NEWS: E&E Daily "House Republicans Cast Doubts on Stimulus Spending"

March 18, 2011

House Republicans took aim at the Department of Energy's stimulus spending yesterday, pointing to its delayed projects and flawed oversight as an example of broader problems with the American Reinvestment and Recovery Act.

DOE has so far spent about $12.4 billion of the $35 billion it received two years ago under the Recovery Act. That money has gone to programs that weatherize homes, clean up former nuclear weapons sites and fund clean energy projects.

Some lawmakers think the money has not been spent quickly enough -- or with the proper controls. The House Energy and Commerce Subcommittee on Oversight and Investigations tackled that issue at yesterday's hearing, though members frequently returned to the ongoing debate over whether the $787 billion stimulus has been successful.

"The whole point of the Democrats' stimulus bill was to spend billions of dollars in the hope that such spending would stimulate the economy and, of course, create jobs," said subcommittee Chairman Cliff Stearns (R-Fla.). "It doesn't appear that this massive increase in spending has done either -- most of the money still hasn't been spent and unemployment still stands at almost 9 percent."

But DOE officials emphasized that the funding has spawned thousands of jobs and jump-started an industry that they hope will provide long-term employment. Democrats also gave examples of successful stimulus dollars; subcommittee ranking member Diana DeGette (D-Colo.), for example, highlighted the weatherization of more than 330,000 homes of low-income families.

"What this does as well as giving jobs to the people involved, is it saves money for those families," she said. The Recovery Act, she added, "already has had a positive impact."

Still, DOE's struggle with the quick influx of cash was recognized on both sides of the aisle. The department's annual budget was $28 billion in 2008; when the Recovery Act passed in 2009, some programs suddenly saw an influx of between 20 percent and 60 percent more funding.

The weatherization program, for example, was forced to rapidly increase the number of homes it renovated. Steve Isakowitz, DOE's chief financial officer, said the program was slow in the beginning so the agency could set up the necessary controls against fraud and waste.

Some Republicans said those delays were an example of too much funding, too fast.

"This overnight infusion of a huge amount of taxpayers' funds has caused a number of problems and concerns of wasteful funding," said Rep. John Sullivan (R-Okla.). "The risk of waste, fraud and abuse increases dramatically whenever there is pressure to spend large amounts of money quickly."

Loan guarantee program scrutinized

In recent months, Republicans have focused attention on DOE's loan guarantee program, which backs investments in renewable energy projects that might otherwise not get private funding. In the past, both Democrats and Republicans have criticized the program for its slow roll-out.

Now conservatives are criticizing the loans themselves. On Tuesday, House Energy and Commerce Chairman Fred Upton (R-Mich.) sent a letter to the Office of Management and Budget requesting information on the agency's review of the loan guarantee that DOE awarded to Solyndra Inc. Solyndra received the program's first-ever loan guarantee in 2009, using the $535 million to help finance the construction of a plant in Fremont, Calif., that would produce solar energy modules.

But the company has struggled, canceling a planned public stock offering in 2009 and announcing a new $75 million loan last month to help restructure its outstanding debts. Solyndra representatives claim the company is growing, however; revenues are expected to reach $250 million in 2011, according to a recent press release.

Rep. Ed Whitfield (R-Ky.) said in an interview yesterday that the Obama administration has "oversold green energy."

"Their policy is they're giving all the money to green energy -- large sums of money to green energy. And some of the companies that received stimulus funds [are] green energy companies that are already out of business," Whitfield said. "So we're writing letters to express our concern about that. And particularly because our baseload is still going to have to be a lot of fossil fuels in the immediate future, and we better start spending some money on clean technology related to that as well."

Subcommittee members alluded to the Solyndra investigation at yesterday's hearing, questioning witnesses on whether it represented an overarching flaw with the loan guarantee program. DOE Inspector General Gregory Friedman and Frank Rusco, director of natural resources and environment at the Government Accountability Office, testified that DOE officials sometimes made loan commitments without first going through the entire "due diligence process."

"There is some concern about if the program were to ramp up the speed of issuing loans -- we would like to see those controls in place," Rusco said. "We're working on our fourth report right now and continue to find issues we're concerned about."

Sullivan pressed Rusco on whether that meant DOE officials were ensuring that the guarantees resulted in improvement to infrastructure and energy efficiency.

"They may be taking steps to do so," Rusco said. "We're not satisfied with the steps, and they have not agreed with most of our recommendations."

"That'd be no?" Sullivan said, adding after Rusco's silence: "Kinda no? Sounds like a no."

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