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Energy Department Grants Made Despite Conflicts, Report Says

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July 26 (Bloomberg) -- A U.S. Energy Department program designed to promote use of alternative fuels for vehicles gave out about $5 million in grants to individuals with conflicts of interest, the agency’s inspector general said.

The department’s Clean Cities program made an award to an individual who in turn gave money to a family member’s company, Rickey Hass, the Energy Department’s deputy inspector general, told a House Science subcommittee in testimony today. In another case, a coalition the government entrusted to distribute federal money gave 40 percent of its available funds to entities associated with board members, Hass said.

The hearing is the latest by House committees looking into the Energy Department’s alternative-energy grant and loan programs following last year’s collapse of solar-panel maker Solyndra LLC. Critics have said the administration was wrong to try to pick winners and losers among emerging energy companies.

“We are spending taxpayers’ money,” said Representative Andy Harris, a Maryland Republican who is chairman of the Energy and Environment Subcommittee. “We should all remember that.”

The Solyndra loan has become a focus on the presidential campaign trail, with Republican challenger Mitt Romney charging that President Barack Obama’s attempts to use government funding to jump-start green-technology industries have been marred by backroom deals with politically connected companies. Solyndra received a $535 million U.S. loan guarantee before going out of business.

The Clean Cities program was given $300 million to distribute to companies and local coalitions through the economic stimulus package Congress approved in 2009.

The Energy Department requires all grant recipients to undergo audits, Kathleen Hogan, the department’s assistant secretary for energy efficiency, told the House subcommittee. If conflicts are substantiated, the department will “take appropriate actions to resolve the issue,” Hogan said.

To contact the reporter on this story: Jeff Plungis in Washington at

To contact the editor responsible for this story: Bernard Kohn at

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