DOE SEcretary Chu Announces Changes to Expedite Economic Recovery Funding
February 20, 2009
Two days after President Obama signed the historic American
Recovery and Reinvestment Act into law, Energy Secretary Steven Chu announced a sweeping reorganization of the Department of Energy's
dispersal of direct loans, loan guarantees and funding contained in
the new recovery legislation. The goal of the restructuring is to
expedite disbursement of money to begin investments in a new energy
economy that will put Americans back to work and create millions of
new jobs.
These changes will bring a new urgency to investments that will
put Americans back to work, reduce our dangerous dependence on foreign
oil, and improve the environment. Secretary Chu said. We need to start
this work in a matter of months, not years - while insisting on the
highest standard of accountability.
By cutting paperwork, processing applications on a rolling basis
and drawing on lessons from the private sector and other agencies, the
Department of Energy will be in a position to:
Begin offering loan guarantees under the Department's previous
loan guarantee program by late April or early May. These offers may
still require recipients to secure their own share of the financing -
similar to earnest money in a home mortgage - or meet other conditions
prior to closing, but DOE will have completed its review. Begin
offering loan guarantees under the new Recovery legislation by early
summer. Again, these offers may still require recipients to secure
their own share of the financing or meet other conditions prior to
closing. Disperse 70 percent of the investment from the American
Recovery and Reinvestment plan by the end of next year.
Since being sworn in, Secretary Chu has been personally reviewing
the Department's process for issuing direct loans, loan guarantees and
other funding to make it faster, simpler and more accountable.
Secretary Chu's reforms to the programs include:
Rolling appraisals of applications - instead of delaying the
consideration of an application until a far off deadline, the
Department will review them when they are submitted so that decisions
can be made more quickly. Streamlining and simplifying loan
application forms and other paperwork. Accelerated loan underwriting
by using outside partners.
In cases where up-front fees may deter companies from applying, the Department
will offer applicants the opportunity to pay the fees as part of the
loan at closing. Further reduction of up front costs by restructuring
credit subsidies so they are paid over the life of the loan.
Additional staff and resources to process applications. Working with
the industry to attract good projects into the loan guarantee program
and helping them navigate the process. A website that will provide
increased transparency in both process and results, as well as
information to help applicants through the process.
Secretary Chu announced that he is naming Matt Rogers as Senior
Advisor to implement these reforms and the investments in the
President's American Recovery and Reinvestment Act. Rogers, formerly a
senior partner of McKinsey and Company, has more than 20 years of
experience in working with the energy industry and has done extensive
work on the economics of addressing the global climate crisis. He
served the Obama Presidential Transition Team in a special effort to
develop opportunities to reduce the cost and increase the use of
renewable energy in federal energy procurement.
The changes announced today by Secretary Chu will affect the Loan
Guarantee Program established by the Energy Policy Act of 2005, the
Advanced Technology Vehicles Manufacturing Loan Program and DOE
funding contained within the President's American Recovery and
Reinvestment Act.
Most of these changes are within the authority of the Secretary
of Energy to make in consultation with the Director of the Office of
Management and Budget. A few will require statutory changes, and the
department will move quickly to work with the House and Senate to make
the necessary adjustments.
Based on detailed analysis of the programs, Secretary Chu is
confident the changes will not introduce additional risk to the loan
process.
Two days after President Obama signed the historic American
Recovery and Reinvestment Act into law, Energy Secretary Steven Chu announced a sweeping reorganization of the Department of Energy's
dispersal of direct loans, loan guarantees and funding contained in
the new recovery legislation. The goal of the restructuring is to
expedite disbursement of money to begin investments in a new energy
economy that will put Americans back to work and create millions of
new jobs.
These changes will bring a new urgency to investments that will
put Americans back to work, reduce our dangerous dependence on foreign
oil, and improve the environment. Secretary Chu said. We need to start
this work in a matter of months, not years - while insisting on the
highest standard of accountability.
By cutting paperwork, processing applications on a rolling basis
and drawing on lessons from the private sector and other agencies, the
Department of Energy will be in a position to:
Begin offering loan guarantees under the Department's previous
loan guarantee program by late April or early May. These offers may
still require recipients to secure their own share of the financing -
similar to earnest money in a home mortgage - or meet other conditions
prior to closing, but DOE will have completed its review. Begin
offering loan guarantees under the new Recovery legislation by early
summer. Again, these offers may still require recipients to secure
their own share of the financing or meet other conditions prior to
closing. Disperse 70 percent of the investment from the American
Recovery and Reinvestment plan by the end of next year.
Since being sworn in, Secretary Chu has been personally reviewing
the Department's process for issuing direct loans, loan guarantees and
other funding to make it faster, simpler and more accountable.
Secretary Chu's reforms to the programs include:
Rolling appraisals of applications - instead of delaying the
consideration of an application until a far off deadline, the
Department will review them when they are submitted so that decisions
can be made more quickly. Streamlining and simplifying loan
application forms and other paperwork. Accelerated loan underwriting
by using outside partners.
In cases where up-front fees may deter companies from applying, the Department
will offer applicants the opportunity to pay the fees as part of the
loan at closing. Further reduction of up front costs by restructuring
credit subsidies so they are paid over the life of the loan.
Additional staff and resources to process applications. Working with
the industry to attract good projects into the loan guarantee program
and helping them navigate the process. A website that will provide
increased transparency in both process and results, as well as
information to help applicants through the process.
Secretary Chu announced that he is naming Matt Rogers as Senior
Advisor to implement these reforms and the investments in the
President's American Recovery and Reinvestment Act. Rogers, formerly a
senior partner of McKinsey and Company, has more than 20 years of
experience in working with the energy industry and has done extensive
work on the economics of addressing the global climate crisis. He
served the Obama Presidential Transition Team in a special effort to
develop opportunities to reduce the cost and increase the use of
renewable energy in federal energy procurement.
The changes announced today by Secretary Chu will affect the Loan
Guarantee Program established by the Energy Policy Act of 2005, the
Advanced Technology Vehicles Manufacturing Loan Program and DOE
funding contained within the President's American Recovery and
Reinvestment Act.
Most of these changes are within the authority of the Secretary
of Energy to make in consultation with the Director of the Office of
Management and Budget. A few will require statutory changes, and the
department will move quickly to work with the House and Senate to make
the necessary adjustments.
Based on detailed analysis of the programs, Secretary Chu is
confident the changes will not introduce additional risk to the loan
process.