES OF MATT ROGERS TO QUESTIONS FROM SENATOR WYDEN

Question 1. Wave Energy—Europe has spent upwards of $100 million developing 

a wave energy research facility in Scotland, while the U.S. Government has committed just a few million dollars to developing a similar capacity at two Marine Energy Centers in Hawaii and Oregon. The U.S. is literally being left high and dry 

in developing this technology. The President’s FY2010 budget stated that FY2010 

funding for the Water Power Program ‘‘complement funds provided by the Recovery 

Act.’’ Despite the commitment in the President’s budget and requests from both the 

House and the Senate, the Department hasn’t provided any funds for these technologies under the Recovery Act. To add insult to injury, the FY2011 budget would 

cut funding in the marine-hydrokinetic research program from the amount that 

Congress gave you to spend in FY 2010 to less than $20 million dollars a year. What 

is the justification for ignoring the President’s FY2010 budget and refusing to provide ARRA funding for this research area, especially in light of the significant sums 

being devoted to these technologies by other countries? 

Answer. Based on Marine Hydrokinetic (MHK) technology development levels and 

the amounts of open water testing and demonstration that have taken place thus 

far, it was determined that no devices were immediately suitable for commercialscale deployment, and could best meet the Recovery Act’s goals of increased energy 

generation and rapid economic stimulus. The FY 2011 request is $40 million, a $10 

million (19 percent) decrease from FY 2010 enacted levels. This amount will be sufficient to continue and build upon activities started in FY 2010, as well as to begin 

to support the development of cost-effective incremental hydropower opportunities 

identified in 2010. FY 2011 is a critical year for the Water Power program to test 

marine and hydrokinetic devices and conduct feasibility studies at hydroelectric facilities and dams not currently producing electricity. The program plans to invest 

$10 million in public-private partnerships for the development and testing of innovative device designs to support establishing baseline costs of energy and performance for different marine and hydrokinetic technologies. Of the $19.5 million for conventional hydropower, the program’s main investment in FY 2011 will be $10.4 million in feasibility studies to identify opportunities for increased incremental power 

generation utilizing efficiency improvements, capacity upgrades, and powering existing non-powered dams. 

Question 2. Alternative Transportation Funding—I support the programs that you 

have put in place such as the SuperTruck grants to improve the energy efficiency 

of vehicles, but there are other transportation technologies that can save energy 

also. There are companies in Oregon that are developing state-of-the-art plug-in motorcycles and streetcars, that not only can reduce our dependence on imported oil 

here at home, they can help us preserve American jobs here at home and create 

products that could be exported around the world—a goal the President just highlighted in his State of the Union Message. The motorcycle company would like to 

export their products to China as well as market them here at home. The street 

car company—United Streetcar—is the only U.S. manufacturer left. And they have 

to import key components like traction motors which they would rather build here 

in the U.S. Unfortunately, there is no U.S. Government support for these technologies. During Under Secretary Kristina Johnson’s testimony before the Committee last December, she indicated that the Department would not be opposed to 

expanding the Department’s advanced vehicle program to include a broader range 

of technologies such as the plug-in motorcycle. As I told Under Secretary Johnson, 

not being opposed is not the same as being supportive. Why isn’t the Department 

supporting a broader range of vehicle technologies? Why can’t DOE use Recovery 

Act funding to develop these energy saving products here in the U.S.? 

Answer. The Department supports a wide range of advanced transportation technologies: electric-drive, advanced combustion, advanced biofuels, natural gas, and 

fuel cells. The plug-in motorcycles described above benefit from the DOE’s investments in electrification. In electrification—the Department is addressing several of 

the largest barriers to deploying plug-in vehicles: the high cost of batteries, the need 

for charging infrastructure, and the need to build consumer confidence by sup-
70 

1This was established by Section 136 of the Energy Independence and Security Act of 2007. 

2 Amended in the Energy and Water Development and Related Agencies Appropriations Act 

of 2010. 

porting the largest electric car demonstrations in the world. Success in these areas 

will also help to ensure that electric motorcycles are more affordable, easier to 

charge, and—as a result—more likely to be embraced by the public. 

The Advanced Technology Vehicle Manufacturer (ATVM) Loan Program is not 

part of the Recovery Act. It has, however, announced four conditional commitments 

for loans supporting advanced technology vehicle manufacturing facilities in the 

United States since issuing the program’s Interim Final Rule in November 2008. 

The ATVM loan program was recently expanded to include a broader range of vehicles that qualify. The original authorizing legislation limited the program to light 

duty vehicles that meet emission standards and achieve an improvement of 125% 

of base year combined fuel economy for similar vehicles.1 Due to the statutes reliance on corporate average fuel economy (CAFE) metrics, DOE’s implementing regulations restricted the program to those vehicles subject to the CAFE standards. Motorcycles are not subject to CAFE standards. 

The amended authorizing legislation includes ‘‘ultra efficient vehicles’’ in addition 

to ATVs.2 Ultra-efficient vehicles achieve 75 miles per gallon-equivalent, in gasoline 

or electric mode. Vehicles must have closed compartments and be designed for at 

least 2-passengers. 

Æ