'Red' Kentucky loses out as energy grants go to battlegrounds

WASHINGTON — The Obama administration on Wednesday awarded $2.4 billion in federal stimulus funds to help develop advanced car batteries — and more than half the amount went to Michigan, a battleground state that went for President Barack Obama in November's election.

Notably absent from the list was a high-profile bid by a consortium of 50 companies to build a new battery plant in Kentucky — a reliably Republican state that is the nation's third largest producer of autos and whose senior senator is Senate Minority Leader Mitch McConnell. McConnell steadfastly opposed the stimulus legislation that created the car-battery program.

Department of Energy officials said applications were judged on merit, not politics, and the Kentucky consortium's founder said many factors played into his group, known as NATTBatt, not getting a grant.

"Obviously we're very disappointed in the decision the Department of Energy made," said James Greenberger, a partner in Reed Smith LLP in Chicago. "It is very clear a couple of arguments DOE wasn't buying. DOE were very intent on giving it to existing (original equipment manufacturers) and their supply chains."

The consortium also tried to make the case that the field was ripe for new domestically based companies. "DOE did not buy that argument and accordingly NATTBatt wasn't attractive to them," Greenberger said.

"The awards by the Department of Energy today are an opportunity to jumpstart an entire industry," said Mark Peters, deputy associate laboratory director for energy science and engineering at Chicago-based Argonne National Laboratory which was instrumental in helping form the consortium.

Ultimately, it may have been the structure of the consortium itself that helped doom the application.

"Looking at the awardees you'll see consortiums weren't successful," Peters said.

Kentucky will still run a federal battery research laboratory formed by Argonne National Laboratory, the University of Kentucky and the University of Louisville. The new national Battery Manufacturing Research and Development Center in Lexington will help develop advanced battery technologies.

But the failure of the consortium to win its bid for the $2 billion grant was a big blow in a state that has weathered layoffs in its own auto industry.

NAATBatt had hoped to use stimulus funding to help build an advanced car battery manufacturing plant in Hardin County that was expected to cost more than $600 million and employ as many as 2,000 people. The state's application enjoyed bi-partisan support from the state's congressional delegation and local lawmakers.

Winning the bid would have ensured Kentucky a federally-funded foothold in a growing field. Experts in advanced battery technology think lithium-ion batteries will replace gasoline as a major source of energy for cars and military vehicles. U.S. auto manufacturers now depend on foreign suppliers — many from Asia — for lithium-ion battery cells.

When the consortium announced it planned on applying for stimulus funds, McConnell lauded what he saw as a "a major victory for the Commonwealth of Kentucky" one that would "allow the citizens of Kentucky to play a key role in accelerating America’s independence on foreign sources of oil."

But McConnell and fellow Republicans Sen. Jim Bunning and Reps. Geoff Davis, Brett Guthrie, Hal Rogers and Ed Whitfield staunchly opposed the $787 billion stimulus that helped fund the grants, saying the plan was far too costly and would deepen the nation's debt. McConnell also questions the Obama administration's claims that the stimulus will create or save millions of jobs.

That opposition doesn’t exactly endear the state to the administration, said Donald Gross, a political science professor at the University of Kentucky

"Just as McConnell, when he ran for office, talked about how his position could bring money into the state, that same position could be detrimental if you have the wrong people in the executive branch," Gross said. "If, all things being equal, you have a choice between giving a project to a state and a locale where they have been helpful, then you have a state that creates trouble, you'll give to the one that is helpful. It puts him in a difficult position in trying to get money for Kentucky."

The location of the grant recipients underscored the point. Obama visited Navistar International Corporation, in Elkhart, Ind., to make the announcement and Vice President Joe Biden was dispatched to Michigan, the largest single recipient of grants and where the financial collapse of American automakers has led to record job losses.

Other high ranking officials traveled to Florida, North Carolina, Pennsylvania and Missouri. With the exception of Missouri, all were battleground states that went to Obama in the presidential election. Missouri went for Sen. John McCain by fewer than 5,000 votes out of 2.9 million cast.