    [House Hearing, 108 Congress]
    [From the U.S. Government Publishing Office]

        ENERGY EFFICIENCY IMPROVEMENTS IN FEDERAL BUILDINGS AND VEHICLES

    =======================================================================

                                    HEARING

                                   before the

                                  COMMITTEE ON
                               GOVERNMENT REFORM

                            HOUSE OF REPRESENTATIVES

                          ONE HUNDRED EIGHTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 MARCH 12, 2003

                                   __________

                                Serial No. 108-1

                                   __________

           Printed for the use of the Committee on Government Reform

      Available via the World Wide Web: http://www.gpo.gov/congress/house
                          http://www.house.gov/reform

                                     ______

    86-197              U.S. GOVERNMENT PRINTING OFFICE
                                WASHINGTON : 2003
    ____________________________________________________________________________
    For Sale by the Superintendent of Documents, U.S. Government Printing Office
    Internet: bookstore.gpr.gov  Phone: toll free (866) 512-1800; (202) 512�091800
    Fax: (202) 512�092250 Mail: Stop SSOP, Washington, DC 20402�090001

                         COMMITTEE ON GOVERNMENT REFORM

                         TOM DAVIS, Virginia, Chairman
    DAN BURTON, Indiana                  HENRY A. WAXMAN, California
    CHRISTOPHER SHAYS, Connecticut       TOM LANTOS, California
    ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
    JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
    JOHN L. MICA, Florida                PAUL E. KANJORSKI, Pennsylvania
    MARK E. SOUDER, Indiana              CAROLYN B. MALONEY, New York
    STEVEN C. LaTOURETTE, Ohio           ELIJAH E. CUMMINGS, Maryland
    DOUG OSE, California                 DENNIS J. KUCINICH, Ohio
    RON LEWIS, Kentucky                  DANNY K. DAVIS, Illinois
    JO ANN DAVIS, Virginia               JOHN F. TIERNEY, Massachusetts
    TODD RUSSELL PLATTS, Pennsylvania    WM. LACY CLAY, Missouri
    CHRIS CANNON, Utah                   DIANE E. WATSON, California
    ADAM H. PUTNAM, Florida              STEPHEN F. LYNCH, Massachusetts
    EDWARD L. SCHROCK, Virginia          CHRIS VAN HOLLEN, Maryland
    JOHN J. DUNCAN, Jr., Tennessee       LINDA T. SANCHEZ, California
    JOHN SULLIVAN, Oklahoma              C.A. ``DUTCH'' RUPPERSBERGER,
    NATHAN DEAL, Georgia                     Maryland
    CANDICE S. MILLER, Michigan          ELEANOR HOLMES NORTON, District of
    TIM MURPHY, Pennsylvania                 Columbia
    MICHAEL R. TURNER, Ohio              JIM COOPER, Tennessee
    JOHN R. CARTER, Texas                CHRIS BELL, Texas
    WILLIAM J. JANKLOW, South Dakota                 ------
    MARSHA BLACKBURN, Tennessee          BERNARD SANDERS, Vermont
                                             (Independent)

                           Peter Sirh, Staff Director
                     Melissa Wojciak, Deputy Staff Director
                  Randy Kaplan, Senior Counsel/Parliamentarian
                           Teresa Austin, Chief Clerk
                  Philip M. Schiliro, Minority Staff Director
                                C O N T E N T S

                                  ----------
                                                                       Page
    Hearing held on March 12, 2003...................................     1
    Statement of:
        Garman, David, Assistant Secretary, Energy Efficiency and
          Renewable Energy, U.S. Department of Energy................    11
        Lynch, Paul, Assistant Commissioner of Business Operations,
          Public Buildings Service, General Services Administration..    16
        Rivers, William, Director of the Federal Vehicle Policy
          Division, Office of Governmentwide Policy, General Services
          Administration, accompanied by Barney Brasseaux, Federal
          Supply Service.............................................    26
    Letters, statements, etc., submitted for the record by:
        Davis, Chairman Tom, a Representative in Congress from the
          State of Virginia, prepared statement of...................     4
        Garman, David, Assistant Secretary, Energy Efficiency and
          Renewable Energy, U.S. Department of Energy, prepared
          statement of...............................................    13
        Lynch, Paul, Assistant Commissioner of Business Operations,
          Public Buildings Service, General Services Administration,
          prepared statement of......................................    18
        Rivers, William, Director of the Federal Vehicle Policy
          Division, Office of Governmentwide Policy, General Services
          Administration, prepared statement of......................    28
        Waxman, Hon. Henry A., a Representative in Congress from the
          State of California, prepared statement of.................     8

        ENERGY EFFICIENCY IMPROVEMENTS IN FEDERAL BUILDINGS AND VEHICLES

                                  ----------

                           WEDNESDAY, MARCH 12, 2003

                              House of Representatives,
                                Committee on Government Reform,
                                                        Washington, DC.
        The committee met, pursuant to notice, at 10 a.m., in room
    2154, Rayburn House Office Building, Hon. Tom Davis (chairman
    of the committee) presiding.
        Present: Representatives Tom Davis, Platts, Waxman,
    Kucinich, Tierney, Van Hollen, Ruppersberger, and Norton.
        Staff present: Peter Sirh, staff director; Melissa Wojciak,
    deputy staff director; Keith Ausbrook, chief counsel; Ellen
    Brown and Uyen Dinh, counsels; David Marin, director of
    communications; Scott Kopple, deputy director of
    communications; Mason Alinger, professional staff member;
    Teresa Austin, chief clerk; Joshua E. Gillespie, deputy chief
    clerk; Phil Schiliro, minority staff director; Phil Barnett,
    minority chief counsel; Alexandra Teitz, minority counsel;
    Earley Green, minority chief clerk; Jean Gosa, minority
    assistant clerk; and Cecelia Morton, minority office manager.
        Chairman Tom Davis. Good morning and thank you all for
    coming, and I apologize for being a couple minutes late.
        The purpose of today's hearing is to assess the Federal
    Government's progress in adopting policies and practices that
    improve the energy efficiency of Federal facilities. Every year
    the Federal Government spends approximately $4 billion to
    supply energy to Federal facilities, including lighting, air
    conditioning and heating to its 3.3 billion square feet of
    office space, and fuel for its fleet of more than 500,000
    vehicles.
        Over the past 10 to 15 years, a number of laws have been
    enacted and Executive orders issued to dictate energy standards
    and policies for the Federal Government. The intent of such
    mandates has been two-fold. First, the purpose has been to
    decrease the Federal Government's dependency on energy
    resources and to slow down the depletion of non-renewable
    resources; and the second purpose has been to utilize the
    Federal Government's leverage to set a new standard for energy
    production and consumption.
        For example, GSA, in purchasing new vehicles, is required
    to purchase cars and trucks that run on alternative fuels such
    as ethanol, methanol, natural gas, propane, or electricity.
    This policy is important in terms of getting the Federal
    Government to be a leader in energy efficiency. Unfortunately,
    my understanding is that, in reality, agencies have faced
    challenges in carrying out these mandates. I am interested to
    hear from the witnesses about their experiences with these
    issues.
        In addition, the Federal Government must meet certain
    energy efficiency standards in construction and renovation
    projects. I understand that the Government requires all new
    construction, as well as renovations to older buildings, to
    comply with environmental standards regarding building
    materials, construction waste management, energy efficiency,
    and water conservation.
        All of these requirements are important and set valuable
    standards for industry to follow. However, the testimony
    provided by the GAO outlines a number of challenges that face
    Federal construction managers. For example, architects and
    construction contractors are not often knowledgeable about
    energy efficient building practices, making it difficult to
    design and build such facilities. Also, the GAO notes the
    difficulties agencies face in convincing Congress and other
    players that the higher initial cost of energy efficient
    construction practices will end up saving the Government money
    in the long run through overall improved energy efficiency and
    reduced costs.
        Regarding funding for energy efficiency renovations to
    Federal buildings, I am interested in hearing more about your
    experience with Energy Savings Performance Contracts [ESPCs]. I
    am a strong proponent of share-and-savings contracts as a way
    to provide Federal agencies with a quick and cost-effective way
    to accomplish capital-intensive projects. My understanding is
    that under an ESPC, a private sector energy service company
    assumes the capital costs of retrofitting a building with
    energy efficient equipment, then works out an arrangement with
    the agency to share in the savings realized from the reduced
    energy costs over the long run. Given the tight fiscal
    restraints tying the hands of Congress for the foreseeable
    future, direct appropriations will be harder than ever. I
    applaud your efforts to utilize all available means of funding.
        GAO also reports that 44 buildings in GSA's inventory each
    had backlogs of more than $20 million in repairs, with the Old
    Executive Office Building downtown facing $187 million in
    repairs. In addition to the cost of the repairs alone, these
    backlogs usually include aging and inefficient plumbing,
    heating and air conditioning systems, meaning that the energy
    services used by the buildings are wasting taxpayers' money,
    adding significantly to the actual cost of delayed repairs. It
    seems to me that providing Federal managers the flexibility to
    optimize asset performance as the President has requested in
    his Freedom to Manage package would help to resolve some of
    these backlogs. I look forward to discussing this issue with
    the witnesses.
        As most of you know, the comprehensive energy legislation
    in the 107th Congress reached conference but was never enacted
    into law. As the Energy and Commerce Committee begins to
    advance comprehensive energy strategy in this Congress, this
    committee is going to weigh in on energy-related issues that
    fall within our jurisdiction, such as energy efficient Federal
    procurement requirements and standards for Federal buildings. I
    look forward to working with all of our members, particularly
    my ranking member, Mr. Waxman, as we craft this aspect of
    comprehensive energy legislation.
        I would like to introduce our panel of witnesses. We have
    David Garman, the Assistant Secretary of Energy Efficiency and
    Renewable Energy at the Department of Energy. Among other
    responsibilities, Mr. Garman oversees the Federal Energy
    Management Program, which works to reduce the cost and
    environmental impact of the Federal Government by promoting
    energy efficiency, water conservation, renewable energy, and
    green management practices.
        I also want to welcome the witnesses from the GSA. Paul
    Lynch, Assistant Commissioner of Business Operations in GSA's
    Public Building Service, will be discussing the Government's
    efforts to adopt energy efficient policies for construction and
    renovation. William Rivers from GSA's Office of Government-wide
    Policy will discuss progress in setting environmentally
    friendly standards for the acquisition and maintenance of
    Federal vehicles.
        Finally, I would like to thank the GAO for submitting
    testimony for the record for this hearing. For Members that are
    new to this issue, GAO's testimony provides an excellent
    overview of the progress being made, the challenges that
    remain, and thoughts to be considered as we move forward with
    energy policy regarding Federal buildings and vehicles.
        I welcome all of the witnesses to today's hearing and look
    forward to your testimony.
        I would now like to recognize Mr. Waxman, ranking
    Democratic member of the committee.
        [The prepared statement of Chairman Tom Davis follows:]

        [GRAPHIC] [TIFF OMITTED] T6197.001

        [GRAPHIC] [TIFF OMITTED] T6197.002

        Mr. Waxman. Thank you very much, Mr. Chairman. I want to
    commend you for holding today's hearing. Issues regarding the
    Federal Government's use and management of energy in government
    operations are squarely within the jurisdiction of this
    committee. I look forward to working with the majority in
    considering legislation on these issues on a bipartisan basis.
        As the single largest energy consumer in this country, when
    the Federal Government makes efficiency improvements or relies
    on renewable energy, it can have a tremendous impact. Increased
    energy efficiency saves the Government money on its energy
    bills, and it has other critically important benefits as well.
        When the Government uses energy more efficiently, air
    pollution from power plants is reduced. This is important
    because air pollution from electric power plant emissions is
    estimated to kill over 30,000 Americans per year, because
    hundreds of thousands of people suffer from asthma attacks and
    cardiac and respiratory illnesses due to power plant emissions
    and because power plants contribute one-third of the mercury
    emissions in this country, which causes neurological damage,
    particularly to fetuses and infants.
        And when the Government reduces its consumption of
    gasoline, this directly enhances our national security. Today
    we are contemplating going to war against a dictator who has
    funded his weapons programs with oil revenues. We are watching
    gas prices rise in anticipation of the disruptions such a war
    will likely cause. Everyone in the country, and especially the
    Federal Government, has an obligation to do all we can to
    reduce our dependence on foreign oil by increasing the
    efficiency of our vehicles.
        Yesterday it was reported that the House took a bold step
    in our Nation's efforts to disarm Iraq: we banned the use of
    the name ``French fries'' and ``French toast'' in the Rayburn
    Cafeteria. Henceforth, they will be called ``Freedom fries''
    and ``Freedom toast.''
        Well, it is time to stop joking and get serious. We are not
    at war with France, a NATO ally, and renaming our cafeteria
    menu won't contribute one iota to enhancing our national
    security. But today we can make a real contribution to ensuring
    our energy security and protecting our environment by exploring
    how the Federal Government can reduce its huge energy
    consumption.
        In the testimony presented today, we will hear how the
    Federal Government has increased its energy efficiency since
    energy management requirements were adopted in the 1980's, and
    I commend the agencies for their progress, but it is important
    to recognize that we can do much more.
        Our entire economy continues to grow more energy-efficient.
    Over the past 30 years, the amount of energy used to generate a
    unit of GDP has fallen by 42 percent. Just as computers keep
    getting more powerful and more compact, our technologies for
    using energy and generating renewable energy have also
    continued to improve dramatically.
        California's experience during the energy crisis
    demonstrates the untapped potential of efficiency improvements.
    In just 6 months, the State reduced its energy consumption by
    10 percent. The State achieved these reductions even though
    California was already one of the two most energy-efficient
    States in the Nation.
        We can achieve tremendous benefits from using energy
    efficiency and renewable energy resources, but Federal agencies
    face disincentives to taking full advantage of these
    opportunities. There are a number of measures that this
    committee might consider in this area, and I look forward to
    working with the chairman on developing such measures.
        Thank you, Mr. Chairman.
        [The prepared statement of Hon. Henry A. Waxman follows:]

        [GRAPHIC] [TIFF OMITTED] T6197.003

        [GRAPHIC] [TIFF OMITTED] T6197.004

        [GRAPHIC] [TIFF OMITTED] T6197.005

        Chairman Tom Davis. Mr. Waxman, thank you very much.
        As you know, it is the policy of this committee that all
    witnesses be sworn before they testify, so if you would rise
    with me and raise your right hands.
        Oh, I am sorry, Mr. Ruppersberger, did you want to make a
    comment?
        Mr. Ruppersberger. No.
        Chairman Tom Davis. OK, thank you.
        [Witnesses sworn.]
        Chairman Tom Davis. Be seated.
        To afford sufficient time for questions, I would appreciate
    it if witnesses would limit their testimony to no more than 5
    minutes. All written statements will be made part of the
    permanent record. You have a light on in front of you. When it
    turns orange, that means you have a minute to try to finish up.
    We have read the testimony and have questions, so your entire
    testimony is entered into the record. And any Members'
    statements will be submitted into the record. Thank you.
        Why don't we start with you, Mr. Garman, and we will move
    straight down?

        STATEMENT OF DAVID GARMAN, ASSISTANT SECRETARY, ENERGY
       EFFICIENCY AND RENEWABLE ENERGY, U.S. DEPARTMENT OF ENERGY

        Mr. Garman. Thank you, Mr. Chairman and members of the
    committee. I appreciate the opportunity to appear on this
    important topic of Federal energy management in buildings and
    vehicles. As the Nation's largest single energy consumer, the
    Federal Government has an opportunity and the responsibility to
    lead by example with smart energy management. The Federal
    Government uses almost one-quadrillion BTUs of energy annually,
    or a little over 1 percent of the Nation's energy consumption.
    In fiscal year 2000, we spent approximately $4 billion on
    energy to heat, cool, light, and conduct operations in a half
    million Federal office buildings. While we have achieved
    significant success in energy management, we need to do even
    better.
        Executive Order 13123 calls for Federal agencies to improve
    the energy efficiency of their buildings, promote the use of
    renewable energy, and reduce greenhouse gas emissions. Since
    1985, the Federal Government as a whole reduced energy use in
    its buildings by more than 23 percent, measured in 2001. The
    Government also saved more than $1.3 billion in 2001, relative
    to 1985, and reduced energy bills, much of which can be
    attributed to energy improvements.
        Executive Order 13123 also requires greater use of
    renewable energy by implementing renewable energy projects and
    by purchasing electricity from renewable sources. The goal for
    new renewable energy use in the Federal Government is currently
    1,384 gigawatt hours by 2005, and Federal agencies are
    reporting that they are producing or purchasing over 600
    gigawatt hours of new renewable energy or 40 percent of their
    goal.
        We are also working to meet the goal in the Executive order
    to reduce greenhouse gas emissions attributed to Federal
    facilities by 30 percent in 2010, compared to a 1990 baseline.
    Carbon emissions from energy used in non-exempt Federal
    facilities declined 19.4 percent in fiscal year 2001, compared
    to the 1990 base year.
        Let me highlight a few areas of opportunity and describe
    how the Department of Energy's Federal Energy Management
    Program [FEMP], is helping agencies to seize these
    opportunities.
        First, the Federal Government designs and constructs new
    buildings each year, investing at least $11 billion in 2002 for
    new construction and renovation projects for buildings and
    facilities. FEMP offers design assistance to Federal agencies
    for new construction projects and helps ensure that
    architectural designs, engineering, and building construction
    practices incorporate energy efficiency and cost-effective
    strategies. Second, we work to improve the Federal Government's
    existing building stock. We provide Federal agencies with
    access to private sector financing through energy savings
    performance contracts and utility contracts to pay for these
    upgrades. To date, Federal agencies have already leveraged more
    than $2.1 billion in private sector investments for these
    projects. Third, we promote the purchase of energy efficient
    equipment. FEMP provides product recommendations that, in
    concert with Energy Star, help direct Federal and other
    purchases to the most efficient products.
        Turning now to the issue of Federal vehicle fleets and
    alternative fuels. The Energy Policy Act of 1992 requires
    Federal agencies to purchase alternative fuel vehicles. Over
    the last 10 years, Federal agencies have purchased over 100,000
    alternative fuel vehicles, a large fraction of all alternative
    fuel vehicles sold in the United States. Over 65,000 of those
    vehicles are in operation today, an increase of over 10,000 in
    just 2 years. Alternative fuel vehicles now account for about
    14 percent of the Federal Government's total light duty fleet
    of over 450,000 vehicles.
        We are also pursuing significant efforts to increase the
    energy efficiency of Federal fleet operations. One driver for
    this is Executive Order 13149, which directs Federal agencies
    to reduce overall petroleum consumption in fleets by 20 percent
    by the year 2005. To meet this goal, we are working with other
    agencies to improve the efficiency of fleet operations,
    increase the use of alternative fuel, and encourage the
    purchase of energy-efficient vehicles. We are also working to
    reduce the overall size of the Federal fleet.
        So, Mr. Chairman and members of the committee, we welcome
    the opportunity to work with all Federal agencies in
    demonstrating leadership and reducing energy consumption in our
    buildings and vehicles, and I would be happy to answer any
    questions the committee has either now or in the future. Thank
    you, Mr. Chairman.
        [The prepared statement of Mr. Garman follows:]

        [GRAPHIC] [TIFF OMITTED] T6197.006

        [GRAPHIC] [TIFF OMITTED] T6197.007

        [GRAPHIC] [TIFF OMITTED] T6197.008

        Chairman Tom Davis. Thank you very much.
        Mr. Lynch, thanks for being with us.

      STATEMENT OF PAUL LYNCH, ASSISTANT COMMISSIONER OF BUSINESS
        OPERATIONS, PUBLIC BUILDINGS SERVICE, GENERAL SERVICES
                             ADMINISTRATION

        Mr. Lynch. Good morning, Mr. Chairman. Thank you for the
    opportunity to present testimony regarding Federal programs for
    energy efficiency and conservation.
        The General Services Administration has a long history of
    supporting Federal energy efficiency in our facilities. We also
    recognize the importance of our unique leadership roles as the
    Government's landlord in demonstrating energy efficiency. GSA's
    actions in the area of energy efficiency closely follow
    mandates set forth in Public Law and Executive order. On an
    annual basis, GSA develops an implementation plan to ensure all
    energy management strategies are identified and are being
    pursued. Results are reported to GSA senior management on a
    quarter basis. Senior management and regional senior management
    executives have energy performance included as part of their
    performance evaluation as well.
        Since 1985, GSA has reduced energy usage in our facilities
    classified as standard by approximately 21 percent from the
    1985 base year. This was achieved by directly investing in
    energy conservation opportunities with paybacks of 10 years or
    less. From 1990 through 2002, GSA invested approximately $316
    million in energy projects. Since 1990, GSA has also reduced
    energy usage in our Energy Intensive, those kinds of buildings
    identified as industrial and laboratories, by about 37.2
    percent from the baseline year of 1990.
        GSA also benchmarks performance with comparable Federal
    facilities. The utility benchmark, established by the Building
    Owners and Management Association, indicates PBS is operating
    approximately 34 percent below comparable commercial facilities
    for the period ending September 30, 2002.
        GSA is also proud of its efforts to earn the Energy Star
    Building Label for our portfolio. To date, GSA has earned the
    Energy Star Label for 93 of our own facilities and 1 leased
    facility, with a total square footage of approximately 28
    million. This represents approximately 19 percent of our
    eligible square footage and 15 percent of our facilities.
        Our actions can be divided into two broad categories:
    leadership and management, and energy efficiency performance
    and implementation strategies. Under management and
    administration, we created a management infrastructure that
    focused our time and attention on implementing the goals of
    Executive orders and law. We have also formed a technical
    support team consisting of appropriate personnel to help in
    that process. We also utilize a wide variety of management
    tools, including award programs, performance evaluations,
    training and education workshops, and designation of our
    buildings as showcase energy facilities.
        GSA activities in energy efficiency are implemented and
    managed by our national Energy Center of Expertise. The Center
    monitors and coordinates energy usage; they develop and
    implement energy saving projects; they leverage our purchasing
    power through national contracts; they establish and manage
    energy saving performance contracts; and they develop annual
    implementation plans and strategies to achieve our goals.
        I would like to take a minute to introduce Mark Ewing. Mark
    is the director of the National Energy Center.
        Chairman Tom Davis. Welcome. Thanks for being with us.
        Mr. Ewing. Thank you.
        Mr. Lynch. The second broad category is performance and
    implementation strategies. On an annual basis, we maintain a
    10-year audit plan. Every year we are actually auditing 10
    percent of our portfolio. These audits identify energy
    conservation measures that may lead to future energy
    conservation proposals or viable alternatives.
        GSA is also maximizing the use of available alternative
    financing mechanisms as a strategy. In fiscal year 2002, GSA
    awarded a total of seven alternatively financed projects. All
    seven were ESPCs. This brings the total to 23 ESPCs and 19
    Utility Energy Savings Contracts currently active and in place.
    We have also an additional 13 projects that are in various
    stages of development, anticipating fiscal year 2003 award. The
    dollars associated with this effort are approximately $179
    million.
        GSA also considers opportunities for solar and other
    renewable energy in building design and retrofits. In fiscal
    year 2002, GSA purchased a total of 24,306 megawatt hours of
    electricity from renewable energy through competitive power
    contracts and the use of green power.
        Looking toward the future in our capital program, we rely
    very heavily on the LEED, Leadership in Energy and
    Environmental Design Silver requirements. Our goal is to bring
    new buildings into our inventory that are energy efficient,
    while optimizing the energy performance of our building
    inventory.
        Mr. Chairman, I would be pleased to answer any questions
    you or other members of the committee may have on this matter.
        [The prepared statement of Mr. Lynch follows:]

        [GRAPHIC] [TIFF OMITTED] T6197.009

        [GRAPHIC] [TIFF OMITTED] T6197.010

        [GRAPHIC] [TIFF OMITTED] T6197.011

        [GRAPHIC] [TIFF OMITTED] T6197.012

        [GRAPHIC] [TIFF OMITTED] T6197.013

        [GRAPHIC] [TIFF OMITTED] T6197.014

        [GRAPHIC] [TIFF OMITTED] T6197.015

        [GRAPHIC] [TIFF OMITTED] T6197.016

        Chairman Tom Davis. Thank you, and thank you for being with
    us.
        Mr. Rivers.

     STATEMENT OF WILLIAM RIVERS, DIRECTOR OF THE FEDERAL VEHICLE
       POLICY DIVISION, OFFICE OF GOVERNMENTWIDE POLICY, GENERAL
       SERVICES ADMINISTRATION, ACCOMPANIED BY BARNEY BRASSEAUX,
                         FEDERAL SUPPLY SERVICE

        Mr. Rivers. Mr. Chairman and members of the committee,
    thank you for inviting us here this morning to discuss the
    experience of Federal agencies with the laws and Executive
    orders mandating energy efficiency in Federal motor vehicles.
        My name is William Rivers, from the General Services
    Administration's [GSA's] Office of Governmentwide Policy, where
    I am the Director of the Federal Vehicle Policy Division. Also
    here from GSA is Mr. Barney Brasseux of the Federal Supply
    Service, where he is the Assistant Commissioner for the Office
    of Vehicle Acquisition and Leasing Services.
        GSA offices share several areas of responsibility in the
    area of fuel efficiency in Federal vehicles. The Federal Supply
    Service includes GSA Automotive, which is the mandatory source
    of supply for all Federal agencies purchasing commercial-
    design, non-tactical vehicles. GSA Automotive buys about 60,000
    vehicles annually on behalf of Federal agencies. Since 1991, we
    have purchased over 65,000 Alternative Fuel Vehicles [AFV's]
    for our Federal customers. The Federal Supply Service also
    includes GSA Fleet, which is a non-mandatory source for Federal
    agencies that wish to lease vehicles rather than purchase them.
    GSA Fleet leases about 190,000 vehicles to Federal agencies,
    which is about one-third of the total Federal fleet; the Postal
    Service also has about a third, and the remaining third are
    owned by various agencies.
        GSA's Office of Governmentwide Policy is responsible for
    establishing the regulations under which all Federal fleets
    must operate. We also serve as an information clearinghouse and
    spokesperson for the Federal fleet community, and we collect
    data on Federal agencies' vehicle inventories and fleet
    characteristics. We also coordinate the responsive of Federal
    Fleet Managers to issues of common concern. We work with the
    Department of Energy and the Federal fleet community to enhance
    and approve the use of AFVs.
        Finally, GSA operates a small fleet of approximately 2,000
    vehicles for its own internal use, most of which are leased
    from GSA Fleet.
        The requirements of statutes and Executive orders in the
    area of vehicle fuel efficiency apply to all Federal executive
    departments. As both a policy and operational function, GSA is
    a supplier of vehicles to Federal agencies and a coordinator of
    agencies' efforts to manage those vehicles effectively.
    However, on matters of governmentwide compliance with energy
    efficiency, we defer to our colleagues at DOE, which has the
    statutory authority to monitor compliance of executive agencies
    with energy efficiency requirements.
        GSA has purchased more AFVs produced by the automotive
    manufacturers than any single organization in this country. In
    fact, of the 65,000 AFVs purchased by GSA Automotive, GSA Fleet
    has acquired 58,000 AFVs at a cost of $900 million. Today we
    have 30,000 AFVs operating in our fleet. We are very proud of
    our AFV accomplishments.
        Many of the issues that we all face today concerning AFVs
    have changed little since the Federal Government's program
    started in 1988. Issues such as vehicle type, fuel type,
    purchase price, resale value, limited driving range, limited
    infrastructure, incremental cost, and the impact of these
    issues on agencies' budgets and missions have changed little
    over the years. For example, dedicated AFVs continue to have
    limited range and limited refueling and maintenance
    infrastructure, while bi-fuel and flexible fuel vehicles are
    often using gasoline because the alternative fuel is either not
    available or is not economical to use.
        Manufacturers have not always offered suitable AFVs. It has
    taken many years to get the full range of AFVs available today.
    Federal fleets, for the first time, were able to acquire E85
    compact AFV sedans in 2003. For nearly a decade, agencies had
    to acquire larger, more expensive sedans in significant numbers
    to meet AFV mandates because cost-effective compact AFV sedans
    were not available. However, DaimlerChrylser recently announced
    that they will not offer the E85 flexible fuel minivan for
    model year 2004 and beyond. The decision to discontinue this
    model is a major disappointment, since we buy thousands of
    those vehicles annually.
        Federal Government purchases alone are not enough for
    manufacturers to realize the economies of scale that they enjoy
    for conventionally fueled vehicles. The 60,000 vehicles
    purchased annually by GSA account for less than 0.36 percent of
    the over 16 million vehicles sold in the United States each
    year.
        Many of our Federal partners have made significant strides
    to comply with AFV minimum fleet requirements, but problems
    persist. For example, the private sector has not developed a
    mechanism to adequately capture alternative fuel use data to
    support AFV fleets. Most of the successful AFVs have been
    flexible fuel and, to a smaller extent, the bi-fuel vehicles.
    This is because these vehicles can operate on gasoline when the
    infrastructure is not available. The dedicated vehicles are
    more suited for base-type operations, where they do not leave
    the facility and AFV refueling is provided at the site.
        As new technologies come to the market, AFV acquisition
    goals may become more difficult to reach. For example, agencies
    do not receive credit for their purchase and use of hybrids
    under the AFV mandates.
        In his State of the Union address, the President has
    announced an exciting new program, the Hydrogen Fuel
    Initiative, to complement work ongoing under the Department of
    Energy's FreedomCAR partnership with the U.S. auto industry.
    Federal Fleet managers are excited about the possibilities and
    eager to participate. We look forward to working with you and
    other interested parties to review the applicable AFV
    authorities to develop a comprehensive, cohesive AFV policy.
        Thank you for the opportunity to testify today, Mr.
    Chairman. I look forward to answering any questions you may
    have.
        [The prepared statement of Mr. Rivers follows:]

        [GRAPHIC] [TIFF OMITTED] T6197.017

        [GRAPHIC] [TIFF OMITTED] T6197.018

        [GRAPHIC] [TIFF OMITTED] T6197.019

        [GRAPHIC] [TIFF OMITTED] T6197.020

        [GRAPHIC] [TIFF OMITTED] T6197.021

        Chairman Tom Davis. Thank you all very much. Let me start
    the questioning over on our side with Mr. Platts.
        Mr. Platts. Thank you, Mr. Chairman. I will be brief, and,
    as always, we are trying to be in four different places at one
    time.
        But I appreciate the testimony that has been provided, and
    I apologize if my couple of questions here were addressed in
    your statements; I was trying to touch base or look at it real
    quickly here.
        Specifically for GSA, when you make decisions like building
    leases for space or automobile purchases or leases, in what way
    do you, if at all, factor in the energy efficiency of building
    A versus building B; is it just square footage and location, or
    do you actually take in things like energy cost in the lease
    decisions, starting with buildings?
        Mr. Lynch. We actually just don't look at the energy cost,
    what we do is when we go out and lease space, we do include
    sustainability requirements in our leases. And I think we have
    more leverage when we actually go out with build-to-suit type
    leases, where we are actually going to live in that building
    for 20 years and it is just going to be a Federal tenant. Some
    good examples of that approach are the EPA in Kansas City, and
    the EPA lab up in Chelmsford, MA. Those were build-to-suits. We
    had a whole bunch of green sustainable energy conservation
    measures in those leases, and we got what we asked for.
        On the Federal side, when we go out with new construction
    now for courthouses or major repair and alterations, we are
    actually telling our designers and we are also telling our
    constructors that they have to build and construct to the LEED
    rating, which is an industry-wide standard established by the
    Green Building Council. The LEED rating gives them some idea
    and some parameters as to what we are looking for from a
    sustainability perspective.
        Mr. Platts. On the lease side, though, when you are making
    a decision on dollars, is there additional credit given to a
    building that you want to lease that is more energy efficient
    because of not just the cost savings, but the environmental
    impacts as well, or is that a factor but it is not an absolute
    benefit?
        Mr. Lynch. It is a factor, but it is not an absolute. I
    mean, we look at the rental rate compared to the marketplace.
    We do specify that we are looking for sustainability. We do
    have some things that we look at in those leases and, again, it
    all depends on if it is a build-to-suit where we are going to
    be in that facility versus a 2,000 square foot lease, it is all
    about leverage and opportunity.
        Mr. Platts. OK. And how about I guess, Mr. Rivers, on
    automobiles. When you make decisions and they require X number
    of four-door sedans, is fuel efficiency of the vehicles
    factored into that decision?
        Mr. Rivers. Yes, sir. The decision essentially is made by
    the using agency. GSA provides, in effect, a menu for them
    either on the purchase side; we have contracts that make a
    number of vehicles readily available, where we highlight both
    fuel efficiency and then, if they are alternative fuel, what
    options are available there. On the GSA Fleet side, we provide
    a range of vehicles if they actually want the vehicle itself.
        But it comes back down to the using agency having to take
    into account what are the characteristics of the vehicle use
    and the availability of alternative fuels in an area. Base-type
    operations probably lend themselves more to use of like a
    natural gas configured vehicle. Where you are more into the
    commercial marketplace, it tends to be a flexible fuel vehicle.
    But those are the decisions agencies have to make; can I get a
    vehicle of the right type with the right fuel supply being
    available in that area.
        Mr. Platts. But many vehicles are just basic gasoline, not
    alternative fuel.
        Mr. Rivers. Yes.
        Mr. Platts. Of those that you say you can make available as
    a fleet for them to choose from?
        Mr. Rivers. That is correct. Agencies have to adhere to the
    Federal average fleet economy, similar to the CAFE for the
    commercial sector.
        Mr. Platts. Right.
        Mr. Rivers. And they have to go through and acquire their
    vehicles. We are under a requirement to increase mile per
    gallon average by at least 1 mpg for 2002. Those numbers I
    think are just coming in.
        Mr. Platts. So that fleet average fuel efficiency is part
    of that decision.
        Mr. Rivers. Absolutely, sir. Yes, sir.
        Mr. Platts. OK.
        If I can squeeze one more question in here. GAO is
    identifying a lot of upgrades, lighting and air conditioning,
    including, I believe, our congressional printing office. I
    guess that Congress could do better. How much is out there, is
    it pretty extensive, the benefits that could be gained, whether
    it would be upgrading lighting or air conditioning systems? Is
    that pretty pervasive and we have a long way to go, and we have
    started a few projects, or have we made a lot of progress from
    a percentage standpoint of where we are?
        Mr. Lynch. I think there are probably a couple answers to
    that. I think if you look at what we have accomplished over the
    last 15 years, I think we have made good progress. That is not
    to say that there aren't additional projects out there. And the
    way we are approaching that, we do have an energy strategy. We
    have looked at our buildings, we audit our buildings; every
    year we look at 10 percent of our buildings and we identify
    opportunities. Those opportunities could be a host of things;
    it could be an energy saving project, it could be us going out
    and buying green power. There is a whole host of things that we
    look at. There are definitely opportunities out there. We are
    taking advantage of a number of tools that we can use; the
    Energy Saving Performance Contracts, our ability to go out and
    leverage green power, things like that.
        Mr. Platts. OK.
        Thank you, Mr. Chairman.
        Chairman Tom Davis. Thank you very much.
        We will start the questioning over here. Mr. Van Hollen.
        Mr. Van Hollen. Thank you, Mr. Chairman.
        Mr. Rivers, in your testimony you said that agencies do not
    receive the AFV credits for the purchase and use of hybrids
    under the mandates.
        Mr. Rivers. That is correct.
        Mr. Van Hollen. And then you go on to say nor should they
    because they can contribute to these other fleet goals. I guess
    my question is why shouldn't they and should we revisit this
    question. You raise it very briefly in your testimony. Should
    we revisit it? Because it seems to me if hybrids result in a
    greater fuel efficiency overall, result in energy savings, why
    shouldn't we revisit this so that we allow them to be counted.
        Mr. Rivers. I think you bring up an excellent point, sir.
    When we were giving it as part of the testimony, it was a very
    narrow view of the increase of alternative fuel usage. Usage of
    a hybrid would not increase alternative fuel usage, so we can't
    count it in that alternative fuel legislative area. We do think
    that they play a very significant role, though, in the
    reduction of petroleum usage, and we would strongly encourage
    and certainly be willing to work with Congress in how we can
    formulate both of those policies working together.
        We do think that there are concerns where maybe some of the
    policies may point us in a little bit different direction. We
    would like to see one comprehensive, cohesive policy. But right
    now we address it only because of the alternative fuel arena.
    Use of hybrids doesn't do that. We do support the use of
    hybrids, though, because of petroleum reduction, and we would
    like to see a more comprehensive policy that gets us there.
        Mr. Van Hollen. Right. I mean, if we revisited this, do you
    think that we could structure it in a way where we would
    actually increase our fuel efficiency of the fleet? In other
    words, could we revisit this, create the incentive so that you
    allow the hybrid fuel vehicles to count somehow, and would that
    not provide us greater energy savings as a Federal Government?
        Mr. Rivers. I think that would be, you know, an excellent
    approach in terms of what can we do to encourage more use of
    hybrids. I think that there is a very definite savings. There
    is also an easier acceptance and use of hybrids than maybe
    alternative fuels because you have more convenient refueling
    stations; the infrastructure is certainly there. So, yes, some
    way that could marry up the use of those two would be something
    we would certainly support.
        Mr. Van Hollen. Thank you.
        Thank you, Mr. Chairman.
        Chairman Tom Davis. Thank you.
        And thank you very much.
        Mr. Ruppersberger. Just one question on that same subject
    matter. Do we know how many hybrid vehicles we do have in use
    in the Federal Government?
        Mr. Rivers. I would have to defer to the Department of
    Energy; they collect the overall data. But I am not sure if you
    have hybrids.
        Mr. Garman. I do, Congressman. Right now there are only
    eight hybrid vehicles that we know of in the Federal fleet; and
    there are a couple of reasons for this. No. 1, hybrids are not
    yet on the GSA schedule. The manufacturers are not getting
    around to asking the Government to put these vehicles on the
    schedule. And the reason that they are doing that,
    manufacturers aren't really making money on hybrids, and they
    are not very interested in selling that many more of them at
    this point, until they get unit costs down a bit.
        And if I could just make a comment on a prior question. I
    think if Congress is thinking about maybe getting proscriptive
    about mandating hybrid purchases, Congress should take great
    care in making sure that it is looking at hybrid vehicles that
    will actually deliver fuel savings. There are hybrids that we
    expect to be entering the marketplace that have been hybridized
    not really so much for the purpose of providing fuel savings,
    but providing other consumer benefits. For example, there is a
    pickup truck that General Motors will soon be offering. It is a
    hybrid technically, but what they are really trying to achieve
    is putting a power invertor and a large battery in there so
    that a contractor, for instance, you can plug in a Skill saw at
    110 volts and drive that off of the truck.
        Now, I offer that saying that would be a hybrid, but it
    might not be the kind of hybrid that would actually deliver
    fuel savings. So Congress should take great care, if it
    specifies the purchase of hybrid vehicles, to do so in such a
    way that it would actually deliver petroleum products.
        Mr. Ruppersberger. I think that is an excellent point,
    because sometimes we get caught up on something that is new,
    and we have to make sure that we think it out and we research
    it. The convenience of refueling is an example of that.
        In your opinion, where do you think the future is with
    respect to hybrid vehicles, as the Federal Government needs
    vehicles to deliver the services in different arenas?
        Mr. Garman. Well, at the Detroit auto show just this last
    January, several automakers announced that they would be
    delivering no less than 12 hybrid models over the next 4 model
    years or so. You know, I am a hybrid vehicle owner myself, and
    so I am a great fan of the technology, but there are a couple
    of things to keep in mind. No. 1, they are more expensive; here
    is a price differential to be dealt with.
        Chairman Tom Davis. How much of a price differential are we
    talking about?
        Mr. Garman. Estimates are as much as $4,000. I think as the
    manufacturers get more and more hybrid vehicles into the
    marketplace, that unit cost differential will come down. I know
    in the trade press General Motors was talking about a price
    differential down to $1,500 in the 2005 timeframe. And that is
    one of the reasons why the President and the National Energy
    Plan proposed a tax credit, to equalize that cost between
    hybrid vehicles and convenient vehicles.
        Mr. Ruppersberger. Do you use a hybrid vehicle. Where do
    you refuel?
        Mr. Garman. It is a gasoline/electric hybrid, so I refuel
    at the gas station. It generates the electricity it needs on
    board the vehicle through a combination of regenerative
    braking; when you brake the vehicle it is actually generating
    some electricity for the nickel metal hybrid battery on board,
    and also there is a kind of integrated generator/alternator or
    electric motor alternator in the drive train that also uses the
    gasoline power of the engine to recharge the battery, it lets
    the gasoline engine shut down at stoplights and shut down when
    you are creeping along in city traffic.
        Mr. Rivers. If I could also add to that. Hopefully the
    availability of hybrids will become more prevalent for the
    Federal community. We have been able to just make some awards
    to both Toyota and Honda so that their hybrids are going to be
    available to the Federal agencies to purchase off GSA
    automotive contracts.
        Chairman Tom Davis. OK. Thank you.
        Let me ask a few questions. First of all, we have 165,000
    alternative fuel vehicles in the fleet, is that right?
        Mr. Rivers. I think 65,000 are currently in the fleet.
        Chairman Tom Davis. 65,000. Isn't that what I said?
        Mr. Rivers. It was 100,000 that had been purchased.
        Chairman Tom Davis. 65,000 currently in the fleet, 100,000
    purchased. How much more did those vehicles cost, on average,
    than a normal gasoline-powered vehicle?
        Mr. Rivers. Mr. Brasseux, would you like to?
        Mr. Brasseux. It varies specifically, Mr. Chairman,
    regarding the particular vehicle.
        Chairman Tom Davis. Why don't you move up to the microphone
    so we get it all recorded and everything?
        Mr. Brasseux. A dedicated CNG vehicle or a hybrid vehicle
    would have a substantial incremental cost, it could go all the
    way up to $7,500 to $8,000. Some of the E85 vehicles that are
    out there on the market today have very little incremental cost
    at all, which is why the vast majority of what we have in our
    fleet are E85 vehicles, because their incremental cost is low.
        I could get back to you for the record on an average.
        Chairman Tom Davis. I am not trying to upset the program.
        Mr. Brasseux. I understand.
        Chairman Tom Davis. I guess my point is simply every time
    we use the procurement system to get other societal goals,
    there is a cost, and I think it is important. This is a great
    hearing to understand what it is costing; and probably not that
    much in the scheme of a budget that runs into the hundreds of
    billions. And what are we accomplishing in terms of our greater
    goals of trying to get these vehicles into wider use? I think
    we would all like to wean ourselves from gasoline and oil. I
    always note that the stone age didn't end because they ran out
    of stones; the stone age ended because there were new
    technologies developed. And I think that will eventually happen
    here, and we want to encourage that to happen; that is the
    purpose behind the Government setting an example, but there is
    a cost to it. And as we take a look at tight budgets and
    everything else going on, I think we need to have an honest
    discussion over what is happening not just with the additional
    costs we pay, but what is happening out in greater society to
    encourage the private sector individuals to use these vehicles
    and Detroit to do it. So that is kind of my point.
        Now, the vehicles we are buying now, there is not much
    incremental cost?
        Mr. Brasseux. Well, again, it depends on the vehicle type.
    Since we have been buying these vehicles, since 1991, I think
    GSA Fleet has purchased approximately 57,000 alternative fuel
    vehicles. The total incremental cost for those vehicles is
    about $90 million over that timeframe, to give you a general
    idea.
        Chairman Tom Davis. OK. But today it is a much smaller
    increment now.
        Mr. Brasseux. Again, depending on the vehicle type. A
    hybrid vehicle has a substantial incremental cost.
        Chairman Tom Davis. Right.
        Mr. Brasseux. I have indicated CNG has a substantial
    incremental cost.
        Chairman Tom Davis. Which ones don't?
        Mr. Brasseux. E85's, the ethanol vehicles do not.
        Chairman Tom Davis. Oh, the ethanols do not. The Speaker
    will be happy to hear that.
        How much do you save on fuel with the ethanol?
        Mr. Rivers. Actually, there has not been a fuel savings by
    using ethanol.
        Chairman Tom Davis. In fact, it is more, isn't it?
        Mr. Rivers. That is correct.
        Chairman Tom Davis. Is that because of economy of scale,
    you think, more than anything else?
        Mr. Rivers. It certainly comes into play on that. I think
    part of it also then becomes the energy content of a gallon of
    E85 is not the same as a gallon of unleaded gasoline, so in
    effect you are going to have to buy more fuel to go the same
    distance; you know, you may take a 10 or 20 percent hit in
    terms of fuel efficiency. But a relative scale for 2002, and
    again, obviously, this is data given current gasoline prices,
    but the Government paid an average of $1.23 a gallon for
    unleaded gasoline, a combination of unleaded gasoline and
    diesel; and our alternative fuel reported payments were about
    $1.50 a gallon, and the overwhelming majority of that was
    ethanol.
        Chairman Tom Davis. And ethanol does not have the same mpg?
        Mr. Rivers. That is correct. There is somewhat of a hit.
        Chairman Tom Davis. So when you factor that in, what is it,
    a 10 percent hit, 20 percent hit? Can you ballpark it?
        Mr. Garman. Mr. Chairman, we estimate that use of E85, 85
    percent ethanol in a vehicle, is 30 percent more expensive per
    mile; and that factors in both the additional cost of the
    ethanol and the lower energy content on an equivalent Btu
    basis.
        Chairman Tom Davis. Now, let me ask this. If ethanol were
    more widely distributed, if we had more cars that contained it,
    would the costs come down significantly, do you think?
        Mr. Garman. We can't legislate the laws of physics that
    change the energy content in the ethanol, so on a per mile
    basis ethanol would still be more expensive.
        Chairman Tom Davis. But the production cost of ethanol,
    particularly with gas prices going up, could all of a sudden
    look better.
        Mr. Garman. There are opportunities for cost savings in
    economy of scale in ethanol.
        Chairman Tom Davis. More difficulty is where do you fill up
    your tank with ethanol.
        Mr. Garman. Right. And most of our ethanol today is made
    from corn, and there is pretty much an upper limit. You know,
    to put it in perspective, we can probably produce about 5
    billion gallons a year of ethanol from corn, and right now I
    think we are around 3.7. And that may sound like a lot until
    you realize we use something on the order of 133 billion
    gallons of gasoline each year and around 33 billion gallons of
    diesel each year. So there is a limit to how much ethanol that
    we can produce from corn.
        Chairman Tom Davis. What else could you produce it from?
        Mr. Garman. We are working on technologies to produce it
    from cellulosic materials such as the wheat straw, the corn
    stover, things that are currently left in the field. We want to
    be able to take that cellulosic material and, through the
    application of some enzymes and other technology, break that
    down and have a great new source of alcohol type fuels.
        Chairman Tom Davis. These are all good policies, but you
    have just totaled up probably in the hundreds of millions the
    additional amounts we are paying for these programs, and if we
    can reach wider societal goals and governmental goals and try
    to get wider usage of this and the like, then it is clearly
    worthwhile. But if we are not going anywhere, then it is just
    an added structure. I mean, do you have any sense of that?
        Mr. Garman. I do. I mean, you are right. Alternative fuel
    vehicles have not really taken off in the consumer market.
    People are not clambering to buy compressed natural gas
    vehicles.
        Chairman Tom Davis. It is just hard to fill it up.
        Mr. Garman. Right. Now, there are excellent niche markets.
    Urban buses are excellent places; in airports, both the tugs
    and the passenger buses that shuttle between. These are
    excellent niche markets, and this is where we are really seeing
    natural gas vehicles, for instance, come into play in a pretty
    large way.
        To get consumers to change, you have to offer them
    something that is dramatic and that is exciting in an
    alternative fuel vehicle. We drove here to the hearing this
    morning in an alternative fuel van and, you know, it drives and
    it feels and it looks like a regular van except you will pay a
    little bit more up-front, you will have a lower resale value,
    and you will have a harder time filling it up. That is not
    exactly inspiring consumers.
        Chairman Tom Davis. It is patriotic, though.
        Mr. Garman. And believe me, we do advertise. We have a big
    sign on the side that says ``Clean Air Van.'' But you are
    right. And I think that is part of what the President's
    Hydrogen Fuel Initiative and FreedomCAR program is all about;
    and, granted, it is a long-term play, but that is pointed
    toward a totally different kind of vehicle that could really
    excite consumers, and that would be a mechanism of making
    environmentally sustainable technologies economically
    sustainable.
        Chairman Tom Davis. When I headed the county government in
    Fairfax, we bought electric and gas vehicles because you fill
    it all up at the same place and that kind of thing, but it
    ended up costing us money.
        Mr. Garman. Fairfax County was the classic example of the
    early technology adopter, and Fairfax County was among the very
    first of entities to have natural gas trucks for the trash
    fleet; and they got rid of them, I think, just about a year and
    a half ago.
        Chairman Tom Davis. After I left.
        Mr. Garman. They were very expensive.
        Chairman Tom Davis. Well, we try to do the right thing.
        Mr. Tierney.
        Mr. Tierney. Thank you. You should have stayed.
        Chairman Tom Davis. I will take that as a compliment.
        Mr. Tierney. It was very much a compliment.
        Just following up on that a little bit, because I was
    making notes. You were talking earlier about the cost of the
    E85s being not too expensive and everything like that, but
    obviously as the chairman was getting into, the problem is, of
    course, making use of them. You buy them and then it turns out
    you never use the ethanol aspect of it, you just use the
    gasoline, and off we go. What have we really accomplished other
    than, you know, a little bit of a CAFE gimmick to try and meet
    that?
        Why don't we concentrate more on the hybrids and why, Mr.
    Chairman, I wonder, too, why don't we think of as a policy here
    of steering it toward the hybrid? I think the investment that
    we could make in the Federal Government looking in that
    direction will eventually help in bringing the cost down
    overall for consumers generally and move us in a direction that
    we need to be going.
        Mr. Garman. I think that is an excellent point. Right now
    you have a choice of exactly three hybrids on the market that
    you could buy: a Honda Insight, which is a two-seater, not
    really appropriate for most Government activities; and then two
    compacts, a Honda Civic and a Toyota Prius. In fact, I saw a
    Prius parked right out front of the Rayburn Building this
    morning.
        Mr. Tierney. Senator Boxer's.
        Mr. Garman. Yes. But, you know, those are, as I think was
    indicated, just now getting onto the GSA lists. There is,
    again, lore that Toyota has not really pushed the vehicles very
    hard because they are not making money on them; in fact, they
    may be losing money on every copy.
        Mr. Tierney. But, I mean, if we decided we were going to
    make the investment on this, maybe we would wake up Detroit,
    God forbid, you know, that both the unions and the management
    people over there, to realize that there is a future in this
    stuff and that there is a market for them and they might have a
    very good customer in the Federal Government; and if they
    don't, then we are going to be looking at the Prius and models
    like that and telling them that there is a market for them. But
    unless we are willing to put the Federal Government's money in
    that direction, we are not going to get the private capital to
    follow, we are not going to get that investment to follow. So I
    am wondering why we don't just bite the bullet and say, all
    right, we are going to start telling people that at a given
    point in time this is all we are going to order; you know, we
    are just going to order this type of a hybrid vehicle and this
    is the dimensions that we need, specifications that we need for
    it, and let's go.
        Mr. Garman. I think I pointed out before you were able to
    join the meeting that Detroit has actually announced at the
    recent Detroit auto show that they will be offering, I think
    General Motors alone, 12 new models of hybrid vehicles
    beginning in 2005 through 2008 timeframe.
        Mr. Tierney. Better late than never, right?
        Mr. Garman. You know, I think the automakers are trying to
    do precisely the same thing. I mean, they want to understand
    where the market is.
        Mr. Tierney. But I think we create the market.
        Mr. Garman. I understand.
        Mr. Tierney. And that is why I think it is important that
    we set the policy out there; and if we think that there is a
    reasonable timeframe that we can move them forward a little bit
    without making it impossible or whatever, then maybe perhaps we
    ought to look at a policy that says given 2006 or whatever we
    are going to purchase the following cars with these
    specifications in hybrid and just go with and let people bid on
    that, and either they are going to get it as an American-made
    product and be in the bidding process or they are not going to
    get it and they are going to be out. But I think if we put
    enough of those cars on the road and give that sort of an order
    in there, then we bring the price down relatively for all
    consumers and we help them create the market and move on.
        Sound reasonable, Mr. Rivers?
        Mr. Rivers. Well, if I could add just a couple of things.
    First, I think there would have to be a couple of steps taken.
    The current law in the books under the Energy Policy Act
    requires that 75 percent of the Federal Government's light duty
    vehicle acquisitions have to be alternative fuel, and it goes
    back to what Mr. Van Hollen was saying about hybrid versus
    alternative fuel. So we would have to have a clarification on
    that.
        Mr. Tierney. I am sorry, I got interrupted by this beeper,
    and I would like you to repeat that, if you would for us.
        Mr. Rivers. I am sorry, sir, I didn't hear you.
        Mr. Tierney. I got interrupted by this beeper that is in my
    pocket here, and I didn't hear all that I wanted to hear of
    your answer. I apologize.
        Mr. Rivers. Yes. I do think that one of the things that we
    have to take into consideration, right now the Federal
    Government is under the Energy Policy Act on the vehicle side
    that 75 percent of the new light duty vehicles have to be
    alternative fuel, and hybrids do not quality as alternative
    fuel.
        Mr. Tierney. I guess my point was that we probably ought to
    change that policy. And I think that is why the chairman is
    having this meeting, is that hopefully you can direct us, and
    you just have, into one area we should be looking at.
        Mr. Rivers. One of the other things that we would need to
    do, and, again, this would be a coordination issue with
    industry, is ensure that the maintenance, repair, and fueling
    infrastructure, although fueling is not as significant,
    obviously, in the hybrids, but the maintenance and repair
    infrastructure is out there to support the new technology
    coming in.
        But one thing, we would also like to see other fleets
    involved. You know, the Federal fleet, while it is significant
    in size, we have had difficulty moving, you know,
    manufacturers. We buy 60,000 vehicles a year; it is 0.36
    percent of the total vehicles sold in the United States.
        Mr. Tierney. What would the impact be if we gave some sort
    of incentive to move States enjoining us?
        Mr. Rivers. Oh, I think the more people that we get
    involved in it, sir, I think that would be definitely the right
    direction, whether it is States, private sector fleets, you
    know, or local governments. There needs to be an economy of
    scale there that would play into; the Federal Government could
    certainly provide, you know, a base if others can build around
    it. I know that there is a lot of interest within the Federal
    community on hybrids. It is just a question of getting there
    now.
        Mr. Tierney. Just two things. One is I think if we
    incentivize States and local communities to join in the Federal
    package, we move in the right direction. And the other is that
    while we do have to make sure that we have the infrastructure
    for servicing the hybrids in place, it is probably a lot easier
    problem than trying to put in place the infrastructure to get
    ethanol and gas or whatever delivered, as well as the
    maintenance of those vehicles.
        Mr. Rivers. Yes, sir.
        Mr. Tierney. Thank you.
        Chairman Tom Davis. Thank you.
        We have about 6 or 7 more minutes. Let me ask a couple more
    questions, then if you have anymore; otherwise I think we can
    probably wrap this up and let you go, because we have some
    votes on the floor, and I don't want to hold you while we go
    over and come back; you have got other things to do.
        Mr. Lynch, let me ask you. GAO reports that there are 44
    buildings in the GSA inventory that face more than $20 million
    in expenses in order to update them with energy-efficient
    facilities. We are trying to put together a Federal property
    management reform bill that would enable agencies to retain a
    share of their profits from property disposal, rather than
    returning it all to the Treasury. These profits could be an
    excellent resource for addressing some of these funny
    challenges facing agencies. Would you agree this kind of
    flexibility would help agencies in dealing with some of these
    challenges?
        Mr. Lynch. Yes, sir, it would. It would definitely help us.
        Chairman Tom Davis. Mr. Rivers, could you walk me through
    the current status of the Government's efforts to meet Federal
    requirements in purchasing alternative fuel vehicles? Is it
    difficult to identify and track these alternative fuel
    vehicles, using AMV? What modifications would you recommend to
    the requirements that we might make?
        I think this goes along with what Mr. Tierney was talking
    about, because we are going to be rewriting some legislation
    from this committee as part of the energy bill.
        Mr. Rivers. There has been progress in the number and the
    quality of alternative fuel vehicles available, and that has
    been our prime experience, whether they are ethanol or
    compressed natural gas. Certainly from 1988, when the
    Alternative Motor Fuels Act went into place, we have seen a
    dramatic increase in the quality of the vehicles from the
    manufacturers.
        There still is difficulty in terms of matching up what the
    manufacturers produce with what the Government needs; are we
    getting exactly the right type vehicle. But I think even more
    so there has to be consideration if alternative fuel is going
    to be used, which is what we are under at the time being, there
    has to be a concerted effort to develop an infrastructure.
    Right now we have got, for example, 180,000 gasoline fueling
    stations in the country; there are between 200 and 300 E85
    fueling stations in the country, almost all concentrated in the
    Midwest, there are 2 in the Washington, DC, area. Progress, you
    know, has been made and there are certainly more of them, but
    there is that type of challenge that if we want to get the
    vehicles in use and out there, there has to be more of a
    convenience factor not only for the Federal community, but then
    also bringing in other players.
        I guess if I wanted to summarize it, you know, from the
    Federal community it is the dollars, the vehicle availability,
    and the infrastructure are the main issues that we would have
    to focus on. We would be happy to work with you on that.
        Chairman Tom Davis. OK. Thank you very much.
        Any other questions over on this side?
        Mr. Van Hollen.
        Mr. Van Hollen. Just very briefly.
        Following up on this discussion of hybrids versus
    alternative fuel vehicles and achieving the goals. Have you
    done a cost benefit analysis to see, with respect to the
    hybrids compared to a similar model of alternative fuel
    vehicle, which one is more cost-effective in terms of the fuel
    efficiency savings?
        Mr. Rivers. We haven't.
        I don't know, has the Department of Energy done that?
        Mr. Garman. I will check, and if we have we will provide
    that for the record.
        Generally said, I mean, just personal experience, the price
    difference in the Toyota Prius that I drive would not, at the
    energy prices when I bought it, say $1.50 a gallon, would not
    justify the purchase. And I don't know where the switch point
    happens, but I would like to answer that for the record.
        Mr. Van Hollen. Well, the way energy prices are going these
    days. And if you could give us the figures on how many miles
    you assume the vehicle has traveled.
        Mr. Garman. Right, a 10-year lifetime.
        Mr. Van Hollen. And how much the savings is and what the
    shortfall is.
        Mr. Garman. Right.
        Mr. Van Hollen. But also comparing that to the cost of the
    alternative fuel vehicles.
        Mr. Garman. Right.
        Mr. Van Hollen. Same model.
        Mr. Garman. If I could just make one more point.
        Chairman Tom Davis. The point of this, of course, if we
    were going to just do this for saving money to the Government,
    we might not ever have undertaken this endeavor. There is a
    higher societal goal, as the gentleman knows, trying to get at
    least some kind of mass production on this and move this out in
    the consumer markets and other government markets; and since we
    are the big purchaser, the 10,000 pound guerilla. So if we try
    to justify this on cost-savings, we will go nowhere, I am
    afraid.
        Mr. Garman. And I just wanted to make the point because
    there was talk of stimulating the market through Government
    purchases; and clearly there is a role to be played there, but
    I felt compelled to make the point that the President has put
    forth in his budget, as well as in the national energy policy
    document a proposal to provide tax credits for hybrid vehicles
    that they are estimating a revenue impact of $3.2 billion, up
    to $4,000 per vehicle. That could drive up to 800,000 hybrid
    vehicles over the time, so that is another very important
    incentive.
        Chairman Tom Davis. Well, who buys them?
        Mr. Garman. That would be a tax credit for consumers.
        Chairman Tom Davis. So consumers could be encouraged.
        Mr. Garman. So the general consumers in the broad market
    could see, you know, the Ford Escape that they will be able to
    see in a showroom, a Ford Escape hybrid at the end of the year,
    perhaps, cost them the same amount of money as a conventionally
    powered Ford Escape; and that could be a powerful inducement to
    get more of these vehicles on the road.
        Chairman Tom Davis. Thank you.
        Any other questions?
        Mr. Van Hollen. I know we have to go, but one.
        I noticed that right now the funds, you don't get the
    additional funds for the additional cost of the vehicle, which
    has got to be a disincentive for some people to look at it.
    Just as the President is offering a tax credit for, you know,
    hybrid fuel vehicles, why wouldn't we provide the same kind of
    incentive within the Government to pick up that additional
    cost?
        Mr. Garman. You make an excellent point; I can't argue with
    it.
        Chairman Tom Davis. Thank you very much. Let me just thank
    all of you for coming in. This is an important piece of laying
    a foundation for the energy bill, and we have jurisdiction over
    this particular site. We may get back to you, as we draft some
    language, to try to get your comments on it. Thank you,
    gentlemen, for participating in this. The briefing paper that
    was given to members will be included in this. If you would
    like to supplement your comments, think of anything else, you
    have 10 days to do that.
        Thank you very much to my staff for organizing this hearing
    and members for participating. I think it has been productive,
    and the meeting is adjourned.
        [Whereupon, at 11:35 a.m., the committee was adjourned, to
    reconvene at the call of the Chair.]
        [Additional information submitted for the hearing record
    follows:]

    [GRAPHIC] [TIFF OMITTED] T6197.022

    [GRAPHIC] [TIFF OMITTED] T6197.023

    [GRAPHIC] [TIFF OMITTED] T6197.024

    [GRAPHIC] [TIFF OMITTED] T6197.025

    [GRAPHIC] [TIFF OMITTED] T6197.026

    [GRAPHIC] [TIFF OMITTED] T6197.027

    [GRAPHIC] [TIFF OMITTED] T6197.028

    [GRAPHIC] [TIFF OMITTED] T6197.029

    [GRAPHIC] [TIFF OMITTED] T6197.030

    [GRAPHIC] [TIFF OMITTED] T6197.031

    [GRAPHIC] [TIFF OMITTED] T6197.032

    [GRAPHIC] [TIFF OMITTED] T6197.033

    [GRAPHIC] [TIFF OMITTED] T6197.034

    [GRAPHIC] [TIFF OMITTED] T6197.035

    [GRAPHIC] [TIFF OMITTED] T6197.036

    [GRAPHIC] [TIFF OMITTED] T6197.037

    [GRAPHIC] [TIFF OMITTED] T6197.038