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THE GREEN ENERGY DEBACLE: WHERE HAS ALL

THE TAXPAYER MONEY GONE?

HEARING

BEFORE THE

SUBCOMMITTEE ON REGULATORY AFFAIRS,

STIMULUS OVERSIGHT AND GOVERNMENT

SPENDING

OF THE

COMMITTEE ON OVERSIGHT

AND GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

NOVEMBER 2, 2011

Serial No. 112–120

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

SUBCOMMITTEE ON REGULATORY AFFAIRS, STIMULUS OVERSIGHT AND GOVERNMENT

SPENDING

JIM JORDAN, Ohio, Chairman

ANN MARIE BUERKLE, New York, Vice

Chairwoman

CONNIE MACK, Florida

RAU ́ L R. LABRADOR, Idaho

SCOTT DESJARLAIS, Tennessee

FRANK C. GUINTA, New Hampshire

MIKE KELLY, Pennsylvania

DENNIS J. KUCINICH, Ohio, Ranking

Minority Member

JIM COOPER, Tennessee

JACKIE SPEIER, California

BRUCE L. BRALEY, Iowa
(III)

C O N T E N T S

Page

Hearing held on November 2, 2011 ........................................................................ 1

Statement of:

Friedman, Gregory H., Inspector General, U.S. Department of Energy;

Elliot P. Lewis, Assistant Inspector General, U.S. Department of Energy; W. David Montgomery, Ph.D., senior vice president, National

Economic Research Associates, Inc.; Greg Kats, president, Capital–E;

and Brett McMahon, vice president of business development, Miller

& Long Concrete Construction ..................................................................... 5

Friedman, Gregory H. ............................................................................... 5

Kats, Greg .................................................................................................. 49

Lewis, Elliot P. .......................................................................................... 21

McMahon, Brett ......................................................................................... 61

Montgomery, W. David ............................................................................. 28

Letters, statements, etc., submitted for the record by:

Friedman, Gregory H., Inspector General, U.S. Department of Energy,

prepared statement of ................................................................................... 8

Kats, Greg, president, Capital–E, prepared statement of ............................. 51

Lewis, Elliot P., Assistant Inspector General, U.S. Department of Energy,

prepared statement of ................................................................................... 23

McMahon, Brett, vice president of business development, Miller & Long

Concrete Construction, prepared statement of ........................................... 63

Montgomery, W. David, Ph.D., senior vice president, National Economic

Research Associates, Inc., prepared statement of ...................................... 30

(1)

THE GREEN ENERGY DEBACLE: WHERE HAS

ALL THE TAXPAYER MONEY GONE?

WEDNESDAY, NOVEMBER 2, 2011

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON REGULATORY AFFAIRS, STIMULUS

OVERSIGHT AND GOVERNMENT SPENDING,

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM,

Washington, DC.

The subcommittee met, pursuant to notice, at 10:06 a.m., in room

2154, Rayburn House Office Building, Hon. Jim Jordan (chairman

of the subcommittee) presiding.

Present: Representatives Jordan, Buerkle, Labrador, DesJarlais,

Kelly, Kucinich, and Cummings (ex officio).

Staff present: Drew Colliatie, staff assistant; Tyler Grimm, professional staff member; Christopher Hixon, deputy chief counsel,

oversight; Kristina M. Moore, senior counsel; Michael Whatley, professional staff member; Jaron Bourke, minority director of administration; Lisa Cody, minority investigator; Ashley Etienne, minority

director of communications; Jennifer Hoffman, minority press secretary; and Carla Hultberg, minority chief clerk.

Mr. JORDAN. The subcommittee will come to order. We want to

welcome our guests and our panel today. Mr. Kats is on his way.

We have been informed that he will be here in just a few minutes.

So we will get started with opening statements and then get right

to our testimony.

Today’s hearing continues the committee’s oversight and examination of this administration’s effort to use taxpayer dollars to

fund a massive green energy experiment. The 2009 stimulus directed around $90 billion toward green initiatives, including loan

guarantees for green energy firms, money to weatherize homes,

green jobs training grants, and many other projects.

The President told the American people that, ‘‘green jobs would

be a major force not just for environmental conservation, but for

economic recovery.’’ The President said that we will harness the

Sun and the winds and the soil to fuel our cars and to run our factories. And he promised that our country would create millions of

green jobs, which would help us compete in the global economy.

However, over 21⁄2 years into this experiment, the available evidence demonstrates these efforts have wasted vast sums of taxpayer dollars, and have possibly caused economic harm.

Even the Washington Post editorial board recently noted that

‘‘green jobs offer a dubious rationale for Federal support of cleanenergy technology. To the extent that government creates jobs by
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subsidizing particular companies, it does so by shifting resources

that might have created jobs elsewhere.’’

This committee welcomes and embraces new businesses and

technologies with the aim of increasing environmental conservation, but it is important that we—that these be brought about by

market forces, not political whims. Today we have a panel of expert

witnesses who can speak to how the administration’s green energy

efforts have panned out and where we should go from here.

The inspectors general from both the Department of Labor and

Department of Energy have done thorough work evaluating the

challenges we faced as the economy has undergone these green initiatives. In an audit released in September, the Department of Labor’s inspector general found that a $500 million program for training people with so-called green skills has so far produced only

1,336 jobs that have lasted over 6 months, with $163 million already spent. This amounts to $121,856 per successful green trainee.

While these numbers are abysmal, the truth of the matter is

even worse. Many of these people who went through this training

to obtain, ‘‘green skills’’ are likely worse off because of it. Instead

of spending time looking for sustainable work or acquiring marketable skills, they acquired skills that are simply not valued in the

marketplace today. This is yet again another well-intentioned government program that appears to harm many of the people it was

designed to help.

In his inauguration speech, the President stated in areas where

government initiatives fail, ‘‘programs will end.’’ And those of us

who manage the public’s dollars will be held to account to spend

wisely, to reform bad habits. The available evidence seems to indicate that programs put forth by this administration aimed at promoting green energy and green jobs failed, and, frankly, should

end. With an unemployment rate still over 9 percent and nearly

$15 trillion accumulated in debt, the American people deserve more

than to see their government going further into the red with programs that simply aren’t doing the job.

With that, I would yield to my good friend from Cleveland for his

opening statement.

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

I think it is right to critically analyze the performance of specific

programs, and that is the purpose of this committee, and I appreciate your role as chair in doing that. The attention that has been

focused on the Solyndra matter is a case in point. These are legitimate questions that have to be asked. But the concern that I have

is that the run-up to this meeting, and generally to the critical

analysis of the administration’s inability to be able to bring forward

a massive greenworks program, should not in any way deter us

from moving forward with an effort on the part of the Federal Government to create a transition in our economy toward more sustainability in our energy and in our manufacturing.

For example, I have long been an advocate of plussing up the

NASA budget for the purposes of looking at areas of developing

green microtechnologies where you could theoretically—now, it is

theoretical—create millions of new jobs involved in the design—in

the concept, design, engineering, manufacturing, installation, and
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maintenance of millions of wind and solar microtechnologies that

would lower our carbon—reduce our carbon footprint, lower our energy costs, and enable an economic—an overall economic stimulus

through jobs and lower energy costs.

America cannot rely on coal, which is a nonsustainable form of

energy, one that is damaging to our environment, for our long-term

energy needs. We cannot rely on oil for our long-term energy needs.

If we really had an accurate cost of a gallon of oil, we would have

to factor in the use of our military, which has been increasingly

used to be able to secure oil—access to oil around the world. And

we can’t rely on nuclear, which is a very shaky form of energy with

respect to its security and the disposition of nuclear—the securing

of nuclear waste. So we have to challenge the administration to

come forward with new possibilities. And today, hopefully, we will

hear from the Department of Defense about some of the directions

that they are going in that might lead to some possibilities for the

larger economy.

America inevitably is going to have to go in a direction of green.

Our economy must go in that direction. There is money to be made

in those directions. The fact that we have seen failure at the beginning, which is important to note, because it—we need to know

what not to do, should not cause us to conclude that there is little

or no hope of being able to not just restore public confidence, but

be able to restore our economy. Because in the end, that’s what we

are all concerned about, getting Americans back to work, and finding ways where America can seize the opportunity to catch the

wave that is inevitably building of green technologies, and particularly with respect to energy.

So I want to again thank the chair for holding this hearing, and

I look forward to hearing the witnesses’ testimony.

Mr. JORDAN. I thank the gentleman. I think he makes good

points.

I would just point out we are all for—I would think Members on

this side of the aisle are for any new technologies that can help

meet our technology energy needs. We just think the market is a

much better and more efficient way of getting us there versus the

kind of program we are going to hear about today from our witnesses.

Mr. KUCINICH. Would my friend yield?

Mr. JORDAN. Be happy to yield.

Mr. KUCINICH. Of the things that I remember a few years ago,

and this was in an investor’s advice that was being given to people

who were interested in energy stocks, this may have been 6 years

ago, people were being told not to invest in green energy, or wind

and solar energy because they were being seen as ‘‘fads,’’ but to put

the investment dollar into oil, coal, nuclear. Now, the market sometimes will go for the short-term gain, using whatever resources are

there, to max them out immediately for maximum profit, without

any necessary concern about the society at large and about the future potential.

So, you know, I understand, you and I have had an agreement

on the government not interfering in the market with respect to

the bailout. We both voted the same way on that. But I am also
4

saying that market forces are not always according to Adam

Smith’s invisible hand here.

Mr. JORDAN. Does the gentleman from Tennessee—or excuse me,

we now have our vice chairman walking in. Does the gentlelady

from New York wish to make an opening statement?

Ms. BUERKLE. Thank you, Mr. Chairman.

Mr. JORDAN. The gentlelady is recognized for 5 minutes.

Ms. BUERKLE. Thank you, Mr. Chairman.

At a time when people across the United States are struggling

to rebuild our economy and create jobs, I would like to thank our

chairman for calling this hearing to evaluate the process and the

substance of the MACT regulations.

Sorry about that. Wrong hearing.

Thank you, Mr. Chairman. Thank you for calling this hearing. I

will yield back my time. Thank you.

Mr. JORDAN. The gentleman from Maryland, distinguished ranking member of the full committee, is recognized.

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

I want to associate myself with the comments of Mr. Kucinich,

and saying that I think we have to be very careful and not throw

the baby out with the bathwater. I think government does have a

role to play here, and a very important role. The Recovery Act provided some $49 billion to a variety of green energy projects, and

that funding has been used to develop crucial new technologies,

train workers for the 21st-century jobs, and improve our national

security.

The Departments of Energy, Defense, and Labor, and the General Services Administration have been instrumental in this effort;

however, only the inspectors general from the Departments of

Labor and Energy are here today. The title of today’s hearing is

‘‘Where Has All the Taxpayer Money Gone?’’ One of the largest recipients of the Federal dollars for green energy programs is the Department of Defense. In a 2010 Memorandum of Understanding

with the Department of Energy, the Defense Department said, ‘‘Energy efficiency can serve as a force multiplier, increasing the range

and endurance of forces in the field, while reducing the number of

combat forces diverted to protect energy supply lines, as well as reducing long-term energy costs.’’

In addition, we are developing green jobs here at home. The

Brookings Institution estimates that in my home State, for example, the green jobs in Maryland employ some 43,207 residents, and

pay out an average of $44,790 per year, which is higher than the

median salary in my State. At a time when the middle class of

nearly every State is shrinking, these figures are indeed good news.

Finally, if we are going to remain competitive in the global economy, we must be willing to make investments going forward. According to a report released by the Pew Charitable Trusts in

March, China and Germany are leading in green energy investments, and other countries like Italy, Mexico, and Argentina are

rapidly increasing their investments. The United States, on the

other hand, is falling behind. If we are not willing to make longterm investments, we risk limiting our competitiveness in the years

to come, something we simply cannot afford to do.
5

So I want to thank the witnesses for being here today. I look forward to your testimony. And I want to, as we look at this particular problem, I want to know how it is that, you know, are we

looking at one situation here? Are we doing a blanket indictment

of all our efforts in this regard? Because I think if we are going

to paint with one brush this entire effort, I think that would be a

major mistake.

And with that, I yield back.

Mr. JORDAN. I thank the gentleman.

Does anyone else wish to make an opening statement?

All right. With that, we will introduce our panel. We first have

Mr. Gregory Friedman, who is the inspector general at the U.S. Department of Energy. We want to thank the Honorable Gregory

Friedman for being here today. Mr. Elliott Lewis, the Assistant Inspector General for Audit at the U.S. Department of Labor. We also

have with us Dr. David Montgomery, senior vice president, National Economic Research Associates, Inc., and is formerly Assistant Director of the CBO, as well as Deputy Assistant Secretary for

Policy at the U.S. Department of Energy. As I indicated earlier,

Mr. Kats is on his way. And we also have with us Mr. Brett

McMahon, who is president of Miller & Long, D.C. And we appreciate our panel being here.

We are going to go ahead and swear you guys in. When Mr. Kats

gets here, we will do that. This is a rule of the committee. So if

you would just please stand up, raise your right hands.

[Witnesses sworn.]

Mr. JORDAN. Let the record show that everyone answered in the

affirmative.

You guys know the rules. Five minutes, you know, you get the

light system there. So stick to that as best you can. And we will

start right down the row here with Mr. Friedman. You are recognized for your 5 minutes.

STATEMENTS OF GREGORY H. FRIEDMAN, INSPECTOR GENERAL, U.S. DEPARTMENT OF ENERGY; ELLIOT P. LEWIS, ASSISTANT INSPECTOR GENERAL, U.S. DEPARTMENT OF ENERGY; W. DAVID MONTGOMERY, PH.D., SENIOR VICE PRESIDENT, NATIONAL ECONOMIC RESEARCH ASSOCIATES, INC.;

GREG KATS, PRESIDENT, CAPITAL–E; AND BRETT MCMAHON,

VICE PRESIDENT OF BUSINESS DEVELOPMENT, MILLER &

LONG CONCRETE CONSTRUCTION

STATEMENT OF GREGORY H. FRIEDMAN

Mr. FRIEDMAN. Thank you, Mr. Chairman.

Mr. Chairman and members of the subcommittee, I appreciate

the opportunity to testify today at your request on the work of the

Office of Inspector General concerning the Department of Energy’s

implementation of the American Recovery and Reinvestment Act of

2009. The intent of the Recovery Act was to quickly stimulate the

economy and create jobs, while fostering an unprecedented level of

accountability and transparency. The Department received $35.2 billion in Recovery Act funding,

dramatically increasing the budgets traditionally available for initiatives such as home weatherization, environmental cleanup,
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science projects, and loan guarantees to advance energy technologies. With the passage of the Recovery Act, the Office of Inspector General immediately launched efforts to assist the Department. We have issued 68 reports covering all major Recovery Act

initiatives and activities, initiated over 100 Recovery Act-related

criminal investigations, and conducted 300 fraud awareness briefings around the country for nearly 16,000 Federal contractors,

State, local, and other officials.

Based on our body of work, we found the efforts by the Department to use Recovery Act funds to stimulate the economy was more

challenging than many had originally envisioned. Our reviews

identified a fairly consistent pattern of delays in the pace at which

Recovery Act funds had been expended by grant and other financial

assistance recipients. As of October 22, 2011, according to the Department’s own records, recipient organizations had spent only 55

percent of available Recovery Act funds.

In terms of the Department’s ability to meet the Recovery Act

goals, we found that weatherization work, for example, was often

of questionable quality. In one recent State-level report, we found

that 9 of the 17 homes visited failed inspections because of substandard workmanship. The success of the weatherization program

was affected by other management issues as well. For example, one

major subrecipient gave preferential treatment to its own employees and their relatives for weatherization services over other eligible residents who were elderly or who had special needs.

The Loan Guarantee Program could not always readily demonstrate through documentation how it resolved or mitigated relevant risks prior to granting loan guarantees. And one of the Department’s environmental management sites, relying on Recovery

Act funding, adopted an approach to radioactive waste processing

that could have cost about $25 million more than necessary.

Further, the Office of Inspector General is investigating various

Recovery Act-related schemes, including submission of false information, mischarging, and misrepresenting test results. To date,

these investigations have resulted in over $2.3 million in monetary

recoveries, as well as a number of criminal prosecutions. This includes a series of cases involving fictitious claims for travel per

diem, resulting in the recovery of $1 million alone in Recovery Act

funds.

The Recovery Act established extremely challenging goals for the

Department. Notwithstanding the Department’s intense effort to

meet these goals, we have a number of overarching observations

about the Recovery Act’s implementation. These included, first, the

demanding nature of the Recovery Act’s implementation placed an

enormous strain on the Department’s then-existing infrastructure.

Second, dealing with a diverse and complex set of departmental

stakeholders complicated Recovery Act startup, administration, and

execution. Third, although shovel-ready projects were the symbolic

goal of the Recovery Act, in most cases execution was more challenging and time-consuming than had been anticipated. Fourth, infrastructure at the State and local levels was overwhelmed. Ironically, in several States those charged with implementing the Recovery Act’s provisions had been furloughed due to economic conditions in those States. Fifth, the pace of actual expenditures was
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significantly slowed because of the time needed to understand and

to address specific requirements of the Recovery Act. And finally,

recipients of Recovery Act funding expressed their frustration with

what they described as overly complex and burdensome reporting

requirements. In summary, a combination of massive funding, high

expectations, and inadequate infrastructure resulted at times in

less than optimal performance.

Over the next year we will further review Recovery Act expenditures in a number of high-risk areas, and our investigative efforts

continue. Additionally, we are evaluating how the Department

plans to deal with the loss of over 4,000 environmental management jobs by the end of this year, a significant downsizing of the

work force that was dedicated to Recovery Act-funded work. Further, we are refining our observations on the Department’s implementation of the Recovery Act, and are drafting a report to highlight other lessons learned from this experience.

Mr. Chairman, this concludes my statement. I would be pleased

to answer any questions that you or the subcommittee may have.

Mr. JORDAN. I thank the gentleman for his testimony.

[The prepared statement of Mr. Friedman follows:]
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Mr. JORDAN. Mr. Lewis, you are now recognized.

STATEMENT OF ELLIOT P. LEWIS

Mr. LEWIS. Good morning, Mr. Chairman and members of the

subcommittee. Thank you for inviting me to testify today on the

OIG’s recent report regarding the Department’s Green Jobs program.

As part of our oversight responsibilities, and in response to a

congressional request, we conducted this audit to determine how

the Employment and Training Administration had defined green

jobs; how they used the $500 million in funds provided by the Recovery Act; and what the grantees had reported achieving with respect to training and placement of workers, including employment

retention.

The OIG’s findings and recommendations are based on the latest

data reported by the grantees to ETA as of June 30, 2011. We

found that ETA defined green jobs as jobs associated with products

and services that use renewable energy sources, reduce pollution,

and conserve natural resources. ETA derived this definition from

the Green Jobs Act, the Energy Policy Act, and from its own data

base of occupational requirements and worker attributes.

The Recovery Act mandated that funds be used for projects that

prepare workers for careers in energy efficiency and renewable energy as described in the Workforce Investment Act. Therefore, we

determined that the definition of green jobs used by ETA to award

grants was in compliance with the requirements of the Recovery

Act.

The second objective of our audit was to determine how the funds

had been used. We found that of the $500 million provided, ETA

awarded the majority of the funding, or $435 million, for training

programs to prepare workers, help targeted populations overcome

barriers to employment, help participants obtain industry-recognized credentials, and place them into green jobs. Overall, our

audit found that although ETA obligated all of the $490 million in

grants as of June 30, 2011, grantees had reported expenditures of

$163 million, or 33 percent of the amount awarded, while approximately 73 percent of the training and nontraining grant periods

had already elapsed.

Our audit also evaluated what grantees had reported achieving

with respect to training and placement of workers, including employment retention. We found that with 61 percent of training

grant periods having elapsed, grantees had reported achieving limited performance targets for serving and placing workers. Grantees

reported that 53,000 individuals were served, 42 percent of the targeted 125,000; 47,000 participants enrolled in training, about 40

percent of the targeted 115,000; 26,000 participants completed

training, 27 percent of the targeted 97,000; and 8,000 participants

were placed into employment, 10 percent of the program’s goal of

80,000; and finally, 1,300 participants retained employment for

more than 6 months, about 2 percent of the planned 70,000.

It is important to emphasize that these training programs are

still under way, and we would expect to see changes in the reported results by the time the programs are completed.
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In response to our audit, ETA officials stated that they expected

performance to significantly increase over time due to an initial lag

during the startup phase of the grants. However, ETA could not

demonstrate that grantees were on target to meet planned outcomes, nor was there a plan to ensure that they could. In addition,

according to interviews we conducted with ETA regional officials

early this year, grantees had expressed concerns about the overall

poor economic conditions, and that green jobs had not materialized,

and therefore job placements had been much less than expected. As

a result, we are concerned as to whether grantees will effectively

use the funds and deliver targeted employment outcomes by the

end of their grants.

Accordingly, we recommended that ETA evaluate the Green Jobs

program, and in so doing obtain a current estimate of funds each

grantee will realistically spend given the current job market and

the demand for green job-related skills. This will help the Department identify and correct any performance issues before the grants

expire, and assess whether the grant funds will remain unspent,

and could therefore be recouped and returned to the U.S. Treasury

so they can be available for other purposes.

In response to our recommendations, ETA stated that it has put

in place appropriate measures to monitor progress and provide

technical assistance to help ensure ultimate grant success for those

grantees that may be at risk of not delivering all of their outcomes.

ETA further stated that it has obligated all of its Recovery Act

funds, and that it expects all funds will have been expended by

September 30, 2013, as required by the Office of Management and

Budget.

In conclusion, Mr. Chairman, based upon the results of our audit,

we believe the Department has an opportunity to evaluate the performance of the Green Jobs program while it is under way in order

to correct any performance issues and maximize outcomes.

Mr. Chairman, thank you for the opportunity to testify on our

work, and I would be pleased to answer any questions that you or

any members of the subcommittee may have.

Mr. JORDAN. Thank you, Mr. Lewis.

[The prepared statement of Mr. Lewis follows:]
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Mr. JORDAN. Dr. Montgomery, you are now recognized.

STATEMENT OF W. DAVID MONTGOMERY

Mr. MONTGOMERY. Thank you, Mr. Chairman and members of

the subcommittee. I was honored by your invitation to testify

today. And I think I can summarize my testimony in five points.

First is that the project failures and wasted money that we are

discussing today are not isolated examples of improper execution of

an otherwise worthwhile and potentially successful program. The

entire concept of using stimulus funds to create a green economy

through energy spending is misguided.

Second point I would make to develop that is that green energy

has none of the characteristics that are required to make effective

use of stimulus funding. In countering a recession, the objective is

to expend funds as quickly as possible—and Mr. Friedman has

pointed out that that hasn’t been happening—and also to phaseout

that spending as the economy improves. This kind of stimulus objective is simply inconsistent with the Department of Energy’s mission. Applying this public works approach to energy would repeat

the cycle of boom and bust that has contributed to the failure of

most of our past efforts to deploy and—to develop and deploy new

energy technology.

My third point would be that the Recovery Act funds have also

been applied at the wrong end of the research, development, and

deployment spectrum, where there is the least economic rationale

for government involvement and the highest likelihood of waste

and failure. I point out in my written testimony the great disproportion that existed in the Department of Energy even before

the stimulus funds compared to other research organizations in

terms of how much money goes into basic research and how much

goes into funding for large-scale demonstration projects. The stimulus program made that far, far worse.

Now, the reason that economists give for a government role in

R&D is the inability of private researchers to appropriate the full

value of their research. This is a serious problem across the board

in basic and in some applied research, but it is only a problem at

the deployment and commercialization stage if there is no market

for their product.

The second point is that peer review makes it possible for government research organizations to do a good job of allocating funds

to basic research, but government has proven over and over again

that it cannot consistently pick winners in the application of known

technology.

And finally, there is a reason why so much money goes into this

deployment and technology demonstration and why it fails. These

are the projects that have electoral significance. They attract lobbying, rent seeking, and porkbarrel politics, and therefore come to

be chosen independent of either their economic or technical merit.

My fourth point would be that the kinds of up-front funding provided by the Recovery Act basically create hothouse plants. And I

think this has a lot do with what we saw in Solyndra and with

other bankruptcies that we are seeing today. Some of these hothouse plants will survive—my wife is occasionally lucky—but it is

the exception.
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And again, there is a reason for the failures. Up-front funding is

not a universal substitute for the lack of a market. Green is not

enough. Green technology that produces energy that costs more

than its current fossil or nuclear substitutes is not going to be purchased, and consumers are not going to be willing to pay enough

to cover the cost of ongoing business for many of the projects that

are being funded under the Recovery Act. The Recovery Act, therefore, has turned into a back-door and ineffective substitute for what

Congress has decided it does not want, a price on carbon. If there

is no price on carbon, there is going to be not much of a market

for green technology, and these projects will fail. In other words,

if it is not a good idea to put a price on carbon, it is an even worse

idea to loan money and fund projects that need it in order to survive.

So that, I think, would be my final point, that, in my opinion,

it is very likely that most of the Recovery Act projects will fail in

one of three senses. Some will fail to survive even with the subsidy

that is provided in up-front funding and loans if the value of their

product in the market isn’t enough to cover the ongoing costs of

producing it. And I think, to be fair, many of these projects were

originally conceived with the hope that there would be a price on

carbon, as Mr. Kucinich pointed out.

Second, the Recovery Act funding will fail to jump-start technologies or industries, because if every new venture has to have an

up-front subsidy in order to overcome the capital barrier that exists

because we don’t put a price on carbon and don’t have a market

demand for green technology, then things will end with the Recovery Act projects.

And finally, it seems to me that these projects will fail to provide

a return to the taxpayer ever if the Recovery Act fails to—if the

Recovery Act is supporting projects that can’t pass the cost-benefits

test on their own.

Thank you, Mr. Chairman.

Mr. JORDAN. Thank you, Mr. Montgomery.

[The prepared statement of Mr. Montgomery follows:]
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Mr. JORDAN. Mr. Kats, if you would please rise. We just need to

swear you in. You walked in just after we swore everyone else in.

So if you would just please stand up and stand and raise your right

hand.

[Witness sworn.]

Mr. JORDAN. All right. Thank you, Mr. Kats. Sorry about that.

We know were you caught in traffic. We welcome you to the committee, and you are now recognized for 5 minutes.

STATEMENT OF GREG KATS

Mr. KATS. Thank you very much, Mr. Chairman and members of

the subcommittee. My background is in finance. I have a MBA

from Stanford. I worked as the Director of Financing for Energy Efficiency and Renewable Energy in the Department of Energy for

the last 10 years. I have been involved in private-equity financing

for clean energy. I have been involved in funding billions of dollars

of clean energy projects, both at a project development and a venture capital perspective.

The way I look at it is from a finance perspective, and I can say

that our international competitors, Japan, Germany, and China,

are not sitting still. They are heavily subsidizing this race to a

clean-energy future, which is a transition that pretty much all companies, certainly the U.S. military, and the large majority of governments now recognize we are involved in. So the support for

ARRA funding and clean energy, although it has had a steep rampup and had some teething problems, on balance was well timed and

has been very important in supporting the U.S. ability to compete

in this critical area.

A recent Brookings study found that between 2003 and 2010 in

this clean energy area, there has been an 8.3 percent job growth.

It has been one of the most important areas of job growth domestically and is an area that our competitors are investing in. So in

terms of economic opportunity and job growth, it has been an important driver for the economy.

The U.S. military is committed to clean energy because, in its

view, and based on its actual experience, clean energy allows them

to deliver their military purpose and security more cost-effectively

than reliance on fossil fuels. So the security dimension of clean energy has become much more important. The U.S. military has been

very clear on this particular issue.

There was a—several independent nonpartisan reviews about the

impact of ARRA funding on clean energy. The Council of Economic

Advisers in November 2010 found that as of the third quarter of

2010, between 2.7 and 3.7 million new jobs had been created from

this ARRA funding, and that it had a positive impact on GDP of

2.7 percent. In May 2011, U.S. Congressional Budget Office found

that in the first quarter of 2011, the impact of this ARRA funding

had been an increase of between 1.1 and 3.1 percent GDP growth,

and an increase in full-time employment of between 1.6 million and

4.6 million people. These success stories are being built on.

As discussed, this very steep ramp-up in funding was hard to deliver because the personnel were not there. As that funding gets

deployed in the field, we expect to see an increase in economic productivity and an increase in employment.
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The last point I would make is that the OMB in its 1705 Loan

Guarantee Program assumed and budgeted for a 12.85 percent default rate, an almost 13 percent default rate. Solyndra, and more

recently Beacon, which went bankrupt, represented about 1.6 percent of that total funding. We expect to receive back a portion, that

is recover a portion, of that funding. So the total default rate to

date, based on these two companies, will be about 1 percent. That

is less than one-tenth of the projected default rate expected for and

planned for by OMB.

About 90 percent of ARRA funding goes to large, clean-energygeneration projects. The large U.S. companies like General Electric

who are competing in international markets have found this funding critical to their ability to compete and to expand and build on

jobs. Funding for Johnson Controls, for example, in building a

3,000-person clean battery bank—excuse me, production facility in

Michigan, will create 3,000 direct jobs and many more indirect jobs

at a cost of under $100,000 per job.

So it is not a perfect story, but given the rate of ramp-up expected from this funding, the success story, I think, has been pretty

clear. At least 1 million to 3 million jobs created, a lot of strengthening of U.S. competitiveness on this critical international issue.

And for investors in clean technology, it is really a commitment to

the future. It is really a vote for those who are optimistic about

America’s capacity to compete successfully in this critical market.

Thank you.

Mr. JORDAN. Thank you, Mr. Kats.

[The prepared statement of Mr. Kats follows:]
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Mr. JORDAN. Mr. McMahon, you are recognized for 5 minutes.

STATEMENT OF BRETT MCMAHON

Mr. MCMAHON. Thank you very much, Chairman Jordan, Ranking Member Kucinich, and other members of the subcommittee. My

name is Brad McMahon. I am the president of the recently founded

Miller & Long DC, Inc. We are a Washington, D.C.-based subcontractor. My previous employer, Miller & Long Co., Inc., was founded in D.C. in 1947. It is one of the Nation’s oldest and largest subcontractors. The company regularly employs approximately 1,500

people as form building carpenters, cement finishers, reinforcing

rodmen, layout engineers, equipment operators, laborers, everything that you could think of under the Sun for our particular

trade. We have provided employment for over 75,000 D.C.-area

residents over the last 64 years.

During my 19 years in construction, I personally have overseen

over 50 high-rise concrete structures, and have been proud to provide employment for over several thousand construction workers,

both here in D.C. and in the Carolinas.

Also active in a number of organizations here locally, including

the D.C. Construction Trades Academy at Cardoza Senior High

School, where we provide the only vocational training available for

construction workers in the District of Columbia.

I first heard the term ‘‘green collar jobs’’ about 4 years ago. Like

many, I was not sure what the term meant. And since so much of

the focus seemed to center around my industry, I thought it would

be wise to at least learn some more about it.

I learned over time that the term was actually a lot more political than actual. It became clear that it was just a new label on

jobs that actually have existed for years. A lot of the public relations effort has gone into trying to claim there is something new

here, and, unfortunately, that is not the case.

Considering this—consider, please, the following example, because I thought this was the clearest I have ever seen, by a gentleman named Mark Anderberg from the Texas Workforce Development Commission in a report labeled ‘‘Green Collar Workers and

Other Mythical Creatures.’’ In it, if you have the testimony in front

of you, you will see the picture of two different toilets. One is a lowflow toilet; one is the old-fashioned one. And the question that begs

from this is what are the skill differences for installing these two

things? What is the possible difference between installing this one

and that one? And the problem is there isn’t one. However, the

claim is that somehow they are trying to say that there is a new

job created because you can install the low-flow toilet instead of the

old one.

For a nonconstruction example, I would hope we could all agree

that the skills necessary to drive an electric car are the same skills

necessary to drive the largest SUV. The same driver can operate

either vehicle just as the same plumber could install either toilet.

The difference is in the product and not the operator. However, a

great deal of effort and tax dollars have gone to the purpose of convincing the public that the plumber who installs a low-flow toilet

should now be called a green collar plumber, and that the new

label should count as a new job. This kind of thing makes those of
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us in construction wonder where somebody would come up with

that idea.

There is something important about the new label that I did not

understand at first. If the new label is more than just a political

talking point, but is actually a formal, new, capital O ‘‘Occupation

Title’’ per the U.S. Department of Labor, then a new problem is

created. When a new occupation is designated for the construction

industry, a new set of standards is developed. In addition to the

antiquated and complex determination of a prevailing wage, a new

apprenticeship training standard is established, even though in

this case the only difference is in nomenclature, not in skill set.

With that understanding, I will relate how this program unfolded

in the District of Columbia. On October 4, 2007, I attended a meeting in the D.C. Department of Employment Services. The purpose

of the meeting was to discuss the rollout of the Green Collar Jobs

initiative. The meeting was basically handled by the staff from the

Center for American Progress. The handout we received is attached

to this document. I kept it because it laid out the goals of their program very clearly. It even included, for the first time I had ever

received one from a D.C.-based meeting, a bar chart schedule detailing new mandatory apprenticeships that will be required to

work on any project covered by the then brand-new at that time

D.C. Green Building Act.

This proposal was a great concern to me because it took my company 26 years to get our apprenticeship program passed by the

D.C. Apprenticeship Council. In fact, the only reason we were finally accepted was because the Apprenticeship Council at that

point had its first and only nonunion member. Union control over

apprenticeship boards is a common roadblock for the 87 percent of

construction workers who have chosen the merit shop over unions.

So when a new occupation gets its own apprenticeship training

standards, the participating employers must apply to have their

program accepted. Having spent the better part of three decades

getting our current program accepted, we were not looking forward

to going through the whole process again.

In the District, there is a local hiring ordinance known as First

Source, which includes mandatory registered apprenticeship participation. First Source only applies to those projects that receive

a certain level of assistance from the District Government. What is

shown in this handout is that the advocates were planning to take

the First Source mandatory apprenticeship concept to a new level.

The inset here from the project schedule is taken from that handout. The advocates were planning to make new green collar apprenticeship mandates apply to every project covered by the new D.C.

Green Building Act. Unfortunately, the District of Columbia Green

Building Act actually covers every brick and stick, public or private, inside the city limits of Washington, D.C. And we were basically looking at being barred from working inside the District.

Thank you.

Mr. JORDAN. Thank you, Mr. McMahon.

[The prepared statement of Mr. McMahon follows:]
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Mr. JORDAN. We appreciate everyone’s testimony.

Mr. Friedman and Mr. Lewis, based on your testimony, it looks

like both this weatherization program and the Green Jobs training

program are, by, I guess, anyone’s conclusion, just a complete failure. And I want to start with you, Mr. Lewis, and walk through

this. Based on your testimony, I think I got the numbers right,

$490 million is out the door, but only $163 million has been spent.

Is that accurate?

Mr. LEWIS. Correct. That was as of June 30.

Mr. JORDAN. Okay. And how many of the $163, $162.8, $163 million spent, how many people have been trained?

Mr. LEWIS. Completed training, 26,000 people.

Mr. JORDAN. And how many now have a job that—how many

have been successful, been trained, and actually are working in

this area and have a job for any length of time, let’s say 6 months?

Mr. LEWIS. Of the 26,000, about 8,000 people were placed into a

job.

Mr. JORDAN. Do you know the math on that? So we have spent

$163 million and trained 20-some thousand; only 8,000 have actually received a job. Do you know how much we are spending per

person?

Mr. LEWIS. I didn’t. I had not calculated that.

Mr. JORDAN. Several thousand dollars probably, right?

Mr. LEWIS. Yes.

Mr. JORDAN. Maybe even close to—I mean, maybe approaching—

well, it wouldn’t be quite 100,000, but lots of money spent per job.

Do you see any way—in fact, what were the targets that the Department of Energy had laid out?

Mr. LEWIS. Department of Labor.

Mr. JORDAN. Department of Labor, I am sorry.

Mr. LEWIS. The total grants added up to a plan to train about

97,000 people. We are at 26,000 had been trained at this point. I

do believe at the end of June there were around 20,000 people that

were in the program.

Mr. JORDAN. All right. Do we know anything about the folks in

this program? Have they been laid off? Are they on unemployment?

What do we know about the people in the program? Do we know?

Mr. LEWIS. Some of the people in the program were unemployed,

although there were—some of the grants were also designed to target incumbent workers, so workers who were already employed,

but wanted to upgrade their skills to qualify for a green job or to

maintain a job.

Mr. JORDAN. Okay. And so I guess there are two perspectives to

look at. You have several thousand people who have been trained.

Some of them may have been receiving some kind of benefit from

the taxpayer. Now the taxpayer is helping them get trained. So

they could be receiving unemployment and getting these additional

dollars spent. Most of them are not getting a job. So we’ve got the

harm to the taxpayer, but, frankly, also the harm to the individual

who went through this training and has maybe not a whole lot to

show for it.

Mr. LEWIS. If we have trained them in something that there is

not a job for, then, yes, we are not doing them the best benefit.
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Mr. JORDAN. Do you think there is any way we can recover—you said $490 million out the door, but only $163 million spent. Is there

any way we can recover the additional over $200-some million?

Mr. LEWIS. Of course, those numbers were as of June. So this

quarter, which we don’t have the reports in yet, there would be

more funding spent. I don’t know how much.

Mr. JORDAN. Isn’t there at some point when you say this program is not working? This actually reminds me of another program

we have had hearings on, the HAMP program, which was designed

to help 4 million homeowners stay in their homes and helped a few

thousand. Lots of money out the door, but lots of money hasn’t. So

is there any way you think we can get the money back, not do any

more harm to people, put them in training that is not going to benefit them, and actually get the money back for the taxpayer?

Mr. LEWIS. Yeah. And that is what we have asked the Department to do, to look at how much at this point has not been spent.

And if it isn’t going to be——

Mr. JORDAN. So is it—the inspector general of the Department,

is your recommendation that we stop the program?

Mr. LEWIS. I would want to have more information from the Department.

Mr. JORDAN. How much more do you need? When you look at

these numbers and how bad they are, how much more do you need

to say this is just not working?

Mr. LEWIS. Well, I don’t know. You know, I know there is 20,000

people in the mill at the end of June. You know, whether these

numbers are going to pick up, there is something we haven’t seen,

I can’t say.

Mr. JORDAN. I mean, at some point we say how much longer do

we give——

Mr. LEWIS. But the placement numbers are very far behind.

Mr. JORDAN. Yeah, very bad. And is there ever a chance to catch

up to the targets they said they were going to hit?

Mr. LEWIS. They could catch up to their targets for serving. They

would have to make a significant increase to catch up with their

placement targets.

Mr. JORDAN. Exactly.

Mr. Friedman, real quickly, because I have about 40 seconds

here, the weatherization program, you mentioned, I think, in your

testimony, if I got it right, 9 of 17 homes you visited—was this

homes or commercial?

Mr. FRIEDMAN. Homes.

Mr. JORDAN. Okay. So homes you visited did not pass inspection.

Mr. FRIEDMAN. That is correct.

Mr. JORDAN. How were these 17—did you select them, did the

Department of Energy tell you? How were these 17 selected?

Mr. FRIEDMAN. They were not selected by the Department of Energy. We don’t work that way, Mr. Chairman.

Mr. JORDAN. Okay. You just randomly picked them or——

Mr. FRIEDMAN. They were picked in conjunction with the States

in some cases. This is one example. There are other examples in

other jurisdictions of rejection rates because of inadequate work

and poor quality work.

Mr. JORDAN. But based on your sample, over half——
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Mr. FRIEDMAN. That is correct.

Mr. JORDAN [continuing]. Over half the homes didn’t meet the requirements.

Mr. FRIEDMAN. In that jurisdiction, that’s correct.

Mr. JORDAN. So I want to ask you the same question I asked Mr.

Lewis: Is this weatherization program, based upon what you have

seen out there, over half the homes not meeting the criteria that

is outlined and meeting the standard, is this a program we should

end?

Mr. FRIEDMAN. Mr. Chairman, that is a long—requires an extensive answer. So give me a minute or two, if you don’t mind. This

program has been in effect since the mid-1970’s. The funding, on

an annualized basis for the last several years, has been about $400

million a year.

Mr. JORDAN. It seems to me it doesn’t matter how long it has

been in existence. If it is bad, it is bad, and it should have ended

a long time ago. Maybe that is a reason that—but that shouldn’t

prohibit us from doing the right thing and ending it if it’s that bad.

Mr. FRIEDMAN. Absolutely. And I am not suggesting that is the

case. What I am suggesting is the fact that the program has a long

history, it is a mixed bag. I wouldn’t say it is a total failure. There

have been some successes, a number of successes. The Department

reports that over 500,000 homes have been weatherized around the

Nation. So there have been some successes, there have been some

failures. I think—I would suggest that we fix it, not necessarily end

it.

Mr. JORDAN. Okay. Not a total failure, just a failure in a lot of

ways.

With that, I will yield to my friend from Ohio, the gentleman Mr.

Kucinich.

Mr. KUCINICH. Mr. Friedman, you are not recommending,

though, that the U.S. Government suspend all weatherization programs; is that correct?

Mr. FRIEDMAN. That’s correct.

Mr. KUCINICH. And this recent audit was 9 of 17 weatherized

homes visited—that were visited failed inspections because of substandard workmanship. You are not concluding, based on that, that

all weatherization programs don’t work; is that right?

Mr. FRIEDMAN. That’s correct. But, Mr. Kucinich, let me put this

in some perspective. We visited 10 or 20 States around the Nation,

and this was reflective of one particular jurisdiction, the work of

one particular community action organization. There were problems in a number of jurisdictions that need to be corrected if the

program is going to be continued. The purpose of—what we were

trying to achieve is a sort of a lessons learned. Here is what has

gone wrong; here is what needs to be corrected if the political judgment is to continue this program going forward.

Mr. KUCINICH. Let’s look at this. I mean, who uses weatherization programs? Primarily lower-income people. So we don’t want to

be in a position as a subcommittee in recommending that lower-income people don’t get the help that they need. We want to do everything we can to lower their energy costs. So I think that this

subcommittee has to be very, very careful about drawing any

sweeping conclusions about failures that may exist in some areas.
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And I will certainly yield to my friend.

Mr. JORDAN. I think the gentleman makes a good point, but we

certainly don’t want to, whether it is a green jobs training program

or a weatherization program, have a program that doesn’t work; on

one hand gives peoples false hope, on the other hand doesn’t give

them the standard that they are entitled to get if we are going to

have the program.

Mr. KUCINICH. You and I are 100 percent in concurrence on saying that if Federal dollars are being spent, we expect the workmanship to be good. That is one of the reasons why I support DavisBacon requirements. It is a workmanship issue.

And so I think that, you know, we are on the threshold of another winter. It snowed here last weekend. Temperatures are dropping. There is poor people shivering in their homes. We don’t want

to tell them that they are not going to have access to a weatherization program. I just want to be very careful about that.

On the issue of workmanship, though, 100 percent in agreement

with you. And we will get Mr. Friedman’s help in how we tighten

that up.

Now, Mr. Kats, in the time that I have remaining, you know,

there is an assertion being made here that somehow this green energy and the potential for profit in it is some kind of a myth. You

are an investor in this, right? Isn’t this your background?

Mr. KATS. Yes, that’s correct.

Mr. KUCINICH. I mean, can investors make money investing in

green energy or not?

Mr. KATS. Yes, they can. And——

Mr. KUCINICH. Do they?

Mr. KATS. Yes, they do. There have been an increasing number

of IPOs and sales to large corporates from firms that we have invested in. I am on the board of Tendril, for example, which is a

smart grid company that has benefited from ARRA funding. Beginning last year they were in 100,000 homes, end this year it will be

4.2 million homes. We expect to get a 10X return on that. Some

companies we have——

Mr. KUCINICH. You want to explain that for the uninitiated, a

10X return?

Mr. KATS. So investments are made in the hope that we are

going to make money. That doesn’t always happen. Part of the

portfolio is expected to not perform well, and others are expected

to perform well. In the case of clean energy, we are seeing more

and more companies that are performing well over time. And as

they get purchased, or as they go public, the investors are returned

money. And the expectation is that the money that they receive

back exceeds the money they put in.

Mr. KUCINICH. Let me ask you this, the Department of Defense

is spending a lot of money on green energy research, is it not.

Mr. KATS. Yes.

Mr. KUCINICH. Why?

Mr. KATS. They believe it reduces the cost for delivering support

services in the field. They believe it reduces adverse security concerns. They believe it strengthens the military. They believe that

clean energy is a more cost-effective way of delivering their obligation.
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Mr. KUCINICH. Have you worked with people in the Department

of Defense on any of these energy issues?

Mr. KATS. Yes, I have. They’re very excited about it. They think

that it strengthens security in a lot of different ways, and on a

cost-effectiveness basis, is a smart investment strategy.

Mr. KUCINICH. And I think it would be interesting for us to have

a hearing just with the Department of Defense on this issue because what we’re seeing is that those people who are inevitably

charged to intervene on energy-related issues, with the geopolitics

being what they are, are themselves cognizant of the imperative of

moving toward green energy, and if the institution that drives one

of the largest parts of the Federal Government is showing an interest in green energy, I think that not only should this committee

pay attention to that, but I also think that Wall Street ought to be

paying attention to that as well.

Thank you, Mr. Kats. Thank you, Mr. Chairman.

Mr. JORDAN. I thank the gentleman. Just one followup question

if I could with Mr. Friedman.

Half of the homes that you looked at that did not meet the standard, do you know who did the work, was it a union contractor or

nonunion contractor, do you know?

Mr. FRIEDMAN. Well, Davis-Bacon—I don’t know in those particular instances. Davis-Bacon, for the first time in its 35- or 40-

year history was introduced to the weatherization program as a result of the operation of the Recovery Act.

Mr. JORDAN. So it is likely—we were talking about union contractors doing this work?

Mr. FRIEDMAN. I don’t know. I can’t answer that question.

Mr. JORDAN. But what you’re saying, Davis-Bacon is being applied now, right, with the stimulus? It’s a requirement now, correct?

Mr. FRIEDMAN. I apologize, let me hear—I missed your statement. Go ahead, please.

Mr. JORDAN. Davis-Bacon is now required?

Mr. FRIEDMAN. Correct.

Mr. JORDAN. You’re charged with looking at stimulus dollars out

the door?

Mr. FRIEDMAN. Correct.

Mr. JORDAN. Your testimony was half the work done was not to

standard, 9 out of 17?

Mr. FRIEDMAN. Correct.

Mr. JORDAN. And so is it likely to conclude who did the work?

Mr. FRIEDMAN. I can’t make that conclusion because it could

have people who were nonunion who were being paid Davis-Bacon

wages.

Mr. KUCINICH. Would my friend yield?

Mr. JORDAN. Would be happy to yield.

Mr. KUCINICH. Since we’re both from Ohio, I bet you a bag of

Buckeyes that they weren’t union contractors. Thank you.

Mr. JORDAN. I now yield to Dr. DesJarlais, gentleman from Tennessee.

Mr. DESJARLAIS. Thank you, Mr. Chairman. I guess just to kind

of bring things back in focus, we’re here today as a subcommittee

of oversight and reform to take a look at stimulus oversight in this
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case, and the hearing, of course, is entitled The Green Energy Debacle: Where has all the taxpayer money gone? And that’s really

why we’re here. We’re all here to make sure that all the good taxpayers are getting the best for their tax dollars, and I think, clearly, the stimulus program has not lived up to its expectation.

So, Mr. Friedman, just to kind of maybe try to put a cap on the

weatherization issue, we’ve been beating that horse here for a

while. I think about $5 billion of the stimulus money was set aside

for weatherization projects for paid contractors and nonprofit

groups to make the homes of low-income Americans more energy

efficient.

Being from Tennessee, I think that the program has revealed

countless instances of waste, fraud, and abuse, and in an audit in

Tennessee, the Inspector General found that 246 energy measures

installed in 41 homes revealed only a third were shown to meet Department-directed minimum energy savings-to-investment ratios.

So your office has done investigations of stimulus funded weatherization projects in many different States. Tennessee may be one,

but what are some of the most egregious examples of the waste

your office has uncovered?

Mr. FRIEDMAN. Well, first, mischarging, that is, charging for

work that was never accomplished. These are some of the schemes

that we are currently investigating and have investigated. Second,

paying premiums for products that could be purchased at lower

cost. Third is charging for work that was never done in general.

Fourth is abusing the priority sequence of those who could or

should be receiving, were eligible to receive the weatherization

work. And those are four or five of the most significant finds, and

of course, the whole question of substandard, the quality of work

issue. In some cases, it was actually life threatening.

Mr. DESJARLAIS. Is it true that weatherization funds can be used

to purchase brand new refrigerators or air conditioners?

Mr. FRIEDMAN. I don’t want to give you an inaccurate answer.

Certainly, furnaces would be appropriate. I don’t know about—did

you say refrigerators?

Mr. DESJARLAIS. Refrigerators, air conditioning.

Mr. FRIEDMAN. There are programs that will give premiums

other than weatherization for purchasing new appliances that are

energy efficient. I don’t believe it was covered under the weatherization program.

Mr. DESJARLAIS. I’m not sure that would be found anywhere in

the Constitution, that that would be a right, but rumor has it that

is the case. How much weatherization money do you think we could

recover at this point of the $5 billion?

Mr. FRIEDMAN. I would suspect that there would be very little

that’s recoverable at this point.

Mr. DESJARLAIS. Okay. Changing gears just a little bit, I think

there was an article in maybe The Washington Post this morning,

but were the State and local governments ready to receive the massive amounts of money that were allocated to them from the Department of Energy as part of the stimulus?

Mr. FRIEDMAN. Unfortunately, they were not and that was an

issue that I think was predictable, and we, in fact, did anticipate

that that would be a problem.
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Mr. DESJARLAIS. So you don’t think it was very wise to send millions of dollars to local governments who were in the process of laying off workers because of the recession, they couldn’t handle this

influx of money, they weren’t ready and that contributed to the

waste?

Mr. FRIEDMAN. Well, not meaning to make a joke out of a very

serious subject, but it’s been equated to attaching a long hose to

a fire hydrant, that the infrastructure—both at the Federal, State,

and local level simply was not there to accept the burden.

Mr. DESJARLAIS. Okay. So you think that that was a great contributor to the inefficiencies and the waste that the office has seen?

Mr. FRIEDMAN. Certainly.

Mr. DESJARLAIS. Okay. Thank you. Mr. Montgomery, you state

in your testimony the mission of the Department of Energy and the

purpose of the Recovery Act were not consistent. Could you please

expand on this point for us?

Mr. MONTGOMERY. Yes. The requirements of an effective energy

technology development program are essentially stable long-term

funding. It also requires a careful selection process, especially if the

money is being put at the R&D stage, and that involves proposals.

It involves peer review. It involves the formation of a program in

which the R&D stage is set.

None of that fits with the classic prescription for stimulus, which

is get the money in fast and turn it off quickly when it’s no longer

needed. That’s exactly the opposite of what the Department of Energy needs, and it’s the way we have killed any number of useful

programs in the past. For example, the Solar Energy Initiative, I

remember back in the 1970’s and early 1980’s, was cut off just as

it was beginning to get going somewhere, and in terms of production and bringing costs down.

Mr. DESJARLAIS. Based on your decades of experience in energy

policy, does the entire concept of promoting green jobs make economic sense?

Mr. MONTGOMERY. Not through programs like the Recovery Act.

I would say that green jobs are a solution in search of a problem.

It’s not a way of dealing with climate change. It is not a way of

dealing with the government’s responsibilities for R&D. It’s not a

way of dealing with the other environmental issues that we face,

and it is certainly not a necessity for getting the U.S. economy to

grow. It’s something that may or may not happen if we put policies

in place for those other objectives, but it is not a program that has

policies significant to itself.

Mr. DESJARLAIS. Okay. And I’m out of time. Thank you, gentlemen.

Mr. JORDAN. I thank the gentleman from Tennessee. Will now

recognize the vice chairman, followed by Mr. Kelly and Mr. Labrador—oh, excuse me. Mr. Kelly is up first.

Mr. KELLY. Thank you, Mr. Chairman. Mr. Montgomery or Doctor, let’s stay with you.

I know in the opening statements we talked about one of the

problems with our dependency on oil is that there’s also a military

investment made. If we were to do it domestically, if we had a really aggressive domestic energy policy, where we actually use our

own resources—we know that a third of the world’s coal is under-
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neath our surface. We know that in Western Pennsylvania it’s now

being called the Saudi Arabia of natural gas. We have oil onshore,

oil offshore. We’ve done an awful lot to hinder that development.

And certainly, I listened to John Hoffmeister early in the spring.

He said there’s 2 million jobs, a minimum of 2 million jobs waiting

right now in the energy sector if we were to have an energy policy,

a strategy that was aggressive. And I’m listening to what you’re

saying. So the cost of military, it’s true we do spend a lot of money

in the military. But we wouldn’t have to do it if we produced it in

our own country. I mean, we wouldn’t be spending petro dollars in

countries whose ultimate goal is to annihilate us and we’re funding

that process.

I have a difficult time when I hear that, yeah, we want jobs, we

want jobs right now, but we keep gaming ourselves, you know, and

this investment that we’ve made—and only in government, by the

way. I come from the private sector, and I love this idea of these

green jobs and you have to go at them, when you don’t have to

worry about a positive return on investment, you can waste a lot

of taxpayer money.

There’s hardworking Americans whose money has been invested

and I keep hearing this, there’s an element of risk. And I understand there’s an element of risk, but when you take hard-earned

American tax dollars, and you throw it at an agenda rather than

at a strategy, and you see the waste, I mean, it must really rankle

somebody like you, your whole life you have watched this happen.

And only in this town, only in this town can you squander money

and not worry about it because there’s an endless supply of it. If

you don’t have enough money for that project, don’t worry, we’ll get

more money. We’ll just raise taxes and we’ll throw some more

money at that and we’ll re-allot money to you.

I think that’s really where we’re at today when we ask about this

money has been wasted. There’s nobody in the private sector that

would continue to squander the capital that we’re squandering

right now on a reelection agenda and not on an energy policy that

makes sense for America.

And I want to hear words. Would it be possible, without government subsidies, for these green jobs to go forward? Because you

know what, I’ll tell you what, in my district, one of the local business owners, he has a marquee out in front of his place. He puts

down ‘‘green jobs equals red ink.’’ And I tell you what, I think that

guy has a better feel for what’s going on about policies right now

than a lot of folks inside this Beltway.

So I mean, really without the subsidies, we talk about—well,

yeah, General Motors is willing to invest in the Volt. Well, no kidding. They’ve got a safety net underneath them. I mean marketdriven means you can drive it off the lot, somebody wants to buy

it, not you’re going to throw somebody $7,500 of taxpayer money,

Federal money, and $3,500 of Pennsylvania money for somebody to

drive that car off the lot.

And we’re already seeing, by the way, and I know this because

I’m a Chevy dealer, this great idea that we’re going to produce

16,000 of these Volts this year. Well, we’re selling about 500 a

month. You do the math. There’s 10,000 Volts that are going to
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have no home to go to. Being a dealer, I know whose driveway they

end up in, or whose lot they end up in.

Just tell me, without the government subsidies, who would venture into this wonderland, and I mean wonderland, wondering if

they could possibly work if it was their own money?

Mr. MONTGOMERY. Thank you, Mr. Kelly. I think I heard three

questions. Let me go back to the first one which was——

Mr. KELLY. More frustrations than questions, I’ve got to tell you.

Mr. MONTGOMERY. Thank you. No, I think there were—well,

there were three topics I would like to talk about.

The first one is energy security. Most of the green jobs that we

are hearing about now are either in the weatherization area, which

we’ve heard talked about, classifying construction—certain construction jobs as green, or they have to deal with generating electricity because in the short term, the technologies that we are deploying are largely electricity-related technologies. And the electricity technologies are already being supported by things like the

State level renewable portfolio standards, and requirements of the

various public accounts, California’s requirements for renewable

energy, and that’s making a market. Again, it’s created by government, but it’s created by regulation.

The opportunities in the near term for actually changing our oil

imports are very, very limited on the green technology side because

biofuels are going to be a long time to develop. They require serious

breakthroughs in order to accomplish something.

Electric vehicles I think you’ve described very accurately, that

the market just does not exist for electric vehicles with the current

price of electricity and the current price of those vehicles, except for

people to whom they’re a very expensive toy or people who will be

given them for free.

So what are we going to do about energy security? Green jobs

program is not affecting energy security because if you define energy security as either reducing the amount of world oil supply

that’s produced by our enemies or reducing U.S. oil imports, their

production is probably the most rapid way that we can do something about it. The transportation sector is going to be very hard

to get off oil, and electricity doesn’t consume oil, so putting money

into electric technologies doesn’t affect our oil balance at all.

As far as government subsidies go, yes, I think that if—once Congress makes—made the decision that there was not going to be a

price of carbon in the market, that there was not going to be a cap

and trade program or a carbon tax, that means that most—that

any technology that was depending on that, any technology that’s

going to produce renewable energy at a cost that’s 25 percent higher than burning coal is not going to have a market beyond what’s

created by the State renewable portfolio standards, which gets into

a third and important issue, I think, and maybe you will let this

have some debate among the panelists.

But it’s that Mr. Kats mentioned that investors can make money

on clean energy. Well, certainly they can if they are selling into,

you know, wind turbines into a market where the RPS, the renewable portfolio standard, says utilities must buy wind. Well, investors are going to make money selling wind. Actually most of the
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wind is—there’s another trade issue about where the wind turbines

are being purchased.

My question is, if a venture that was funded largely by private

equity and made it 10 times return for its private equity investors

when it was sold to a big company, why did it need Recovery Act

funding? It seems to me that we are in a situation where if you—

if you—if you can make a profit on doing something through private equity, you don’t need the Recovery Act funding, and if there’s

not a market for the product, the Recovery Act funding is not going

to be enough to create a sustained industry.

Mr. JORDAN. Thank you, doctor. Now recognize vice chairman.

Ms. BUERKLE. Thank you, Mr. Chairman, and thank you to our

panelists for being here this morning.

Now, many of us came to Congress in part of the 2010 elections

because of the economy, because of jobs, because of the state of

what was going on in our country, and this notion that the government can spend money to create jobs, and the stimulus which was

touted as you know never going to get unemployment above 8 percent, we see that we’ve now got unemployment and it’s been there

for 24-plus months at 9 percent or hovering around 9 percent. So

the Keynesian economics didn’t work.

Now, we’re being pushed another stimulus, well, we need an additional stimulus because the first stimulus wasn’t enough. Now

we’re going to have a second stimulus, and we’re going to spend

money. And when I’m out in the district and I hear from some of

the supporters of this notion, they say, well, it creates jobs and we

want to create jobs. And we all want to create jobs. We want to get

this economy back on track, but the government can’t do that. It’s

the private sector’s job. The private sector can do it.

So we look at the stimulus, and my question is for Mr. Friedman.

All of these jobs that were created, these green jobs, what happens

when this money is spent? What happens to those jobs?

Mr. FRIEDMAN. Ms. Buerkle, the Department’s $35 billion plus

its loan guarantee authority that came with the Recovery Act,

there are a lot of different ways in which it was spent, but let me

give you one example.

As I reported in my testimony, the Department used a substantial amount of money to advance its environmental remediation

program, remnants of the Manhattan Project at sites around the

country, and the money has dried up. The money has come to an

end, and between 4,000 and 5,000 people will be losing their jobs

between now and the end of December of this year.

So you have to look at each bucket somewhat separately, and

certainly in the case of the money that was spent for creation of

these jobs, they come to an end, and which is unfortunate for those

individuals.

Ms. BUERKLE. And so the arguments that we hear, well, let’s

spend this money and create jobs, these are short-term jobs, and

we will far better served to get a good, solid transportation bill in

place which would have shovel-ready jobs eventually, and those

jobs and the funding would be available rather than this temporary

spending.

Mr. Friedman, I just want to talk a little bit about 1705 loan program, and my question is—and I realize you’re going to be looking
79

into this or you are looking into it and you may not be able to comment on certain portions of it. And this kind of goes to what Mr.

Kelly was talking about, this notion that when the government is

funding something, it’s an endless pit, you know, there’s just more

money—if it doesn’t work, we’ll just pour more money into it.

When a program like Solyndra, when you identify that there’s

such a significant loss, is anything done to make a change midway

through that program and say this isn’t working and we need to

restructure this program so it does work, so we’re not throwing

good money after bad, and we’re not wasting American taxpayers’

money?

Mr. FRIEDMAN. Well, Ms. Buerkle, I can talk about the audit

work that we’ve done with regard to the loan guarantee program.

The most recent report was issued in March of this year of which

we identified problems in the way the Department documented, the

way it addressed risks, and mitigated those risks. I can certainly

talk about that, but in terms of the specific case that you’re referring to, we have acknowledged, as has the FBI and the Department

of the Justice, that we have an ongoing criminal investigation, and

I can’t comment beyond that.

Ms. BUERKLE. And last, I have a few seconds left here, aside

from Solyndra, is your office concerned that there will be other

losses with programs where we’ve given money to them and that

the government, aka, the American taxpayers, will also sustain

losses?

Mr. FRIEDMAN. Well, I—at this point I’m not in a position to—

I have not evaluated every loan guarantee in the portfolio, so I’m

not in a position to get—to project or to anticipate what may occur

or may not occur. So I can’t give you really a thorough answer.

Ms. BUERKLE. Thank you very much. Mr. Chairman, I yield back.

Mr. JORDAN. I thank the gentlelady. I now recognize the gentleman from Baltimore, ranking member of the full committee, Mr.

Cummings, and then Mr. Labrador.

Mr. CUMMINGS. Mr. Friedman, one of the things you said that

was very interesting is that the—that part of the problem was that

when these funds went to the States that, in some instances, the

employees who were responsible for dealing with these had furloughs were an issue? Sir?

Mr. FRIEDMAN. Yes.

Mr. CUMMINGS. And was that—did you find that the case in

many instances?

Mr. FRIEDMAN. There were several jurisdictions, States in which

that was the case, Mr. Cummings, and it was there’s an irony there

which is really unfortunate, which is that here we come to the

States with a program that is designed in part to stimulate the

economy and to create jobs, and yet, the very people who would administer the program and apply the mechanics to the program,

make it work, were furloughed because of the State—the condition

of the State’s economy. It is an unfortunate irony if that’s the right

word for it.

Mr. CUMMINGS. And the—and to get these—I mean, it sounds

like, and I think Mr. Lewis said something to this effect, also—it

seems as if there was an effort to get the programs up and running

in a certain amount of time, and in an effort to do that, a lot of
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times all the mechanisms weren’t in place to effectively accomplish

that. Would be that be a fair statement, Mr. Lewis?

Mr. LEWIS. Certainly, one of the premises of the Recovery Act

was to get money out there quickly. There are a lot of programs—

we did have a lot of new grantees that had not applied for the program before.

Mr. CUMMINGS. And the DOE $535 million loan guarantee to

Solyndra and the subsequent bankruptcy are well-known, and on

Monday we learned that Beacon Power Corporation, which received

$43 million in stimulus funds through the loan guarantee program,

filed for bankruptcy on October 30th. Now, Mr. Friedman, isn’t it

true that DOE’S loan programs office was specifically designed to

provide funding for companies that because of the type of funding

find it difficult to obtain funding from the private sector? Is that

an accurate statement?

Mr. FRIEDMAN. Earlier, I think before you returned to the room,

I indicated I can’t, because of the criminal investigation, discuss

particular——

Mr. CUMMINGS. I’m sorry.

Mr. FRIEDMAN. In terms of the generic question, you’re absolutely correct. That was the reason for the program, and that was

the reason that the office was created as well.

Mr. CUMMINGS. And isn’t it true that these companies are generally pursuing—I think this would be in your purview—pursuing

cutting-edge technology from battery production to solar to even

nuclear power? Is that an accurate statement?

Mr. FRIEDMAN. I believe that’s accurate, yes.

Mr. CUMMINGS. Isn’t it true that the list of companies funded

through DOE’s office involves almost 50 companies who have operations throughout the United States and, therefore, when we see

some failures, wouldn’t that be expected given the high-risk nature

of what they do?

Mr. FRIEDMAN. I’m a little reluctant to get into the question of

risk and outcomes, but obviously there is a risk, otherwise these

firms would not need government—or the government loan guarantee.

Mr. CUMMINGS. And when you look back on what you found,

what were your recommendations?

Mr. FRIEDMAN. Well, we recommended with regard to the

March—the third of our reports, which was March 2011, we recommended that the Department develop a much more robust system for documenting how it evaluates the risks with each individual applicant and how those risks are mitigated.

Mr. CUMMINGS. Did this funding come under Delaney, Mr.

Delaney.

Mr. FRIEDMAN. I’m sorry?

Mr. CUMMINGS. Did this money come under Mr. Delaney’s

watch?

Mr. FRIEDMAN. Well, I am a member of the Recovery Act Accountability and Transparency Board so I guess arguably all the

Recovery Act money was within the purview of the board and Mr.

Delaney, so the answer I suppose is yes, but this is a Department

of Energy program outside of that.
81

Mr. CUMMINGS. I got you. Well, let me tell you why I ask that.

One of the things that he said was that he was trying to put in

mechanisms by which he would prevent these things from happening, and I was just wondering were there prevention efforts

here, and if so, why did we have so many problems?

Mr. FRIEDMAN. Is that directed to me?

Mr. CUMMINGS. Yes.

Mr. FRIEDMAN. Certainly, there was a system of due diligence

that was exercised by the Department. Was it adequate? You know,

that remains to be seen, and the due diligence effort, at least presumably, would have been to identify the risks, to determine what

mitigating circumstances or what mitigating factors are or controls

can be put in place, was the risk—were the risks tolerable and how

you proceed from there. So, yes, there was a due diligence process

in place. The adequacy I’m not sure I can comment on.

Mr. CUMMINGS. Thank you, Mr. Chairman.

Mr. KELLY [presiding]. I now recognize Mr. Labrador.

Mr. LABRADOR. Mr. Chairman, I yield my time to you.

Mr. KELLY. Thank you, sir.

Mr. McMahon, I really—these hearings are a great value, I

think, for the American people because it’s the only time they really get to see how their money is being spent. I look at this as more

of a stewardship than anything else. I know it is an elected office,

but really, we’re stewards of American taxpayer money and we

have to be responsible to them for the way this money is being

spent. So I’ve been here 9 months, but I come from the private sector as you do.

Can you discuss a little bit these green jobs? We found out in a

prior hearing that a bus driver who’s driving a diesel bus, when he

switches over to an alternative energy bus now becomes—we’ve

created a green job. So the fact that the American public gets

gamed so many times with these marketing efforts to take whatever it is that we’re trying to achieve, and I really struggle sometimes to go back home and tell people in northwest Pennsylvania

we’re spending your money the right way. They say, really, we

don’t see it that way. So tell me, again, some of the green jobs that

you see in your construction business.

Mr. MCMAHON. It’s true. It’s quite fascinating, because actually

it’s all the same jobs that currently exist. The goal here is to create

a new label. It is—it’s just a misnomer to think that somebody who

works—who cuts wood from the sustainable forest has any skill

that’s any different from somebody who cuts wood that doesn’t

come from one. But if you were to ask the Department of Labor,

this current Department of Labor, that is a new skill-set somehow.

It literally is—we’ve had carpenters for a long time. We’ve had

sheet metal workers, reinforcing steel people that maybe they turn

bolts to erect a wind turbine, but it’s no different than building a

coal-fired furnace a couple of years ago, literally.

And you will have people, you know, we’ve done—LEED standards was started in early 1990’s here in D.C. Actually. I actually

worked for the guy who helped write them originally back in the

early nineties, and we’ve done probably north of a hundred LEEDcertified buildings, several hundred million square feet, just
82

through the company ourselves, but there’s no skill-set difference

between these two people.

The idea here really, what they’re trying to do in the District is

really quite nefarious, and it’s nice that they just kind of laid it all

out here. They’re trying to take a zoning law, the D.C. Green

Building Act, and claim that somehow there was a new skill-set required to actually work on things covered that were considered

green. Therefore, create this place where they create a new apprenticeship standard.

I mean, I know that we as a company and every other merit shop

contractor in the District area, we would all have had our—you

know, literally decades of apprenticeship standards trying to get

them passed, we’d have them tossed, and therefore, we’d be barred,

and this wasn’t the only jurisdiction that that was attempted.

Texas, northern Virginia, some of those places where attempting to

use a zoning bill, claim that somehow the skill-set required a new

apprenticeship standard and then people would have to recertify

their program.

If I could just quickly answer one quick question, I heard the

ranking member discussing about Davis-Bacon wages. Back in

Title X of the Energy Act that passed at the end of 2007, there was

something included called the Clinton-Sanders amendment. It altered the Workforce Investment Act. For the first time, you were

required to actually have a union as a partner in order to qualify

for any training grant funds.

Furthermore, the union, in a particular jurisdiction or covered by

a particular trade, would have effectively veto power over any

grant money that was expended. So it is in the law that—they altered the Workforce Investment Act, which up to this point had

never considered union or nonunion affiliation as far as grant funding. This actually requires that you have a union as a partner in

order to qualify for the grant funding under the Green Jobs Act

that the Inspector General is telling us about.

Mr. KELLY. Thank you. And I do think, again, this is a forum for

people like you coming out of the private sector, getting a chance

to actually speak to the American people.

Mr. Lewis, Department of Labor, tell me some of these jobs that

we were training people for, the skills that we’re training them in?

Mr. LEWIS. Well, some of them are very technical. They are very

technical skills related to the green energy industry, but some are,

as you’ve heard this morning, they’re jobs that can be just as easily

applied to other industries. So they could be teaching people to

weld for a green manufacturing entity, but they could use that

skill-set elsewhere.

Our real concern, and the results of this job at this point is still

interim, is that, you know, whether you call it a green job or not,

we simply don’t see the people getting a job, any job. The rate of

placement to what they had intended for this program, and compared to our other programs, is significantly lower.

Mr. KELLY. And I don’t doubt for 1 second the intention, and I

think government does this a lot, that the intentions are always

great. It’s just that I’ve seen much better results coming out of the

private sector, when it’s your own skin in the game and you have

to measure twice and cut once. You know you have that dollar to
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spend one time and that’s your dollar and there’s no backup.

There’s no safety net. So once it’s gone, it’s gone, and I think that’s

the whole purpose of the hearing today.

Every penny we’re talking about comes out of the American taxpayers’ pocket, and not only do they deserve a positive return on

that, they should expect that from us. And when we get to a point

that we can no longer objectively describe where their money went

and that we have to relabel it or game it in order to make a failure

look like it worked, I mean—I would say, Mr. McMahon, you and

I have made many decisions in our life, and we go before the people

that we represent and we say, look, you know, I made a mistake,

I got to tell you, this isn’t working. But we also don’t have the benefit of unlimited sources of revenue, capital, that we don’t have to

collateralize, and I think that’s the danger of these programs.

Well-intentioned or not, we end up in a situation where we continue to throw good money after bad because we can’t stand and

tell people, you know what, it was a bad policy. It was a bad program. And we need to backtrack now.

We have money that’s been appropriated but not yet spent.

There’s got to be a way to pull that money back and put it somewhere where it’s actually going to have a positive effect.

I can say I really appreciate all of you being here today. I know

it’s tough to take time out of your personal lives and come here,

but it’s important for the American people to understand that we

do have an accountability that we must face with them, and if it’s

truly only going to be about reelection, then we shouldn’t run

again. It has to be about actually reforming, what it is that we’re

doing, and if we’re not doing it the right way, stand up and say

we made a mistake and we’re going to change it.

So, again, thank you so much for being here, and at this point,

the hearing is adjourned. Thank you.

[Whereupon, at 11:31 a.m., the subcommittee was adjourned.]

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