Without a stated reason in the committee report, the FY 2012 House Energy and Water Development Appropriations Bill recommends, as compared to this year, a cut of 44.3 percent or $79.6 million in the FY 2012 budget for the Advanced Research Projects Agency-Energy. The $100.0 million level in the proposed bill stands in stark contrast to the $550.0 million Administration request. An attempt to increase this funding was rejected when the bill was considered by the full committee, as reviewed below, with notable opposition from a senior Democratic member.
The appropriators devoted two pages to ARPA-E in the committee report accompanying the bill that were, on balance, very supportive of the agency. In the introduction to this section, the appropriators state:
“The Advanced Research Projects Agency - Energy (ARPA-E) supports research aimed at rapidly developing energy technologies whose development and commercialization are too risky to attract sufficient private sector investment, but that are capable of significantly changing the energy sector to address our critical economic and energy security challenges. Projects funded by ARPA-E include such wide-ranging areas as production processes for transportation fuel alternatives that can reduce our dependence on imported oil, heating and cooling technologies with exceptionally high energy efficiency, and improvements in petroleum refining processes.”
Excerpts from other sections follow:
“ARPA-E, launched in the first half of 2009, has been widely praised for its internal management and its effective collaboration with industry and academia.”
"Further, the Administration has emphasized the importance of hiring leading technical experts to serve for limited terms as ARPA-E program directors, and it has had notable success assembling a strong leadership team known to be at the technical forefront of ARPA-E areas of focus. The Committee encourages the Department to apply lessons learned from ARPA-E’s program director strategy to other Department of Energy programs, and to evaluate whether term assignments of technical experts for program management positions are advantageous and practical in other Department program offices.”
Up-front Project Funding
“The Department has decided to fund ARPA-E projects in fiscal year 2012 in the same fashion by fully funding most new awards with fiscal year 2012 appropriations. The Committee supports this decision, as it will not create mortgages on funding in future years and will preserve the program’s flexibility to enter new technology areas each year rather than saddling the budget with commitments to past awards.”
“Project risk, however, is difficult to measure and quantify, and the Department has not set forth a plan for how it intends to do so more coherently than on a case-by-case basis. The Committee strongly encourages the Department to fund only projects that cannot otherwise attract private capital investment, and directs ARPA-E to provide to the Committee, not later than December 15, 2011, a definition of estimated project risk that guides the determination of what projects should be funded by ARPA-E and what are more appropriate for other Department programs.
“ARPA-E leadership has noted that failure of projects is endemic to the high risk level deliberately chosen by the program. The organization is accordingly considering the first terminations of projects that have not met performance standards. The Committee does not view a measured quantity of project terminations as a symptom of program failure, but rather as an indication that the program has chosen projects with an appropriately high level of risk. Further, the Committee views the termination of projects as a sign of strong program management capable of enforcing a commitment to use scarce federal funding effectively.”
The final section is entitled Progress Report, and is below in full:
“Only in its third calendar year of operation, ARPA-E is still an experimental research model for energy innovation and the Department must continue to closely evaluate the efficacy of the program. By its nature, some of the program’s projects will yield moderate successes, some projects will fail, and perhaps others will yield great success. However, the Department has not stated how it will measure the program’s overall success in the near-, mid- and long-term. The Department must determine the frequency with which ARPA-E projects should succeed in order to consider the overall program a success, and over what timeframe it expects the program to yield successes that significantly impact the energy marketplace and American competitiveness.
“The Committee looks forward to receiving a clear articulation by the Department of its measurement plan, project success rate targets, and market impact goals for ARPA-E. To help the Committee begin to gauge ARPA-E’s success rates, the Department is directed to provide, not later than February 10, 2012, a listing of all projects, including areas of focus; federal funding levels, private sector capital attracted before and after engagement with ARPA-E, and an assessment of project performance compared with ARPA-E’s project targets. The Committee acknowledges the tension between transparency and confidentiality for award recipients when ARPA-E reports on project metrics, and the Committee will work with ARPA-E to find the right balance.”
When the full House Appropriations Committee considered the bill on June 15, Rep. Adam Schiff (D-CA) offered an amendment to restore ARPA-E’s proposed FY 2012 funding to its current level of $179 million a year. Schiff lauded ARPA-E’s funding of high risk, high reward R&D and its management structure, saying that the government should encourage such an approach. He cited a report by Norman Augustine, Bill Gates, Jeff Immelt and other senior corporate leaders recommending ARPA-E annual funding of $1 billion. While acknowledging the need to reduce the federal deficit, Schiff stressed the importance of research such as that supported by ARPA-E to energy advances and national security.
Energy and Water Development Appropriations Subcommittee Chairman Rodney Frelinghuysen (R-NJ) opposed the amendment. He pointed out that the almost $80 million Schiff wanted to restore to ARPA-E’s budget was not offset by a funding reduction elsewhere in the bill. If adopted, Schiff’s amendment would require reductions to be made in other subcommittee allocations, cautioned Frelinghuysen.
The subcommittee’s Ranking Democratic Member, Peter Visclosky (D-IN), was far more pointed in his opposition, telling his colleagues: “My concern is ARPA-E is about a year to eighteen months old. We also have 21 labs and technology centers at DOE. We have 46 Energy Frontier Research Centers. Assuming this bill is adopted in its entirety, we are going to have five Hubs for energy innovation. We have 3 Bioenergy Research Centers. And we have a Joint Genome Institute. At this point, until DOE can prove that they can manage programs adequately and stop creating more stove pipes I’m not interested in pushing another $79 million at them.”
Rep. Chaka Fattah (D-PA) spoke in favor of the amendment, praising ARPA-E’s business-centered approach and its research into new battery technologies enabling the U.S. to significantly increase its global market share. Fattah and Schiff’s recommendation to maintain ARPA-E’s funding at its current level did not sway a majority of their fellow appropriators. Schiff’s amendment failed on a voice vote. Said Schiff before the vote was taken: “If there’s an illustration of cutting the seed corn, I think, in the federal budget this year, this may be it.”