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74–042 PDF 2012

OVERSIGHT OF THE DEPARTMENT OF ENERGY’S 

STIMULUS SPENDING 

HEARING 

BEFORE THE

COMMITTEE ON OVERSIGHT 

AND GOVERNMENT REFORM 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

MARCH 20, 2012 

Serial No. 112–136 

Printed for the use of the Committee on Oversight and Government Reform 

( 

Available via the World Wide Web: http://www.fdsys.gov 

http://www.house.gov/reform 

(II) 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM 

DARRELL E. ISSA, California, Chairman 

DAN BURTON, Indiana 

JOHN L. MICA, Florida 

TODD RUSSELL PLATTS, Pennsylvania 

MICHAEL R. TURNER, Ohio 

PATRICK T. MCHENRY, North Carolina 

JIM JORDAN, Ohio 

JASON CHAFFETZ, Utah 

CONNIE MACK, Florida 

TIM WALBERG, Michigan 

JAMES LANKFORD, Oklahoma 

JUSTIN AMASH, Michigan 

ANN MARIE BUERKLE, New York 

PAUL A. GOSAR, Arizona 

RAU ́ L R. LABRADOR, Idaho 

PATRICK MEEHAN, Pennsylvania 

SCOTT DESJARLAIS, Tennessee 

JOE WALSH, Illinois 

TREY GOWDY, South Carolina 

DENNIS A. ROSS, Florida 

FRANK C. GUINTA, New Hampshire 

BLAKE FARENTHOLD, Texas 

MIKE KELLY, Pennsylvania 

ELIJAH E. CUMMINGS, Maryland, Ranking 

Minority Member 

EDOLPHUS TOWNS, New York 

CAROLYN B. MALONEY, New York 

ELEANOR HOLMES NORTON, District of 

Columbia 

DENNIS J. KUCINICH, Ohio 

JOHN F. TIERNEY, Massachusetts 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

JIM COOPER, Tennessee 

GERALD E. CONNOLLY, Virginia 

MIKE QUIGLEY, Illinois 

DANNY K. DAVIS, Illinois 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

JOHN A. YARMUTH, Kentucky 

CHRISTOPHER S. MURPHY, Connecticut 

JACKIE SPEIER, California 

LAWRENCE J. BRADY, Staff Director 

JOHN D. CUADERES, Deputy Staff Director 

ROBERT BORDEN, General Counsel 

LINDA A. GOOD, Chief Clerk 

DAVID RAPALLO, Minority Staff Director 

(III) 

C O N T E N T S 

Page 

Hearing held on March 20, 2012 ............................................................................ 1 

WITNESSES 

The Honorable Steven Chu, Secretary of Energy, U.S. Department of Energy 

Oral statement .................................................................................................. 6 

Written statement ............................................................................................ 9 

APPENDIX 

The Honorable Darrell Issa, Chairman, Committee on OGR: Hearing preview 

statement .............................................................................................................. 64 

The Honorable Elijah E. Cummings, A Member of Congress from the State 

of Maryland: Opening statement ........................................................................ 65 

Chairman Issa, U.C.: Emails from Kim Dong, Emily Wheeler and David 

Frantz .................................................................................................................... 67 

Article from the Clean Cities Energy.gov site regarding liquid natural gas ...... 72 

Article from Business Insider, ‘‘The U.S. is sitting on a 200-year Supply 

of Oil’’ .................................................................................................................... 74

New York Times Article, ‘‘Employee Lawsuit Exacerbates Issues at Livermore 

Lab’’ ....................................................................................................................... 75

Chairman Issa, U.C.: Submission from the U.S. Energy Information Administration ................................................................................................................... 80 

The Honorable Gerald E. Connolly, A Member of Congress from the State 

of Virginia: Written statement ............................................................................ 81 

(1) 

OVERSIGHT OF THE DEPARTMENT OF 

ENERGY’S STIMULUS SPENDING 

TUESDAY, MARCH 20, 2012 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, 

Washington, DC. 

The committee met, pursuant to notice, at 10:08 a.m., in room 

2154, Rayburn House Office Building, Hon. Darrell E. Issa (chairman of the committee) presiding. 

Present: Representatives Issa, McHenry, Jordan, Chaffetz, 

Walberg, Lankford, Buerkle, Labrador, DesJarlais, Gowdy, Ross, 

Guinta, Farenthold, Kelly, Cummings, Maloney, Norton, Kucinich, 

Clay, Connolly, and Speier. 

Staff present: Ali Ahmad, Majority Communications Advisor; 

Kurt Bardella, Majority Senior Policy Advisor; Michael R. Bebeau, 

Majority Assistant Clerk; Robert Borden, Majority General Counsel; Molly Boyl, Majority Parliamentarian; Lawrence J. Brady, Majority Staff Director; Joseph A. Brazauskas, Majority Counsel; 

Drew Colliatie, Majority Staff Assistant; Gwen D’Luzansky, Majority Assistant Clerk; Adam P. Fromm, Majority Director of Member 

Services and Committee Operations; Linda Good, Majority Chief 

Clerk; Tyler Grimm, Majority Professional Staff Member; Peter 

Haller, Majority Senior Counsel; Christopher Hixon, Majority Deputy Chief Counsel, Oversight; Justin LoFranco, Majority Deputy 

Director of Digital Strategy; Mark D. Marin, Majority Director of 

Oversight; Christine Martin, Majority Counsel; Kristina M. Moore, 

Majority Senior Counsel; Rebecca Watkins, Majority Press Secretary; Michael Whatley, Majority Professional Staff Member; Lisa 

Cody, Minority Investigator; Kevin Corbin, Minority Deputy Clerk; 

Ashley Etienne, Minority Director of Communications; Jennifer 

Hoffman, Minority Press Secretary; Carla Hultberg, Minority Chief 

Clerk; Chris Knauer, Minority Senior Investigator; Dave Rapallo, 

Minority Staff Director; and Donald Sherman, Minority Counsel. 

Chairman ISSA. Good morning. The hearing will come to order. 

The Oversight Committee exists to secure two fundamental principles: first, Americans have a right to know the money Washington takes from them is well spent and, second, Americans deserve an efficient, effective government that works for them. Our 

duty on the Oversight and Government Reform Committee is to 

protect these rights. Our solemn responsibility is to hold government accountable to taxpayers, because taxpayers have a right to 

know what they get from their government. We will work tirelessly 

in partnership with citizen watchdogs to deliver the facts to the 

2 

American people and bring genuine reform to the Federal bureaucracy. This is our mission statement. Today, gasoline is $3.80. When this Administration took office, it was close to half that. Whether it is 2009 at $2.05, 2010 at $2.72, 

or last year at $3.69, or today at $3.84, we know that gas prices 

are a leading indicator of whether or not we are on the right track 

or wrong track in the overall energy fight. 

The Department of Energy was produced as a separate cabinet 

level position as a result of years of, in fact, declining fuel self-sufficiency and a need to ensure that we had a full cabinet at the President’s table level department to ensure that energy was a priority. 

At that time we were more energy self-sufficient than we are today. 

At that time the dreams of green energy were talked about, too. 

The fact is, at that time we had a bigger percentage of our portfolio of electricity coming from nuclear than we do today. The fact 

is 51 percent of electricity produced in America today is produced 

from that same dirty coal that was always used. Thanks to the Department of Energy and others, coal is cleaner than it was. 

The fact is our reliance on coal, petroleum, natural gas, somewhat on hydroelectric, all remain somewhat similar to what it was, 

and the dreams and the investments in green energy continue to 

be somewhat elusive. 

That is not to say we shouldn’t continue. As the Secretary may 

mention today, we still invest in fusion on a limited basis in the 

hopes that someday from a glass of water we will produce green, 

sustainable energy at a high level, just as the sun does. 

The fact is that is not what we are going to talk about today. I 

want to make it clear that administration after administration has 

set lofty goals and not achieved them. We are going to talk, to a 

great extent, today, and hear from the Secretary about Department 

of Energy’s $14.5 billion loan guarantee program, including the 

much known and touted Solyndra. 

We are going to go beyond that, though. We are also going to review the Inspector General’s report. We are going to recognize, like 

any large agency, it is made up of multiple different sub-entities 

that must do their job, must be respectful of internal management, 

must heed the Inspectors General and other groups who find fault. 

Today we are not here to find primary fault. We are here to, in 

fact, ask the Secretary to respond to a number of findings, many 

of which came from whistle-blowers, but even more came from internal audits done by the Inspector General and the Department 

of Energy itself. 

Let’s make it clear. We are the Oversight Committee, but we are 

also the committee that has an obligation to ensure that reform occurs. 

Post the election of the President, the first act of the new Congress was, for all practical purposes, to pass the largest single expenditure of money in a relatively, at the discretion of the President way, in history. In other words, the stimulus was very much 

discretionary money. At the time people said, no, no, it is going to 

be well-accounted for. I think we know better today. We know that 

in fact a tremendous amount of money, enough money to double 

the size of the budget of the Secretary we have before us today, 

was put at his disposal. 

3 

It is hard to spend that much money and spend it responsibly. 

I believe in our Q&A today we are going to find that, in fact, in 

many cases it was too much money too quickly to be spent well. 

As we look at weatherization failures noted by the Inspector General, it is going to be clear too much money, too loose control, too 

much to ramp up and do well perhaps will be the excuse, but the 

bottom line is we need to learn from this mistake. 

If our goal is in fact to save energy through providing assistance 

for weatherization for needy families, that in fact we have to make 

sure that it is done well, it is done cost effectively, and that there 

be no excuse that we simply couldn’t find enough good vendors so, 

as a result, we found vendors who did a shoddy job and in many 

cases left people worse off, not better off, than they were before 

their windows or insulation were installed. 

It is very clear that the Obama DOE was DOA when it came to 

delivering affordable energy to consumers. One of the challenges 

we have today will be to ask did we need to have large loans? Why 

did we need them? Were they proof of concepts or were they part 

of a grand plan by the Administration to ensure that enough funding to scale up green energy to make it work was possible? 

As a Californian, I am very well aware that many of the projects 

would not even have been penciled out for these loan programs if 

my State had not mandated that our incumbent electric utilities 

buy energy at as much as 10 times the cost of other energy sources. 

California and other States have made determinations to buy green 

energy at whatever the cost was. That fueled a lot of penciling of 

projects that could have worked, but as we found they didn’t always work. Additionally, the Department of Energy’s $5 billion weatherization assistance program is a stunning example of wasted billions of 

taxpayer dollars. Let’s understand, $5 billion should have done 

more for needy people in America. Perhaps the most important 

thing is it should have been spent at the pace that would have allowed every weatherization project to be done by a skilled contractor at an affordable price, delivered and verified. 

That does not mean that the Secretary before us is directly responsible. He oversees a vast agency that has multiple bureaucratic and appointed individuals. But we need to ask today, Secretary Chu, can we allow this to happen again? Can we do better? 

What were the lessons learned? How would you keep it from happening again? And since weatherization programs are not exclusive 

to just the stimulus, can we in fact do a much better job? Have we 

found out, if done correctly, what the real benefits would be? 

Last, but not least, I would like to commend the Secretary today 

for being probably the smartest cabinet officer in a generation; for 

being someone who understands the potential of technology. Our 

criticisms today of the Department of Energy I believe you will find 

have more to do with whether or not the people that work for you 

deliver the kind of product they should have delivered; whether in 

fact people that you are asked to hold accountable in fact did you 

do a disservice by putting either their personal priorities or simply 

not being good managers. 

So as we go through today, Mr. Secretary, I, for one, am somebody who believes that your continued participation in the science 

4 

community, your continued participation in the future of energy 

and of science are essential. So as the questions get hard, please 

understand they are not about you; they are about an agency that 

you began to lead nearly 3 years ago. 

With that, I recognize the Ranking Member for his opening statement. 

Mr. CUMMINGS. Thank you very much, Mr. Chairman, and thank 

you for calling this hearing. 

And to you, Mr. Secretary, I am very glad that you are with us 

today, and I want to thank you on behalf of a grateful Congress 

and a grateful Country for what you do for us every day. 

One of our Nation’s most important public policy goals is to move 

toward energy independence and energy efficiency. We all know the 

reasons for this: we want to enhance national security by reducing 

our dependence on foreign oil; we want to remain competitive with 

countries like China by developing innovative technologies of the 

future; we want to boost our economy while reducing our environmental footprint; and we want to lower energy costs for American 

consumers. 

We all agree with these goals, so how are we doing? First, the 

United States is now producing more oil than any time in the last 

8 years. We are producing record amounts of natural gas; we are 

now the largest producer of natural gas in the world. The Administration has approved more than 400 permits for additional drilling, 

but with safeguards to prevent the devastation faced by the Gulf 

after the oil spill of 2010. 

We have also become more efficient. In 2010, oil imports to the 

United States fell below 50 percent for the first time in 13 years 

and a new agreement on fuel economy standards by the Administration and U.S. auto companies will reduce oil consumption by 

more than 2 million barrels a day by 2025. 

Regardless of how much we drill and how much we save, however, we know that these measures alone will not achieve energy 

independence. We use about 20 percent of the world’s oil, but have 

only about 2 to 3 percent of known reserves. We need an aggressive 

policy to invest in the most innovative clean technologies of the future, and that is where the Recovery Act comes in. 

The Recovery Act has been extremely successful in responding to 

the economic crisis of 2008. It allocated more than $35 billion for 

more than 15,000 projects and increased the number of people employed by between 1 million and 2.9 million, according to the Congressional Budget Office. The Recovery Act has also made significant investments in projects that boost the ability of private sector 

companies to innovate and produce new technologies in order to 

generate more energy and lower costs for consumers. These investments include electric grid improvements, advanced energy manufacture, geothermal businesses, and hundreds of other projects. 

The United States is now on track to double renewable energy 

generation by the end of this year, and companies supported by the 

Recovery Act are making amazing breakthroughs in technologies 

that could dramatically reduce energy costs and generate whole 

new industries. For all of these reasons, Members of Congress on 

both sides of the aisle have written nearly 500 letters in support 

of these broad goals and specific projects. 

5 

In addition to evaluating the overall effectiveness of the Recovery 

Act, one of our jobs in this Committee is to examine the procedures 

used by the Department and industry to determine whether they 

can be improved. Although the bankruptcy of Solyndra raised legitimate questions about these procedures, it did not and does not 

support unsubstantiated allegations that the Department engaged 

in criminal conduct or made its funding decisions based on political 

favoritism, pay-to-play relationships, or outright corruption. 

We have to be responsible about our oversight. We cannot simply 

attack any program that has the words Obama and clean air attached to them. We have to base our review on the facts and strive 

to serve the long-term interests of the American people, rather 

than short-term interests of partisan politics. For example, last 

week the non-partisan Government Accountability Office issued a 

report with recommendations to improve the procedures used by 

the Department to evaluate loan guarantee applications. GAO also 

made this little notice of finding: it concluded that the Department’s due diligence procedures ‘‘may equal or exceed those used 

by private lenders to assess and mitigate project risks.’’ 

I think the Department should be commended for these actions 

even as it continues to become more efficient and effective. 

As our Committee conducts its oversight of the Recovery Act, I 

hope we fairly assess the overall success of the Department’s programs and focus on constructive ways to fulfill our shared goal of 

energy independence and energy efficiency. 

With that, Mr. Chairman, I yield back. 

Chairman ISSA. I thank the gentleman. 

Mr. JORDAN. Mr. Chairman, I ask unanimous consent for one 

minute to make a statement. 

Chairman ISSA. Without objection, so ordered. 

Mr. JORDAN. Thank you, Mr. Chairman. 

Chairman ISSA. The gentleman is recognized. 

Mr. JORDAN. I appreciate that and I will be brief. 

Let me just say this. The Department of Energy’s budget authority went from $23 billion in 2008 to $69 billion in 2009 when the 

Secretary took over. DOE was the main conduit through which the 

Obama Administration sought to implement their green energy 

strategy and, 3 years later, what do the American people have to 

show for DOE’s use of their money? A disgraceful portfolio of loans 

and loan guarantees. 

Solyndra, which went bankrupt in August 2011, had a credit rating of B, B-minus when the Department of Energy gave it its loan 

guarantee. And we were all shocked to find out that the entire 

DOE portfolio for the 1705 program has an average unweighted 

credit rating the same as Solyndra’s, B, B-minus, with several companies receiving credit ratings even below that of the bankrupt 

Solyndra. 

When you look at this information, I think there are only two explanations: either gross incompetence at this agency or, just as 

dangerous, decisions were not made on the merits of the projects 

but, rather, on the names in the company’s Rolodexes. For a disturbingly large portion of the projects that got loan guarantees, 

there are connections to the Obama Administration too stark to ignore. In my opinion, this loan guarantee program typifies the kind 

6 

of cronyism that has made Americans across the Country despise 

what they see in Washington. 

Mr. Chairman, it is either incompetence at this agency or you 

had to be a friend of the Administration to get a loan guarantee, 

and that needs to be investigated. And I want to thank you for having this critical and important hearing today. With that, I yield 

back. 

Chairman ISSA. The gentleman yields back. 

Members will have 7 days to submit opening statements for the 

record. 

Before I recognize the panel, I would ask unanimous consent that 

the list of all the Republican members of this Committee who submitted loan guarantees be placed in the record. Without objection, 

so ordered. I might note that no Republican-only requests for funding from the Department of Energy were granted; the only one that 

was granted was actually bipartisan, had almost all the Indiana 

members, including the Senator. 

Additionally, Mr. Cummings had sent me a letter yesterday. 

Here is a full response letter, along with all of the Committee notes 

that substantiate the invalidity of your letter. 

With that, I would recognize our first panel, first and only panel, 

the Honorable Steven Chu. Secretary, as I did in my opening, I 

made it clear you are undoubtedly the smartest person to occupy 

your office in a very long time, if ever. Your resume, including 

maybe not more patents than I have, but patents that are certainly 

more long-reaching than mine, speak for themselves. 

I would, however, note that the Committee rules require we 

swear all witnesses. Would you please rise to take the oath? 

Do you solemnly swear or affirm the testimony you are about to 

give will be the truth, the whole truth, and nothing but the truth? 

[Witness responds in the affirmative.] 

Chairman ISSA. Thank you. Please be seated. 

Let the record reflect a yes. 

Mr. Secretary, in my printed response it says, as it always does, 

limit yourself to 5 minutes, look at the clock, and so on. To be fair, 

take the time you need. Bear in mind that your entire opening 

statement will be placed in the record, so what is not in the record 

is just as valuable as what is in the approved notes. 

With that, you are recognized. 

STATEMENT OF THE HONORABLE STEVEN CHU, SECRETARY 

OF ENERGY, U.S. DEPARTMENT OF ENERGY 

Secretary CHU. Thank you, Chairman Issa, Ranking Member 

Cummings, members of the Committee. Thank you for the opportunity to discuss the Department of Energy’s work through the Recovery Act to strengthen the U.S. economy and promote a secure 

energy future. 

When President Obama took office, the United States was in the 

midst of the greatest economic crisis since the Great Depression. 

To meet this challenge, we had to respond quickly and forcefully. 

In February 2009, President Obama signed into law the American 

Recovery and Reinvestment Act to jump start the economy and lay 

the foundation for our future prosperity. 

7 

Today we are moving in the right direction and the economy has 

added private sector jobs for 24 straight months. The nonpartisan 

Congressional Budget Office estimated that at its peak the Recovery Act was responsible for up to 3.6 million jobs nationwide. The Energy Department received more than $35 billion through 

the Recovery Act, supporting more than 15,000 projects across the 

Country and helping the United States compete in the global clean 

energy race. 

Since the summer of 2010 we have consistently supported between 40,000 and 50,000 direct jobs each quarter. The Department 

takes its obligation to the American taxpayers seriously, and from 

day one our mission was to get the Recovery Act funding out the 

door quickly, responsibly, and transparently. 

Oversight has been a top priority for the Department and me. 

We have put in place an aggressive monitoring system to ensure 

that the Department and its grantees spend Recovery Act funds 

wisely. The Department takes any case of waste, fraud, or abuse 

very seriously. 

To date, less than one-tenth of a percent of the Department’s Recovery Act projects have resulted in a criminal indictment or conviction for waste, fraud, or abuse. Each of these cases was unacceptable. We have taken action to address issues early on and hold 

responsible parties accountable. Moreover, the Department has cooperated, and will continue to cooperate, with the Inspector General’s investigations. 

I have spent my career as a scientist. Rigorous peer review and 

double-checking someone else’s findings are fundamental to sound 

scientific progress, and I believe the same is true in the government. So I welcome any and every sincere effort at oversight and 

where we find mistakes we have and we will move swiftly to correct them. 

I hope today can be an opportunity to have a serious, substantive 

dialog. The American people expect all of us to honestly assess the 

investments we have made and chart our course for the future. Ultimately, we share the same goal: ensuring that America wins the 

clean energy race. 

While any case of fraud, waste, or abuse is unacceptable and deserves swift and appropriate action, oversight also requires us to 

examine the overall effectiveness of our Recovery Act programs. 

These investments are helping to modernize the ways we produce 

and use energy so we can compete for energy jobs of the 21st century. We have made strong progress in several areas. 

Through the Recovery Act we have helped families and communities save money by saving energy. We have put construction 

workers, contractors and others to work weatherizing 680,000 

homes. Thanks to the Recovery Act investments, the United States 

has nearly doubled the renewable energy generation since 2008. 

Projects supported by the 1603 program, the 48(c) tax credit, and 

the Section 1705 loan program are putting tens of millions of 

Americans to work building and installing the clean energy technologies that will power our future. 

The Recovery Act is also helping to diversify our transportation 

sector to protect consumers from high gas prices and to reduce our 

dependence on imported oil. We are supporting advanced biofuel faVerDate Aug 31 2005 11:58 Jun 25, 2012 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 C:\DOCS\74042.TXT APRIL
8 

cilities and strengthening our electric vehicle manufacturing industry. 

Through the Recovery Act, we are upgrading the grid to a more 

secure, stable electrical system. We are investing in cutting-edge 

research so the United States can maintain our leadership in 

science and technology. 

The Department of Energy’s Recovery Act efforts are working. 

They have created jobs and put us in a stronger position to compete in the global clean energy economy. Last year the United 

States reclaimed the title from China as the world’s leader in total 

clean energy investments. However, our comeback was due in large 

part to the programs and tax incentives that have expired or are 

set to expire soon. 

America has reached a crossroad. We can play to win in the 

clean energy race, investing in America’s workers, industries, and 

innovations, or we can wave the white flag and cede leadership to 

other countries. I believe the United States can and must win this 

race. The Recovery Act gave us a strong foundation to build on, but 

we must move forward with fierce urgency. 

Thank you, and now I welcome your questions. 

[Prepared statement of Secretary Chu follows:] 

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Chairman ISSA. Thank you, Mr. Secretary. I will recognize myself 

for 5 minutes. 

Let me start by saying you were still speaking in the present 

tense. My understanding is the Recovery Act is expired. You can’t 

spend funds under the Recovery Act now, is that correct? 

Secretary CHU. The Recovery Act has expired. There are programs put in place, for example, in the loan program we still have 

the majority of disbursements to go forward with. So there is recovering due diligence that has to be done in the Recovery Act. 

Chairman ISSA. So from a pure standpoint of stimulus Recovery 

Act, it was all supposed to be spent in a year or two in order to 

get the economy going again. We are 3 years past its passage and 

you haven’t spent it all. Would you say that in fact much of the 

money that you have left to spend legitimately is in fact not stimulus per se, but in fact simply a plussing up of what you got to do 

for your entire 4 years as Secretary? 

Secretary CHU. No, I respectfully disagree. The requirement was 

we would have to work toward obligating the funds. 

Chairman ISSA. No, no, I understand the law. What I want to hit 

you on is a little bit more of your undergraduate economics. Stimulus was supposed to get the people working again, it was not anticipated, nor was it designed, to go 4 years. But in fact you are 

saying today it is going to go four-plus years. You will still be 

spending or obligating these funds, particularly from the loan programs, after a full 4 years at the current run rate, meaning that 

the money rushed in quickly and spent, basically $800 billion, was 

in fact an effective doubling of your budget for the entire 4 years. 

Secretary CHU. Not exactly. Not really, in fact, because if you 

look at the things that were funded under the Recovery Act, they 

were proportioned considerably differently than what the earlier 

Department of Energy budgets had been doing. 

Chairman ISSA. Well, I didn’t head this Committee when President Bush was doing the plus-ups for war, but I watched the Department of Defense simply decide how much to put in one pot and 

how much to put in the other pot, and basically what happened is 

DOD got a huge windfall going into the war that let them catch 

up with a lot of things they wanted to do. 

The point I think that we are making here today is your weatherization program—would you put the weatherization slide up? 

This is from your own IG. You rushed quickly and you effectively, 

and these are hard to see, but these are actual finished products 

where the vendor left and the IG went in, and the IG’s report says 

basically you didn’t have the controls in order to ensure that vendors like this were quickly fired and the job was corrected. 

So on one hand weatherization was effectively doing a shoddy 

job. I don’t think most of us would like to have that particular improved blanket over our hot water heater, although I have been 

told it might be somewhat effective. 

Realistically, on one hand you had a lot of money coming in 

quickly and on the other hand you had projects like Solyndra and 

so on, and many other that are still going to be ongoing and funded 

well into the future, is that correct? 

16 

Secretary CHU. We have some projects that are ongoing and 

funded, as you note, in the future, but as I noted virtually all the 

money has been obligated. 

Chairman ISSA. Okay, well, obligated is not stimulative. 

Now, let me just ask one basic question. In an earlier hearing 

you gave yourself an A minus. In weatherization do you give yourself an A minus? 

Secretary CHU. Actually, I do. 

Chairman ISSA. Okay. In controlling the cost of gasoline at the 

pump do you give yourself an A minus? 

Secretary CHU. Well, the tools we have at our disposal are limited, but I would say I would give myself a little higher in that 

since I became Secretary of Energy I have been doing everything 

I can to get long-term solutions. 

Chairman ISSA. Well, and I appreciate that. Now, the President 

took two pieces of credit in the State of the Union that I want to 

just question you on factually. First of all, he said that the Department of Energy created fracking. He took credit for that in the 

State of the Union. My understanding is fracking was created 60 

years ago and enhancements to fracking which the Department of 

Energy participated in in funding the improvements occurred before you came to office, is that correct? 

Secretary CHU. It is absolutely true that there were earlier ventures into fracking it was producing at the very earliest times less 

than a percent of the natural gas. The Department of Energy, in 

1978 to 1992, I believe, invested in fracking. We got out when 

Schlumberger got in. 

Chairman ISSA. Okay. So when the President says the Department of Energy is the reason, that is great. The only problem is 

he was still in high school when the Department of Energy started 

investing in that. I just want to make sure we understand the time 

line of this particular President’s claims. 

Last, but not least, if you had to do it all again, would you have 

made the large scale investments that you made in Solyndra and 

all these others, or would you in fact have made smaller scales? In 

other words, was it essential to put tens of billions of dollars at 

risk, hundreds of billions of dollars at risk in some ways? Was that 

scale responsible or in fact proof of concept, some sort of a scaling 

up, where we could have had a Solyndra bankruptcy for less? 

Secretary CHU. That is an excellent question. So as Herb Allison 

and his committee report commented, our loan portfolio can be divided into essentially three tranches. One was the tranche of investing in the deployment of innovative technologies; solar, wind, 

others, geothermal. Virtually all of them had power purchase 

agreements. That actually requires a considerable amount of 

money, but as Herb Allison said, on balance, those are lower risk. 

The higher risk ones included innovative manufacturing because 

you don’t really know how things are going—but on that innovative 

manufacturing we think that some loan assistance played a very 

useful purpose. 

And then, finally, there were two major auto loans to Ford and 

Nissan which at the time were regarded as risky, especially the 

Ford loan, and did not have, at the time, a reasonable rating, but 

that turned out to be a very successful loan and we saved a lot of 

17 

jobs, created a lot of jobs, and Ford has bounced back tremendously. 

Chairman ISSA. I am sure we will get to other questions about 

the term innovation. 

With that, I recognize the Ranking Member. 

Mr. CUMMINGS. Thank you very much, Mr. Chairman. 

Mr. Secretary, yesterday the Chairman made a new allegation, 

he said that in reviewing a loan guarantee for an Arizona-based 

company called First Solar, the Department of Energy ‘‘manipulated analysis, ignored objections from career professionals, and 

strategically modified loan evaluations in order to force project 

funding out of the door.’’ Mr. Secretary, prior to issuing its report, 

did the Committee contact you about that allegation or ask you for 

an explanation? 

Secretary CHU. Yes, it did. 

Mr. CUMMINGS. And did you provide them with one? 

Secretary CHU. I believe we did. 

Mr. CUMMINGS. And can you tell us now are these allegations 

true? 

Secretary CHU. No. What was happening was that there was a 

series of emails and internal debate among our career professionals. Internal policies establish that we wanted these loans to 

support deployment of innovative technology, and there is a robust 

discussion between our career professionals as to whether it met 

the self-imposed criteria, and in the end the person who was looking and trying to decide within his own group said, no, these we 

think are innovating and crosses that threshold. 

Mr. CUMMINGS. Did the Department manipulate the analysis, ignore senior officials, and force this funding out the door for political 

reasons? 

Secretary CHU. No. In fact, this was discussion all with the career employees. Who by the way, I would have to say I know some 

of these individuals. They are truly outstanding individuals. 

Mr. CUMMINGS. Was your career employee overruled by political 

appointees in order to defy his own scientific judgment? Is any of 

that true? 

Secretary CHU. No, it is quite the opposite. Again, it was all in 

the career staff and in internal discussion. 

Mr. CUMMINGS. Mr. Secretary, I don’t know if you are aware, but 

in March 2011 Arizona Governor Jan Brewer issued a statement 

praising First Solar’s projects in the State and she said, ‘‘First Solar’s presence in Arizona has been a great engine in driving our renewable energy sector forward.’’ She also noted that First Solar’s 

Mesa facility project, would create 600 quality jobs ‘‘and the potential for hundreds more, and would help in promoting Arizona’s 

Commerce Authority’s plan for business attraction, retention, and 

expansion.’’ In October 2011, Governor Brewer touted First Solar’s 

DEOE projects as part of Arizona’s ‘‘ascension as a national and 

global leader in solar energy.’’ 

Were you aware of those statements? 

Secretary CHU. Perhaps distantly. 

Mr. CUMMINGS. And can you tell us did you take any action because of her political support of First Solar? 

18 

Secretary CHU. No. As I have said repeatedly, we evaluate each 

loan application on its technical merits. 

Mr. CUMMINGS. Now, Governor Brewer was not alone. Senator 

John McCain also praised First Solar’s decision to build in Arizona 

and he stated, ‘‘First Solar’s announcement to build a new factory 

in Mesa and deploy their domestically manufactured modules in 

solar projects like Agua Caliente in Yuma County will not only create jobs for Arizonans, but also represents another important step 

toward greater energy security.’’ 

Were you aware of that? 

Secretary CHU. Again, I don’t read all of those statements, so I 

am not really sure. 

Mr. CUMMINGS. Mr. Secretary, one last question. On September 

20, 2011, the Chairman went on national television and condemned 

the Department’s entire loan guarantee program as a ‘‘broad scandal’’ that ‘‘has been driven by political favoritism, accusations of 

pay-to-play relationships.’’ He stated that having politicians involved in selecting winners and losers is how we ‘‘end up with corruption in government.’’ 

Is there any truth at all to the allegation that you base your findings and decisions on political favoritism or on pay-to-play relationships or on outright corruption? 

Secretary CHU. No, there is none. 

Mr. CUMMINGS. Now, you said, in answering one of the Chairman’s questions, he asked you about grading yourself with regard 

to weatherization, I think you gave yourself an A or an A minus, 

and gas at the pump you gave yourself an A. 

Mr. Chairman, you took a little longer than I did. Can I have a 

little extra time? 

Chairman ISSA. Continue. 

Mr. CUMMINGS. All right. 

Let me ask you this. Explain why that is. I am just curious. 

Secretary CHU. Sure. Very, very quickly, because I see time is 

running out. If you looked at, for example, the weatherization program, we set up a system where, before you are reimbursed for 

work done, everything had to be inspected. Our money went to the 

State, the State went to local organizations, and local organizations 

then arranged for contractors. In addition to that, that you have to 

verify the work had been done, we also set up through the States, 

insisted on an independent audit. At least 5 percent of the work 

had to be seen and its value done independently. 

And what we found in this audit was there were about 3 or 4 

percent of the work fell into three categories. One category is perhaps the family didn’t qualify because there was a maximum of 200 

percent above poverty line; in some cases, if the work was not done 

adequately or shoddily done; and, finally, if not all the stones were 

unturned, there could have been other weatherization work in that 

program. I don’t have the breakdown, but it is lumped into those 

three. 

So what they found was roughly 3 or 4 percent went into those 

three categories in an independent audit. Then the DOE IG and 

the Government Accounting Office did another independent check 

on what this independent group found, and my understanding is 

they found very little beyond what our IG found. So in 3 or 4 perVerDate Aug 31 2005 11:58 Jun 25, 2012 Jkt 000000 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 C:\DOCS\74042.TXT APRIL
19 

cent of the cases and in all cases where there were things as shown 

in those pictures where, yes, it was a very badly done job, the contractors were asked to go back and fix it on your own dime. 

So if you look at that 3 or 4 percent, this is not that bad in an 

area where a lot of insulation and things like that are largely invisible. So it was the mere fact that we set this robust oversight. And 

then the third independent oversight wasn’t really finding anything 

more, it told us that it was more or less all right. 

But again let me stress, and I will say this, we are not happy 

with those instances where there was shoddy workmanship. We are 

not happy with any of it. 

Mr. CUMMINGS. Thank you, Mr. Chairman. 

Chairman ISSA. You are very welcome. 

I would ask unanimous consent now that the email records, and 

I apologize, Mr. Secretary, your people provided no Bates stamps 

and delivered only on paper, so I will read a little bit. The document dated Tuesday, February 1st, 2011, at 1:57 p.m., from David 

Franz, which, by the way, is the one that says, Isn’t that a carbon 

copy of Agua Caliente? His answer is, it is. 

Something prohibited within the regulations. It is in your report 

too. 

Second, the document dated February 1st, 2011, 12:12 p.m., from 

Sarah Huizinga; and, third, the document dated Thursday, June 

23rd, 2011, 12:34 p.m., from Kim Dong, who I understand is, or 

Dong Kim. I am reading, unfortunately, his form rather than his 

name. Dong Kim, who is Director, Technical and Project Management Division LP 30 Loan Program Office. 

Without objection, so ordered. 

Mr. CUMMINGS. Mr. Chairman, may I have copies of those? 

Chairman ISSA. Of course. You already have copies. 

Mr. CUMMINGS. Where are they? 

Chairman ISSA. They were all delivered to you in the same fashion, with no Bates stamps by the Department of Energy, who chose 

to print off of computer paper so they would be extremely hard to 

go through. We were delivered 50 boxes. You were delivered the 

same boxes. 

With that we recognize the gentleman from North Carolina, Mr. 

McHenry, for 5 minutes. 

Mr. MCHENRY. Thank you, Mr. Chairman. 

Secretary Chu, thank you for being here. My constituents commute, on average, 25 minutes a day to work. Eighty-four percent 

of them drive themselves. Public transportation is not readily available in western North Carolina. Tell me what you have done to reduce the price of gas at the pumps. What policies have you put in 

place to reduce the price of gas at the pumps? 

Secretary CHU. Well, I can tell you what the Administration has 

done and then I will narrow it down to what the Department of Energy can do and has done. Certainly, a lot of Federal lands have 

been put up for auction for production of oil. Although due to a 

complex set of reasons, it is certainly true that, since the President 

took office, the amount of oil production in the United States has 

gone up and—— 

Mr. MCHENRY. My question, Secretary Chu, as you know, the 

production of oil on public lands has actually gone down under your 

20 

Administration’s watch. What policies and production has gone up 

on nonpublic lands? For instance, in the Dakotas, the Bakken 

Shale is fantastic, wonderful technology advancements, but what 

policies has this Administration put into effect to help reduce the 

price at the pumps? 

Secretary CHU. Well, there was one policy, I would say, a reaction to an oil interruption due to the Libyan incident, but in the 

tools that the Department of Energy has at its disposal, what we 

have done is we have worked with manufacturers to improve the 

efficiency of internal combustion engines to reduce those costs. 

We are very aggressive in trying to look for alternatives other 

than petroleum, if adopted worldwide, could have a moderating effect on the price of gasoline, bring those prices down. For example, 

we were very enthusiastic about the development of natural gas, 

shale gas, especially over the last 5 and 10 years, and the Department of Energy has been very active looking at ways to use natural 

gas for long-haul trucking, for centralized delivery trucking. 

We just put out an announcement saying we want to see if we 

can reduce the cost of storage of natural gas in automobiles and 

short-haul trucks that can be readily available. If we can do this, 

we can move to what are called bi-fuel cars, so that the same internal combustion engine can burn natural gas or gasoline or diesel. 

But one of the barriers is the very high cost of that carbon fiber 

tank or the very high pressure. So we have pushed forward a program to develop better storage. 

So those are examples. Battery, electrification alternatives. Right 

now the electric cars are fairly expensive, $32,000 for a Nissan 

Leaf. Before subsidies, the Chevy Volt is about $40,000. Very aggressive about adding battery development so that we can dramatically bring down the cost of electrification to $20,000, $22,000. 

Mr. MCHENRY. Well, Secretary Chu, you have mentioned a number of things. At what point will those have an effect of my constituents’ cost of purchasing gas at the pumps? 

Secretary CHU. Well, as you know and as we all know, you look 

at all the tools available in our chest and we looked at all those 

tools, but as the President has repeatedly said, there is no single 

bullet. Yes, we want to increase production. Yes, we want to do all 

those other things. And mostly we want to diversify to give our 

consumers a choice to decrease—— 

Mr. MCHENRY. So at what point will those have an impact on the 

market? 

Secretary CHU. Natural gas long-haul trucking, very quickly. A 

consortium of companies—— 

Mr. MCHENRY. Before the next election, perhaps? 

Secretary CHU. Yes. Their plan is to have invested $300 billion 

in liquid nitrogen fueling stations by December 2012. 

Mr. MCHENRY. My time is short. You have listed a long list of 

things that this Administration has done. I have not yet heard that 

they are trying to increase the supply of American oil or our refining capacity, or limit the regulations in the diversity of blends that 

are required. I have heard nothing from you today that indicates 

a policy this Administration has put in place that will meaningfully 

impact the price at the pumps, other than driving it up. 

21 

The policies this Administration has put in place have actually 

increased the cost of fuel at the pumps; they have increased the 

cost of commuting for my constituents. And to tell my constituents, 

with 10 percent unemployment in western North Carolina, that 

you need to go buy a Nissan Leaf, that in order to commute for 50 

minutes a day, you are going to have an employer who is wonderful 

enough to provide you a place to plug in your car so you can get 

home is absolutely ridiculous. 

And the anger that my constituents have of the cost at the 

pumps is very real. And if the President doesn’t get this, if the Secretary of Energy doesn’t get this, we have a real problem here. We 

doubled the budget of the Department of Energy in 2009—— 

Chairman ISSA. The gentleman’s time has expired. 

Mr. MCHENRY [continuing]. And yet we are paying twice as 

much at the pumps. This is absolutely ridiculous. We have seen 

Solyndra—— 

Chairman ISSA. The gentleman’s time has expired. 

Mr. MCHENRY. We have not seen a reduction at the pumps. 

Chairman ISSA. I thank the gentleman. 

Mr. Secretary, I know there wasn’t a question there, but would 

you like to restate what I believe was a quote that they are investing these billions in liquid nitrogen? 

Secretary CHU. Sorry, a misstatement. Liquified natural gas. 

Thank you. 

Chairman ISSA. Correct. Without objection, we will also place the 

article from the CleanCitiesEnergy.gov site on liquid natural gas. 

With that we recognize the gentlelady from the District of Columbia. You are recognized for 5 minutes. 

Ms. NORTON. Thank you very much, Mr. Secretary, for being 

here. 

We live in a bubble; it is called the United States of America. 

But when I think of oil, of course, I think of the increasing consumption by the rest of the world. I was astonished to learn that 

we have only about 2 percent of the world’s known oil supplies, and 

yet consume 20 percent of the oil supply, and noted this in a report 

by the managing director senior analyst covering oil and gas for 

Oppenheimer & Company, who said if we drill in the middle of 

Manhattan and everybody drill in their backyard, we would not 

have enough oil to move the global market. 

Would you explain what he is talking about? 

Secretary CHU. Well, the oil markets are an international market 

because one can ship oil fairly inexpensively anywhere in the 

world, and, yes, it is true that America has increased its oil production in the last 4 years. That is a good thing because it means we 

import less oil, and we are all for that. But there are other countries, for example, Canada has become a major oil exporting country, and yet, aside from the difference in taxes, the average Canadian and U.S. prices bob up and down exactly the same. Of course, 

there are differences in provinces and States because of taxes. 

So the issue here is it is an overall supply and overall demand, 

and there are what I would call concerns with the Middle East that 

also tend to drive up prices. The overall demand is dominated by 

developing countries, notably China and India. The demand in the 

United States is quite moderate; in fact, it is essentially flat, which 

22 

is good news, especially as we increase our oil production. That is 

why our imports have gone down from 60 percent to, let’s say, 45, 

46 percent. And it will continue to go down because we are going 

to increase oil production in the U.S. because of new technologies. 

So the direct tie is really this world oil price, in large part driven 

by growing demand in developing countries. In large part there is 

an issue having to do with excess reserve capacity that also makes 

people concerned. And then, finally, worries of the Middle East. 

Ms. NORTON. Yes. So what countries do in their own territories 

doesn’t much affect the world market and the world demand for oil, 

which brings me to going to other forms of energy. Do we have the 

same competition for other forms of energy that we have for oil and 

gas. The way they are coming at us in China and India for the oil, 

are they coming at us? Do we have any head start at all for alternative forms of energy? 

Secretary CHU. Yes. Absolutely. Natural gas is one. The infrastructure for liquefying and shipping natural gas around the world, 

it is starting but it doesn’t really exist, so there are big differences 

in natural gas prices, and that is why the Department of Energy 

is so keen on offloading some of our transportation energy to natural gas. 

Biofuels is another possibility because we have great agricultural 

resources, just as we have great natural gas resources. So beginning to create biofuels without subsidy is our goal that can offset 

petroleum is another big deal for us. 

So those two things create wealth in the—— 

Ms. NORTON. So instead of everybody joining the race to apparently nowhere for oil, understanding that we have to get as much 

of that as we can, we have to join other races as well. Does the 

funding of some of the alternative sources in the Recovery Act help 

in this race toward at least some form of energy which would be 

usable and affordable? And, if so, how did the Recovery Act help 

in that? 

Secretary CHU. Well, the RP was funded, started in the Recovery 

Act. RP has been instrumental in many of the innovative biofuels, 

batteries, electrification. Also, an RP company has actually doubled 

the world record for lithium ion energy density, and we think that 

the cost of manufacturing will remain the same or perhaps even go 

down, so you have just cut in half the price of electric batteries. 

If we can cut it to one-third, one-quarter, we can really talk 

about a $20,000 car that can pay for itself in 5 years. It would be 

cheaper than the $16,000 car, and that will bring immediate relief 

to all the families who are trapped in situations where they have 

long commutes. And we do feel that pain and we are working as 

hard as we can to give the American public those technologies. 

The good news is those technologies could also be used worldwide 

and deployed worldwide. That would have a downward impact on 

the price of oil because the demand will be moderated. 

Ms. NORTON. Thank you, Secretary Chu. 

Chairman ISSA. I thank the gentlelady. 

I now ask unanimous consent that the article be placed in the 

record, ‘‘The U.S. is sitting on a 200 year oil supply.’’ This is from 

the Business Insider. It quotes President Obama. President Obama 

said the U.S. possesses 3 percent of the world’s oil reserves, or 

23 

about 22.3 billion barrels, which comes out to a 200 year supply of 

our need. 

Without objection, so ordered. With that we recognize the gentleman from Tennessee, Mr. DesJarlais, for 5 minutes. 

Mr. DESJARLAIS. Thank you, Secretary Chu. Appreciate your testimony today. Five minutes goes very quickly. If you could, no one 

likes yes or no answers, but if you could answer yes or no to these 

questions. I think they are fairly straightforward. 

With regard to First Solar, DOE deemed both Agua Caliente and 

Antelope Valley Solar Ranch as innovative projects, correct? 

Secretary CHU. That is correct. 

Mr. DESJARLAIS. The innovative component of the Agua Caliente 

projects involved inverters that benefited from fault ride-through 

technology and dynamic voltage regulation, correct? 

Secretary CHU. Yes, that is correct. 

Mr. DESJARLAIS. Thank you. And you agree that Antelope Valley 

Solar Ranch’s application indicated it would use the same exact inverter related technology? 

Secretary CHU. A very similar technology plus one additional innovative technology, one-access tracking of the sun with these 

lower efficiency solar panels. 

Mr. DESJARLAIS. Okay. But since Agua Caliente has already relied on the inverter—— 

Chairman ISSA. Would the gentleman yield for a second? As a 

Californian, I have to say Agua Caliente. 

Secretary CHU. Yes. I did not want to correct—— 

Chairman ISSA. The chairman of the Agua Caliente tribe in my 

district just passed away, so I am acutely aware that today I would 

like it—we will give you back the time. Agua Caliente. 

Mr. DESJARLAIS. How did you pronounce DesJarlias the first 

time? 

[Laughter.] 

Chairman ISSA. So I was showing off. 

[Laughter.] 

Chairman ISSA. For a long time I just said, you are next, Doc. 

Mr. DESJARLAIS. Okay, Caliente, is that right? 

Secretary CHU. Agua Caliente, yes. 

Mr. DESJARLAIS. Okay. But since Agua Caliente already relied on 

the inverter technology, Antelope Valley needed to find another innovation to further differentiate itself, is that correct? 

Secretary CHU. That is correct. And it had this other differentiated technology. 

Mr. DESJARLAIS. Okay. Are you aware that DOE deemed single 

access trackers which rotate to follow the sun as the innovation 

that would differentiate Antelope Valley from Agua Caliente? 

Secretary CHU. I believe so. 

Mr. DESJARLAIS. Okay. I think that is what you were referring 

to earlier. Okay. 

Can we put up a slide where Dong Kim discusses the trackers? 

Oh, it is already up? Thank you. 

[Slide shown.] 

Mr. DESJARLAIS. Secretary Chu, I am about to show you an 

email here where Dong Kim, the Director of DOE’s Technical and 

24 

Project Management Division, makes clear that these trackers are 

not innovative. Can you explain this? 

Secretary CHU. Trackers have been used before. They have been 

used in smaller scale things. They have been used in higher efficiency solar panels because the added cost of tracking, the motor, 

the locking as the sun goes across was something that had been 

used before. But when you go to very large scale and the thin film 

technology, the—rods they were using, at the time 11 percent efficient, wasn’t comparing to where you had a much higher efficiency, 

let’s say 16 percent silicon to track. 

So the question was can you get a large project and the additional capital expense of tracking to make it work with, at that 

time, relatively lower efficiency panels, which were lower cost to 

make. Now, the good news is the efficiency has gone up to 14.5 percent, but that was the merging of the technologies. And in the end 

Dong Kim decided that perhaps—and again it was totally a discussion within that group as to what would rise to the threshold of 

innovation. 

Mr. DESJARLAIS. So you disagree with Dong Kim? 

Secretary CHU. I think Dong Kim has an opinion that he then 

wrote the justification of that opinion later on. So what you see is 

the workings of an internal discussion with Dong, with others within that section of the Department. So this is all internal within the 

career folk. So Dong Kim, actually when he wrote up, because in 

the end it is going to be a decision that they put forward. If they 

decided it was not going to be innovative, then it would not go forward. 

The other email that was referred to we believe was referring to 

the terms of the project finance. It is more a finance agreement 

rather than technology. But I don’t really know, we are just assuming. That is the carbon copy. But I can’t put myself in the minds 

of Dave France, but we think it might have to do with the terms 

of the finance agreement with regard to the reference of carbon 

copy. 

Mr. DESJARLAIS. Okay, thank you. So based on the facts, Antelope Valley Solar Ranch failed to meet the innovativeness required 

and, as a result, DOE made a $646 million mistake by approving 

the loan. Will you personally commit to preventing any additional 

money from going to First Solar’s Antelope Valley project? 

Secretary CHU. Well, first, I don’t really know what the status 

of that is. Once we make a commitment to a loan and begin to disburse the loans, we take very seriously the contractual obligations. 

So we can get back to you on what those contractual obligations 

are. 

Mr. DESJARLAIS. Okay. And the projects need to meet benchmarks, is that right? 

Secretary CHU. That is correct. 

Mr. DESJARLAIS. Okay. 

My time is up. 

Chairman ISSA. Would the gentleman yield? 

Mr. DESJARLAIS. Yes, sir. 

Chairman ISSA. So since they are both with the same company 

and they used a carbon copy and created a false difference, one 

that really didn’t exist, one that could have been some units with, 

25 

some without, by definition isn’t their application in fact one that 

you could go back and question whether their application claiming 

innovation was correct or not? 

You are the owner of 15 patents, including the ones that are 

pending. The fact is a patent is not a right that you can’t be reviewed for its accuracy later. Don’t you have the right to go back 

and look at the accuracy of claims by a company who chose to invent, if you will, a difference where there was none? 

Secretary CHU. Well, I don’t know. 

Chairman ISSA. From an innovation standpoint. 

Secretary CHU. I think in terms of a loan guarantee, a finance 

agreement, once you have decided you have made a commitment 

and you go forward, as you well know, that is a contractual basis. 

It was an internal debate within our career folk as to whether the 

next project Antelope Valley had borne the threshold of innovation, 

and those people who, as I said before, are very, very good people, 

determined that it was so. 

So again, once we entered into an agreement, we have to be very 

careful. There are milestones, there are things of that nature, and 

we will follow those procedures. 

Chairman ISSA. Okay, I will give the Minority a copy of this, but 

I am going to enter at this time into the record a page, page 12, 

which indicates no difference in the application on the actual document. We will give you a copy, Mr. Secretary, and come back to it 

in a few minutes. 

Chairman ISSA. With that, the gentleman from Virginia, Mr. 

Connolly, is here. 

Mr. CONNOLLY. Thank you, Mr. Chairman. 

Welcome, Secretary Chu. It is great to see you again, and thank 

you for your leadership. I think our Country is very fortunate to 

have somebody with your caliber and your background leading the 

Department of Energy, and I thank you for your leadership. 

For some, Dr. Chu, the narrative here seems to be that the stimulus bill, with respect to energy in particular, was a complete 

waste of time, a boondoggle, not very transparent, and accomplished almost nothing; in fact, maybe negative nothing because 

there was fraud, there was waste, we didn’t know what we were 

doing. 

I am just curious. Let’s take weatherization, which has been singled out. At the time we were considering the stimulus bill, weatherization was heralded as a potential boon in terms of energy efficiency in helping lower income folks who otherwise couldn’t retrofit 

their homes or businesses, it would put people to work, and it 

would save on energy costs over time. We have a report today by 

the Majority staff that basically asserts that billions were wasted 

and that program didn’t work. Your take? 

Secretary CHU. We think that aside from these isolated some 

subset of that 3 or 4 percent, it was, overall, a very successful program. Its overall impact actually can’t be fully felt, but let me just 

tell you a little story. 

I went to one of the earlier homes that was weatherized, a widow 

in Milwaukee. She was living in a small house; it was weatherized, 

they put insulation in the ceiling, in the walls; they gave her a new 

heating system, and she said for the first time in as long as she 

26 

can remember she can now eat breakfast in her kitchen. Before 

that time it was just too cold, and this is within 200 percent of the 

poverty level. This is a person who was suffering and spending a 

lot of a very limited set income on her energy bill, and that went 

way down. So then that person can take that money and channel 

it right back into the local economy. 

So we have hundreds and thousands, actually, hundreds of thousands of stories like that if you consider the 680,000 homes that 

were weatherized. 

Mr. CONNOLLY. Six hundred and eighty thousand. And do I understand that the average saving per year for each of those 680,000 

is about $437? 

Secretary CHU. That has been an estimate, yes. 

Mr. CONNOLLY. So would you say that the program funded by the 

Recovery Act was a success, in your view? 

Secretary CHU. Yes. As I said, that is why I was willing to give 

that one an A. I am actually always amused when people ask me, 

as a professor, how I grade myself. I am a tough grader, but, in 

any case, yes, that would, and again let me point out in those instances where there has been shoddy workmanship, for example, 

we went back and insisted they fix it with no cost to the taxpayer. 

Mr. CONNOLLY. Yes. Well, perhaps some who have an ideological 

bent against any such invention, they want to highlight some of the 

problems and gloss over the preponderance of success. But in terms 

of effectiveness in energy efficiency, this program has long been 

touted as something that actually is quite effective, is that correct? 

Secretary CHU. Well, it is very effective and it brings relief. And 

when you see it on a very personal level, when you actually see 

how it affects our population and—— 

Mr. CONNOLLY. Mr. Secretary, let me just, if I may, move on. Did 

you say that U.S. oil production has actually increased in every 

year during the Obama presidency, reversing an 8-year trend? 

Secretary CHU. Yes, I did. 

Mr. CONNOLLY. And how did that happen? I thought the President was opposed to fossil fuel exploitation and just liked sort of 

squishy renewable energy. 

Secretary CHU. Well, it happened in large part because of things 

that were being developed over a period of a couple decades, notably the shale oil and shale gas liquids. 

Mr. CONNOLLY. So it went up, not down, under President 

Obama? 

Secretary CHU. That is correct. 

Mr. CONNOLLY. The stimulus bill, we put some R&D money into 

advanced battery research, is that not correct? 

Secretary CHU. That is correct. 

Mr. CONNOLLY. Did we not also put some money into advanced 

battery manufacturing? 

Secretary CHU. That is correct. 

Mr. CONNOLLY. And did that have any efficacious effect? Did that 

change the percentage of our world market share of advanced batteries manufactured in the U.S.? 

Secretary CHU. Yes, it did. First, by producing a higher quantity 

and meeting demands of Volt and Leaf and other manufacturers, 

it shifted the balance. We went from producing less than 1 or 2 

27 

percent of the world’s advanced batteries to a capability of going 

up to 20 or 30 percent. So it helped reduce the price of the batteries 

that are going into today’s cars, and will further help reduce the 

price in the next generation. 

Mr. CONNOLLY. And positioning us competitively—— 

Secretary CHU. Right. 

Mr. CONNOLLY [continuing]. Where we were pretty much almost 

eliminated. 

Chairman ISSA. The gentleman’s time has expired. 

Mr. CONNOLLY. I thank the Chair. 

Chairman ISSA. The gentleman from Ohio, Mr. Jordan, is now 

recognized. 

Mr. JORDAN. I yield to the Chairman a few seconds. 

Chairman ISSA. The gentleman from Virginia asked the question 

and you answered it as capacity. Isn’t it true that in fact the actual 

amount of lithium ion and other advanced batteries being placed 

in the United States is not significantly greater and, in fact, we 

continue, both in photovoltaic and in battery production, to see 

China effectively continuing to see our technology that we invest 

in, but ultimately be the place of choice for that purchase? 

Secretary CHU. Well, actually—— 

Chairman ISSA. When the government doesn’t mandate buy in 

America. 

Secretary CHU. I think the biggest competition was actually coming from Japan and Korea in the batteries. But with that program 

we did see a couple of U.S. manufacturers bring factories back 

home, which was very, very good. We can give you a complete list. 

Chairman ISSA. We appreciate that. 

I thank the gentleman from Ohio, the home of Honda Motors, 

one of the great manufacturing companies. I ask unanimous consent the gentleman have his full 5 minutes. Without objection, so 

ordered. 

Mr. JORDAN. Thank you. 

Mr. Secretary, Nancy-Ann DeParle, White House Deputy Chief of 

Staff, financially entangled with Granite Reliable, did that in any 

way influence your decision to give Granite Reliable a loan? 

Secretary CHU. I didn’t know she had any connection. 

Mr. JORDAN. Yes. With her son. She actually yielded a share to 

her son. Mr. Secretary, did the fact that Michael Froman, Deputy 

Assistant to the President, investor in Solar Reserve, did that in 

any way influence your decision to give Solar Reserve a loan guarantee? 

Secretary CHU. No. Similarly, I didn’t know—— 

Mr. JORDAN. Mr. Secretary, did the fact that David Sandalow, 

Senior Advisor at Good Energies, Assistant Secretary at Department of Energy, major investor in Solar Reserve, did that in any 

way influence your decision to give Solar Reserve a loan guarantee? 

Secretary CHU. No. 

Mr. JORDAN. Mr. Secretary, Steve Spinner, whose wife’s law firm 

represents Solyndra, former bundler for the President, Mr. Spinner 

was, did that in any way influence your decision to help Solyndra? 

Secretary CHU. No. 

Mr. JORDAN. Mr. Secretary, how about John Bryson, former 

Chairman of the Board at Bright Source, now the Commerce SecVerDate Aug 31 2005 11:58 Jun 25, 2012 Jkt 000000 PO 00000 Frm 00031 Fmt 6633 Sfmt 6633 C:\DOCS\74042.TXT APRIL
28 

retary, did that in any way influence your decision to give a loan 

guarantee to Bright Source? 

Secretary CHU. No. 

Mr. JORDAN. How about Peter Weeks, Mr. Secretary, Clean Energy Advisor at the Department of Energy for loan guarantee programs. Did he have any influence on whether decisions were based 

on politics, seeing how his experience on his resume says his only 

experience prior to working in the Presidential campaign? 

Secretary CHU. No. 

Mr. JORDAN. How about, Mr. Secretary, Sanjay Wagle, principal 

at Vantage Point Venture Partners, investor in Bright Source Energy, did that in any way influence the Department of Energy’s decision to give Bright Source a loan guarantee? 

Secretary CHU. No, it did not. 

Mr. JORDAN. Mr. Secretary, how about Larry Summers, former 

Director at the National Economic Council at the White House, formerly with DE Shaw, an investment firm with a stake in the 

Cahokia Project, did that in any way influence your decision to give 

a loan guarantee to Cahokia? 

Secretary CHU. No, it did not. 

Mr. JORDAN. How about Steve Wesley, Mr. Secretary, who bundled a half a million dollars for President Obama in the 2008 campaign? Did that have any influence on your decision to give a $465 

million loan guarantee to Tesla, the company that he was involved 

with? 

Secretary CHU. No, it did not. 

Mr. JORDAN. Did any of these individuals I mentioned today in 

any way lobby you, talk to you about the respective companies that 

they had a stake in during the decisionmaking process with the 

1705 program? 

Secretary CHU. To the best of my knowledge, no. In fact, this is 

a remarkable list because I was unaware of—— 

Mr. JORDAN. I just mentioned nine people, Mr. Secretary, if I 

could, because I have a short time. I just mentioned nine people 

representing eight different companies. My understanding is there 

were 27 companies in the 1705 program who got a loan guarantee, 

8 of which had connections, close connections with the Administration, with the campaign. 

Do you see any kind of pattern? This is approximately 30 percent 

of the recipients in the 1705 program, close connections with the 

White House. Do you see a pattern or concern there? 

Secretary CHU. No, I don’t. 

Mr. JORDAN. Do you think the American people might see a pattern if 30 percent of the folks were bundlers for the President, involved the Administration, sitting on the boards of the companies 

who received money, particularly companies like Solyndra that are 

now bankrupt? Do you think the American people might see a pattern? 

Secretary CHU. Well, if the full record is revealed, I think you 

could look at some of the other financial backers of some of our 

loans who were prominent Republican donors. The fact is—— 

Mr. JORDAN. Did the White House ever call you, ever talk to you 

about any of these? Did you get someone from the White House, 

29 

Chief of Staff, someone from the White House talk to you about 

these respective companies involving these individuals? 

Secretary CHU. No, we did not. 

Mr. JORDAN. So you weren’t just helping your friends? You 

weren’t just helping people who were politically connected to the 

Administration? 

Secretary CHU. That is correct. 

Mr. JORDAN. Even though 30 percent of the loan guarantees 

went to people who had connections with the Administration? 

Secretary CHU. Well, as I said, we looked at loans on their own 

merits, we don’t look at who is backing—— 

Mr. JORDAN. Okay, so let me turn to that. So if you weren’t helping your buddies, and you were basing the decisions on the merits 

of the loan, how do you explain the fact that 23 of the 27 recipients 

of the loan guarantees were rated as junk status investments? How 

do you explain that fact? This is what my opening statement was 

about. 

If it wasn’t your political buddies, it had to be incompetence, because tell me what organization would put money at risk in 23 

companies out of 27 that are rated junk category, B, B-minus. This 

is what the American people want to know about. Because there 

is no other conclusion you can reach. You helped your friends or 

you guys were incompetent. When you look at the 1705 program, 

the facts are the facts, and I don’t see how anyone could arrive at 

any other decision. 

Secretary CHU. When you look at the constraints and what we 

wanted to do with the loan program, which was to invest in innovative technologies, if you are a AAA rated company—— 

Mr. JORDAN. What does junk status mean, B, B-minus? What 

does that mean? It means analysts expect these companies to fail. 

And yet you put millions of taxpayer dollars, American dollars at 

risk in companies that S&P and Moody’s expect to fail, and you put 

the money at risk. So you are telling me that is what you did because, your words, you didn’t base it on the fact that these were 

political friends of the White House. So you had to base it on something, and it certainly couldn’t have been the investment ratings 

that they were given by the investment companies, because that indicates that these companies are expected to fail when they are 

junk status. 

Secretary CHU. Well, first, if you look at the statutes in the loan 

program, it said that we wanted to invest in innovative projects but 

had a reasonable chance of repayment. And if you look at the—— 

Mr. JORDAN. Don’t you think—— 

Chairman ISSA. The gentleman’s time has expired. If you just 

want to get a final answer. 

Mr. JORDAN. I would just say a reasonable expectation of succeeding, then why did the ratings agencies say that they were junk 

status, which means that they are probably going to fail. That is 

why they gave them the rating. 

Chairman ISSA. The Secretary may answer. 

Secretary CHU. Very briefly, I think we can all look up what 

these ratings mean and—— 

Mr. JORDAN. Oh, I have. I have. I wish you guys would have before you gave the loans. 

30 

Chairman ISSA. The gentleman’s time has expired. 

Mr. CUMMINGS. Mr. Chairman? 

Chairman ISSA. Yes. 

Mr. CUMMINGS. Mr. Chairman, I would ask, those were some 

strong allegations, at least give him a chance to answer. 

Chairman ISSA. I am. 

Mr. CUMMINGS. Okay. 

Chairman ISSA. That’s why I keep saying the gentleman’s time 

has expired. 

Mr. Secretary, we want to make sure you are fully able to answer a question. Please continue. 

Secretary CHU. Mr. Chairman, thank you for that courtesy. All 

I wanted to say is that B, B-minus things of that nature, they are 

qualitative words. This can be quantified with FCRA ways of dealing with this and the FCRA rules are saying that you try to assign 

as best you can, it is an art more than a science, a probability of 

failure. So we used those FCRA rules to actually begin to quantify 

if you look up in Standard & Poor’s and Moody’s, you name it, any 

definition of these, they are more qualitative, they talk about potential risks, things like that. 

So then it lands down to what is the probability of failure, and 

we feel that it has to have at least a 50 percent chance of succeeding. 

Chairman ISSA. Well, Mr. Secretary, because I want you to fully 

answer, do you have guidelines that say where you do or don’t provide funding? Is there a point at which you are not supposed to 

provide funding based on these letters? 

Secretary CHU. Well, we believe that it should be a 50 percent 

or better chance of repayment. The highest credit subsidies we 

gave, actually, at the time, and this was determined by OMB, were 

to a company like Ford, which turned out to be a good choice, but 

at the time it was deemed by OMB to be risky. 

Chairman ISSA. Thank you. I am sure there will be more questions. 

With that we go to the gentleman from Utah, Mr. Chaffetz. 

Mr. CHAFFETZ. Thank you, Mr. Chairman. I want to follow up on 

Representative Jordan’s comments, and thank you, Mr. Secretary, 

for being here. 

Is it ethical or unethical for a Federal employee to personally 

benefit from the decisions that they are involved with? 

Secretary CHU. It is unethical. 

Mr. CHAFFETZ. Is it proper or improper for a Federal employee 

to personally financially benefit from the decisions that they are involved with? 

Secretary CHU. Yes, we have rules forbidding that and very rules 

so that people don’t get near any gray area. 

Mr. CHAFFETZ. So if somebody does step over that line, what is 

the consequence? 

Secretary CHU. We would probably turn it over to the IG for investigation. 

Mr. CHAFFETZ. Okay, so they go through this investigative process. But let’s say it comes to a conclusion that they have stepped 

over this ethical line. What is the consequence for stepping over 

that line? 

31 

Secretary CHU. Well, again, it depends on the exact nature of 

what they did and the law, but we would certainly take this very 

seriously and the IG would, I am sure, have a recommendation, 

should that occur. 

Mr. CHAFFETZ. Have you turned over any of the names that Mr. 

Jordan talked about, or any others, over to the IG for further investigation? 

Secretary CHU. Well, in the few cases that I know, most of those 

people I didn’t actually know they had connections until today, but, 

for example, in the case of C. Spinner, he was actually firewalled 

from participating in any decisions regarding whether we make a 

loan to anything that he might have had a relationship to. 

Mr. CHAFFETZ. What about David Prend? 

Secretary CHU. I don’t know David, Friend. 

Mr. CHAFFETZ. David Prend, you don’t know David? 

Secretary CHU. Prend? No. 

Mr. CHAFFETZ. He currently evidently serves on a panel that assists the DOE with solar technology issues. What about Steve Wesley? 

Secretary CHU. Steve Wesley I do know. 

Mr. CHAFFETZ. Has he been turned over to the IG yet? 

Secretary CHU. No, because we in deciding on the Tesla loan, he 

made no overtures, no phone calls, no instances to encourage us to 

make that loan. 

Mr. CHAFFETZ. What about Nancy-Ann DeParle? 

Secretary CHU. I didn’t know she was connected with any of our 

loans. 

Mr. CHAFFETZ. But she turned over some of the assets that she 

had to her son and she sat on the board and owned interest in 

Noble Power. Noble owned a company called Granite Reliable 

which received a partial guarantee of $168.9 million loan from the 

Department of Energy. 

I guess, Mr. Secretary, one of the concerns is following up on that 

ethical standard. If there isn’t a true and consistent standard that 

is not enforced, then it exacerbates the problem. And as Mr. Jordan 

rightly pointed out, there seems to be a pattern. There are so many 

names on this list. I just want to know personally what are you 

doing to follow through on our concerns that these people were personally financially benefiting from the decisions? They are there in 

a position to influence people, where they had major financial gain 

on the upside of these loans. What are you doing about that? 

Secretary CHU. Well, first, we look at any allegation and see if 

there is any merit to it. Also, what I have been doing, again, because there were no—certainly my ears would have perked up if I 

got phone calls from people saying we want you to look at this loan, 

we encourage you to fund this loan, but we didn’t receive those. 

But since this time and since people have brought up these connections, if you look at our loan portfolio, you also find very prominent people who have invested in companies we have given loans 

to who are very prominent Republican donors. We simply didn’t 

know that at the time, nor does it really matter, because we do not 

give loans based on—— 

Mr. CHAFFETZ. I guess I am worried about the people that work 

in your Department, work in the White House who are Federal emVerDate Aug 31 2005 11:58 Jun 25, 2012 Jkt 000000 PO 00000 Frm 00035 Fmt 6633 Sfmt 6633 C:\DOCS\74042.TXT APRIL
32 

ployees who are personally benefiting in a group sitting there 

where they have an opportunity to influence people and their decisions. That is the deep concern, Mr. Secretary. I don’t see any evidence that you are following through and pushing these to the Inspector General. I just want to get an assurance that you are going 

to do that and that there are serious consequences for people who 

do step over those ethical lines. 

Secretary CHU. Well, certainly our own general counsel’s office, 

they look at all these allegations, as we do, and if we think it rises 

to the threshold where it deserves further scrutiny, we will turn 

them over to the IG. 

Mr. CHAFFETZ. I have seconds here, but describe what that line 

is. What, in your mind, becomes unethical behavior? 

Secretary CHU. If it turns out that any of these people were actually active in either actually lobbying or were part of any decisionmaking process for the loans, I think that would warrant—— 

Mr. CHAFFETZ. The fact that they worked for the Department or 

the agency and they personally benefited, does that not reach a 

threshold that is concerning to you? 

Secretary CHU. There are people who work for the Department 

and if they are firewalled from being part of any decision, then that 

is how we manage these potential conflicts of interest, and we do 

firewall them and we are very scrupulous about trying to make 

sure that they have no influence on any decision. 

Mr. CHAFFETZ. Thank you, Mr. Chairman. 

Chairman ISSA. Thank you. 

Mr. Secretary, they are going to bring you down an email. It was 

provided in our discovery, dated April 29th, 7:28 a.m. I would ask 

unanimous consent it be placed in the record. 

Chairman ISSA. At this time I would like you to read it and see 

if you want to reconsider whether or not there were contacts between the White House and DOE officials. 

Secretary CHU. Well, okay, so Daniel Tobin I don’t recall. I don’t 

remember him. So you want me to read it out loud or just read it? 

Chairman ISSA. Please. You have said that there were no contacts. This clearly is a DOE official asking for the information of 

an entity that had not yet been given a loan, saying the White 

House wanted it. 

Secretary CHU. Well, I don’t know what the context of this email 

is, but it says, Steve, Steve Ably, I guess, Steve, can you provide 

the number of jobs that will be created during the construction and 

what percentage of this product is U.S. content? I understand the 

majority of this equipment is from Germany. Do you have a breakdown? Apparently, the White House is asking for this information. 

This is pure speculation as to what this was about, but certainly 

when we install and we provide loans, we would like to see a large 

fraction of the content, if we are installing a wind project, to ok 

U.S., because it is U.S. jobs. And the good news is, as this project 

went forward, we started three, four or 5 years ago, I am not sure 

when the clock starts, but with 25 percent U.S. made contact, on 

average, and now the wind turbines being constructed in the 

United States are about, according to the wind representatives, 

about 65 percent U.S. content. Automobiles manufactured by 

33 

Chrysler, Ford, and GM are about 75 percent U.S. content. So this 

is a good step. 

So I am guessing, and it is just pure speculation, that the concern was we don’t want to be giving loans that is largely non-U.S. 

content. 

Chairman ISSA. I appreciate that, and I would only ask that 

since our discovery did find this, if you would do a follow-up discovery under the same subpoena and deliver us succinctly all the 

contents like this that appear to be involving applicants, DOE, and 

the White House, since obviously there is at least one that does involve the applicant, DOE, and the White House. 

Secretary CHU. I can do that. 

Chairman ISSA. And we will loan you a Bates stamp, if that 

helps make sure that we get numbers on the next time. 

Secretary CHU. Very good. 

Chairman ISSA. Thank you. 

With that, we recognize the gentlelady from California, Ms. 

Speier. 

Ms. SPEIER. Mr. Chairman, thank you, and thank you, Mr. Secretary. 

Secretary CHU. How are you? 

Ms. SPEIER. I am fine, thank you. I would like to ask you a series 

of questions that you can answer for the record, and I would also 

like to submit for the record, Mr. Chairman, an article from The 

New York Times, September 10th, 2011, that is entitled Employee 

Lawsuit Exacerbates Issues at Livermore Lab. 

Chairman ISSA. Without objection, so ordered. 

Ms. SPEIER. Secretary Chu, I am just going to run through these. 

The details of the fees the Department of Energy has been paying 

to the management company since 2008; an explanation as to why 

the work force at Livermore Labs has shrunk to 6,800 full-time employees from 9,400, while Federal funding has remained at 2007 

levels of $1.2 billion; an explanation as to why the number of peer 

reviewed published articles by Livermore Labs scientists has dramatically decreased since the Bechtel-led coalition has been in 

charge and has the contract; and, finally, what oversight actions 

the Department of Energy has taken in response to cost overruns, 

degradation, and capabilities and lapses in security at Livermore 

Labs. 

So you don’t have to answer those at the moment, unless you 

have some overarching comment you would like to make, but I 

would like to have them made available to the Committee at a 

later date. 

Secretary CHU. So in respect for your remaining time, I will not 

answer, but certainly I lived through that restructuring—— 

Ms. SPEIER. I know you did. 

Secretary CHU [continuing]. When it became from the University 

of California to a limited liability corporation, which include 50 percent, I believe, University of California, and at the time, we, the 

Lab, people felt that this would be some of the fallout. 

Ms. SPEIER. Okay, thank you. According to the International Energy Agency’s World Energy Outlook, the fossil fuel consumers 

worldwide received about six times more government subsidies 

than the renewable energy industry. Mr. Secretary, do you know 

34 

how long we have been providing subsidies to the fossil fuel industry? 

Secretary CHU. Well, it depends on which one you are talking 

about, but I believe oil started roughly 100 years ago. But we can 

get you the precise types of subsidies. 

Ms. SPEIER. All right. According to a 2010 New York Times editorial, the oil industry has spent $340 million over the past 2 years 

lobbying against cuts to its subsidies. One of the reasons they 

argue for retaining the subsidies is retaining American jobs. But I 

note that despite heavy subsidies between 2005 and 2009, the top 

five oil companies have actually reduced the U.S. work force by 

more than 10,000 workers. So it does not appear that the subsidies 

to oil companies are keeping jobs in the United States. 

Do you have any comments you would like to make on that? 

Secretary CHU. Well, it is very complicated, but certainly those 

major companies are doing well, they are large, stable companies 

making hundreds of billions in profits, and a lot of the new finds, 

new gas finds and new oil finds, are started by independents, 

smaller entities. 

Ms. SPEIER. So what would happen, Mr. Secretary, if we offered 

similar subsidies to clean energy initiatives? 

Secretary CHU. Well, we think that it would help create an environment that would stimulate this, but I, for one, don’t believe 

clean energy subsidies in wind and solar, for example, need more 

than, let’s say, 20 years. The technology is improving very rapidly 

and they can be ramped down because the technology is improving, 

and will be competitive with any form of new energy. So I think 

many people in this room would be agreeable to saying that there 

should be sunsets in all technology subsidies. 

Ms. SPEIER. All right. In 2009, the University of Massachusetts 

issued a study called The Economic Benefits of Investing in Clean 

Energy. The study reported that investments in clean energy initiatives create two to four times more direct and indirect jobs compared to the same investments in oil and gas production. The report concluded that investing $1 million to retrofit buildings to 

make them more energy efficient creates three times more jobs 

than $1 million invested in oil and gas. 

Without getting into specifics, do you agree with the findings of 

this report? 

Secretary CHU. Well, I can’t say to the exact numbers, but I do 

say that energy efficiency especially is something by saving energy, 

you save money. The energy efficiency, the retrofits, the building 

of new buildings, new infrastructure in the United States, something we know can’t be outsourced, and once you save that money, 

whether you are an individual, a residence, a business, that money 

gets recycled right back into the economy. So we think that that 

is a very good way of making us more competitive, making us economically stronger, and stimulating our own economy. 

Ms. SPEIER. Thank you. My time has expired. 

Chairman ISSA. I thank the gentlelady. 

We now recognize the gentlelady from New York, Ms. Buerkle, 

for 5 minutes. Would the gentlelady yield for 10 seconds? 

Ms. BUERKLE. Absolutely. 

35 

Chairman ISSA. Isn’t it true, on a per megawatt basis, that the 

subsidy to fossil fuel is a fraction of a subsidy to renewables at this 

time, that those are weighted based on very small amount of renewals, very large amount of fossil fuel? 

Secretary CHU. I haven’t looked at the numbers, but I would presume so because the amount of energy generated by fossil fuel still 

overshadows that of—— 

Chairman ISSA. I thank the gentleman. 

The gentlelady is recognized. 

Ms. BUERKLE. Thank you, Mr. Chairman, and I thank you, Secretary Chu, for being here this morning. 

I want to just refer to and reference a comment my colleague 

from the District of Columbia mentioned about the 2 percent oil reserves that exist in the United States. Do you agree with that assessment? 

Secretary CHU. Well, I am not an expert on oil reserves. I have 

certainly heard that. But oil reserves are a very specific definition 

of what an oil reserve really means. But I have heard that number. 

Ms. BUERKLE. Thank you. And we have heard the President refer 

to that both during his campaign and in his State of the Union. I 

think the last figure he used was 3 percent. 

But I think it is important because the people throughout the 

Country need to know the truth, and if I look at these numbers 

here, our Country doesn’t have just 2 percent of the reserves. At 

least 86 billion barrels of oil in the outer continental shelf, 24 billion barrels in shale deposits in the lower 48 States, up to 2 billion 

barrels of oil in shale deposits in Alaska, up to 12 billion barrels 

in Anwar, as much as 19 billion barrels in Utah that is tar sands, 

according to the Bureau of Land Management. 

Now, all of these numbers are coming out of governmental agencies. There is a massive green river formation in Wyoming which, 

according to the USGS, contains a stunning 1.4 trillion barrels of 

oil shale, and on it goes. Rand Corporation found that about 800 

billion barrels of oil shale are in Wyoming and neighboring States. 

All told, U.S. has access to 400 billion barrels of crude that is recoverable via existing drilling technologies. 

That is really very important for us to recognize, that we do have 

more than 2 percent of oil reserves and that we can be energy independent if we just tap what is in the United States of America. We 

can become less dependent on the Middle East oil. 

And I think, as I sit here, it is so important for me to get a feel 

from this Administration. Do you understand, and I will just briefly 

mention my district, which is upstate New York. No mass transit 

and very cold weather. So we have folks up there who must drive 

to work, and we don’t measure in terms of blocks and miles like 

we do down here in Washington; they drive half an hour, an hour 

to work, just as my colleague from North Carolina mentioned. And, 

beyond that, we live in a climate where the battery in the Leafs 

and the Volts, they don’t work real well because they are so light, 

and in the weather and the snow that we have—last year we had 

over 200 inches of snow in my district. So they need heavy duty 

cars that burn fuel. 

So my question to you this morning is does the Administration 

even begin to appreciate the pain at the pump that the American 

36 

people are feeling? Seventy percent of Americans drive automobiles. This issue is on their minds. And I would like to see 

whether or not you think the Administration is even aware of the 

pain that the people of America are feeling at the pump. 

Secretary CHU. The Administration, the President and I personally feel that very much, and we actually know this pain because 

if you are in a situation where you do have to commute and you 

do have to use your own car, it is causing great hardship. 

Ms. BUERKLE. Then, with all due respect, why aren’t we tapping 

into the resources that exist in the United States of America? And 

I agree, all energy exploration. But from what I am hearing, and 

we talked about the stimulus and the advantage of the weatherization program and the fact that it benefits 680,000 Americans, and 

I think the number you used was approximately $437 a year in 

savings. That is now being eaten up at the pumps. That is nothing. 

Any benefit, if you could possibly justify it as stimulus plan, has 

gone out the window because this Administration is not willing to 

be aggressive and establish a sound domestic policy here, energy 

policy, where we explore all energy possibilities, but we rely on the 

resources that exist in this Country. 

And I think if we did we would see, and you mentioned it in your 

opening comments, supply and demand, very simple. We increase 

the supply of oil, we send a message to other countries that we are 

not going to be dependent on you, we have the resources here, and 

I think you will see gas prices drop dramatically. 

And I would ask of you to go back to the Administration and say 

the American people are hurting; they need you to do something 

now. They need the Keystone Pipeline initiative. They need this 

Country to say, yes, we will do all forms of energy exploration, but 

primarily we will drill and we will make sure the American people 

have access to lower gas prices and we access all of the resources 

that exist in our Country. 

I see my time has expired. Thank you, sir. 

Chairman ISSA. Mr. Secretary, if you wanted to respond. I don’t 

want to have you cut off. 

Secretary CHU. Again, thank you, Mr. Chairman. Very, very 

quickly, the Administration is supportive of increased production in 

the United States. Very aggressive program going on now through 

Secretary Salazar of Interior, much more land being offered for 

auction to decrease our dependency on imported oil, because we 

also recognize it creates jobs in America. So we are doing what we 

can in that respect. 

Chairman ISSA. I thank the gentleman. 

We now go to the gentleman from Missouri, Mr. Clay, for 5 minutes. 

Mr. CLAY. Thank you, Mr. Chairman. 

It is good to see you, Mr. Secretary. While some have criticized 

individual and, I think, uncommon examples of disappointing results, I know of many successful recipients of Department of Energy grants; smart grid, clean cities, energy efficiency, environmental cleanup, renewable energy, hybrid technology. All of these 

and more are successful examples of Recovery Act funds administered by the Department. 

37 

In my city, St. Louis, the Danforth Plant Science Center received 

funds via the Recovery Act for a project to determine how bluegreen algae might be modified to produce fuel. Boeing received a 

smart grid grant via the Recovery Act to modernize the power grid. 

Washington University in St. Louis holds one of 46 Departmentcreated energy frontier research centers. Researchers at the Photosynthetic Antenna Research Center are studying how plants harvest light and funnel energy in order to improve solar technology. 

As with all the organizations that received ARRA funds, our park 

provides employment for staff at all levels. The city of Florissant, 

Missouri, in my district, was awarded Recovery Act funds through 

the Department’s Energy Efficiency Community Block Grant program. The funding covered installation of a new integrated solar 

panel roof system for the civic center. In addition, the grants provided funds for an energy audit and retrofit of heating ventilation 

and air conditioning units for all government-owned buildings. 

These projects not only provide jobs, they save a tremendous 

amount of money and energy. Also, Mr. Secretary, in my district, 

in Hazelwood, Missouri, Emerald Automotive has developed an all 

new lightweight range extended hybrid for fleet operators. The Emerald vehicle has a range of over 450 miles and achieves over 160 

miles per gallon the first 100 miles driven. The vehicle reduces 

emission by 85 percent and saves a fleet operator considerable fuel 

costs. A testing on prototypes is currently being conducted and the 

green vehicle will be produced in Missouri and sold domestically 

and in Europe. 

Mr. Secretary, Emerald has advanced through the early stages of 

the advanced technology vehicle’s manufacturing loan program 

process with flying colors. There have been two rounds of questions 

from the Department, which have been answered promptly and 

thoroughly. Over 1,000 pages were submitted in the last round 

alone. The Emerald vehicle is exactly the type of project for which 

the ATVM loan program was created, yet the process has stalled. 

Mr. Secretary, what needs to be done to have DOE consider the 

Emerald application on its merits? 

Secretary CHU. Well, as I said, we, first, consider all the applications strictly on the merits, and what we need to do is we have to 

decide how do you walk this balance between a company that is offering innovative promising technology to our responsibility to the 

taxholders that there is a likely chance of repayment, and this has 

always been the motivating factor in any decision we make. 

Mr. CLAY. And it is projects like these that create jobs that were 

the genesis of the Recovery Act, is that correct? 

Secretary CHU. Yes. But, again, I can’t speak specifically about 

a specific loan, but it is, again, this balance between innovation 

that will help spur American innovation and leadership with the 

responsibilities to the taxpayer. 

Mr. CLAY. Could you please talk about these other Recovery Act 

programs that have brought so many jobs and created so many innovations in my city and the rest of the Country? 

Secretary CHU. Well, some of those are grants. I don’t know of 

all of them, but I know of some of them. There are research grants, 

EFRCs we believe are very successful research grants, mostly to 

universities and groups to encourage professors to get together as 

38 

a group and solve a problem, rather than working as an individual 

research group, ban together, because we think that if they do get 

together two plus two can be more than four and one plus one can 

be more than two. So we think that that has been very successful. 

The biofuels Danforth thing, again, innovative, it is a grant. Danforth is a great organization, so, again, all based on the merits. We 

are looking for ways of breaking through. Currently, the new generation biofuels is not competitive without subsidy, let’s say an $80 

barrel of oil, and that is our goal, we want it to be competitive 

without subsidy. 

Mr. CLAY. Well, thank you very much. 

Chairman ISSA. I thank the gentleman. I have one question for 

the gentleman, if I could. Was it wise to talk about all the grants 

you already got, when you wanted to know about the next one you 

wanted? 

Mr. CLAY. I think it is cumulative, Mr. Chairman. 

Chairman ISSA. It is cumulative, okay. You have done well, my 

friend. 

Mr. CLAY. Thank you. 

Chairman ISSA. With that we recognize the gentleman from 

South Carolina, Mr. Gowdy. 

Mr. GOWDY. Thank you, Mr. Chairman. 

Thank you, Mr. Secretary. I want to ask you about your quote 

from 2008. Somehow we have to figure out how to boost the price 

of gasoline to the levels in Europe. Was there a specific country in 

Europe that you wanted to emulate, or would you have settled for 

a continentwide average? 

Secretary CHU. Well, as I said repeatedly since I became Secretary of Energy, that was no longer my goal, that was no longer 

what I had to do as a government servant. 

Mr. GOWDY. I understand that. You made that comment a few 

months before you were sworn in as Secretary of Energy, and I assume you meant it at the time you said it or you would not have 

said it. 

Secretary CHU. My duties as Secretary of Energy and my duties 

to serve the Administration take on different aspects, so when I became Secretary of Energy I knew what I had to do, and especially 

since we ended up going through this free-fall recession. 

Mr. GOWDY. I understand that, but I also want to understand 

what you meant by that comment, which was just a few months 

before you were sworn in. So when you said somehow we have to 

figure out a way, who is the we? Somehow we have to figure out? 

Secretary CHU. Again, I would rather dwell on what my record 

has been in the Department since I became a public servant. 

Mr. GOWDY. Mr. Secretary, when you said somehow we have to 

figure out a way to boost, the word boost has a specific meaning, 

it doesn’t mean to let elevate, boost is intentional. What did you 

mean by the use of the word boost? 

Secretary CHU. I am not sure I said boost, but, as I said,—— 

Mr. GOWDY. What word would you have substituted? 

Secretary CHU. Well, as I said, it is now irrelevant in my present 

job. 

Mr. GOWDY. Do you know what the average price of gasoline in 

the United States was in 2008, when you made that comment? 

39 

Secretary CHU. It was not low, as I recall. We were suffering one 

of these gasoline price spikes at the time. 

Mr. GOWDY. It was $3.50 a gallon. Do you know what the average price of gallon of gasoline was in Europe when you made that 

comment? 

Secretary CHU. Considerably higher than that. 

Mr. GOWDY. About $8.00 a gallon. You have mentioned several 

times, in fact, you did it several times in one quote, the overall goal 

is to decrease our dependency on oil, to build and strengthen our 

economy and to decrease our dependency on oil. Twice in one quote. 

The President, on the other hand, talks about decreasing our dependency on foreign oil. Why the distinction? 

Secretary CHU. Well, we want to decrease our dependency on foreign oil because it is really exporting money out of the United 

States. 

Mr. GOWDY. I understand why he uses the word foreign. What 

I am asking is why you don’t. 

Secretary CHU. I think I use foreign. I think I use oil. I use them 

interchangeably because oil prices are set by an international market. 

Mr. GOWDY. You and Mr. Jordan were talking about probability 

specifically with reference to bond ratings and investability. What 

are the probabilities of a CCC rated company getting millions of 

dollars in government loan guarantees? 

Secretary CHU. Well, CCC plus is really at the edge of what I 

would consider the risk to the taxpayers. 

Mr. GOWDY. So what would the probabilities of someone at the 

edge getting a loan? 

Secretary CHU. Well, again, going back and looking at how the 

OMB, whose responsibility it is to set the credit subsidy, and the 

credit subsidy as it is set is literally, if one looks at the statute, 

there to offset the potential losses due to nonrepayment of any 

kind, delinquencies, so the credit subsidy score is 50 percent—— 

Mr. GOWDY. Chances are 100 percent if you donated $30,000 to 

the President’s election bid. 

Secretary CHU. Sorry. 

Mr. GOWDY. What about the probabilities of a B rated company 

getting loan guarantees? That is not a very high rating either. 

Secretary CHU. I thought we were talking about the probability 

as to the FCRA method. 

Mr. GOWDY. Talking about Abound Solar and Solar Power, one 

of which was rated CCC, one of which was rated B, both of whom 

had principals who contributed mightily to the President’s reelection bid, both of whom got loan guarantees. 

I have 14 seconds. I want to ask you about subordinating taxpayer repayment for private investor repayment. Do you take the 

position that if there is a loan closing in the morning and, by statute, the taxpayers cannot be subordinated, that if you renegotiate 

that afternoon, you can negotiate them to get in line behind private 

investors? 

Secretary CHU. No, I don’t take that position. 

Mr. GOWDY. What length of time has to pass before it can be restructured? 

40 

Secretary CHU. It is not a matter of length of time. As Herb Allison pointed out in his testimony, it is when a company goes into 

difficulty and your goal is to benefit the taxpayer as much as possible to give the chance that the U.S. Government can get back as 

much as possible, then Herb Allison, in his report, said that that 

restructuring is one of those tools. 

Mr. GOWDY. I know I am out of time, Mr. Chairman. My point 

was the statute is pretty clear. Taxpayers cannot be subordinated 

to other investors. Legal counsel for the Department of Energy has, 

in a case of mental gymnastics that I am actually enviable of, says 

that only applies to the first structuring of the loan, not to subsequent structurings. So my question is can you restructure it that 

afternoon, according to her legal memo? 

Chairman ISSA. The gentleman’s time has expired. The Secretary 

may answer. 

Secretary CHU. Very quickly, I think there is no debate. The statute very clearly says at time of origination it can’t be subordinated. 

And we follow that. The statute does not say, when further on 

down the line, what you need to do, and when asked whether it 

was wise to allow restructuring to continue, many people in the financial world say if your goal is to maximize taxpayer benefit, that 

should be one of the tools. 

Mr. GOWDY. Thank you, Mr. Chairman. 

Chairman ISSA. I thank you. 

For the record, because Mr. Connolly has left, I just want to 

enter in—oh, good, Mr. Connolly is here. So, for the record, from 

the EIA, U.S. Energy Information Administration, we currently use 

about 19,497,960 barrels a day, of which we import 11,753,000. The 

arithmetic on that, and I will put it in for the record, without objection, indicates we still have not reached that lofty more than 50 

percent at the present time, according to EIA’s current figure. So 

we can all run around, but we are still not getting that far and we 

certainly are not doing it on public lands. With that we go to the 

gentleman from Florida, Mr. Ross. 

Mr. CONNOLLY. Would the gentleman yield for 1 second? 

Chairman ISSA. Yes. 

Mr. CONNOLLY. My only point was that we actually had reversed 

a trend in terms of domestic production. I think your point is well 

taken, and obviously more progress needs to be made. 

I thank the Chair. 

Chairman ISSA. And I appreciate that. The problem we have, Mr. 

Connolly, is that it was all reversed on private land and, in fact, 

what we did was reversed the public lands being made available 

made them less available. 

So one of the problems we have on this debate today is, yes, we 

have more oil, more natural gas, it is a result of private people 

doing on private land and, in some cases, States like Texas, who 

have special sovereignty, when in fact the Federal Government, 

represented by the Secretary and the other secretaries, Interior 

and so on, have actually reduced, they may be reversing it now, but 

they reduced the availability for oil production. 

So it is one of those things where you can’t take credit for that 

which you are deterring just because you are being overcome by 

the private sector working around it, if you will. 

41 

Mr. Ross, for 5 minutes. 

Mr. ROSS. Thank you, Mr .Chairman. 

Mr. Secretary, thank you for being here. I want to follow up on 

what one of my colleagues earlier, Mr. DesJarlais, was inquiring, 

specifically with regard to single access trackers as an innovation. 

It is my understanding that the Department of Energy recognized 

single access trackers as an innovation, is that correct? 

Secretary CHU. As an innovation as applied to that particular 

project. 

Mr. ROSS. And that particular project was the Antelope Valley 

Solar Ranch, is that correct? 

Secretary CHU. That is correct. 

Mr. ROSS. If you could take a look at the monitor there. There 

is an email or a memo from what looks like Dong Kim to Jeff 

Walker, where he states specifically someone keeps changing 

AVSR, meaning Antelope Valley Solar Ranch, technical slides to include single access trackers as an innovation. Be clear this is not 

an innovation. The record will show that we did not grade this as 

innovative. 

Now, would you agree or disagree with that assessment? 

Secretary CHU. Well, this is an email Dong Kim, and as I tried 

to explain before, he later, for whatever reason, I don’t know the 

particulars of it, he graded that. Is it the world’s greatest innovation? Probably not. 

Mr. ROSS. But he indicated it was not innovation and, therefore, 

Antelope Valley Solar Ranch got the loan guarantee of $646 million. Wouldn’t you say that is a mistake? 

Secretary CHU. Well, you know, he actually wrote up the justification for these things and ultimately it was a decision he and 

his group made. So it was nothing, for example, I or anybody—— 

Chairman ISSA. Would the gentleman yield? 

Mr. ROSS. Yes, sir. 

Chairman ISSA. Mr. Secretary, I just want to make sure we get 

this for the record. The ‘‘I think it is innovative’’ came first. The 

‘‘I know it is not innovative, stop trying to inject that’’ came later. 

Could we agree to that? Because your documents delivered to us 

indicate that clearly he earlier allowed it to be considered innovative; later was overtly objecting to it being called innovative and actually objected to slides being put in that indicated it was innovative when it wasn’t. I just want to make sure we get the order 

right, because the press has been given the assumption that he 

changed from no to yes, when in fact he changed from yeah, it 

looks okay, to hell no. 

Secretary CHU. Well, I actually can’t speak to that because, 

again, I was not party to this back and forth internally within the 

career folk. So we will gladly look at the full email chain and get 

that back to you. 

Chairman ISSA. Mr. Ross, please continue. But we will in fact 

make sure you have the paper trail you provided us back—— 

Secretary CHU. All right. 

Chairman ISSA [continuing]. So that you understand that this 

was one of those where it is a half billion dollars that would not 

have occurred had you listened to his later guidance. 

42 

And I would ask unanimous consent the gentleman have the additional minute that I took. Without objection. 

Mr. ROSS. Thank you, Mr. Chairman. I would also like to ask 

unanimous consent that the memo from Dong Kim, dated August 

4, 2010, to several other recipients be admitted into the record. 

And I will submit that to the Chairman. 

Chairman ISSA. Without objection, so ordered. 

Mr. ROSS. Mr. Chu, you indicated in your opening statement that 

each one of these cases, speaking of criminal indictments, was unacceptable and we have taken aggressive action to address issues 

early on and hold responsible parties accountable. Does it just take 

a criminal indictment to hold somebody responsible and take remedial action, or have you taken remedial action on these other matters that have resulted in absolute failure? 

Secretary CHU. No, absolutely not. If you look at some, for example, in a very small amount of the cases of weatherization, if someone does shoddy workmanship—— 

Mr. ROSS. Has anybody been let go as a result of any of these 

failures? Have you terminated anybody’s employment with DOE as 

a result of these projects, whether it be Solyndra or anybody else, 

and loan guarantees? 

Secretary CHU. No, I haven’t. 

Mr. ROSS. What remedial action, then, have you taken to guarantee that this won’t happen again? Or have you taken any remedial action? 

Secretary CHU. We have. We have taken remedial action, for example, in the cases where we found shoddy workmanship, things 

of that nature. We tell the contractor you have to go back, you have 

to fix it on your own nickel. 

Mr. ROSS. And you still use these same contractors? 

Secretary CHU. In some cases. Well, I can’t—— 

Mr. ROSS. I guess what I am getting at is there has not been an 

established guideline that have been implemented as a result of remedial action to be taken to make sure this doesn’t happen again, 

is that correct? 

Secretary CHU. There were established guidelines, but you have 

to also understand that in weatherization programs we give money 

to the States, the States give to local organizations. We oversee 

what the States and those local organizations do, and we have very 

clear guidelines if there is any improper work—— 

Mr. ROSS. So you would be willing to bet, then, that these instances will not happen again, the Solyndras, the Antelope Valley 

Solar Ranches, the excessiveness in the weatherization program 

that have proved to be, as you have seen in the slides, totally abject failures? It is your testimony today that you have taken remedial measures to make sure that this doesn’t happen again? 

Secretary CHU. We always look to ways of improving both our 

oversight of the Recovery Act and our oversight of the business we 

have in the Department of Energy, but it is just when McKundo 

happened and we worked very hard to help stop that leak that—— 

Mr. ROSS. Let me shift real quickly, because I want to get on 

this. We talked about oil production and we talked about oil production being up under this Administration. Now, we are talking 

about crude oil production, correct? 

43 

Secretary CHU. Yes. 

Mr. ROSS. We have not increased refined oil production, have we, 

in the United States? 

Secretary CHU. I actually don’t know about that. 

Mr. ROSS. How much have we been exporting of our crude oil 

production? Has that increased under this Administration? 

Secretary CHU. I think the correct question you meant to ask 

was what are the net imports or exports, because there is—— 

Mr. ROSS. Of crude or refined? 

Secretary CHU. I think both. 

Mr. ROSS. Okay, then answer. 

Secretary CHU. Because depending on the refineries and how 

sour or sweet the crude is. So there is a little bit of going back and 

forth of crude—— 

Mr. ROSS. But we have increased our exports of refined oil, have 

we not? 

Secretary CHU. Again—— 

Mr. ROSS. And would not increase in production, even from the 

drawing board, as an economist, affect the market rate of crude oil 

prices, even if it takes 10 years to develop? 

Chairman ISSA. The Secretary may answer. 

Secretary CHU. As I said, the thing that affects prices, yes, supply and demand, very, very important. Other things that affect 

prices are the amount of spare capacity. Other things that affect 

prices are forward-looking things and nervousness about international events. All those things affect the international price of 

oil. 

Mr. ROSS. Thank you. I yield back. 

Chairman ISSA. I thank the gentleman. 

My staff has given me the two documents we have been talking 

about and we are going to post them on my website prominently 

so that the August 4th, 2010 statement from Dong Kim, which is 

on your website as your answer to justification is placed next to the 

June 2011, 8 months later, when he says clearly these are not, not 

innovative. 

I would ask that you consider strongly putting the correction, the 

8 month later on the website so that the public stops thinking that 

he thought it was innovative when in fact, 8 months later, well before funding, he said clearly it wasn’t. 

And with that we go to the gentleman from Pennsylvania, Mr. 

Kelly. 

Mr. KELLY. I thank the Chairman. 

Secretary, thanks for being here today. You are in a very tough 

position, and I really would suggest that it is really not the pain 

at the pump that is affecting a lot of the comments anymore, it is 

the pain at the polls. That is certainly driving the great interest 

of how we are going to solve this Nation’s energy problems. 

I have to tell you I was very impressed with your resume. You 

certainly are, and the Chairman said earlier, one of the smartest 

people that has ever been here. In your statement you said, I have 

spent my career as a scientist. Rigorous peer review and doublechecking someone else’s findings are fundamental to a sound scientific process. 

44 

I believe the same is true in government. The American people 

expect all of us to honestly assess the investments we have made 

and chart a course for the future. 

You also were talking about job creation and things that have 

happened, and I am a little bit confused because when I look at the 

claim that there is over 60,000 jobs created, I say, okay, well, 

33,000 of those jobs for the advanced technology vehicles from 

Ford. Those people are already at Ford, so you didn’t really create 

those, that is just now they are wearing a little different cap. Three 

thousand at Solyndra that’s bankrupt; 240 at Poet, which declined 

the loan; 188 at Abound that have been laid off; and 34 at Beacon 

went bankrupt; and 26 at Fisker that were laid off. Actually, the 

net total is 24,900. 

So if we are going to inspect other people’s data and other people’s findings, then we really need to get down to the actual empirical data that we have to deal with. It is nowhere near 60,000 jobs; 

it is just about half that amount. And a lot of that is dubious also. 

When I hear about this increased production in oil under this 

Administration, this is not an original quote, but it is very much 

like the crowing rooster taking credit for the daybreak. Just because you happen to be sitting in a position that is benefiting from 

years, years of technology coming now into fruition, and I know a 

little bit about it; my family has a 147-year background in energy 

production. Fracking is 60 to 70 years old, it isn’t new. So I think 

that we sometimes get these things twisted around when it comes 

to a political reelection, as opposed to real answers for our energy 

problems. 

And I have to tell you that I am trying to understand, as a private citizen and one who has borrowed great deals of money from 

time to time, I thought it was a great deal of money for me because 

I actually had to pay it back; I had my own skin in the game. But 

when I look at some of these loans, and I am trying to understand, 

now, this is maybe not you, but you have a team of people that 

would be approving these loans. Mr. Jordan asked about it, Mr. 

Chaffetz asked about it, and my colleagues have asked about it. 

There is no way in heck anybody could have looked at these if 

it was their own money, if you were truly a lender who was responsible to a group of investors for the way your money was being lent, 

you would say, no, no, no, no, we can’t invest this way. There is 

something called the five Cs that come up, and most lenders would 

talk to you about it as character, capacity, capital, collateral, and 

conditions. All those come into effect before any loan is given out 

to any person trying to borrow it. 

But I wonder as a scientist, and you say, I wanted to check, I 

wanted to double-check. There is no way anybody double-checked 

or nobody looked at these things. This isn’t science; this is a basic 

business model that has failed dramatically, and it has failed with 

American taxpayer money. So this idea that we are these benevolent monarchs just showering these favors to these folks is absolutely preposterous. We have wasted so much money. 

The lady from California was asking about this. Fossil fuels 

produce 78 percent of American energy, 13 percent of the tax incentives. Renewables, they are responsible for 11 percent of production 

and they get 77 percent of tax incentives. So if you were asking 

45 

which one did you want to eliminate, I would say, you know what, 

I think I will put my money on a horse that I think can win. 

So I really do, I wonder. Sitting there as a private citizen coming 

here for the first time, an automobile dealer my whole life, having 

to fund everything myself, having collateral, having character, having the ability to have great deals of money, capital of my own to 

invest in any type of a way-out project before any lender would 

even look at me, it is incredible to me that we have gotten to this 

point today where we have wasted billions and billions of hardworking American taxpayer money on some green dream that isn’t 

playing out very well. 

I have to tell you this is the House of Representatives that represents the people of the United States. I don’t come here as a Republican; I come here just as an American. And I hope my friends 

from either side feel the same way. The American people deserve 

to know how could we have been so careless and so casual with billions of taxpayer dollars? 

In Section 1703 we were looking at nuclear, fossil, and renewables. When we went to section 1705, you know what we completely left out? Nuclear and fossil. It is all renewables. I just don’t 

understand anybody’s economic model that looked at something 

that was such a long shot and say, you know what, I think this is 

right. I think this is what we should go for. In fact, you know what 

you really drove out of the market were the venture capitalists. 

And I would like to submit for the record a letter from Bright 

Automotive. 

Chairman ISSA. Without objection, so ordered. 

Mr. ROSS. I think we have a slide on this, too. 

Chairman ISSA. I would ask the gentleman have an additional 1 

minute. Without objection, so ordered. 

Mr. ROSS. All right, Secretary Chu, this is February 28th. This 

is very recent. Today, Bright Automotive will withdraw its application for a loan under the ATVM program administered by your Department. Bright has not been explicitly rejected by the Department of Energy. Rather, we have been forced to say uncle. 

As a result, we are winding down our operations. Last week we 

received the fourth, near final conditional commitment letter since 

September 2010. Each new letter arrives with more onerous terms 

than the last. The first three were workable for us, but the last was 

so outlandish that most rational and objective persons would likely 

conclude that your team was negotiating in bad faith. We hope that 

as their Secretary, this was not at your urging. 

And as you look at this. I mean, we really have driven a venture 

capitalist out of the market because they cannot compete with a 

group of bureaucrats that have absolutely no background but are 

making decisions that would have been made by them based on the 

likelihood of a good investment. 

So the Energy Department may be well-intentioned, but has absolutely destroyed a part of the investment industry through an absolutely preposterous model that has no basis to be even looked at 

and said, you know what, these were good decisions based on good 

information. If it had a 50 percent chance of survival? I would like 

to talk to one lender that would have said thumbs up on that one, 

just wouldn’t have happened. 

46 

I yield back my time. 

Chairman ISSA. Mr. Secretary? There wasn’t a question 

there—— 

Secretary CHU. I don’t think there was a question, so—— 

Chairman ISSA. Okay. With that we will go to the gentleman 

from Texas, Mr. Farenthold. 

Mr. FARENTHOLD. Thank you, Mr. Chairman. 

Secretary Chu, thank you for being here. I applaud your taking 

the time to be here and I am happy to see we have somebody in 

charge of an organization that actually has a scientific background. 

Let’s talk a little bit about natural gas, if you don’t mind. Natural gas is cheap and abundant right here in America, and lower 

natural gas prices in some areas of the United States are at historic lows. Just for the record, would you say that falling natural 

gas prices reduce the favorableness of the business model for some 

of these alternative energy sources? Maybe one of the reasons they 

are less able to compete is we can go to a proven technology, natural gas, power plant on and put $2.60, $2.70 natural gas in it? 

Secretary CHU. I would certainly agree that falling natural gas 

prices, especially where they are today, makes natural gas very 

competitive with other forms of energy. 

Mr. FARENTHOLD. So now that we have relatively low natural gas 

prices and we actually do see the oil and gas sector ramping up 

employment, in South Texas we are under 7 percent unemployment, actually looking at jumping under 6, we are actually having 

trouble finding people to work in the oil field. Do you think this 

might be an opportunity for us to invest in technologies to export 

some of that natural gas to bring money into the United States in 

the energy sector and lower our balance of trade? 

Secretary CHU. Well, first, we are very, very happy that the natural gas boom and the ability to recover natural gas where we 

thought, 20 and 30 years ago, was not recoverable, we are very excited about that. As you noted, it is creating a lot of jobs. We also 

think that natural gas is a good transition fuel. 

In weighing whether we export natural gas or not, the Department of Energy is undertaking a study to see whether we should 

be doing this. And I just want to add very briefly that it lumps into 

two things: into fair trade countries, which we have no choice, we 

approve; and non-fair trade countries, which we have to weigh 

what is in the overall benefit of the United States. 

Mr. FARENTHOLD. It just seems like we shouldn’t be trading energy any differently than we trade our farmers, our automakers, 

our airplane makers. We encourage exports in those fields and it 

seems like doing the opposite in the natural gas field might be a 

mistake and might be an opportunity to lower. 

You also mentioned the term transition fuel. Transition to what? 

Secretary CHU. Well, to a lower carbon intensive economy. Natural gas emits about less than half the carbon dioxide of the average conventional coal plants. While we work to do research to help 

coal plants capture and sequester the carbon dioxide, which we are 

also very committed to, we do see, particularly with these low gas 

prices, that the power companies will shift the balance somewhat 

to natural gas. They won’t go all the way because they too don’t 

want—— 

47 

Mr. FARENTHOLD. Obviously you want a diversification of fuels. 

Secretary CHU. Right. 

Mr. FARENTHOLD. But I would encourage your Department to be 

expeditious in approving permits to do exports. 

Before I finish, I do want to ask you about a company called 

Abengoa. I think it was $132 billion. It had the lowest rating in the 

entire DOE profile, lower than Beacon Power or Solyndra, both of 

which have gone bankrupt. Are you concerned about having loaned 

money to this risky venture? 

Secretary CHU. Well, we look at all our loans. We are very careful, we are very mindful of risks to taxpayer money and we monitor 

these situations. Frankly, what has happened in the solar industry 

and solar manufacturing, no one really anticipated that the price 

of solar modules, the bidding price would drop to only 20 percent 

of what it used to be some 4 years ago. 

Mr. FARENTHOLD. Which brings up the issue of kind of a lack of 

diversification within the DOE profile. You have Abengoa, First 

Solar, Project Amp. They received about half of the 1705 program 

funds, or about $7 billion. Shouldn’t we be inconsistent with the all 

of the above energy that the President has said and that we Republicans have been touting all along, be looking at diversifying that 

over a wide variety of different projects, rather than dumping half 

of it in three questionable programs? 

Secretary CHU. Well, in 1705 we invested in solar, we invested 

in green, we invested in some geothermal. In our other loan programs, for example, we invested in nuclear. We have a conditional 

commitment to Vogel for their first two nuclear reactors that we 

started for the last 30 years. There are loans in the 1703 program 

for gasification of coal. So there are other parts of our loan program 

that include those technologies. 

Mr. FARENTHOLD. It looks like 80 percent went to solar in 1705. 

We will look at the numbers with respect to the other programs, 

but just the heavy investment in solar has me concerned. 

I am out of time. 

Chairman ISSA. We will have a second round for the gentleman, 

if he will remain. 

Secretary Chu, I just want to verify one thing. 1703 was essentially all the previous administration; 1705 was your administration. So when the gentleman is talking about what was funded 

under 1703, including nuclear and other forms of fossil fuel, those 

were the Bush Administration. Yours is 1705, which is essentially 

no nuclear, no fossil fuel, is that correct? 

Secretary CHU. Not quite. I think 1705 was authorized in, I 

think, 2007. 

Chairman ISSA. Right, but it is what you have acted on during 

your administration. 

Secretary CHU. Well, before this administration no loans in 1703 

or 1705 went out. 

Chairman ISSA. Okay, I think I am not going to take it as my 

time because it isn’t as my time. 

We now go to the gentleman from my college hometown, Mr. 

Walberg, for 5 minutes. 

Mr. WALBERG. And we are better off because of it, I am certain. 

48 

Chairman ISSA. I hope Sister Peg is listening to that as we 

speak. 

Mr. WALBERG. She is listening and wondering why. 

Michigan. Michigan, the motor capital of the world. Michigan rebounding. Michigan, in my district and I think all over, frustrated 

with the high cost of using those excellent vehicles that are produced in Detroit and other areas of Michigan and around this 

Country. 

We are not going to relinquish that standard that we have and 

the desire to give people resources of transportation that they 

want. And I know it seems right now, at least from my perspective 

and that of my constituents, that their government is attempting 

to do mind-changing, whole process changing, moving to some 

other direction that, frankly, they are not accepting at this point 

in time. 

And primarily in the nine town hall meetings I had last week, 

I just heard from my constituents saying, reduce the cost of gas at 

the pump. Get us what we want on that area and then take the 

next 200, 600, 800 years to find all of the resources that you think 

will come following that. I know they are not committed to destroying our environment, but they want an economy in this Country 

that promotes them. 

In your testimony, Secretary Chu, you stated clearly that where 

we find mistakes, we have and we will move swiftly to correct 

them. Project Amp received a $1.4 billion loan commitment from 

the Department of Energy. The Recovery Act required projects to 

commence construction before 2011, by September 2011. We 

checked in February 2012 and still Project Amp had not commenced construction. What is your response to that? Is that not a 

mistake? Is that not a violation? And what will you do? 

Secretary CHU. I would have to get back to you on that one, so 

we will look into it. 

Mr. WALBERG. Well, I guess I go back and the question stated 

you said where we find mistakes we have and we will move swiftly 

to correct them. If indeed the requirement is that the project where 

someone receives or this specific Project Amp received a $1.4 billion 

loan commitment and they haven’t commenced construction yet as 

of February 2012, when they were supposed to commence it by September 2011, what other answer would be other than we ought to 

be withdrawing? 

Secretary CHU. Again, I am going to look into the exact things 

and commencing construction, whether it is an obligation, but I 

will certainly look into it and get back to you on whether it satisfies the statute of the law. 

Mr. WALBERG. My colleague, Congressman McHenry, asked what 

you had done and this Administration had done to lower gas prices. 

You spoke of programs to improve engine efficiency and other vehicle technology. The Advanced Technology Vehicle Manufacturing 

program is a Bush-era program designed to assist manufacturers 

of advanced technology vehicles. Do you know where the last 

ATVM loan was issued? When the last ATVM loan was issued? 

Secretary CHU. Not off the top of my head. 

Mr. WALBERG. April 2011. Do you know how many companies 

are awaiting a loan at this time? 

49 

Secretary CHU. I, again, don’t know the exact number. There are 

a number of loan applicants right now. 

Mr. WALBERG. Well, with the lack of knowledge or seemingly attention to this detail, why does the Department of Energy website 

tout the ATVM as a jobs program? 

Secretary CHU. You are asking for an exact count of the number 

of loan applications that are before us, so I was just saying that 

I did not know the number. It is a jobs program. 

Mr. WALBERG. I will take a guesstimate. Any guesstimate on it? 

Secretary CHU. Four, five, six? I don’t know. 

Mr. WALBERG. So, again, why do we list this or tout it as a jobs 

program if it seems pretty insignificant at a time when we have energy concerns that are frustrating people at the pump? 

Secretary CHU. Well, it is a program that was set up in a previous administration. We believe that it did a lot of good. The loans 

to Ford and Nissan created and saved a lot of American jobs, and 

I think you would agree with that. 

Mr. WALBERG. One final question, Mr. Chairman, if I could. 

Chairman ISSA. I would ask the gentleman have an additional 

minute. Without objection, so ordered. 

Mr. WALBERG. Thank you. 

Simple question. When will oil production go up on Federal 

leased land? 

Chairman ISSA. On Federal leases. 

Mr. WALBERG [continuing]. Lands? We tout all of the oil production that is going up, but it is on private lands, through effective 

efforts that have gone on with permits that have given in past administrations, on average, 73 percent of the permits requested were 

approved. This Administration, 23 percent. So when will oil production go up on federally leased lands? 

Secretary CHU. Sir, I can’t rightly say. But if you look at the 

amount of federally leased lands under the control of oil companies, 

it is increasing. The oil companies have to make a decision as to 

whether they want to develop on those lands. The President actually has encouraged them to do this. When he suggested begin development or lose it, there was great objection by the oil companies. 

So we can do what we can to encourage oil companies to develop 

their leases that they now own on Federal lands. 

Mr. WALBERG. Well, thank you, Mr. Chairman, for the extra 

time. I would just question if they are pushing back, there is a significant reason why they are pushing back on using lands that they 

requested to use. Thank you. 

Chairman ISSA. If the gentleman would yield. 

Mr. WALBERG. I would yield. 

Chairman ISSA. Mr. Secretary, how do you explain that on private lands, where they pay at or greater than the 17.5 percent royalty they pay to the public, on public lands they are choosing to go 

to private lands and you are saying, or the Administration is contesting that they are choosing not to go on public lands. Public 

lands should be cheaper based on our typical royalty of 17.5 percent, but in fact they are going and buying rights on private land. 

How do you explain that? 

Secretary CHU. Well, most of the land the Government has been 

leasing is in offshore, deepwater. There is Arctic also made availVerDate Aug 31 2005 11:58 Jun 25, 2012 Jkt 000000 PO 00000 Frm 00053 Fmt 6633 Sfmt 6633 C:\DOCS\74042.TXT APRIL
50 

able. Those, by their very nature, are harder to develop than this 

new technology which, over the last 10 years, has improved remarkably. So that is why you see this great proliferation of rigs 

and things of that nature; it is on land. It has become a technology 

that we know how to use and the initial up-cost investment and 

the time of development is much shorter. 

Chairman ISSA. I appreciate that and I will mention that 

Prudhoe Bay is a term that we have been using since I came here 

12 years ago, and we have not approved the request they have 

made in the ANWR. 

With that we begin our second round with Mr. Kelly, who has 

waited and kept the President even waiting for an opportunity. You 

are recognized, sir. 

Mr. KELLY. Thank you, Mr. Chairman. 

Secretary, you didn’t have much of a chance to respond. When 

it comes back to Bright Automotive, there is a report that you had 

a conversation with Amy Dobrikova, a former employee, and that 

was as recent as March 5th, 2012, at the Green Fleet Conference, 

that you knew a year and a half ago that Bright wasn’t going to 

be able to qualify for this loan. Is that true? 

Secretary CHU. I had a conversation with the woman. That is not 

what I said. We felt that for a long period of time this looked like 

a very iffy proposition, and although very sympathetic to the company and to her, so we did not ‘‘know’’ long ago, but it was on the 

margin for a long period of time based on our market analysis, 

based on all the other things that would entail the risk to the taxpayer money. 

Mr. KELLY. And I guess that is part of the question, because the 

same thing with Fisker. We are asking them to push science forward to meet a market demand. There is not a market demand for 

it, but we are saying the science has to come into line right now, 

we have to do things quicker. Tell me a little bit about Fisker, because Fisker is going through the same situation right now; all of 

a sudden what they were told they were going to get in total, they 

have only gotten part of it because they haven’t met some of the 

metrics I think that the Department has asked them to do. What 

is it that they are coming up short at? 

Secretary CHU. Well, I am not going to talk specifically about any 

specific loan, but I will tell you in general what we have in our program, in our loans, and that is we have milestones. So as we mete 

out and disburse the funds, companies have to meet milestones, 

and if they don’t we enter into discussions with them to see what 

can be done. And in general we think this is a very responsible 

stewardship of taxpayer money. So not going into any details of 

any company, we are just saying that we do take the responsibility 

to the taxpayer very seriously. 

Mr. KELLY. In some instances, not in all, because, as we have 

seen before in previous instances, there were moneys given out to 

companies that had this B, B-minus rating and really didn’t have 

the metrics in place. 

Going back to the conversation you had with Amy Dobrikova, are 

you saying that The New York Times misquoted you? 

Secretary CHU. The conversation that I recall was that I said we 

had our doubts about Bright Auto and we were trying to work 

51 

through with the company how to get the loan. So that is the conversation I recall. 

Mr. KELLY. Okay, because there is an audio of that. 

But this is what I was referring to earlier. So if we are taking 

people who would normally, venture capitalists who would get involved and we have taken them out of the equation now because 

bureaucrats now are making decisions on investing capital, not 

their own, but taxpayer money, so tell me where this is going, because it really does change the dynamics of the lending environment right now. And I don’t know how people would go forward if 

they are not sure. 

Where does the government get off? Where do the venture capitalists have their opportunity or where is their niche in that market? 

Secretary CHU. Okay, so, first, there is a slight definition difference. We are providing not capital, but debt. 

But regarding your second statement about venture capital, the 

loan program actually does not compete with venture capital. Venture capital typically invests smaller tranches of money in earlier 

funding, things that would be considered too risky for our loan program. So it wasn’t intended to compete with venture capital. 

Mr. KELLY. So let me go into Fisker. Where is Fisker right now? 

Secretary CHU. Again, I can’t talk to the particulars of any loan, 

so I hope you would understand that. 

Mr. KELLY. Well, I understand that, but I am not sure Fisker 

does, because they bought a plant in Delaware, a former GM plant. 

Tesla bought a former GM plant in California. And a lot of this is 

predicated on the fact that private investment and government investment, which comes first, the chicken or the egg; do we have to 

get the private money in first before we qualify for the government 

money? 

And from the private sector they are saying, well, unless you 

have a guarantee on the loan, we are not willing to put more 

money into it. So I am kind of confused. I actually have had to borrow a lot of money in my lifetime. I am trying to understand where 

is it that this fits and would give anybody who was actually seeking one of these loans any type of a clear avenue as to how you 

would obtain this funding and how you go forward. 

Secretary CHU. Well, I think those requirements we hope are 

reasonably clear because it is written into the statute, that when 

we offer either a loan guarantee or something of that nature, that 

a minimum of 20 percent has to come from private equity investments or investments some other way. In some instances the government is following considerable investments in the private sector 

and then the company comes forward and says we would like to do 

another project which we think fits in the scope of the definition 

of the loan program and, therefore, they would ask for a loan. 

Mr. KELLY. I know Fisker has run into some trouble. In fact, 

their car wouldn’t start when they had it at one of the shows. They 

couldn’t get it to start and I know they are facing some great difficulties. 

I see I have run out of time. But I do appreciate your being here 

today and I know you are in a tough position, but on behalf of the 

American taxpayers, we really have to be looking into these things. 

52 

It just seems to me that so far we don’t have a very good positive 

rate of return on what we have invested. 

Thank you, and I yield back. 

Chairman ISSA. I thank the gentleman for yielding back. 

With that we go to the Ranking Member, Mr. Cummings. 

Mr. CUMMINGS. Secretary, a little bit earlier Mr. Jordan asked 

you a series of questions where he mentioned people who may have 

had some connections with the Administration or the White House. 

I think we have to be very careful with those because basically 

what he has asked you is to go back and to look into that, which 

I know you will, and if I were those people I would be concerned, 

as a lawyer, because there is an implication that they may have 

done something wrong. 

You said that a number of those people you didn’t even know. 

You knew some of them, others you did not, you may have known 

them, but you didn’t know they had involvement. And I think there 

were one or two people that you said there had been a firewall put 

up, is that correct? 

Secretary CHU. Well, there are firewalls put up on any person 

who works within the Department of Energy who would have any 

connection with a loan applicant or actually a grantee of any kind. 

And the firewalls are that that person cannot in any way participate in any part of the selection process. 

Mr. CUMMINGS. I had asked you about First Solar and the Washington Post said that one of Senator John McCain’s, and this is the 

same project, by the way, that John McCain spoke up for and Governor Brewer, but the Washington Post went on to say that a fellow named William Post was a top bundler for Senator McCain and 

he served on the company’s board of directors for First Solar. But 

that had nothing to do with First Solar getting an opportunity, did 

it? 

Secretary CHU. No. Whether the investors are Republicans or 

Democrats did not enter into any decision as to whether we were 

going to fund the loan. 

Mr. CUMMINGS. Now, last November, then White House Chief of 

Staff William Daley appointed Herb Allison to conduct an independent study of DOE’s loans and loan guarantees to clean energy 

projects. The independent consultant was responsible for completing three tasks: number one, evaluating the current status of 

the loan portfolio; two, recommending ways of strengthening and 

managing of the oversight of DOE’s loan program; three, proposing 

an early warning system for spotting potential problems that could 

affect the value of the loan portfolio. 

Are you familiar with that? 

Secretary CHU. Yes. 

Mr. CUMMINGS. Now, the independent consultant’s report acknowledged that Congress directed DOE to support ‘‘innovative’’ alternative energy projects that involved more risk than is typical for 

a project in corporate debt financing. 

Mr. Secretary, your agency has an important mandate to fund 

these innovative clean energy projects, but to do so in a way that 

does not waste taxpayers’ investment. I think you have actually 

said that. Can you discuss what due diligence procedures you put 

53 

in place in the loan guarantee program to help ensure that DOE 

balanced both of these interests? 

Secretary CHU. Sure. So, for example, our experiences, for example, in the solar market, where the ecosystem of that market, the 

costs of commodity goes down by that much, made us acutely 

aware that this is something we had to monitor on a weekly basis, 

if you will, and monitor very closely. 

The other thing that we have instituted and we continue to 

strengthen, and we agree with the Allison report; in fact, it started 

this before the Allison report, was that we had to start a separate 

organization within the Department of Energy, another organization, yes, part of the loan program, but actually is an independent 

set of eyes, certainly independent from the originators of the loan 

that could then say, the responsibility to the taxpayers’ money, if 

things are in trouble, it is often said that the parents sometimes 

look through rose colored glasses at their children and originator 

of a loan is in a certain sense were parents of those loans. So we 

felt it very important to establish an independent set of eyes with 

people not only within the loan program, but people outside the 

loan program per se. 

So these are examples of some of the things we have begun. 

Mr. CUMMINGS. And GAO recently issued a report finding that 

your Department’s due diligence procedures were as good, if not 

better, than procedures used by private sector investors. Are you 

familiar with that? 

Secretary CHU. Yes, we hear that from our loan applicants all 

the time, that we somehow put them through a lot more diligence. 

Mr. CUMMINGS. Now, there has been this whole concept of drill, 

baby, drill. Folks seem to believe—I ask unanimous—— 

Chairman ISSA. An extra 30 seconds. Go ahead. 

Mr. CUMMINGS. Can I have a minute like the Republicans? 

Chairman ISSA. You can have a minute. 

Mr. CUMMINGS. Thanks. 

The Republicans have been touting the drill, baby, drill, as if 

that is going to reduce gas prices. I remember when we had gas 

price hikes when President Bush was around. I reminded my colleagues that there are certain limitations that we have. It has been 

implied that you all are not doing all that you can to reduce gas 

prices, and since the American people may see this, I want you to 

be able to tell them what you are doing, and if that drill, baby, drill 

thing works. 

Secretary CHU. First, as noted several times, this is a world commodity, it depends on the world structure. We actually like the idea 

that the United States is increasing its production of oil and natural gas. This is good; it means American jobs, so we are supportive of that. 

I have listed before in the previous Administration I twice was 

asked to help, spent an hour and a half with President Bush in the 

Roosevelt Room with a few others to try to help get relief to the 

pump. He wanted to know about biofuels and things of that nature. 

I spent another time, over an hour, after working with the Secretary of Energy, with Secretary of Treasury Hank Poulson, with 

the head of NEC Jack Hubbard, and the Secretary of Energy to 

54 

look at in the previous Administration, what can the Department 

of Energy do to bring relief. 

So in the previous Administration I was asked to give my ideas 

on what they could do. It has not changed in this Administration, 

and there again I was at the service of a previous Administration 

who also felt the pain of Americans at the pump. 

Chairman ISSA. I thank the gentleman. 

We now go to the gentleman from Ohio, Mr. Jordan, for 5 minutes. 

Oh, I will notify everyone we anticipate coming out of recess and 

going into a vote. 

Mr. Secretary, the earlier of the two, of that vote or 1, will be 

your reprieve, if you don’t mind. 

Secretary CHU. Thank you. 

Chairman ISSA. Thank you. 

Mr. Jordan. 

Mr. JORDAN. I thank the Chairman. 

Let me just pick up where the Ranking Member started his time. 

I wasn’t implying anything with my questions, I was simply trying 

to get at how the Department of Energy made their decisions, and 

that is why I referenced nine different individuals who were either 

in the Administration or were fundraisers for the Obama campaign, eight of which have ties to companies in the 1705 loan program, if that had any bearing, any influence on the Department of 

Energy’s decision to give those companies with ties to eight of those 

nine individuals who are in the Administration or who are fundraisers for the Obama campaign, if it had any bearing on their decision to give those companies loan guarantees. 

The Secretary’s response was no to all nine of those individuals. 

He said then we based our decisions on the merit of the company 

who is going to get the loan, who is going to get taxpayer dollars, 

which prompted me to ask, if it is based on merit, why were 23 of 

the 27 companies who received money rated as junk status by 

Fitch and Standard & Poor’s. 

The Secretary seems to have, since then, referred to this independent review that was done, so I want to spend a little time on 

that if I can. Who conducted the independent review? 

Secretary CHU. It was led by Herb Allison. 

Mr. JORDAN. And did Mr. Allison have any ties to the Administration? 

Secretary CHU. I can’t know the exact—oh, yes, I do know of one 

tie. I think he was part of Treasury for a while. 

Mr. JORDAN. So the guy who did the independent review was 

also formerly a member of the Obama administration? 

Secretary CHU. I believe so. 

Mr. JORDAN. And what was his title, do you know? 

Secretary CHU. I can’t give you the exact title, but I think he was 

part of—he was working with Freddie Mac and Fannie Mae. 

Mr. JORDAN. Yes, he was Assistant Secretary at the Treasury Department, is that right? 

Secretary CHU. Again, I don’t remember his exact title. 

Mr. JORDAN. But it is true that the guy who did the independent 

review was also formerly a member of the Obama Administration. 

Secretary CHU. Yes. 

55 

Mr. JORDAN. Okay. And his review said that it is okay to give 

loans to 23 companies that are rated junk status? 

Secretary CHU. He did not address that. His charge of his committee and his report was, going forward, how to help ensure the 

taxpayer interest and the vitality of the loan program. 

Mr. JORDAN. And isn’t it true in his report that he said, ‘‘serious 

systemic technical and management problems exist at the Department of Energy’’? Isn’t that a direct quote from Mr. Allison’s review? 

Secretary CHU. I don’t recall those words. 

Mr. JORDAN. Okay, well, they are in there. 

Let me back up a second. Do you think maybe the American taxpayer who saw millions of their dollars put at risk at 23 companies 

with junk rated status, do you think maybe when you have an 

independent review done by a former member of the Obama Administration, do you think they might question whether in fact it 

was independent, particularly when some of these companies went 

bankrupt with their tax dollars? 

Secretary CHU. It was a very independent review and the high 

standards at which Herb Allison and his people conducted the review have to be applauded. I should also say—— 

Mr. JORDAN. But here is what I keep coming back to, and I don’t 

see how a rational person can’t at least think this may exist. Nine 

individuals in the Administration or raising money for the Obama 

campaign, you say that has no bearing on who gets loans. Twentythree of the 27 companies that got loans, below investment grade 

status, junk status. And then you hire someone to do an independent review and, oh, by the way, the independent reviewer, he 

also worked in the Obama Administration. 

Really? That is how you are going to defend yourself, someone 

who was previously in the Obama Administration does the independent review? That is supposed to be independent to justify the 

fact that all these connections exist and 23 of the 27 companies 

weren’t investment grade? Unbelievable. 

The taxpayer is sitting back there going, are you kidding me? 

This is what goes on with our tax dollars in one of our Federal 

agencies? The guy who is supposed to justify all these actions with 

an independent review actually worked in the Administration. That 

is amazing that that goes on with American tax dollars. That is the 

point that the American people find so frustrating and so troublesome when they look at this entire situation. 

Secretary CHU. When the loan program was set up, it was set up 

to fund innovative companies, and it was also set up with a loan 

loss reserve, which was specifically set aside. So this was money 

appropriated, not money, this is real dollars appropriated by Congress to account for losses. 

And Herb Allison’s report said that the moneys available for this 

loan loss reserve of about $10 billion, they estimate that perhaps 

2.7, less than one-third, is at risk, and they also said that we don’t 

say that they are going to lose 2.7. So it is far less than what Congress appropriated for those losses. 

Mr. JORDAN. Well, Mr. Chairman, look, you can—— 

Chairman ISSA. Would the gentleman yield? Would the gentleman yield for a second? 

56 

Mr. JORDAN. I made my point. I would be happy to yield to the 

Chairman of the full Committee. 

Chairman ISSA. Mr. Secretary, notwithstanding where your independent, Mr. Allison, was before, he clearly shows us that if not for 

Nissan and Ford, you would have had a disastrous result; that, in 

fact, when you pulled them out, this is an awful performing portfolio. It is only Ford and Nissan coming back that actually improves it. And he includes things in his own: a lack of clarity in 

lines of authority within the loan program; lack of balance between 

those in government experience and those with substantial private 

sector experience and skill in the project. As I read it, he pretty 

much said you didn’t do that good a job, and he does give you credit 

for the loan loss being less, but when you take Ford and Nissan 

out it is more, isn’t it? 

Secretary CHU. Well, one can take this out, put that in, and 

things of that nature. He also points out—— 

Chairman ISSA. Well, wait a second. The reason I am asking 

about take them out is these are world class huge companies—— 

Secretary CHU. Exactly. 

Chairman ISSA [continuing]. And when you take Ford and Nissan, you are not talking about these BB, CC startup companies 

with, quite frankly, as Mr. Jordan said, insiders, friends of the 

President, bundlers, and so on. So they are very different. The 

characteristics of the loans might be similar in their amount, but 

the characteristics of the companies bear no resemblance, do they? 

Secretary CHU. Well, you can say that today and everybody recognizes Ford has bounced back beautifully, it is a great company. 

Chairman ISSA. Ford is a 100-year-old business worldwide, and 

Nissan came out of World War II and has gone almost straight up 

for two generations. So I think, in fairness, you cannot compare 

auto companies to the startup electric companies and so on, can 

you? 

Secretary CHU. The credit subsidy for the Ford loan speaks for 

itself, it was roughly 50 percent of the loan. So in the eyes of the 

OMB, who sets that credit subsidy score, they felt that it had a 50 

percent of default at the time. But it turned out not to be, and we 

applaud Ford for doing all the things it did and it is a great company. 

Chairman ISSA. We all agree on that part. 

Mr. Clay, would you like a second round? The gentleman is recognized. 

Mr. CLAY. Thank you, Mr. Chairman. 

Last July, the Brookings Institution issued a major study providing the first comprehensive analysis of the U.S. clean energy 

economy. That report made a number of findings and I would like 

to focus on two. 

First, the report found that the clean economy generates good 

paying jobs. According to the report, the clean economy employs 

about 2.7 million workers. That is more than the fossil fuel industry. The report said this: ‘‘Newer clean tech segments produce explosive job gains and the clean economy outperformed the Nation 

during the recession. Newer clean economy establishments, especially those in young energy-related segments such as wind energy, 

57 

solar, and smart grid, added jobs at a torrid pace, albeit from small 

bases.’’ 

Secretary Chu, do you agree with the Brookings report that certain segments of the clean economy, particularly those who Recovery Act moneys have been invested, offer the potential for substantial job growth? 

Secretary CHU. I do. 

Mr. CLAY. And the Brookings report also makes a second important key point, which is that the U.S. needs to support these key 

sectors to remain competitive globally. Here is what the report 

says: ‘‘China now leads the world in clean economy deployment. In 

2010, China put into place a staggering $54.4 billion in clean energy investments. By contrast, U.S. private investment in clean energy totaled $34 billion. Now the gap is widening further.’’ 

The Brookings report also says this: ‘‘China, which now produces 

half of the world’s wind, turbine, and solar modules, recently announced it would accelerate its clean revolution over the next 5 

years and has set out aggressive growth plans for strategic emerging industries critical to economic restructuring, including multiple 

new energy categories, electric vehicles, and energy efficiency products.’’ 

Secretary Chu, do you agree that the sectors that might bring 

this Country greater energy independence, solar, wind, geothermal, 

advanced battery development, et cetera, are critical for the U.S. 

to develop to remain globally competitive? 

Secretary CHU. I agree with that. 

Mr. CLAY. In a press release of the company, the release of the 

Brookings study, a principal at the Brookings Institution commented on the U.S. Government’s involvement in this sector and 

said this, ‘‘This is not an area where the public sector needs to get 

out of the way. Government leaders at all levels need to get in the 

game. Otherwise, we will watch the rest of the world pull away 

from us.’’ 

Secretary, do you agree with that statement? 

Secretary CHU. I do agree because many countries, China is one 

of them, but there are dozens of others who recognize the economic 

opportunity in this clean energy, energy efficiency, and that is why 

these countries are investing so much. So even just to level the 

playing field we need to be doing something. China has shown that 

it simply views this as a great economic opportunity for their prosperity and future, both to be deployed at home, they are going to 

probably be the biggest deployer of clean energy in the world this 

year, but also for export market. 

Mr. CLAY. So if we tamp down on our government investment in 

clean energy technologies, then we will lose ground to the rest of 

the world. 

Secretary CHU. Well, I would say that we have great strength in 

America in invention and innovation. We have the best venture 

capital system in the world. We actually have great public-private 

finance markets in the world. And we should look to those 

strengths, and to the extent the U.S. Government can help those 

great strengths move forward, we should be doing that. 

Mr. CLAY. And some people argue that the U.S. Government 

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58 

peting with China for clean energy technology. My question for you 

is this: What will that mean in terms of who owns the technologies 

of the future and where those jobs are located? 

Secretary CHU. Well, again, we made decisions in the past that 

have led to our preeminence in many things; semiconductors, computers, airplane, very competitive business, heavy government investments. 

Again, not everyone feels this way, but I certainly am one of 

those who do feel this way, that going into the future these technologies, which are going to be as cheap as new forms of energy, 

including natural gas at $4.00 btu, whether it is this decade or a 

decade and a half from this, this is happening, and when that happens there is going to be a huge world market, there is a growing 

world market, it is over $200 billion, it is estimated to be, just for 

those things, in the next 10 or 15 years, over $400 billion. So it is 

a big market, and we have the smarts and the know-how, so we 

would rather be exporting than importing. 

Chairman ISSA. I thank the gentleman. 

Mr. CLAY. Thank you. 

Chairman ISSA. I am going to now recognize myself for a second 

round and I am going to try to be lightning about this. 

First of all, Mr. Secretary, you commented on something earlier 

that was important to me. Under current law, we must sell, for example, to Korea, where we have a free trade or fair trade agreement; Mexico, et cetera, et cetera. So all of our liquified natural gas 

that is currently scheduled to be produced and online in Louisiana 

and I guess there are five sites, but two are further along in Louisiana and Corpus Christi, Texas, when those come online, for example, Korea could buy and could force us to sell, while Japan cannot. 

Does that seem like something that you should proactively look 

at to make sure that, for example, our close ally, Japan, much more 

heavily dependent on outside sources of energy, would have equal 

access to that and be able to compete for these lines? Because right 

now, as I understand, liquified natural gas is being sold in the futures market such that the only countries who feel comfortable bidding are those who know that there will be a guarantee of delivery. 

Secretary CHU. Well, first, we are abiding by the law and, as I 

said, we are obligated to allow those countries which we have free 

trade agreements, and my understanding is that in the first 

liquified natural exporting plant that is being constructed, well, it 

is not being constructed yet, but we are awaiting—— 

Chairman ISSA. It is permitted, I understand. 

Secretary CHU. I think they are awaiting further FERC approval, 

and that will take four or 5 years to complete, that these contracts 

and the agreements that company are essentially spoken for by the 

FTA countries. 

Chairman ISSA. I understand. So I guess the problem is Japan 

can’t be part of that under current law without the fear that they 

wouldn’t get delivery. And I am concerned only because Russia has 

used energy as a weapon. I had the honor of being in Azerbaijan 

with my wife, actually, for the opening of that pipeline, which the 

Bush Administration backed specifically in order to piece by piece 

59 

by piece break down the fear in Europe of energy being unavailable 

if you didn’t do what somebody else wanted. 

Let me go through an earlier point, though, now. In the case of 

the Project Amp, we have, and I will ask unanimous consent it be 

placed in the record, emails exchanged with the lobbyist for that 

organization that verifies that Bank of America, the co-investor, 

has no current loans out, meaning we have a reasonable assurance 

that in fact they have not met their September 11th deadline to 

begin construction. If that is true, Mr. Secretary, will you assure 

us today that that $1 billion loan commitment will not be funded, 

since the law specifically says that they must begin construction by 

September 2011? 

Secretary CHU. You certainly have my assurance that we are 

going to do what we need to do within the bounds of the law. I actually—— 

Chairman ISSA. The law is explicit. They had to begin construction, this is a taillight, by September 2011. We have a current assurance from the people that would have funded the other part of 

it that they have not. 

Secretary CHU. Well, I was forwarded a note from my loyal staff 

behind me that said exactly what you just said, that there was a 

requirement to break ground on some part of the Prologis loan 

guarantee, and they tell me they have indeed broken ground. 

Chairman ISSA. Okay, well, we will share the email exchange 

that they have not, and, of course, we would like to make sure they 

did substantially break. But it is a large amount of money for a 

program that has statutorily ended, and apparently you have put 

no money out. Ours was February 12th, so can your people assure 

you that they broke ground by the September statutory limit? 

Secretary CHU. We will get back to you on that. We will doublecheck. 

Chairman ISSA. Thank you. I appreciate that. 

Then moving to Blue Mountain, a program in Nevada, now, this 

program, oddly enough, bore your own signature on the approval 

and no jobs were created, although it was a 1705 loan. In fact, the 

moneys that were disbursed as a result of the loan guarantee went 

to the parent company and the construction had already been done. 

If that is true, will you be able to seek any kind of a drawback for 

it, since under the statute it was estimated and your own website 

says created 200 construction jobs and 14 permanent jobs? Since 

the construction was already done on the day that the loan was approved and funded, does that fly in the face of what is on your 

website? 

Secretary CHU. I would have to get back to you on that and the 

particulars about the timing. 

Chairman ISSA. Okay. Most of this comes from discovery that you 

voluntarily delivered to us. 

Mr. Secretary, I want to end mine on a note that I am particularly interested in, and I ask for 30 additional seconds to ask the 

question. Without objection. 

Mr. Secretary, today natural gas is plentiful. We are even flurrying it. Natural gas has a per, if you will, mile of driving that is 

substantially less than gasoline. Estimates that I have been given 

are that natural gas, if used as a fuel today, and this is assuming 

60 

that you had just an out of the tank, not all the conversion costs, 

would be a dollar something a gallon equivalent to use natural gas 

at market price versus gasoline at market price. 

If that is true, if the American people could have nearly a onefourth reduction by using natural gas, and if the difference between 

it being viable and not viable is in fact getting the 3500 pounds per 

square inch compression that is typical in order to put enough of 

it in your tank down to 400 pounds, can you give us, and please, 

Secretary Chu, in language that the viewers can understand, give 

us the steps you believe would have to occur in order to get from 

where we are today, where the compression costs so much and has 

some danger questions and some cycle life, to one in which people 

could simply fill up their tank at home overnight and drive for 

hundreds of miles on this fuel and, as you said earlier, selecting 

fuel back and forth with this kind of a choice? 

Secretary CHU. Well, Mr. Chairman, thank you for that. You and 

I both share the excitement of the potential for using American energy resources in natural gas to offload a considerable amount of 

our transportation needs, because that means more creation in the 

United States, less imported oil, less oil dependence. 

So with regard to that, we are talking right now about very, very 

high pressures, which require a very expensive carbon fiber tank, 

and we would be looking at things you put inside the tank, materials where the natural gas can absorb onto the surface of very 

highly porous, high surface materials. 

So it turns out, even though it is counterintuitive, if you have 

some other stuff in there and it goes and lands on a surface instead 

of just the free gas, you may be able to store as much or more material in the same volume, and if we could do that, that would 

greatly reduce the costs of the fuel tank, it would greatly reduce 

the pressure, it would make natural gas filling stations much less 

expensive. 

So we are now designing. We first had a request for comment, 

but having realized this great natural resource, we are designing 

a program that says, let’s invest in this research. And if it happens, 

and if it happens possibly in a year or three, we don’t know because it is research, but that would have a profound impact on 

transportation not only in the United States, but all over the world, 

because there is a lot of natural gas now in fracking all over the 

world. Again, that means the whole world diversifies and that will 

have an effect on oil prices. 

Chairman ISSA. Thank you, Mr. Secretary. 

Mr. Gowdy. 

Mr. GOWDY. Thank you, Mr. Chairman. 

Mr. Secretary, I realized the quote I asked you about predated 

your swearing in, but, in all candor, you just recounted for us a 

conversation you had with President Bush and another member of 

his administration which also predated your swearing in. So I 

think the notion that we have a firewall at your swearing in as the 

time beyond which we can’t ask any questions is not correct. 

But I don’t want to quote you incorrectly, too, and you seemed 

to suggest that maybe there was a word that I included in your 

quote that was not correct. Do you have the quote from 2008 in 

front of you? 

61 

Secretary CHU. No, I don’t. 

Mr. GOWDY. Does your staff have a direct quote from 2008 in 

front of them? 

Secretary CHU. No, I don’t. But let me go back to what you said 

about my service to President Bush and his cabinet. I was asked 

in my role as a scientist for ideas that could help diversify the use 

of oil in the United States so it could bring relief to Americans, and 

that advice I gave, and I was delighted, I was honored to be asked 

for that and I was delighted to give the advice. That actually has 

not changed at all. I am very committed to diversifying the energy 

supply of transportation in the United States. 

Mr. GOWDY. Mr. Secretary, I was in no way, shape, or form being 

critical of the fact that you were gracious enough to serve two different Administrations. The fact that you would talk to folks from 

both parties is laudable. What I am trying to figure out, these were 

not the musings of a misspent youth. This wasn’t a private diary 

that somebody got their hands on. This was a public comment that 

you made months before you were sworn in. 

And if the quote is correct, somehow we have to figure out how 

to boost the price of gasoline to the levels in Europe. And other 

quotes you made contemporaneous with that suggest that the reason for that is to shrink demand for environmental concerns. So 

the notion that we have pivoted because we are in a recession, that 

doesn’t impact the environmental concerns and why you initially 

advocated for higher gas prices in the first place, does it? 

Secretary CHU. Well, I think you have made some logical leaps 

there, but let me just say that—— 

Mr. GOWDY. Well, then let me ask you why did you advocate for 

higher gas prices in 2008? 

Secretary CHU. I have nothing more to add to that quote. I have 

said and I continue to say every action that I have had as Secretary of Energy, every action I have had as a scientist was actually to diversify the supply of energy, which ultimately, if adopted 

on a world basis, would actually decrease gasoline prices. 

Mr. GOWDY. You had a colloquy with one of my colleagues where 

you all agreed that this is a worldwide commodity with prices that 

are set by market pressures. So I think it is fair to ask, assuming 

that, how would you boost the price of gasoline? If it is set by the 

market, how would you do it? 

Secretary CHU. Excuse me, I am not trying to boost the price of 

gasoline. Quite the opposite. I am trying to help as a scientist develop technologies that can diversify our energy that we use in 

transportation not only in the United States but, if successful, 

those technologies could be marketed by United States companies 

all over the world. That would have an effect on gasoline prices. 

Chairman ISSA. Would the gentleman yield for just 1 second? 

Mr. GOWDY. Sure. 

Chairman ISSA. Secretary Chu, did you support cap-and-trade by 

this Administration? 

Secretary CHU. I did. 

Chairman ISSA. And that would necessarily increase dramatically 

the cost of carbon, including gasoline, correct? 

Secretary CHU. Well, I think the estimate of the cost of gasoline 

was, I think, about 30 cents, something like that. 

62 

Chairman ISSA. Thank you for yielding. 

Mr. GOWDY. I am not trying to cross-examine what you said in 

2008; I am trying to figure out—I assume that you meant it at the 

time you said it, and I assume, because you are a thoughtful, precise person, that you put some thought into it before you said it. 

And I am just trying to understand why you felt that way in 2008, 

when gasoline prices were almost identical to what they are now. 

Secretary CHU. Again, we keep returning. I really have nothing 

more to add. And if you look at all my actions, what I have done 

as Secretary of Energy, I think everything is quite toward the other 

side. How do you help the American public? How do you actually 

help in real long-term solutions and mid-term solutions, and, quite 

candidly, a little bit here and there, and by that I mean on shortterm solutions. Let me give you an example—— 

Mr. GOWDY. I am not going to interrupt you, but I do have one 

more question. I am going to let you finish that, but I have one 

more question. 

Secretary CHU. Go ahead with your—— 

Mr. GOWDY. No, no, I don’t want to cut you off. 

Secretary CHU. Okay. I spent a great deal of personal time trying 

to help stop a leak in the Gulf of Mexico. I spent a lot of time trying to help the Japanese with their nuclear reactors. They have 

secondary effects on the prices of oil. When the Japanese stopped 

generating electricity from nuclear, they have to go to natural gas, 

coal, and oil. Had there been more significant environmental impacts in the Gulf, that could have had an effect on the development 

of offshore oil. 

So if you look at what I do, I can attribute in all those ways to 

help moderate those—— 

Mr. GOWDY. I actually am not questioning your motives, Mr. Secretary. I am just wondering how a 30-second swearing in ceremony 

could have called someone to pivot from advocating for European 

level gas prices to now doing everything within his power to lower 

gas prices. That just strikes me as being a fair question. 

But let me ask you my last one. Loan guarantees shall be subject 

to the condition that the obligation is not subordinate to other financing. Why do you think that was put in the statute? 

Secretary CHU. I think because when you initiate a loan, the 

Congress felt that they did not want to put the taxpayer behind 

any loan, that they actually have essentially, to use a colloquial expression, first dibs on repayment back. 

Mr. GOWDY. And that rationale would be equally sound at a restructuring, correct? 

Secretary CHU. No. The reason it would not be sound at restructuring is at a restructuring you restructure because the company 

is in stress of some kind. 

Mr. GOWDY. That just strikes me that would be all the more reason to want to protect the taxpayer, because if the company were 

doing well, then you may have private investors or you may have 

an alternative form of getting your loan. Only if the company is not 

doing well would you need to renegotiate and subordinate taxpayers, which just strikes me a company not doing well has all the 

more reason for that clause I just read to you, to protect the taxpayers. 

63 

Secretary CHU. Well, let me try to explain. When a company is 

not doing well, typically what they would want is they would seek 

extra capital to ride something out. There might be a setback, 

there might be a number of reasons. This happens all the time in 

the private sector. So they need extra capital. 

Now, if you are a private investor, you come in and you say, well, 

look, this company is not doing well and you want me to put in 

extra capital, and yet you want me to be second in line? There is 

no way I can do this. So those in the investment community understand this very well and that is why when the company is not 

doing well you want to use whatever your means to maximize recovery of whatever the government put in, and it may turn out— 

there are other possibilities, you could take warrants, things of that 

nature. 

But as Herb Allison said in his hearing, if your intent is to maximize taxpayer recovery in these situations, this is one of the tools 

you should allow to remain open. 

Chairman ISSA. I apologize, but we are going to have to bring 

this to a close. I promised the Secretary that we would get out. 

The Ranking Member has asked for 30 seconds. The gentleman 

is recognized for 30 seconds. 

Mr. CUMMINGS. Thank you very much, Mr. Chairman. 

I wanted to clear up something from earlier. When Mr. Jordan 

was asking questions, there was an implication that Herb Allison, 

who acted as the independent consultant, and he is the head of the 

troubled asset relief program, there was an implication that he was 

not an independent type of party. 

I just wanted to submit for the record, Mr. Chairman, this New 

York Times article dated today which states that he was the Finance Committee Chairman for Senator John McCain—— 

Chairman ISSA. That will be entered into the record without objection. 

Mr. CUMMINGS. Thank you. 

Chairman ISSA. I thank the gentleman. 

In closing, Mr. Secretary, I want to say you have been a great 

witness. We have not always agreed; we have not agreed at the 

end. I certainly think Mr. Gowdy makes a good point that Congress 

needs to look very carefully at under what cases and with what information in the future any part of the executive branch will be 

able to subordinate a restructuring, and there was no notification 

in the statute for those restructurings. 

But I want to thank you for being an excellent witness. I want 

to close with just one pleasant thought. As we look at Solyndra and 

the other losses the American people are going to experience, there 

is one silver lining: Moore’s law has begun to affect photovoltaic. 

And, in fact, the cost of producing electricity from the sun is getting closer and closer to a case in which we can genuinely substitute electricity made from the sun with other sources. I look forward to that day. I continue to support, as I think all of us do, the 

real research and development that will help get us there and limited innovation. 

With that, Mr. Secretary, we thank you and we are adjourned. 

[Whereupon, at 1:09 p.m., the committee was adjourned.] 

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