AbstractPrograms administered by the U.S. Department of Energy under the American Recovery and Reinvestment Act (ARRA) of 2009 were designed to spur investment in clean energy and jump‐start the economy. There was considerable variation, however, in the proportion of obligated funds that states spent during each year. A primary goal of the ARRA was to infuse as much money as possible into the struggling economy; however, there was significant variation in the success with which states implemented these programs. This article draws on and extends the literature on intergovernmental implementation to explain such variation. The authors argue that jurisdictional capacity and federal guidance were important determinants of the rate at which states spent ARRA funds and, more important, that these factors interacted with one another in the implementation process. This assertion is tested using a mixed‐methods approach that includes a regression analysis of state ARRA spending between 2009 and 2012, as well as an evaluation of interviews conducted with 46 state agency representatives responsible for spending ARRA energy funds.