[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
RUNNING ON EMPTY: HOW THE OBAMA ADMINISTRATION'S GREEN ENERGY GAMBLE
WILL IMPACT SMALL BUSINESS AND CONSUMERS
=======================================================================
HEARING
before the
SUBCOMMITTEE ON REGULATORY AFFAIRS,
STIMULUS OVERSIGHT AND GOVERNMENT SPENDING
of the
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
OCTOBER 12, 2011
__________
Serial No. 112-87
__________
Printed for the use of the Committee on Oversight and Government Reform
Available via the World Wide Web: http://www.fdsys.gov
http://www.house.gov/reform
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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
DARRELL E. ISSA, California, Chairman
DAN BURTON, Indiana ELIJAH E. CUMMINGS, Maryland,
JOHN L. MICA, Florida Ranking Minority Member
TODD RUSSELL PLATTS, Pennsylvania EDOLPHUS TOWNS, New York
MICHAEL R. TURNER, Ohio CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina ELEANOR HOLMES NORTON, District of
JIM JORDAN, Ohio Columbia
JASON CHAFFETZ, Utah DENNIS J. KUCINICH, Ohio
CONNIE MACK, Florida JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan JIM COOPER, Tennessee
ANN MARIE BUERKLE, New York GERALD E. CONNOLLY, Virginia
PAUL A. GOSAR, Arizona MIKE QUIGLEY, Illinois
RAUL R. LABRADOR, Idaho DANNY K. DAVIS, Illinois
PATRICK MEEHAN, Pennsylvania BRUCE L. BRALEY, Iowa
SCOTT DesJARLAIS, Tennessee PETER WELCH, Vermont
JOE WALSH, Illinois JOHN A. YARMUTH, Kentucky
TREY GOWDY, South Carolina CHRISTOPHER S. MURPHY, Connecticut
DENNIS A. ROSS, Florida JACKIE SPEIER, California
FRANK C. GUINTA, New Hampshire
BLAKE FARENTHOLD, Texas
MIKE KELLY, Pennsylvania
Lawrence J. Brady, Staff Director
John D. Cuaderes, Deputy Staff Director
Robert Borden, General Counsel
Linda A. Good, Chief Clerk
David Rapallo, Minority Staff Director
Subcommittee on Regulatory Affairs, Stimulus Oversight and Government
Spending
JIM JORDAN, Ohio, Chairman
ANN MARIE BUERKLE, New York, Vice DENNIS J. KUCINICH, Ohio, Ranking
Chairwoman Minority Member
CONNIE MACK, Florida JIM COOPER, Tennessee
RAUL R. LABRADOR, Idaho JACKIE SPEIER, California
SCOTT DesJARLAIS, Tennessee BRUCE L. BRALEY, Iowa
FRANK C. GUINTA, New Hampshire
MIKE KELLY, Pennsylvania
C O N T E N T S
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Page
Hearing held on October 12, 2011................................. 1
Statement of:
Anwyl, Jeremy, CEO, Edmunds.com; Marlo Lewis, Ph.D., senior
fellow, Competitive Enterprise Institute; Roland Hwang,
Transportation Program Director, Natural Resources Defense
Council; and Scott Grenerth, independent trucker, owner-
operator, Independent Driver's Association................. 7
Anwyl, Jeremy............................................ 7
Grenerth, Scott.......................................... 61
Hwang, Roland............................................ 37
Lewis, Marlo, Ph.D....................................... 16
Strickland, David, Administrator, National Highway Traffic
Safety Administration; Gina McCarthy, Assistant
Administrator for the Office of Air and Radiation,
Environmental Protection Agency, accompanied by Margo Oge,
Director of the Office of Transportation and Air Quality,
Environmental Protection Agency............................ 101
McCarthy, Gina........................................... 108
Strickland, David........................................ 101
Letters, statements, etc., submitted for the record by:
Anwyl, Jeremy, CEO, Edmunds.com:
Information concerning academic research................. 98
Prepared statement of.................................... 10
Buerkle, Hon. Ann Marie, a Representative in Congress from
the State of New York, letter dated May 16, 2011........... 122
Cummings, Hon. Elijah E., a Representative in Congress from
the State of Maryland, prepared statement of............... 5
Grenerth, Scott, independent trucker, owner-operator,
Independent Driver's Association, prepared statement of.... 63
Hwang, Roland, Transportation Program Director, Natural
Resources Defense Council, prepared statement of........... 39
Kucinich, Hon. Dennis J., a Representative in Congress from
the State of Ohio, prepared statement of................... 90
Lewis, Marlo, Ph.D., senior fellow, Competitive Enterprise
Institute, prepared statement of........................... 18
McCarthy, Gina, Assistant Administrator for the Office of Air
and Radiation, Environmental Protection Agency, prepared
statement of............................................... 110
Strickland, David, Administrator, National Highway Traffic
Safety Administration, prepared statement of............... 104
RUNNING ON EMPTY: HOW THE OBAMA ADMINISTRATION'S GREEN ENERGY GAMBLE
WILL IMPACT SMALL BUSINESS AND CONSUMERS
----------
WEDNESDAY, OCTOBER 12, 2011
House of Representatives,
Subcommittee on Regulatory Affairs, Stimulus
Oversight and Government Spending,
Committee on Oversight and Government Reform,
Washington, DC.
The subcommittee met, pursuant to notice, at 10 a.m., in
room 2247, Rayburn House Office Building, Hon. Jim Jordan
(chairman of the subcommittee) presiding.
Present: Representatives Jordan, Buerkle, Labrador, Guinta,
Kelly, Issa (ex officio), Kucinich, Speier, and Cummings (ex
officio).
Staff present: Michael R. Bebeau, assistant clerk; Molly
Boyl, parliamentarian; David Brewer, counsel; Tyler Grimm,
professional staff member; Christopher Hixon, deputy chief
counsel; Kristina Moore, senior counsel; Sharon Meredith Utz,
research analyst; Krista Boyd, Claire Coleman, minority
counsels; Ashley Etienne, minority director of communications;
Devon Hill, minority assistant; Jennifer Hoffman, minority
press secretary; and Suzanne Sachsman Grooms, minority chief
counsel.
Mr. Jordan. All right, the subcommittee will come to order,
do opening statements. I want to welcome our witnesses or
panelists and guests.
The subcommittee convenes this morning to continue with the
investigation into the process by which the Obama
administration set fuel economy standards for cars and trucks,
and the impact these standards will have on small businesses
and consumers.
On July 29, 2011, President Obama announced his
administration had come to an agreement with the State of
California, labor unions, and several major auto manufacturers
on increased corporate average fuel economy standards for 2017
through 2025. Previously, the administration enacted fuel
economy standards for light-duty cars and trucks from the 2012
to 2016 time line and for heavy-duty trucks from 2014 to 2018.
In announcing the latest version of these standards, the
President boasted that the agreement had been reached ``without
Congress.'' Based on this statement and other evidence, it
appears that the President has forgotten that there are in fact
three separate, but equal, branches of Government, and it is
Congress that writes the law. In addition to forgetting about
Congress, the President also forgot about his pledge to be the
most transparent president in history. It appears that each of
these standards were set based on closed-door negotiations with
select stakeholders who sometimes were awarded with billions in
Federal grants or loans or, in the case of a few, a generous
taxpayer bailout.
Despite the President's expressed desire to craft
regulations in a way that is sensitive to their impact on job
creation, the President's staff never bothered to consult with
consumers or the small businesses that will be impacted by
these very regulations. While the administration has argued
that a future notice and comment rulemaking will cure this
defect, there is reason to believe that such a process will be
merely a pro forma exercise and that the voice of the consumers
and small businesses will never be heard because the critical
elements of the regulation are already set in stone.
What is more, these new regulations do not come cheap. The
2012 to 2016 standards are expected to cost manufacturers $50
billion in compliance costs. The 2017 to 2025 standards may
well cost three times that amount, $150 billion. Truckers can
also expect to pay a minimum of $6,000 more per truck starting
in just 2 years, and many argue that the estimate is at the low
end.
Because of these concerns, Chairman Issa has sent detailed
letters to the White House and the agencies asking the
administration to reveal the process used to determine the
standards and to be transparent with the public on the impact
these higher fuel economy standards will have on future cars
and trucks. We look forward to reviewing the administration's
response.
In addition to these procedural concerns, today's hearing
will focus on the impact these fuel economy standards are
expected to have on consumer choice and the safety of the
vehicles. The committee wants to know how much these
regulations will cost and how many consumers will be priced out
of the new car market. If consumers can't afford to purchase
new vehicles, what will be the impact on the many automobile
dealerships that depend on new car sales for their very
survival.
It appears that the administration is simply substituting
its bureaucratic judgment for the independent judgment of the
marketplace. When Government substitutes its judgment for the
private market, the result is never good. Most likely, these
standards will force the auto industry to limit consumer choice
and manufacture products that Americans may not want or simply
cannot afford.
In the case of the trucking industry, we want to know if
the heavy-duty fuel economy standards are necessary and, if so,
how they will impact the livelihood of independent truckers. It
appears as though the administration's heavy-duty truck
standards will have dire consequences for independent truckers,
who are the backbone of American commerce. Independent truckers
did not have a seat at the table during the administration's
negotiations, but these negotiations now threaten to force them
off the road.
We also want to know if NHTSA has a handle on how many
people may lose their life or suffer severe injury as a result
of these standards. In the case of light-duty vehicles, these
standards will force Americans to drive lighter weight
vehicles. This has significant implications for driver safety.
Moreover, if the heavy-duty trucking regulation forces
independent owner-operators to retire, it is possible that less
experienced drivers will take their place. This turnover could
have severe implications for highway safety as well.
Regrettably, we may never know the full truth about how the
2009 standards were set, because they were the result of closed
door negotiations where, according to the California Air
Resources Board Chairman Mary Nichols, participants took a
``vow of silence'' and took great pains to ``put nothing in
writing ever.''
The committee wanted to ask Ms. Nichols what exactly she
meant by that statement but, regrettably, she has refused to
appear before this panel. The committee also wanted to ask Ms.
Nichols why her State is in the business of setting fuel
economy standards at all, in light of the explicit
congressional preemption of State action on matters relating to
fuel economy standards. In my opinion, her absence today
crystalizes why the State of California should not be part of
this rulemaking process. Quite simply, CARB is unaccountable
and unresponsive to the needs of the Nation and should not be
in the business of establishing Federal law.
With these considerations in mind, we look forward to
hearing from today's witnesses.
With that, I will yield to the ranking member of the full
committee, the gentleman from Maryland, is now recognized for 5
minutes.
Mr. Cummings. Thank you, Mr. Chairman.
I would like to welcome Administrator Strickland, Assistant
Administrator McCarthy, and Director Oge for joining us today
to discuss the recently announced corporate average fuel
economy and greenhouse gas emission standards for automobiles
for models year 2017 to 2025.
I am pleased that the Obama administration is moving
forward on fuel economy standards that will decrease our
dependence on foreign oil, improve vehicle value for consumers,
our constituents, and improve air quality across our Nation.
Despite what some may claim, the standards proposed by the
Obama administration are not grabs from thin air. In 2007,
President Bush signed into law the Energy Independence and
Security Act, which set a national standard of 35 miles per
gallon by 2020. President Bush praised this legislation,
calling it, ``a major step toward reducing our dependence on
oil; confronting global climate change, expanding the
production of renewable fuels; and giving future generations of
our country a Nation that is stronger, cleaner, and more
secure.''
Now, just 4 years later the majority has arrived at the
puzzling conclusion that improving energy efficiency is not in
our national interest. Today's hearing is entitled Running on
Empty, which is a misguided criticism of fuel efficiency
standards supported by the industry, consumers, and the
administration. Frankly, I have a hard time understanding what
the majority's problem is with the fuel efficiency standards,
or whose interests they are representing in opposing them.
I also understand that the majority is concerned that the
administration has been inappropriately colluding with
stakeholders. This is also a strange claim considering the
frequent complaints from the other side about the
administration seeking too little input from industry when
developing regulations.
While the administration has worked out a proposal that
automakers support, as you will hear today, it fully intends to
go through the formal rulemaking process and comply with the
requirements of the Administrative Procedures Act.
The new standards are critical to ensuring that consumers
are getting the most for their money. According to the Union of
Concerned Scientists, the new standards are expected to save
average drivers, our constituents, $3,500 over the lifetime of
their vehicles, after factoring in the cost of new fuel
technology. In recent months, several of the top automakers
have reported that their customers are increasingly choosing
fuel-efficient vehicles over the less efficient products. We
can certainly understand that in these recessionary times.
The new standards also will help create new jobs. Serus
estimates that the standards could create as many as 8,400 new
jobs in Maryland, my State, and 500,000 jobs nationwide by
2030.
While there undoubtedly will be some challenges to meeting
these standards, the substantial buy-in from industry indicates
that they are achievable and ultimately will benefit consumers
and the U.S. auto industry as a whole.
With that, Mr. Chairman, I yield back.
[The prepared statement of Hon. Elijah E. Cummings
follows:]
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Mr. Jordan. I thank the gentleman for his statement.
We will now introduce our first panel. We first have Mr.
Jeremy Anwyl, who is CEO of Edmunds.com. We also have Dr. Marlo
Lewis, senior fellow at the Competitive Enterprise Institute;
Mr. Roland Hwang is the transportation program director at the
Natural Resources Defense Council; and finally, Mr. Scott
Grenerth is an independent trucker from the Fourth District of
Ohio. So we appreciate all of you being here today.
Pursuant to the rules, all witnesses are to be sworn in
before they testify, so if you will please stand up and raise
your right hands.
[Witnesses sworn.]
Mr. Jordan. Let the record reflect that all witnesses
answered in the affirmative. Thank you.
We will go now to our first witness, Mr. Anwyl.
STATEMENTS OF JEREMY ANWYL, CEO, EDMUNDS.COM; MARLO LEWIS,
PH.D., SENIOR FELLOW, COMPETITIVE ENTERPRISE INSTITUTE; ROLAND
HWANG, TRANSPORTATION PROGRAM DIRECTOR, NATURAL RESOURCES
DEFENSE COUNCIL; AND SCOTT GRENERTH, INDEPENDENT TRUCKER,
OWNER-OPERATOR INDEPENDENT DRIVER'S ASSOCIATION
STATEMENT OF JEREMY ANWYL
Mr. Anwyl. Thank you, Chairman Jordan and Ranking Member
Cummings and members of the committee. Thank you for the
opportunity to speak today on this most important issue.
I have been tracking the progress of the soon to be
proposed CAFE standards with a growing level of concern. This
concern relates to several areas, but my comments this morning
will focus on one in particular. This is one we at Edmunds
think about every day, and that is the automotive consumer.
I have three points to make this morning. The first is that
up until now consumers have been either ignored or
misrepresented; the second is that consumers matter; and the
third is that consumers are most definitely not on board.
The evidence that consumers have been ignored is
everywhere, but one of the clearest is this interim technical
assessment prepared by EPA that listed the CAFE stakeholders.
These included environmental groups, auto firms, labor unions,
and others, even EV charging firms were seen as needing a seat
at the table, but apparently not consumers.
Consumers matter because responding to their needs is what
drives innovation, and innovation is what should drive our
economy. They matter because, at the end of the day, they are
the ones who will be asked to buy and to drive the vehicles our
Government is potentially demanding car companies build.
Most importantly, let me emphasize the consumer is not on
board with the proposed standards. Now, I know there has been a
blizzard of polls showing consumers want higher mileage
standards. My contention is these polls are worse than
meaningless; they are in fact grossly misleading.
Instead of polls, we should, first and foremost, be guided
by what consumers are actually doing, by actual purchases. In
the U.S. market, consumers have demonstrated the marked
preference for larger vehicles, illustrated by sales as
recently as just last month. And a particular caution exists
around the new high-tech higher mileage vehicles that have been
introduced. These are the very vehicles that the administration
seems determined to mandate through the proposed CAFE
standards. In these instances, it is not the car company that
is not getting it; they are delivering the goods. It is the
consumer that is not interested. And in several cases these
cars are selling slowly, even after large tax credits have been
offered.
Any study of actual sales makes clear that for the vast
majority of consumers fuel economy is simply not their primary
motivating factor when purchasing a vehicle. This doesn't mean
they don't care about fuel economy, just that other things are
more important.
Consumers decide which vehicle to buy based on a weighing
of vehicle features and a judgment on which set of features
best meet their needs. In other words, they make tradeoffs.
Price and fuel economy for most consumers represent costs.
Passenger capacity, cargo space, towing ability, and other
things represent features. Consumers are always happy to pay
less or save fuel, but not if it means giving up features they
deem important. This is key.
Edmunds can actually add a special clarity around this
issue of consumer preferences and demand because among our many
datasets we have a market simulation model that was developed
working with leading academics. This simulator can be used to
show how consumers weight various vehicle attributes in terms
of importance. And I have actually run an analysis for this
committee and the following are the results.
Note that vehicle mileage accounts for only about 6 percent
of why consumers purchased a particular vehicle. As you would
expect, the weighting does vary amongst vehicle categories, but
it is important to note that even in the heavily cost-sensitive
segment of subcompacts, mileage only accounts for about 15
percent of the purchase decision.
There is an obvious factor that can influence these
weightings, and that is the price of fuel. We have seen that
when fuel prices jump there is an increase in the number of
consumers who consider smaller vehicles and, in some cases, buy
them. But these effects are not as dramatic as I have seen
claimed. Further, they have been short-lived as consumers have
shifted back to larger vehicles quickly, either because they
grew accustomed to the higher price, fuel prices dropped, or
maybe a little bit of both.
Looking at the data, there is an argument that could be
made that if fuel prices increase sufficiently, market demand
could align with future CAFE standards, and this is an
interesting point. But the increase, about a doubling of
today's price, would need to be far higher than even the most
extreme forecast deemed likely. And we should also consider the
chance that fuel prices in the mid-term could actually be lower
than prices seen today.
I do have some good news. If we look back, the auto
industry seems to have delivered the impossible: they have
added features, increased safety, elevated performance, and
delivered increased fuel economy, much of this even during a
period when CAFE standards were stable. I credit mostly the
advance of technology and expect this progress to continue. But
if mandates trigger an escalation of prices, a reduction in
consumer utility, or the adoption of technologies before they
have been proven, consumers will react. This reaction could
destabilize an industry that is a vital engine of our
collective prosperity.
Thank you again for the opportunity to speak and I look
forward to your questions.
[The prepared statement of Mr. Anwyl follows:]
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Mr. Jordan. Thank you, Mr. Anwyl.
Dr. Lewis.
STATEMENT OF MARLO LEWIS, PH.D.
Mr. Lewis. Mr. Chairman and Ranking Member Cummings, thank
you for inviting me to testify today.
I know of no oversight proceeding more important than
committee Chairman Issa's investigation of the administration's
actions to regulate greenhouse gases and fuel economy. Only
last year Congress declined to give EPA explicit authority to
regulate greenhouse gases when Senate leaders abandoned cap-
and-trade legislation. Recall that a key selling point for the
Waxman-Markey cap-and-trade bill was its broad preemption of
EPA regulation of greenhouse gases through the Clean Air Act.
A bill introduced in 2009 authorizing EPA to do exactly
what it is doing now, regulate greenhouse gases through the
Clean Air Act, as it sees fit, would have been dead on arrival.
Therefore, the notion that Congress gave EPA such expansive
authority in 1970, almost two decades before global warming
became a public concern and 5 years before Congress enacted its
first fuel economy statute, defies common sense.
In his September 30th letter to Administrator Jackson,
Chairman Issa says that he finds EPA's actions troubling and
inconsistent with the system of government articulated in the
U.S. Constitution. I think he means the following. The
Constitution seeks to ensure a system of democratic
accountability through the separation of powers. The
Constitution is vitiated when agencies legislate, when they
exercise powers not delegated by Congress, when they flout
procedural safeguards Congress has put in place.
To obtain industry buy-in for its new career as fuel
economy regulator, EPA pursued what might be called a
regulatory extortion strategy. By reconsidering California's
request for a waiver to establish its own greenhouse gas, motor
vehicle emissions program, EPA threatened to allow State
governments to balkanize the U.S. auto market. This flouted the
Energy Policy Conservation Act's express prohibition against
State laws or regulations related to fuel economy.
Then, in negotiations culminating in the May 2009 historic
agreement, EPA offered to remove the threat of a regulatory
patchwork if automakers promised not to oppose EPA and
California's new non-congressionally authorized roles as
national fuel economy regulators.
The negotiations, as you mentioned, Mr. Chairman, were
conducted under a vow of silence and no notes were taken, an
apparent violation of the Presidential Records Act. Similarly,
the negotiations culminating in this year's historic agreement
to raise fuel economy standards appear to violate Federal
Advisory Committee Act standards of transparency and
accountability.
As Chairman Issa also notes, the fuel economy targets in
this year's historic agreement are ``outside the scope of
law.'' NHTSA and California plan to set fuel economy standards
for model years 2017 to 2025, a 9-year period, but EPCA limits
setting fuel economy standards to ``not more than five model
years.'' The 9-year plan also conflicts with the EPCA
requirement that NHTSA consider economic practicability when
setting fuel economy standards. As Chairman Issa has explained,
at the present time it is impossible for NHTSA to adequately
consider economic practicability for fuel economy standards in
model years 2022 to 2025 because car manufacturers themselves
do not have product plans for those years.
The agencies claim that EPA and California's greenhouse gas
emission standards are harmonized and consistent with NHTSA's
fuel economy standards, but EPA's standards do not allow
automakers to pay fines in lieu of compliance or earn credits
for producing flexible fuel vehicles during model years 2016 to
2019. This means automakers face more stringent requirements
than they would if fuel economy were administered under the
statutory scheme Congress created.
Fuel economy advocates may see no problem in the transfer
of power from NHTSA to EPA and California because it produces
policy outcomes they want. They forget an elementary civics
lessons: the legislative process is more valuable than any
result an administrative agency can obtain by doing an end-run
around it. And I think Members of Congress should understand
this better than anyone else.
Thank you very much. I will be happy to take questions.
[The prepared statement of Mr. Lewis follows:]
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Mr. Jordan. Thank you, Dr. Lewis.
Mr. Hwang.
STATEMENT OF ROLAND HWANG
Mr. Hwang. Thank you, Chairman Jordan and Ranking Member
Cummings, for the opportunity to testify today.
My name is Ronald Hwang. I am the Transportation Program
Director for the Natural Resources Defense Council. NRDC is a
nonprofit organization of scientists, lawyers, and
environmental specialists dedicated to protecting public health
and the environment. Founded in 1970, NRDC has more than 1.3
million members and online activists nationwide.
President Obama's July 30th announcement of the latest
clean car agreement builds on two other previous highly
successful and broadly supported agreements for stronger
pollution and fuel efficiency standards for passenger vehicles
and commercial trucks. These three agreements exemplify how
leadership, partnership, and compromise can solve the enormous
environmental, economic, and energy challenges facing this
country.
Far from running on empty, these clean car and fuel
efficiency standards will save Americans from emptying their
wallets at the pump, slow the emptying of our national wealth
for foreign oil, and cut the dangerous carbon pollution that is
emptying our children's future.
Over the lifetime of model year 2012 and 2025 vehicles
covered by the first and second round of clean car standards,
drivers will save $1.7 trillion in fuel savings, oil dependence
will be reduced by 12 billion barrels of oil, and heat trapping
pollution that drives global warming will be cut by
approximately 6 billion metric tons.
By cutting our oil dependency, the national program will
act as a powerful economic stimulus by allowing us to keep $100
billion annually by 2030 in the U.S. economy, money that
otherwise would be sent overseas to Saudi Arabia, Iran,
Venezuela, and other oil exporting countries. Drivers will have
more money in their pockets. By 2030, net fuel savings from
these combined standards will be equivalent to a $330 tax
rebate for every American household. This higher level
investment in the U.S. economy and reduced fuel bills is
estimated to create 500,000 more jobs by 2030.
With such overwhelming benefits, it is not surprising the
most recent clean car agreement has strong support from a broad
array of stakeholders; from automakers to environmentalists,
Republicans to Democrats, consumer advocates to energy security
advocates, business leaders to labor unions. Even an
overwhelming 80 percent of small business owners support a 60
mpg standard by 2025.
One of the great success stories is the role the national
program has played in laying the foundations for the auto
industry's remarkable recovery. In a world of volatile but
steadily rising oil prices, it is regulation that has played a
crucial role in providing businesses the certainty they need to
invest in fuel-efficient technologies needed to be competitive
in the future.
Compared to 2009, when the auto industry hit rock bottom,
car sales, profits, and fuel efficiency are all on the rise.
And one of the key reasons for why stronger standards and the
auto industry recovery are going hand-in-hand is that with
$3.50 gallon gasoline prices, consumers are demanding, make no
mistake about it, fuel-efficient cars. In fact, thanks to the
new products now on the market in anticipation of stronger
standards, automakers like General Motors and Ford find
themselves stepping up production and hiring new workers to
keep up with the demand for fuel-efficient cars like the Chevy
Cruze and Ford Focus.
The market trend toward fuel efficiency is clear. Americans
have fallen out of love with gas-guzzling vehicles and engines.
Where once truck-based SUVs and V8s ruled the road, now one out
of every two vehicles sold is a small car, small crossover, or
a mid-sized car. And thrifty 4-cylinder vehicles are now
America's most popular engine choice. Even picky drivers are
choosing fuel efficiency. Six out of 10 Ford F-150 buyers are
now choosing the more powerful and more fuel-efficient EcoBoost
engine options, even though it costs extra.
But perhaps the most remarkable result of the newest clean
car agreement is what it shows about getting beyond political
gridlock in today's America. The President, the auto companies,
States, labor, and environmentalists have once again shown what
it means to govern effectively and what can be accomplished by
constructive compromise.
Chairman Jordan, Ranking Member Cummings, and members of
the subcommittee, the Clean Car and Clean Truck National
Program are examples of Government at its best. The results
speak for themselves. Upsetting this important program would
only raise drivers' fuel bills, increase dangerous pollution,
and make us more dependent on foreign oil.
In view of its overwhelming benefits and overwhelming
support, if anything, Congress should be urging the agencies to
implement this important program sooner rather than later.
Thank you for your attention, and I welcome your questions.
[The prepared statement of Mr. Hwang follows:]
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Mr. Jordan. Thank you, Mr. Hwang.
Mr. Grenerth, you are recognized for 5 minutes.
STATEMENT OF SCOTT GRENERTH
Mr. Grenerth. Thank you. Good morning, Chairman Jordan,
Ranking Member Cummings, and members of the subcommittee. Thank
you for inviting me here to testify.
My name is Scott Grenerth. I have been a professional truck
driver for more than 10 years and proud to hail from Chairman
Jordan's home district. I am here on behalf of the Owner-
Operator Independent Drivers Association.
OOIDA's approximately 150,000 members are small business
professional truckers in all 50 States. I am here to talk about
how the EPA and NHTSA heavy truck duty greenhouse gas and fuel
efficiency rule will impact small trucking operations such as
mine, particularly during a time when most small business
truckers are fighting to stay afloat.
While trucking is my career, environmental stewardship is
my life's passion. Before trucking, I worked for many years in
environmental education. My wife and I were married on Earth
Day in 1995 and we both took the name Grenerth to mark our
commitment to the planet. So you might assume that I support
the heavy-duty truck rule. However, I am strongly opposed to
this one-size-fits-all regulation and the mandates it places on
trucking.
Compared to large trucking companies, small business
truckers and owner-operators have a very different reality when
it comes to fuel efficiency. Simply put, with diesel at close
to $4 a gallon, if I do not drive in a fuel-efficient manner, I
will be driving myself out of business.
Considering that small businesses are the vast majority of
trucking companies, it is hard to understand why the agencies
chose not to tap into the collective knowledge of truckers like
me on how to improve fuel efficiency. They did not speak to a
single truck driver, apparently taking the attitude that truck
drivers will never improve fuel economy without regulation.
This view was eagerly supported by large motor carriers, who
all too often do turn to the Government to diminish competition
from smaller carriers.
The resulting rule mandates add-ons and truck
specifications that work for large motor carrier operations,
even though trucking has hundreds of thousands of different
operating models. Despite EPA's claims, this will add new costs
to small business truckers, negatively impacting operations,
and could lead to reduced efficiency for some.
For example, a colleague hauls fresh produce in a
refrigerator box trailer for most of the year, but for a few
months he pulls a flatbed trailer. His tractor has a roof
fairing that improves fuel efficiency while he is hauling
produce. When he is not using his box trailer, he removes the
fairing because it actually decreases fuel efficiency with his
flatbed operation. Under this new rule, removing the fairing
and improving fuel efficiency this way will be a violation of
Federal law.
Truckers inspect their trucks from bumper to bumper, making
sure that everything meets the needs of their business.
However, truck manufacturers have stated that this rule will
reduce operations to truckers. This puts us in a tough
position: buy the wrong truck for my operation or buy the right
truck and pay a $37,000 EPA penalty.
Truckers are also forced to purchase equipment they don't
need or want under this rule. Take heavy haul operations that
move loads like Army tanks and massive construction equipment.
There is no way the aerodynamics of their truck will improve
efficiency, but they will be forced to pay for mandated add-ons
anyway. Low rolling resistance tires which reduce traction are
also a significant part of this rule. Am I expected to only
drive on dry and clear roads? EPA estimates all this will add
another $6,000 to the price of a truck; this on top of the
$20,000 to $30,000 their previous engine emissions rules added.
And that is the crazy thing about this new rule. EPA sees
truckers as the reason fuel economy is down. But, in reality,
they should look at themselves. The technology required under
the former rules has significantly reduced fuel economy,
forcing truckers to buy around 800 gallons more fuel every
year. Think about how much more oil has to be refined directly
because of EPA emission standards mandates.
These past rules cost truckers in other ways. New trucks
break down more often, costing drivers more money. Further,
OOIDA has learned that truck manufacturers are charging big
dollars for once low-cost warranties and instituting EPA
surcharges that add another $20,000 to the price of a truck.
Instead of a costly one-size-fits-all rule, EPA and NHTSA could
have offered a compliance alternative focused on improved
driver training to operate any truck one driver drives as
efficiently as possible. Yet, they ignored that significant
recommendation from the National Academy of Sciences in lieu of
a rule that unquestionably will fail to achieve purported
goals.
Chairman Jordan and members of the subcommittee, OOIDA
supports improved efficiency and lower emissions, but there
must be recognition of the costs they entail and the fact that
trucking is a diverse industry. Small business truckers are
inherently focused on maximizing fuel efficiency because our
business success depends upon it. Pure economics tells you that
trucking is going to take advantage of every opportunity to
improve fuel efficiency based on their operating needs and
without Government mandates.
Thank you for the opportunity to testify and I welcome your
questions.
[The prepared statement of Mr. Grenerth follows:]
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Mr. Jordan. Thank you, Mr. Grenerth. We appreciate all the
witnesses' testimony.
We are going to start with the gentleman who understands
this issue or has to deal with this issue on a regular basis,
and that is the gentleman from Pennsylvania, who is a small
business owner in the car business. Mr. Kelly is recognized for
5 minutes.
Mr. Kelly. Thank you, Mr. Chairman.
Mr. Anwyl, thanks for being here today. As the chairman
said, I think one of the other costs that we are not looking at
is what it costs a dealer to stock these vehicles. I am a
Chevrolet dealer, and have been when my dad started in 1953. We
have a Chevy Volt on the lot right now; it has been there now
for 4 weeks. We have had one person come in to look at it, just
to see what it actually looked like.
Now, my question, and I guess what I am trying to
understand is, here is a car that costs $45,763. I can stock
that car for probably a year and then have to sell it at some
ridiculous price. Now, by the way, I just got some information
from Chevrolet. In addition to the $7,500 tax credit,
Pennsylvania is going to throw another $3,500 to anybody
foolish enough to buy one of these cars, somehow giving $11,000
of taxpayer money to buy this Volt.
Now, when you look at this, it makes absolutely no sense. I
can stock a Chevy Cruze, which is about a $17,500 car and turns
every 30 to 40 days out of inventory, or I can have a Volt,
which never turns and creates nothing for me on the lot except
interest cost. And I am trying to understand how in the world
we come up with these ideas that somehow, somehow, if we just
go electric we are going to save all this money and all this
fuel, and we are going to relieve the world of all this
emission that is out there. It is absolutely insane that we
continue down this path.
A Chevy Cruze can get 36 miles per gallon on the highway.
Now, they say on a Volt you can get 94 miles per gallon. That
is if you go on an electric charge, right? Which I think the
range on that, I think you can go 35 miles if you just go
electric, okay? Which doesn't make sense for people who live in
northwest Pennsylvania. Sometimes that is the one way just to
your work.
So a lot of these things that we are seeing and that are
going on have a tremendous economic impact on the people who
are being asked to stock them and sell them. There is no market
for this car. I have some friends who have sold them and they
are mostly to people who have an academic interest in it or
municipalities that they are asking to buy these cars.
So just from your standpoint, because you talk to a lot of
dealers, people like me, is there any upside to any of this? We
can get cars that I can turn every 35 to 40 days that get
almost the same amount of miles per gallon, their emissions are
clean. Please tell me what is the marketing strategy on this?
And I saw where Mr. Ackerson said we need to build 200,000
of these. I tell you what. If he builds 200,000, he is going to
have to find somebody that can buy those cars and put them on
their lot. If General Motors wants to ship them to me and I
will put them on my floor plan, I will gladly store them in the
back lot for them as long as I don't have any economic interest
in it.
But if you can tell me where do you see this going. I mean,
is anybody out there, other than somebody that is good with a
laptop but lousy with an econotop, cold tell me where in the
heck are we going with this policy and where does this lead
down the road? If we continue this policy, it makes no sense.
And I can tell you as far as job creation, the guy who ordered
that Volt in my store is no longer in that job. So it actually
worked against him.
And I am trying to understand. And I was told that the
reason that that car is on our lot is that General Motors told
him had to stock it. I said, wait, let me understand. I told
you under no circumstances were you to order a Volt. And he
said, yeah. And I said, so why did you order it? He said, well,
General Motors told me. I said, is this the same General Motors
that tried to take my Cadillac franchise from me? These are the
people you listen to? The guy that signs your check doesn't
have as much influence as the guy who tried to take the
franchise?
So if you could, tell me where is this market going? Do you
see any market for this car at all?
Mr. Anwyl. There is a little bit of good news. You
mentioned it did create some traffic for you, albeit one
person. That is something that the car companies tout, is that
these vehicles do attract some interest, some traffic; not
necessarily buyers.
I think there are a couple things in what you are
mentioning. And let me also mention the Volt is actually a very
nice vehicle. We bought one ourselves. It is in a long-term
fleet. We have an extended charger. People actually enjoy it.
But the problem I think you have outlined is really twofold.
One of them is that there are all sorts of inducements for
people to be buying these vehicles. In California it varies; I
think it is $2,500 plus the $7,500.
And yet, when you look at who is buying these vehicles, and
there are people buying them, they are at the very high end of
the demographic scale. And there is a group in society, a group
in the marketplace who are very passionate about alternatively
powered vehicles, Leafs, Volts. We have an environmental editor
who bought a Leaf with his own money and he is putting solar
panels on his roof so that he can actually charge the vehicle
from the sun. So this is a little extreme, but there are people
that are very passionate about that. And for these people I
think the Volt is a perfectly fine choice, and so is the Leaf a
perfectly fine choice.
The question is, though, how many people are there like
that? And right now we are seeing people who would have bought
that vehicle anyway, even without the tax credits, getting the
tax credit obviously at the expense of other taxpayers, and you
have to wonder about the wisdom of that.
Mr. Kelly. Well, people who actually have to work within a
budget that they are very limited to, and part of it is not
only their housing cost and their food cost, but also their
transportation cost and the cost for fuel, it makes absolutely
no sense to those people. I am talking about hard-working,
taxpaying American public that actually needs transportation to
get back and forth to work. These are the people that cannot
afford to buy these cars, and it makes no sense to it. It is
not a vehicle that I would want on my car lot in northwest
Pennsylvania.
Thanks for weighing in on it.
Mr. Anwyl. Sure.
Mr. Kelly. Thank you, Mr. Chairman.
Mr. Jordan. Thank you.
Next, the gentlelady from California is recognized for 5
minutes.
Ms. Speier. Thank you, Mr. Chairman.
First of all, to Mr. Kelly, send that Volt to California.
It doesn't have to stay on your lot, because there is a waiting
list in my district at my Chevrolet dealership of 6 months to
get a Chevy Volt.
Mr. Kelly. Would the gentlelady yield? Give me the name of
the dealer. I will get it out there as quick as I can.
Ms. Speier. Putnam Chevrolet. Send it to him today and I
can guarantee you----
Mr. Kelly. If you will pick up the transportation costs, I
would love to do that.
Ms. Speier. All right.
Mr. Jordan. Bipartisan operation.
Mr. Kelly. Thank you. Appreciate your help. We do work
together. Thank you. [Laughter.]
I will be right back; I am going to call the store.
Ms. Speier. Mr. Chairman, I respect your authority as
chairman of this committee. I realize that you can set the
agenda, but this subcommittee has the responsibility to look at
a number of things, probably the most important is Government
spending. And if we spent our entire legislative agenda in this
subcommittee on getting rid of wasteful Government spending and
look exclusively at the $30 billion to $60 billion of
contracting that goes on that is fraudulent, we would be doing
a service to the public. But this hearing, with all due
respect, is a bad fairy tale because it doesn't reflect
reality.
And to you, Mr. Anwyl, you said, under oath, that the
consumer is not on board with higher mileage vehicles. I don't
now what consumer in this country wouldn't be interested in
getting a vehicle that gets better mileage, because they save
money at the gas pump if they get a vehicle that gets better
mileage.
Now, I want to address to you the press release put out by
Ford Motor Co. in June 2011, just a couple of months ago,
entitled Miles Per Gallon Matters. ``Forty-two percent say fuel
economy is key in new vehicle purchase decisions. Influence
likely to grow.''
The release cited the new vehicle customer study done by
Moritz Research that has been going on since the 1970's, and
according to this study 42 percent of those surveyed say fuel
economy is ``extremely,'' not a little, extremely important in
their decision to purchase a new 2011 model, and it has been a
13 percent increase versus 10 years ago.
So for you to say that the consumer is not on board is a
false statement, and I want you to address the Ford Motor Co.
press release that says 42 percent say it is extremely
important in their new car decision.
Mr. Anwyl. Thank you. So let me explain. And I did say that
under oath and I do stand by that statement. The issue that we
are dealing with is that what you are citing are surveys, and
there are a lot of surveys out there that show that consumers,
and the numbers are going to vary, but basically they are
making the case that to consumers fuel economy is very
important.
The issue that you run into, though, either through the
survey design or pretty much on any surveys, that surveys are
going to create some strange results. The big one is that
consumers tend to respond to surveys in ways that they think
are societally acceptable. And a great example of this would be
when you ask someone why did you pick the job that you have?
They are going to talk about job satisfaction or making a
difference. And yet, when you actually do a mathematical
scientific study, you are going to find that they took the job
because of the money, and yet nobody says that on a survey. And
we are seeing the same thing in terms of the cars that people
are buying.
So when I say that they are not on board, it is not that
they don't say nice things in surveys. What matters are the
vehicles that they are buying, and their preference is
overwhelmingly not for the types of vehicles that are being
mandated by this proposed set of regulations.
Ms. Speier. So you are basically saying that people don't
say what they mean.
Mr. Anwyl. Absolutely.
Ms. Speier. So then why do we listen to any polls?
Mr. Anwyl. That is a very good question. [Laughter.]
I would echo that.
Ms. Speier. But, Mr. Anwyl, you cited your own poll. So it
sounds like you are being selective.
Mr. Anwyl. No, no, I did not cite a poll. No, the study
that we have done is actually a market-based study, where we
look at the vehicles that people are buying and we blend into
that consumer analysis, but it is fundamentally driven by the
vehicles that they are choosing in the marketplace, not what
they are saying when somebody calls them at dinnertime.
Ms. Speier. All right, Mr. Hwang, how would you respond to
that?
Mr. Hwang. First of all, I think this discussion about the
Chevy Volt is a good discussion to have, and I think we would
like more Chevy Volts in California; however, the fact of the
matter is the 54.5 mpg standard will not require vehicles like
the Chevy Volt. General Motors is free to build such vehicles,
but reaching 54 mpg can be done with rather conventional
technologies.
Furthermore, Mr. Anwyl does point out a very important
issue, which is that we should listen to the market. So let's
look at the marketplace. In September what we have seen is an
increase in so-called crossover utility vehicles. Okay, these
are not SUVs. I believe in his testimony he labeled these as
SUVs. A true truck-based SUV market no longer exists,
practically no longer exists; it has been cut in half since
2005. These are the Chevy Tahoes and what you traditionally
might think of as a Ford Explorer.
In fact, in September a very popular vehicle, very popular
Chevy vehicle that drove General Motors' sale growth is a
crossover utility vehicle, a car-based, very tall station wagon
type vehicle called the Chevy Equinox. The Chevy Equinox, the
most fuel-efficient version you can buy, which many customers
are choosing, achieves 25.9 miles per gallon for a crossover
utility vehicle that replaces the Chevy Trailblazer. And the
Chevy Trailblazer used to achieve--General Motors no longer
builds it--17.2 miles per gallon combined cycle.
So, therefore, customers are speaking. They are buying
fuel-efficient vehicles, whether they are crossover utility
vehicles, whether they are compact cars, or whether they are
other types of vehicles.
A recent article by Edmunds, October 6th, on Edmunds site
talked about pickup trucks. Pickup truck sales did increase in
September, but the title of the article was ``Incentives Bulge
to Keep Big Pickups Moving.'' So it is not like the American
public are flocking back to big gas guzzling vehicles. One,
they are crossover utility vehicles, not SUVs; and, two,
incentives, according to Edmunds, averaged for pickup trucks,
the current incentive level is $4,281, up in April of $3,261. A
quote from Edmunds, ``Appears market share perhaps profitable,
perhaps not, was bought largely with increased incentives.''
Again, this is the pickup market.
Mr. Jordan. Thank you.
Before recognizing the gentlelady from New York, let me
just be clear. Mr. Anwyl, so you are saying your poll is based
on actual purchases versus what people may say, is that
correct?
Mr. Anwyl. Yes, Mr. Chairman. It is actually not a poll,
this is a scientific study.
Mr. Jordan. The facts are the facts. Let me ask one quick
question. Let's assume Ms. Speier is right, that in fact
Americans want higher miles per gallon. Then I go to the
fundamental question: Why do we need Government to impose it?
If that is what they want, won't the market get us there?
Mr. Anwyl. Well, I think the three pillars under which I
have heard supporters talk about the new CAFE standards, one of
them is that the technology is readily available; the second is
that it is cheap; and the third is that the consumers want it.
And I think, to your point, in a pre-market economy you
wouldn't need regulations to drive sales; under those
circumstances the market would be pulling sales through for
you.
Mr. Jordan. Correct. Thank you.
Now let's recognize the gentlelady from New York, Ms.
Buerkle.
Ms. Buerkle. Thank you, Mr. Chairman, and thank you to our
panelists for being here today.
Unfortunately, the gentlelady from California left. I just
have a couple of issues with what she said. First of all, she
mentioned we should be dealing with wasteful Government
spending, and I think when we see $7,500 tax credits to a car
that is questionable in the market, and trying to put the
Government in the middle of how the market works, I think that
is a waste of taxpayer money.
I also want to mention about Ford and the press. I was
going to ask her to repeat the press release that she read
regarding Ford. Ford has a vested interest in this, and
speaking of wasteful Government spending, the amount of money
they received from this administration, both in grant and in
loans, is several billions of dollars. So I think when they
issue a press release such as that, they have a vested interest
in this whole initiative going forward, and that is precisely
what we are doing here this morning. We are trying to
understand why a regulatory agency is circumventing the
legislative process. So we all are concerned with wasteful
Government spending, but I think we need to be clear about
that.
I wanted to talk to Mr. Anwyl. I have a couple questions
for you. NRDC cites a survey, and Mr. Hwang mentioned it, the
Small Business Majority, that says the majority of small
businesses support fuel economy standards. The whole project,
frankly, seems fundamentally, ideological, and clearly liberal.
That is what was stated within the Democratic party. The Small
Business Majority has all the hallmarks of a shadowy interest
group, starting with a name.
Are you familiar with this survey, the Small Business
Majority?
Mr. Anwyl. Yes, I have seen an overview of the study, yes.
Ms. Buerkle. And how does that reconcile with what your
studies have shown?
Mr. Anwyl. Well, I think this echoes what I was talking
about earlier. This is actually a poll, so it is not a
scientific study. I think, as I was saying, the poll
respondents tend to say what they think is societally
acceptable. You will find that with every poll. The third
thing, on this particular study, is it seems, when you look at
how the questions were phrased, that the results were somewhat
inevitable. I mean, I can read you the one question. This is on
the pro-regulation side.
Ms. Buerkle. Yes, if you would clarify that, that would be
great.
Mr. Anwyl. Sure. So listen to the question. It says, Should
automakers be required to meet higher fuel efficiency standards
because of our growing dependence on Middle East oil is a
serious threat to our security and American car companies lost
market share in this country because they built fuel
inefficient vehicles?
From a polling perspective, that is what I would call a
highly leading question. There is almost no way to respond to
that other than in the affirmative. So, as you would expect,
that is what the poll did, it showed that small businesses
favored higher standards.
Ms. Buerkle. Now, in your testimony you mentioned that the
consumers were left out, they weren't consulted. Can you just
expand on that?
Mr. Anwyl. Well, I think we have heard this morning that
the new standards were arrived at through a process where
secrecy was a requirement, and from the consumer perspective we
were looking at this all along and were very troubled by that
process. My personal belief is that government should be
transparent, that things should be simple and should be easy to
understand. When we contacted the EPA about the consumer point
of view, their response was that consumers would have the
ability to contribute during the hearing process. After the
rules have been published, there is a process where consumers
can comment. I wonder how much consumer comments will be
actually taken into consideration when a deal has already been
announced.
Ms. Buerkle. So your position or your thought is that this
period of time for comment isn't going to cure the defect in
this whole process.
Mr. Anwyl. I would find that unlikely.
Ms. Buerkle. Dr. Lewis, would you like to expand on that?
Mr. Lewis. Well, yes. There is a basic difference between
the opinions that people express just in response to a question
and the revealed preferences that they have when they are
actually putting their money where their mouth is. So I think
that is what my colleague's here study actually tries to
measure, is revealed preference.
Another point to be consider would be--and I completely
acknowledge that a lot of people really do want to buy more
fuel-efficient cars, and I trust the data that Mr. Hwang was
mentioning about how many people are now buying V6s rather than
V8s and so on, but if that is what people really want, why do
we need a law forcing automakers to produce those cars? If the
automakers don't provide customer satisfaction, and if the
dealers, Mr. Kelly, don't have cars on the lot that people want
to buy, they will be penalized in the marketplace more
ruthlessly than any government regulator could possibly
administer.
So it seems to me that the only purpose that a fuel economy
standard would serve would be to actually limit what customers
are able to buy and what automakers are able to sell and
produce. I mean, that is the only point of them, really,
because if we just had a totally free market, then automakers
would be able to cater to consumer preferences rather than
government agency directives.
Mr. Buerkle. Thank you, Dr. Lewis.
My time is up, but I just want one further comment, if I
may, Mr. Chairman. In all of this, everyone wants to drive a
fuel-efficient car, but I had six children, my son has seven
children, so some of these options--it isn't that I don't want
to drive a fuel-efficient car, it is that the reality is that I
have to fit these kids in a car and I want my kids to be safe.
I yield back. Thank you, Mr. Chairman.
Mr. Jordan. I thank the gentlelady.
Real quickly. Mr. Grenerth, as a small business owner who
has the standards already imposed on your trucking company, did
you feel your concerns were addressed during the comment time
that you had? We are talking about the comment period that
exists for people to weigh in, consumers and business owners.
How was it for you?
Mr. Grenerth. I know the staff from OOIDA is more than
happy to get hold of me any time. They know I will show up in
D.C. any time there is a worthwhile opportunity for input. They
tried to get the EPA to provide an opportunity for actual truck
drivers to have input. Nothing. They did not get back to them.
That is one of the things that drives me nuts.
Mr. Jordan. So you would agree with the statement that Mr.
Lewis and Mr. Anwyl made, that it seems to be the deal is
already done.
Mr. Grenerth. Yes, that generally seems to sum it up there,
definitely. It is very disheartening, to put it mildly.
Mr. Jordan. I thank the gentleman.
I now recognize the ranking member of the full committee,
the gentleman from Maryland.
Mr. Cummings. Thank you very much. As I listen to all of
this, I am wondering what, Mr. Hwang, let's assume for a moment
that all that Mr. Anwyl is saying is true, and Dr. Lewis. I am
trying to figure out what is the down side of trying to save
fuel. Maybe I am missing something. You talked about how we are
sending dollars overseas and how it would be good to, for our
consumers, our constituents, to spend less money on gasoline.
But you have listened to Mr. Anwyl and he has talked about what
consumers are doing, but what is the down side of trying to do
this? Maybe I am missing something.
Mr. Hwang. Frankly, Mr. Cummings, I strongly concur with
you. I struggle to see down sides in this new proposal. The
benefits to the consumer, the benefits to our balance of trade
and reducing imported oil, the benefits to the environment are
overwhelming. Why is there a law or requirement for automakers
to raise fuel economy and lower CO2? Well, the fact of the
matter is that there is a national interest here at stake: our
energy dependency and the future of our health and our
environment. So there is a national interest here at stake, so
I think it is quite appropriate that there are long-term
standards.
Furthermore, of course, what we have seen over the past
history of the U.S. auto industry and what we see in the
combativeness associated with the last two decades of trying to
lower carbon pollution and raise fuel economy for motor
vehicles has not actually done a great service, actually has
done a disservice to the U.S. auto industry, who was caught
multiple times, when oils prices were raised and lost market
share, jobs were lost, companies lost market share, especially
the domestic automakers.
So no one really wants to return to the bad old days of
fighting about new standards because everybody recognizes that
it is in our long-term interest, both from a business
perspective from the U.S. auto industry and from a national
interest perspective to reduce our dependency on oil and
enhance U.S. economic competitiveness by having the U.S. auto
industry build the cars of the future.
And Ms. Buerkle, I am the father of two children. Safety is
of absolutely critical importance to myself personally, and I
would say that to your question about needing to haul around
your family, needing a larger vehicle, when it comes to safety,
design matters. Vehicles which are lighter can be safe, are
safer than heavier vehicles. This is data that I am happy to
submit; some of it is in my testimony.
Furthermore, I also mentioned that there is a vehicle
called the Chevy Equinox. The Chevy Equinox is a crossover
utility vehicle that holds probably at least, I will have to
check on that, but it is a mid-sided crossover utility vehicle.
That vehicle achieves 25.9 miles per gallon, 50 percent higher
than the 17.2 miles per gallon vehicle that Chevy replaced
called the Chevy Trailblazer.
Mr. Cummings. Let me just interrupt, because I want to ask
you one more question. You talk about your kids. I teach my
kids to never mistake a comma for a period, and I think we
could go the route we have been going and be the same place we
are 20 years from now. At some point I think we have to aim in
the direction that we are aiming in.
And let's assume what Mr. Anwyl says is true, that maybe
people are not buying these vehicles as fast. I am just
assuming for the moment. Maybe there are some people that need
to catch up with that. I mean, at some point I can tell you
people in my area, they need that extra savings because a lot
of them have lost their jobs, lost their houses. So if there is
any way that they can save fuel, they want to do that.
When we talk about innovation, sometimes we need to be
aiming at a higher standard. We are better than this. When I go
to other countries, it seems like I see these cars everywhere.
How do we compare to other countries with regard to this kind
of issue?
Mr. Hwang. Well, the fact of the matter, when it comes to
international competitiveness, we have slipped behind, and we
are behind Europe and even China when it comes to current fuel
economy levels. Both Europe and China are moving forward very
aggressively with advanced vehicles also, including electric
vehicles. So the world is moving at a more fuel-efficient, the
world is moving toward hybrid electric vehicles, battery
electric vehicles, plug-in electric vehicles, and that is
really the future and that is really where we need to invest
our money, in our U.S. manufacturing innovation and
competitiveness, if we still want to be able to compete in the
21st century.
Mr. Cummings. Thank you, Mr. Chairman.
Mr. Jordan. I would argue part of that in Europe is the
price of gasoline is about $8 a gallon, so there is a little
different climate there.
Let me just, real quickly, ask Mr. Lewis. You know, Mr.
Hwang, if it was up to him, why don't we make it 70 miles per
gallon, 100 miles, if it is going to be all this wonderful
world and just raise it as high as we possibly can? Can we meet
the standard now, the 49 miles per gallon, that NHTSA has, the
54 that EPA? Can that standard be met today? I know that is the
target in the future, but can it be met?
Mr. Lewis. There are very few cars that could meet that
standard today.
Mr. Jordan. And certainly not in a practical sense, for
folks who live like in northwest Pennsylvania, like Mr. Kelly
talked about, right?
Mr. Lewis. Yes. Yes. And if we are going to offer $7,500 in
tax rebates to put a million of these vehicles on the road,
that is $7.5 billion in loss of revenue at a time of a fiscal
crisis. So you wonder how affordable it is from a national
perspective as well.
I wish I had the reference here, I will provide it to the
committee, but I saw an article only a few weeks ago that said
that in China SUV sales are booming, that in 2010 there were
850,000 SUVs sold and only one hybrid sold. One Prius in all of
China, and it may have been purchased from an engineer who was
trying to take it apart to see how it worked.
So here is the down side that I see.
Mr. Jordan. Quickly, because I want to recognize the
gentleman from Idaho.
Mr. Lewis. Okay. The premise of setting fuel economy
standards really is that consumers don't understand their best
interest, that they let the short-term pain of a higher priced
vehicle overwhelm their good judgment in achieving longer-term
fuel savings. But this kind of reduces the consumer to a two-
dimensional character.
The only thing that the consumer considers from this
mentality is up-front costs versus fuel expenditures. Whereas,
in fact, we know that consumers are much more complicated than
that. Sometimes you don't want to spend a couple extra thousand
dollars this year on a car because you want to send your kid to
college or because you need it for the kid's music lessons.
So if you read the EPA NHTSA literature, they say the
consumers undervalue fuel economy. Well, that is like saying
consumers undervalue music lessons.
Mr. Jordan. Thank you.
Mr. Lewis. And where it gets really crazy.
Mr. Jordan. Hang on a second. I am going to stop you right
there.
Mr. Lewis. Okay.
Mr. Jordan. I want to get to Mr. Labrador, and maybe you
can jump right back in there.
The gentleman from Idaho is recognized. Thank you.
Mr. Labrador. Thank you, Mr. Chairman.
Mr. Grenerth, I just have a question. I don't know if you
heard what Mr. Hwang just said, but he said that there is
really no down side to this new CAFE standards, and I think I
heard your testimony say something different. Do you agree with
his statement?
Mr. Grenerth. Oh, I definitely would say there is a down
side to it, because the fact that if you just look at, for
example, the last time the EPA did this with the 2004 and 2007
standards, fuel economy dropped with the exhaust gas
recirculation being introduced in trucks, it dropped by one
mile per gallon. One mile per gallon on a vehicle that gets, on
a good average, 6 miles per gallon. That is a huge down side.
That is very detrimental. That puts more greenhouse gas out in
the air.
The other thing that came along with that is reduced
reliability, and I mean in a big way. Those valves fail
frequently. As a matter of fact, I called a shop back in
Congressman Jordan's district, where I get my truck worked on,
and this is a pretty small truck repair shop, too. In that week
they replaced four EGR valves on trucks. That is $400 apiece
plus basically missing an entire day's work and maybe, even
worse than that, losing a customer because you are viewed as
not a reliable individual anymore in your business.
So that unproven technology is a very, very serious
concern. It has been proven, unfortunately, from these previous
mandates, that this does happen, talking about trying to push
technology that is really not there. And that is why I
personally can tell you that when I went to buy my truck,
almost exactly 3 years ago, when I became an owner-operator, I
intentionally purchased a truck that did not have that exhaust
gas recirculation on it because I believe that I can make the
choice the way I drive the vehicle between here and my right
foot, that I know how to drive it appropriately and get the
best fuel economy. I haul very heavy loads all the time. I get
7.2 miles per gallon.
Mr. Labrador. So what you are saying is that central
government planning doesn't necessarily work.
Mr. Grenerth. Absolutely. It doesn't necessarily mean you
are going to end up with proven technology. There are a lot of
risks in this. I don't gamble. I am willing to take a risk
being a small business owner, but I do not gamble, definitely
not.
Mr. Labrador. Mr. Anwyl, what is the number one selling
vehicle in America right now?
Mr. Anwyl. Generally, it is the F-150 pickup truck from
Ford.
Mr. Labrador. And that is just like a Prius, right, it gets
the same gas mileage?
Mr. Anwyl. It is a little bit bigger than a Prius.
Mr. Labrador. Okay. And can you explain to us why, if
America wants fuel efficiency, why the F-150 is the number one
selling vehicle in America?
Mr. Anwyl. Well, I think it actually is supported by my
earlier testimony, and that is that consumers are looking for
fundamental utility when they buy a vehicle. They buy a vehicle
to do something, to take their family around, to haul
something, to tow something. And I think it is important to
note that the car companies have been delivering utility and
better performance, better safety, and improved fuel economy
over the past few years, and I do expect that to continue. So
when we talk about the future, what we need to be recognizing
is that the future in terms of fuel economy is going to improve
even without additional regulation. The trend line there is
pretty clear.
The F-150 is interesting because they have introduced a V6
EcoBoost engine, and I think that is probably the best evidence
of what I have described, because what Ford has done with the
EcoBoost is actually improved the utility of the truck; it has
more torque, more towing capacity, happens to get only 1 mpg
better, so it is not like it is solving all the problems, but
it is a step in the right direction.
Mr. Labrador. Excellent.
Dr. Lewis, I am having a hard time here understanding why,
if America wants these cars, we have to give them $7,500 to buy
them. I really like Big Macs, and the Government doesn't have
to make me, force me to buy those Big Macs. So how does this
work?
Mr. Lewis. Well, you have just provided the reductio ad
absurdum, and you are absolutely correct. And what is even, I
think, stranger, and this is what I was going to get to
earlier, is that the EPA and NHTSA seem to think that even
truck drivers, people who haul freight for a living, people
whose single biggest operating expense is fuel, people who live
on razor thin profit margins don't understand their true
interest are shortsighted buyers and need to be forced to buy
trucks that meet Government-imposed fuel economy regulations,
and, you know, it is like saying we need a Big Mac mandate.
Mr. Labrador. So we are too stupid to know that we want
these cars. Is that what is being said here?
Mr. Lewis. I think there is a nanny status aspect to this
in which ordinary people are viewed as just big children.
Mr. Labrador. Mr. Chairman, I respect your job very much
and I think that if we are going to look at Government
spending, the fact that we are spending $7,500 for each one of
these cars, and in some States we are adding another $2,000 to
$2,500, I think that is wasteful Government spending,
especially if it is something that the people want.
Mr. Jordan. Well said. I thank the gentleman.
Now yield to the ranking member of the committee, my good
friend from Cleveland, Mr. Kucinich.
Mr. Kucinich. Thank you very much, Mr. Chairman, members of
the committee. I just want to say I think Mr. Anwyl is one of
the most remarkable witnesses that this committee has ever had
because he came to a town that is totally reliant on polls.
[Laughter.]
The White House, the Presidential race, Republican Party,
the Democratic Party, just about every Member of Congress is
reliant on polls, and we have a witness come before this
committee who tells us definitively, authoritatively, no doubt,
that polls are not scientific. I want everyone to mark this
moment and check with your campaign treasurers. [Laughter.]
And I think that we ought to take Mr. Anwyl's other comment
about consumers don't care much about fuel economy with the
same humor.
Now, I just want to say the trucking industry is a critical
part of Ohio's economy; provides Ohio with over 290,000 jobs.
But in order to survive and remain competitive, truck drivers
need trucks that get better gas mileage and cost less to
operate. That is exactly why the new fuel efficiency standards
for medium- and heavy-duty trucks that are finalized this
summer are so important to Ohio and the trucking industry; and
it is also why there is a long list of trucking industry groups
that support the new rule, including the American Trucking
Association and its Ohio affiliate, the Ohio Trucking
Association.
Now, Mr. Hwang, I am puzzled by Mr. Grenerth's testimony
that members of the Owner-Operator Independent Drivers
Association will be harmed by the new standards. Can you
discuss the impact of the proposed fuel economy standards on
the trucking industry, including trucking companies that are
small, locally owned businesses? What do they stand to gain or
lose? Thank you.
Mr. Hwang. Thank you, Mr. Kucinich. According to EPA
analysis, standards of this new fuel economy and CO2 program
for medium- and heavy-duty trucks will save truck owners quite
a bit of money. Semi-truck owners will save an average of
$73,000 over the life of the truck. Purchasers of new trucks,
fuel savings in the first year will outweigh incremental costs
of $6,200, so fuel savings are estimated to be about, for most
truck drivers, $10,000.
For drivers that finance their purchase, savings will
accrue immediately in the form of lower monthly payments both
for the vehicles and fuel costs. So in the first month most
truck owners will actually see savings; in the first year they
will see the incremental costs paid.
Mr. Kucinich. Thank you, sir. I just want to say whatever
views one holds about environmental protections against
greenhouse gas emissions, it would be difficult to dispute the
fact that unemployment and a weak labor market are continuing
to devastate the future of this country. The bottom line is
that job creation benefits from the manufacturing of fuel-
efficient vehicles and components will help reduce the massive
unemployment rate in this country.
Ohio is at the heart of the auto industry, ranking second
only to Michigan in terms of employment in the motor vehicle
industry. In Ohio, it is estimated that the higher fuel
standards will create at least 23,000 new jobs. I know that in
Ohio we have many more skilled workers who would jump at good
jobs in a clean auto manufacturing industry.
Now, we have a chart here. Now, this chart shows every
Member's district in this room stands to gain jobs resulting
from new technologies. Mr. Hwang, again, can you talk in detail
about the array of job opportunities, both inside and outside
the auto industry, that will be created as a result of higher
fuel efficiency and auto pollution standards?
Mr. Hwang. Yes, I would be glad to. In terms of job
opportunities for fuel efficiency, we have seen what has
happened to the U.S. auto industry from lack of attention to
fuel efficiency; jobs have been lost, market share has been
lost. Conversely, we see the benefit already of the U.S. auto
industry, U.S. auto supply industry already in a joint study by
United Auto Workers, NRDC, and the National Wildlife Federation
have identified already 300 facilities in 43 States plus the
District of Columbia that are currently responsible for
employment of 150,000 workers today that are building
components for fuel-efficient and clean advanced and
conventional I would add vehicle technologies.
According to a recent forecast, in 2030 the job creation
potential will be close to 500,000 for a 54.5 mpg by 2030. That
is accruing both from new manufacturing jobs and the fact that
there will be more money back in the pockets of consumers
equivalent to a $330 tax rebate that they can spend back into
the economy.
Mr. Kucinich. I want to thank the gentleman.
My time has expired. Thank you, Mr. Chairman. And I want to
thank each of the witnesses for testifying. Thank you.
[The prepared statement of Hon. Dennis J. Kucinich
follows:]
[GRAPHIC] [TIFF OMITTED] 71980.083
[GRAPHIC] [TIFF OMITTED] 71980.084
Mr. Jordan. I thank the gentleman.
We now yield to the chairman of the full committee,
gentleman from California, Mr. Issa.
Mr. Issa. Thank you, Mr. Chairman. Following up on Mr.
Kucinich, there is a lot of humor here and I know that Dennis,
my friend, you intend to find humor whenever you can. But what
I find humor is that only a couple weeks ago this committee had
a hearing in which we had Secretary Hilda Solis and we asked
her about green jobs, and she was able to show that this
administration, for $250 million, had managed to create 1,000
new green jobs, those being jobs that last a year or more. They
created 8,000 if you don't mind the fact they only lasted as
long as we paid for the training.
So what I find interesting in Mr. Hwang's testimony is he
is talking about green jobs. Well, the problem is the
definition of green jobs includes a bus driver, we found out
last week. Not the hybrid bus driver, not electric bus, just
any form of public transportation. So as I see this
administration have a war on the private automobile and the
private light truck, I kind of get it that, yes, you will get
green jobs, and those green jobs will be forcing people off the
road and out of the vehicles they want.
Dr. Lewis, when I compare the mission of the NRDC, which is
to save the earth and to hell with the American people--no, I
am serious. Sometimes you just get a witness and you look and
say I know the organization; I am sure he is knowledgeable and
so on. But I have been through this. Clearly, they could care
less about whether we still have automobiles. As a matter of
fact, we are mandating electric vehicles. Fine. GE bought a
bunch of them as long as they got the tax break. But we are
doing it when we still don't have a nuclear or other
alternative to the 51 percent of our fuel that is created by
coal when it comes to electric fuel.
So I want to ask a couple of quick questions. When you look
at the total package of subsidies and unfunded mandates that
are in the current CAFE increase--and when I say unfunded, the
cost to industry that they are going to have in addition to the
subsidies and so on--if you were to take that amount of money
and set it in a pot and say we will invest in better mileage
technology at a given weight, a given performance level, what
fraction of that $100 billion a year do you think it would take
if the Government started looking and saying we want to be part
of the solution, not simply shift cost to people so they can
feel good?
I happen to own a Prius. It is a wonderful vehicle. At the
end of 50,000 miles, it hasn't paid for itself, and everyone
knows it.
Where will we be if we took that other tact, instead of
constantly shifting huge amounts of unfunded mandates to auto
companies, some of them effectively owned or controlled by the
American administration currently in the White House?
Mr. Lewis. Well, I do think that we would be more
prosperous in that the auto industry would be--one of the
figures that was cited earlier is that just to comply with the
current model year 2012 to 2016 standards requires an
investment of $50 billion. Now, what if that money had been
invested by the auto industry to meet revealed consumer
preferences? I would imagine that some of that would have gone
into fuel economy improvements. But some of it might have gone
into other amenities, features, capacities, maybe things we
can't even imagine.
So it seems to me, though, that a very good suspicion is
that it would have, in the long-term, produced more jobs, more
happy customers than the Government trying to determine what it
is people should want to buy.
Mr. Issa. Mr. Grenerth, I am going to follow up with you.
As an environmentalist, as somebody who does care about how we
get more for less strain on our environment, you mentioned you
carry heavy loads. By definition, to get to 55 miles per
gallon, isn't a big part of that going to be simply limiting
the capacity of vehicles, dumbing down categories so that your
category may not be where the real savings is; the category of
the vehicle you need to carry heavy loads simply may be the one
that they try to find a way not to sell? Isn't that really what
you have seen in the past in CAFE standards?
Mr. Grenerth. Well, there is definitely with Kenworth, for
example, streamlined option choices when we are talking about
large trucks. They are talking about, to meet these standards,
having to eliminate some of the choices that are available, and
those are things like, when you get into heavy-haul, people
that do--when I say heavy, I am talking 80,000 pounds,
typically.
Mr. Issa. Okay. And I assuming that you already go to alloy
wheels, alloy tanks, aerodynamic improvements.
Mr. Grenerth. I have a few things----
Mr. Issa. All the things that reduce drag and to reduce
weight. But ultimately, if you are carrying a 65,000 pound
cargo, that part, there is no way to make it lighter, is there?
Mr. Grenerth. Absolutely. Or if it is a very large object
with a lot of wind resistance. You can't do that.
Mr. Issa. So when we look at the standard--and we have been
talking about cars and light trucks today. When we look at the
standards, don't we really have to look at the fuel economy
achievements, carrying a specific load, whether that is the
vehicle or, in this case, the cargo; look at the low-road
industry and the improvements that they continue to make
because it is all about carrying more for less, and the heavy
truck industry, and haven't we found that basically that is
mostly an engine design improvement to optimize efficiency,
something that is not in the CAFE standards? The CAFE standards
rewards you for simply taking weight out, making light, tiny
vehicles, not necessarily producing true efficiency increases.
Isn't that what you found in the trucking industry?
Mr. Grenerth. I found you definitely have to spec your
vehicle out for specifically what you are doing. Owner-
operators take great care to make sure that the wheels, the
transmission, the final gear ratio----
Mr. Issa. Tire pressure.
Mr. Grenerth [continuing]. Everything, tires, exactly, and
maintain it impeccably as well, too. So, absolutely, you have
to do that or you are not going to succeed. It is that simple.
Mr. Issa. Thank you.
Mr. Chairman, I might comment for the record, because it
always seems like the press says you have a vested interest in
this. I had two RVs. My old RV, which used the Mercedes diesel,
was a Sprinter, Dodge Sprinter, before they required that
actual fuel economy reduction design. So I have experienced my
old one versus my new one; and I like the new one and I like a
lot of the features. But going to a newer RV with a ``next
generation engine'' and getting less mileage was pretty
repugnant to me, and I think to all of us who----
Mr. Kucinich. Would the gentleman yield?
Mr. Issa. Of course.
Mr. Kucinich. I would just like to say while the chairman
and I may have some fundamental disagreements about where we go
with these policies, I think there are probably very few
Members of Congress who have the kind of expertise that you do
have in this area. We have to appreciate that.
Mr. Issa. Thank you. And I thank you for pointing out the
wrong way in diesel technology because it is something that I
think this committee didn't watch closely enough, and hopefully
we will continue to monitor it.
Thank you, Mr. Chairman.
Mr. Jordan. Thank you.
Mr. Hwang, earlier you referenced material on safety and
the idea that lighter cars are in fact, you cited, I think,
some study that shows their safety. We would like for you to
provide that to the committee at the end of the hearing, if you
would be able to do that.
I want to next recognize Mr. Guinta for his 5 minutes.
Mr. Guinta. Thank you very much, Mr. Chairman.
Mr. Hwang, I read your testimony on page 3. You said by
2030, the 2012 to 2025 national program standards will reduce
oil consumption by 3.1 million barrels per day. Can you tell me
what expectation you have for vehicle sales annually during
that period of time?
Mr. Hwang. Yes, absolutely. The issue of vehicle sales, as
currently, the estimate for this year, the sale for calendar
year 2011 is 13.6 million units. I believe in 2008, when the
auto industry hit rock bottom, the units were about 10 million,
10 point something million units. So this points to the fact
that vehicle sales can increase, profits can increase, as well
as fuel efficiency.
If you take the agency estimates, as well as our estimates
of what the cost of the new technology will be and what the
payback time will be in 2025 for the 54.5 mpg, my full
expectation is that vehicle sales will continue to increase
from the 13.6 million units that we are expecting this year,
and my full expectation is that these vehicles will actually be
highly desirable for consumers, and because of the payback time
attractiveness, that there will be no impact, and if there is
any impact, in my opinion, it will be a positive impact, an
increase in sales.
Today, the vehicles on the used car market, the most
valuable cars on the used car market, according to data from
KBB, from Edmunds, and other places, and also NADA, the
National Automobile Dealers Association, the most valuable
vehicles on the used car market today are fuel-efficient
vehicles; the least valuable vehicles on the used car market
today are fuel-inefficient vehicles.
The F-150 is a great example. In the new car market, 6 out
of 10 buyers are buying the F-150 EcoBoost more fuel-efficient
V6 option. So consumers are willing to pay more for fuel
efficiency because of the benefits that it accrues. So my
expectation is that sales in 2025 will continue to increase
from today's and it will, if anything, vehicle sales will be
higher than otherwise.
Mr. Guinta. Okay, in New Hampshire, where I represent, we
roughly have 600 businesses that are related to the motor
vehicle industry and we have about 13,000 employees. There was
a chart that was put up earlier that showed, with these
standards, we would increase jobs in New Hampshire by
approximately 2,600. I would love to see an increase in this
industry for New Hampshire by 2,600.
What you are saying is, in part, the increase in sales will
continue to grow as the economy comes back, but you also said
something else. You said this is based also on payback. I want
to take just Manchester, the city that I am from. The average
family income is somewhere between $55,000 and $60,000. If you
are looking at payback and looking at Chevrolet as the example,
the Cruze is a $20,000 vehicle, the Volt is $45,760. That is a
difference of $25,763. Here is the math that I don't quite
understand. The Cruze, $1,682 is what you would spend annually
for fuel, and the Volt is $1,000 according to the sticker. So
that is a difference, a fuel savings of $682 per year.
My math says that you would have to have that car for 37
years in order to achieve payback. So if I purchase that today,
I just had a birthday last month, I am 41, I would be 78 years
old by the time I had payback on that vehicle.
I am struggling to see how the marketplace, the consumer,
when they walk into a showroom and decide that they want a
vehicle with greater fuel efficiency, and I agree with the
statement made earlier that fuel does matter, but purchase
price matters even more. So if you can find a purchase price
that dictates these savings, I think the theory would be that
more people would buy these vehicles.
But you are talking right now about almost a $26,000
differential and a 37-year payback. So I struggle to appreciate
or understand how that math would work and how the country,
over this period of time, would see that 37-year payback as
something effective for their family and efficient for their
family in cost dollar savings.
Mr. Hwang. Well, very quickly, in 2025--today's technology
is not 2025 technology, for one. Second, the calculations that
we have done based upon the agency and our own cost estimates,
is that in the first month drivers who financed the purchase of
their vehicles will see monthly savings in their vehicle
payments and fuel costs. Their costs will go down.
Mr. Guinta. But how is that possible if the vehicle is
$45,000 today for the Volt, $45,760. So if I, as an average
shopper--what does an average individual spend on a car,
$25,000?
Unidentified Speaker. Thirty-three.
Mr. Guinta. Thirty-three. Okay, so just take the 33 number.
You are adding, you are going up to $45,000, almost $46,000. I
fail to see how the financing would actually monthly payment
would come down. I mean, unless you are financing it over a
longer period of time, of course it would come down in that
perspective.
Mr. Hwang. I believe, sir, the difference in our
calculations are that, and my calculations and my estimates
based upon the agency's and other publically available research
data, we believe that Chevy Volts and other kind of electric
vehicles will actually not be required to--no one will have to
be required to build those kinds of vehicles to meet the 2025
standards.
In fact, the 2025 standards can be met through relatively
conventional gasoline vehicle technology, much less expensive.
The example I gave earlier is 50 percent improvement between a
Chevy Equinox and a Chevy Trailblazer, and both of those are
considered to many people as a sport utility vehicle, when in
fact the Equinox is a lighter, more fuel-efficient so-called
crossover utility vehicle, 50 percent better improvement in the
combined EPA estimated fuel economy.
Mr. Guinta. Thank you, Mr. Chairman.
Mr. Jordan. I thank the gentleman from New Hampshire.
Mr. Kelly, you are recognized.
Mr. Kelly. Thanks, Mr. Chairman. I would like to ask we put
in the record I have the actual window stickers that would
probably help testimony that shows actually the list prices and
the fuel savings based on the calculations that is on the label
of every vehicle produced. So I would like to submit that
because that really adds some authenticity to what we are
talking about.
Mr. Jordan. I thank the gentleman.
Mr. Anwyl, just one question for you. Why, if it is not in
the consumers' best interest, if it doesn't seem to be in the
best interest of the market, why are the auto manufacturers
going along with the whole process, the whole scheme?
Mr. Anwyl. Well, I think that is a good question and it is
one I put to them directly. I meet with the car companies on a
regular basis. The expression that I hear repeatedly is they
felt they had a gun to their head, and by that I think they are
referring to the threat of a California opt-out, the California
waiver. We have talked about the balkanization of the
marketplace, but the cost associated with meeting individual
standards across the 50 States would be overwhelming. So the
threat of the California waiver is very real and very scary.
Mr. Jordan. And you have individuals represent the auto
manufacturers tell you this personally?
Mr. Anwyl. Yes, absolutely.
Mr. Jordan. Okay. I thank the gentleman.
I want to thank our panel for a great hearing. Mr. Anwyl.
Mr. Anwyl. I don't know if this is out of order or not, but
I do----
Mr. Jordan. It is, but go ahead.
Mr. Anwyl. Okay. Well, I wanted to characterize, again, my
testimony as not saying that consumers don't care about fuel
economy, because that is not what I am saying. What I am saying
is they care about other things more.
Mr. Jordan. Exactly.
Mr. Anwyl. And the second thing I would like to offer for
the written record would be copies of peer vetted academic
research that actually do show that what consumers say in polls
and what they do in the real world are not the same thing. And
I feel that that might be a public benefit as an outsider from
Washington.
Mr. Jordan. Without objection.
[The information referred to follows:]
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Mr. Jordan. Since we are going down the list, go ahead, Mr.
Lewis.
Mr. Lewis. Okay. Well, thank you very much. There is a
cartoon that I would like to send the committee which shows a
man who looks very depressed, and his friend says what is
wrong? And he says, everybody I talk to lies to me. Why? Are
you a defense attorney? No, I am a pollster.
Mr. Jordan. Here we go.
Mr. Lewis. But a point that I would like to make in regard
to Chairman Issa's question about an unfunded mandate, you see,
if I remember the figure from Mr. Hwang's testimony, EPA and
NHTSA are saying that the truck driver will save something like
$68,000 over the lifetime of the truck, netting out all the
costs with the savings.
Mr. Jordan. Mr. Grenerth disagrees.
Mr. Lewis. Right. Okay. Now, the problem, though, is what
if EPA and NHTSA are wrong? What if the reliability problems
that Mr. Grenerth talked about are just horrendous and he
actually ends up with the short end of the stick, paying more
for a truck that costs him more to operate? And then what about
the manufacturer who then finds that there is no market for
these vehicles?
If EPA and NHTSA were actually providing a guarantee, we
guarantee that you will save $68,000 over the life of the truck
and, if not, we will refund your purchase to that amount, it
would be a whole different story. But my point is that the
agencies don't assume any of the risk. And we know that when
people make decisions, including regulatory decisions, and
other people bear all the risks, well, then factors like
ideology get to play a bigger part than prudence.
Mr. Jordan. Well said.
In the spirit of bipartisanship, I will give you 30
seconds, Mr. Hwang and Mr. Grenerth. One last quick statement
because we do want to get to our next panel quickly because I
have to leave shortly.
Mr. Hwang. Yes, much appreciated, Chairman Jordan. I will
just say, in terms of your request for the safety data, that is
all in my testimony, and I am glad to provide the committee
with even more data, and I am also glad to provide the press
release from a safety expert named Clarence Ditlow that
reinforces the position.
Mr. Jordan. Great.
Mr. Grenerth.
Mr. Grenerth. Yes, absolutely. Appreciate it. I would just
say earlier Mr. Kucinich was asking about the cost in Ohio and
all that. We are talking about basically $50,000 being added to
the cost of a vehicle. That is a huge problem for a small
business owner.
And regarding EPA's attitude about this and not including
truck drivers, to me it is as if you are a doctor and we give
you a drug without consulting you. They are trying to force us
to take this medicine, if you will, that we have no idea what
is going to happen. It is unproven technology we are going to
rely on and that could be fatal to my business.
Mr. Jordan. Thank you very much for taking the time to come
today, Mr. Grenerth, and all of you as well. We appreciate your
great witness panel.
We will quickly get ready for the next panel because we
have to move very fast.
The committee will come back in order. I want to thank our
witnesses for being here and for your patience. We thought the
first panel was great and we had, as you can see, a full
committee. But we now want to welcome you.
Our first witness is the Honorable David Strickland. He is
the Administrator of the National Highway Traffic Safety
Administration. We also have with us the Honorable Gina
McCarthy, who is the Assistant Administrator for the Office of
Air and Radiation at the Environmental Protection Agency; and
also Mrs. Margo Oge, who is the Director of the Office of
Transportation and Air Quality at the EPA.
So let's quickly swear you in. If you would please stand
and raise your right hands.
[Witnesses sworn.]
Mr. Jordan. All right, let the record show that all
witnesses answered in the affirmative.
Mr. Strickland, you know the routine here. You have 5
minutes. Fire away with that high-tech gadget there in front of
you.
STATEMENTS OF DAVID STRICKLAND, ADMINISTRATOR, NATIONAL HIGHWAY
TRAFFIC SAFETY ADMINISTRATION; GINA MCCARTHY, ASSISTANT
ADMINISTRATOR FOR THE OFFICE OF AIR AND RADIATION,
ENVIRONMENTAL PROTECTION AGENCY, ACCOMPANIED BY MARGO OGE,
DIRECTOR OF THE OFFICE OF TRANSPORTATION AND AIR QUALITY,
ENVIRONMENTAL PROTECTION AGENCY
STATEMENT OF DAVID STRICKLAND
Mr. Strickland. Thank you. On the part of Secretary LaHood
and the entire Department of Transportation and my staff at the
National Highway Traffic Safety Administration, we appreciate
this opportunity to testify before you today on our efforts to
improve the corporate average fuel economy [CAFE], standards.
Now, this joint rulemaking with the Environmental
Protection Agency highlights the very best in the rulemaking
process. This process created greater transparency with early
technological engagement with stakeholders assisted these
agencies to develop the most informed proposal possible to
maximize economic and environmental benefits without impacting
safety or vehicle choice.
Now, Ms. McCarthy and Ms. Oge will speak to a lot of the
aspects about our work and process-wise. I want to take my time
in oral statement to talk about the safety perspective, which
is my agency's core mission.
We at the National Highway Traffic Safety Administration do
not require any manufacturer to do anything that would have a
negative impact on safety. Past safety tradeoffs occurred
because manufacturers chose at the time to build smaller and
lighter vehicles to help them meet the CAFE standards in years
past.
Staying true to our safety-first mission, the National
Highway Traffic Safety Administration moved from a flat fuel
economy standard that subjects each manufacturer to a single
standard, regardless of differences in their product mix, to an
attribute-based standard. This attribute system, which is used
as the vehicle's footprint as the foundation for the standard,
was then mandated by the Energy Independence and Security Act
in 2007.
Under this revised system, cars and light trucks have fuel
economy targets based on a specific vehicle's footprint, which
is roughly the area between the points at which the tires touch
the ground. As a result, manufacturers no longer have an
incentive to try to average out sales of larger vehicles by
producing more small vehicles. Every additional small vehicle
actually increases a manufacturer's overall compliance
obligation under the new attribution system.
In our analysis, then, we try to make sure that the
proposed standards are safety-neutral in two ways: first, we
set footprint-based standards that do not encourage
manufacturers to build smaller vehicles to even out the larger
ones; and, second, although manufacturers can choose whatever
technologies they want to meet our standards, we demonstrate
that in our analysis there is a feasible technology path that
the industry could pursue to meet the standards that do not
require unsafe levels of mass reduction. The National Highway
Traffic Safety Administration will be continuing this safety-
neutral approach in the upcoming CAFE proposal as we undertook
this work in model year standards for 2012 through 2016.
Now, in addition to building on the safety efforts that we
founded in 2012 to 2016, working in collaboration with the
Environmental Protection Agency, we also were tasked to make
sure that this process had the ability to pull forward the hard
work that we achieved in model years 2012 to 2016 very
successfully. That work was almost 14 constant months and,
frankly, the work for model years 2017 to 2025 has actually
been a very intensive and very transparent 2-month effort.
After several milestones, including the Notice of Intent
that was issued in September of last year, also the Joint
Interim Technical Assessment Report, we, along with the
Environmental Protection Agency, looked at the potentials of
cost, effectiveness, and lead time requirements for over 30
technologies that could be applied toward the new standards in
2025. These particular assessments describe the Agency's
initial assessment of what could be done, recognizing that we
received comments from more than 30 organizations and more than
100,000 individuals.
Following this opportunity for public notice and comment
through these processes, we published a supplemental Notice of
Intent in December 2010 which highlighted many of the key
comments received in response to the initial Notice of Intent
and to the initial Technical Assessment Report. It is that
work, us and the Environmental Protection Agency, working in
consultation with the California Air and Resources Board, where
we undertook an opportunity to have a forward-reaching
opportunity to speak to key stakeholders to better inform the
upcoming proposal for model years 2017 to 2025. This is
something exactly that the President of the United States asked
for us to do in his executive order and, frankly, shows the
best aspects of how rulemaking should be made clear,
transparent, and forward thinking.
Thank you very much, Mr. Chairman.
[The prepared statement of Mr. Strickland follows:]
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Mr. Jordan. I thank the gentleman.
Ms. McCarthy, you are welcome to go.
STATEMENT OF GINA MCCARTHY
Ms. McCarthy. Chairman Jordan, members of the committee,
first, thank you for inviting Margo Oge to testify today about
motor vehicle regulations that are being developed jointly by
EPA and NHTSA that will reduce greenhouse gas emissions and
improve fuel economy for cars and light-duty trucks, as well as
medium- and heavy-duty trucks and engines. These motor vehicle
regulations are a great success story for this country. They
will save consumers and small businesses money; they will lower
the cost of transporting goods; they will reduce our dependence
on foreign oil; and they will help protect the environment.
Combined, the model year 2011 to 2025 light-duty vehicles
are estimated to save Americans $1.7 trillion in fuel costs and
reduce our need for oil by a total of 12 billion barrels.
Ultimately, our savings will reach nearly 4 million barrels a
day. That is almost as much as we import from all OPEC
countries combined. The regulations are supported by a wide
variety of stakeholders, including the industries they
regulate, the labor unions representing workers in those
industries, environmentalists, and States.
The first of these regulations was last year's joint EPA-
NHTSA rulemaking for model year 2012 to 2016 vehicles. This
national program allows manufacturers to build a single
national fleet that satisfies EPA, NHTSA, and California
standards. It is common sense, good government approach that
harmonizes three different regulatory programs. EPA standards
for model year 2016 light-duty vehicles are projected to
achieve an average tailpipe CO2 compliance level of 250 grams
of carbon dioxide per mile, equivalent to a fuel economy level
of 35.5 mile per gallon if they are met only through fuel
economy improvements.
Over the lifetime of the vehicles, these standards are
projected to save 1.8 billion barrels of oil and reduce
greenhouse gas emissions by about 960 million metric tons.
Consumers and small businesses buying model year 2016 vehicles
are projected to average net savings of $3,000 over the life of
the vehicle. Those fuel savings far outweigh the initial
additional cost of the vehicle.
We are now working on the President's request to extend
this national program to 2017 to 2025 vehicles. This past July
we published a preliminary framework for this program,
including standards that could lead to a projected EPA
fleetwide model year 2025 compliance level of 163 grams per
mile CO2, which is equivalent to 54.5 mile per gallon, if
reductions were achieved through fuel economy improvements. We
project these standards set at these levels would reduce
greenhouse gas emissions by approximately 2 million metric tons
and save 4 billion barrels of oil over the lifetime of the
vehicles, while still allowing consumers to have access to the
full range of vehicle choices that they have today.
The preliminary elements of the 2017 to 2025 program were
informed by extensive public process over the course of the
past year that included publication of a technical assessment
of a range of standards, several notices published in the
Federal Register, and extensive dialog with a wide range of
stakeholders. The program is supported by letters from no less
than 13 CEOs of auto companies, as well as the California Air
Resources Board, which again intends to accept compliance with
the Federal program as meeting California's standards. EPA and
NHTSA will soon publish a Joint Notice of Proposed Rulemaking,
seek an additional public comment before making any final
decision on the 2017 to 2025 greenhouse gas and CAFE standards.
The third set of regulations is a joint EPA and NHTSA
rulemaking that established greenhouse gas and fuel efficiency
standard for model year 2014 to 2018 medium- and heavy-duty
trucks and engines. Supporters of this program include engine
and truck manufacturers, the American Trucking Association,
environmental groups, and California. We estimate that these
standards will save about 530 million barrels of oil, they will
reduce CO2 emissions by about 270 million metric tons, and help
vehicle owners achieve $50 billion in total fuel savings over
the lifetime of these vehicles. A semi-truck operator could pay
for the technology upgrades in under a year and realize net
savings of $73,000 to reduce fuel costs over the truck's useful
life.
Efforts like this national program represent monumental
achievement for America and American families. History has
shown that we can clean up pollution, preserve jobs, help grow
our economy all at the same time.
Again, I appreciate the opportunity to provide the Agency's
views on this matter and I look forward to answering questions.
Thank you very much.
[The prepared statement of Ms. McCarthy follows:]
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Mr. Jordan. Thank you, Administrator.
We will go first to the gentlelady from New York, Ms. Ann
Marie Buerkle.
Ms. Buerkle. Thank you, Mr. Chairman, and thank you to our
panelists for being here this morning.
For those of you who don't know me, I have spent much of my
professional career in health, so safety is of utmost
importance to me. As I mentioned in the previous panel, I have
six children and soon to be 12 grandchildren, so safety is
always on my mind when you are putting kids in a car.
Mr. Strickland, you talked about one of the ways to
increase efficiency and decrease the use of fuel is decreasing
the weight of a car, and I am concerned. Can you talk to me
about the safety impacts resulting from making fleets smaller
and lighter?
Mr. Strickland. Absolutely. Well, the goal is actually to
not encourage mass reduction, but actually to use fuel economy
through driving technology, which is the reason why the
National Highway Traffic Safety Administration went to an
attribute-based standard, I believe, for our last set of truck
rules prior to 2012 to 2016, which I think are for light-duty
trucks, which was, I believe, in 2005. That system was actually
not only validated, but actually mandated by the Congress in
2007.
When you have a flat standard, which is basically one rule
covering the entire manufacturer's individual fleet, that
encouraged car companies at the time to offset larger vehicles
by making more smaller vehicles. This attribute-based system
actually discourages that, and what you do is you don't take
out weight. Actually, what you do is you encourage
manufacturers to reduce weight in their largest vehicles. So
not only do you have----
Ms. Buerkle. Okay, I don't mean to interrupt----
Mr. Strickland. Oh, certainly. Go ahead.
Ms. Buerkle. Five minutes go by so quickly.
Ms. Oge, I would like to just follow up with you. With
regards to EPA and the concern for this fuel efficiency, what
if the number of increase in fatalities and injuries goes up?
At what point does the EPA say maybe this isn't such a smart
idea, maybe this fuel efficiency approach is to the detriment
of safety, so we are going to back off of this?
Ms. Oge. Thank you for the question. Actually, this is a
question that should go to Mr. Strickland. The beauty of the
two agencies working together is that we were able to bring the
expertise of our two technical teams. EPA has extensive
expertise for the past 40 years to regulate the car companies
for emissions and NHTSA has significant expertise in the area
of safety. So, working together, we are going to put a proposal
together that will demonstrate----
Ms. Buerkle. So let me just----
Ms. Oge [continuing]. Safety neutral proposal.
Ms. Buerkle. So EPA is setting these standards without
having the expertise with regards to safety issues?
Ms. Oge. Under the Clean Air Act, we are required to look
at safety, and we do that, so we have our own expertise. But
also NHTSA has that expertise, so we rely on NHTSA when it
comes to the fuel economy greenhouse gas program.
Ms. Buerkle. So based on that would you just tell me what
EPA's position is with regards to safety? We always do benefits
and burdens analysis, so we want fuel efficiency, but we also
want safety. So at what point do you say let's back off from
this fuel efficiency issue because it is jeopardizing safety?
Ms. Oge. As will become evident from the proposal, the
proposal will be safety-neutral. That means we have taken that
into consideration as one of the many factors that both
agencies have to evaluate.
Ms. Buerkle. Okay. We have evidence to the contrary.
Mr. Strickland, I will just go back to you because you
mentioned that these safety studies were continuing on.
Mr. Strickland. That is correct.
Ms. Buerkle. And I think it is important for you, if you
are willing to do this, to commit to this committee that if in
fact this final rule isn't going to be issued until and unless
we know what the impact on safety is going to be. Are you
willing to commit that to this committee today?
Mr. Strickland. That is part of our statutory
responsibility, Congresswoman.
Ms. Buerkle. No, that wasn't my question. Would you be
willing to not issue a final rule until and unless all of the
safety studies have been completed and we understand what the
impact of these fuel-efficiency standards are going to be on
safety?
Mr. Strickland. The issue is for us to be able to have the
most complete information possible before we, as an agency,
make a recommendation to Secretary LaHood about a final rule,
of course, or proposal, for that matter. So the question of all
the studies being completed, if the agency feels that we have
enough technical information on hand to make a very educated
decision in terms of proposal, we will go forward with that.
Ms. Buerkle. So you are not willing to commit that we are
not going to get all the safety studies first, before we issue
the final rule.
Mr. Strickland. We will have all the appropriate safety
studies done to make a decision, Congresswoman.
Ms. Buerkle. Mr. Chairman, I would like to introduce into
the record a letter from Mark Pryor, Senator Pryor, a letter to
him from Ray LaHood.
Mr. Jordan. Without objection.
Ms. Buerkle. Thank you.
[The information referred to follows:]
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Ms. Buerkle. I see my time has expired. Thank you, Mr.
Chairman.
Mr. Jordan. Thank you.
Mr. Strickland, is the fuel efficiency standard for NHTSA
in year 2025 49.6 miles per gallon? Is that going to be the
standard?
Mr. Strickland. Actually, it is virtually a conditional
target. We are not allowed to set standards for more than 5-
year periods.
Mr. Jordan. What does that number come from, then?
Mr. Strickland. It is actually the work collectively done
with us and the Environmental Protection Agency in terms of the
technological reviews we are doing initially. Now, at this
particular point----
Mr. Jordan. But is that the number?
Mr. Strickland. We have open notice and comment not only to
have to go through for the initial part of the rule for 2017 to
2021; we, under statutory obligation, under the Energy
Independence and Security Act, we have to go through another
open notice and comment period. We have to literally do another
set of rulemaking. So we do not have a set endpoint standard;
we can't, by law.
Mr. Jordan. Anything on NHTSA letterhead or anything that
points to that number, 49.6 miles per gallon?
Mr. Strickland. We believe that the long-term program has
the ability at this point to achieve that, but, once again, it
has to be evaluated under the----
Mr. Jordan. So that is a standard that is at least out
there and proposed and being talked about and subject to maybe
being the number.
Mr. Strickland. It is a similar issue as an advanced notice
of proposed rulemaking under the APA, which is you can
definitely have a prospective number for thinking about
planning purposes and also for long-term purposes planning for
the manufacturers.
Mr. Jordan. Ms. McCarthy, is the number that the EPA has
54.5?
Ms. McCarthy. That is the number that we have put out in a
framework that is initially guiding our thought based on public
information that has been out in the record.
Mr. Jordan. So I guess that begs the question, then, is
there one national standard? Is there going to be one standard
as we are looking ahead or is there going to be two, 49.6 that
one Federal agency is saying and 54.5 another Federal agency is
saying? Because one of the things I hear and, look, I have been
hearing for 2 years when I talk to business owners in our
district and, frankly, across the State of Ohio, is the word
that comes up more and more often, you hear it from elected
officials, is the uncertainty in the marketplace with business
owners today. So wouldn't it seem like maybe if there is
supposed to be one national standard, we wouldn't want two
numbers out there?
Ms. McCarthy. Well, the success of the 2012 to 2016 program
was that for the first time we did have one national program,
which means we had three regulatory agencies that worked
together so that one national fleet could be produced that
would achieve all of the regulatory requirements.
Mr. Jordan. My question is do you think that adds to
uncertainty, the fact that there is not one standard at least
in the proposed numbers and the target that manufacturers are
going to have to hit?
Ms. McCarthy. I think the manufacturers are well aware that
for the first time they can build one fleet that achieves all
of the regulatory requirements. That is the first time that we
have been able to deliver it. That is why they asked us to look
beyond 2016 and actually get together to extend that national--
--
Mr. Jordan. Okay. Let me go to this, then. So the process--
and you were all here for the first panel. Mr. Grenerth talked
about during the comment period for the truck industry where he
felt like he was not heard at all and talked about the
additional cost he now faces as a small business owner. And Mr.
Anwyl, in his comments, talked about how he thinks the deal is
already done now as we are moving forward with the new set of
standards coming.
How do you respond to that, that here are folks, consumer
advocates, small business owners, who feel like they are not
actually having their concerns addressed in the process and the
deal is already done?
Mr. Strickland. The deal is not done. We still have to
propose, bottom line. What we did was asked stakeholders to
provide us technical information to better inform the proposal.
So everyone that was here that provided you testimony, we are
looking forward to seeing their comments in our open notice and
comment period when we issue the proposal.
Again, also, I believe that OOIDA, which is, I think, the
group that Mr. Grenerth, actually did have meetings not only
with my technical team, but also with the EPA, and I can have
Ms. McCarthy answer more specifically to that. But in terms of
hearing particular voices or the consumers' voice or things of
that nature, that is what open notice and comment is for, and
our doors were always open throughout this process.
While there were numbers of technical meetings that were
going on with lead stakeholders, there were other meetings
going on all the time for the process. Mr. Anwyl was always
welcome, if he had his study, to be able to provide that to the
agency, to provide that to EPA; we would happily have taken
that into consideration in the preliminary look in shaping the
proposal and especially, more importantly, during open notice
and comment, which is where we have to evaluate all this
information.
Mr. Jordan. Well, I appreciate that, Director, but we had
two people under oath just testify that they thought it did
work the way you just described. We have this statement from
the Center for Progressive Reform which says the Center notes
that the agreed-upon CAFE standards are ``the result of raw
political wrangling, not the rational rulemaking process.'' So
this is not a small business owners, this is probably a center-
left organization making that kind of statement.
We had Mr. Anwyl, under testimony before, saying he called
it the California balkanization, talking about manufacturing,
and I think the statement he used was he feels like the
manufacturers had a gun to their head and they felt they had to
go along with the proposed standards.
So how do you respond to that?
Mr. Strickland. Well, I can't speak to the state of mind to
a manufacturer, you need to ask them how they felt.
Mr. Jordan. How about Administrator McCarthy?
Ms. McCarthy. Well, first of all, I would say that the
national program has garnered such widespread support because
it is a model of how government can and should work effectively
with a wide range of stakeholders to develop thoughtful data-
driven regulations that benefit consumers, that improve the
environment, that improve security----
Mr. Jordan. A lot of the questioning in the first--if I
could just real quickly. A lot of the questioning in the first
panel was on the cost issue. Did you guys, when you go through
this, you did, I would assume, a pretty extensive cost-benefit
analysis?
Ms. McCarthy. We did, and we will provide a similar
analysis when we put out the proposed rule----
Mr. Jordan. And is there a chance the committee could get
that cost-benefit analysis used thus far to arrive at the
decisions you have arrived at?
Ms. McCarthy. Actually, all of that information is in the
public record already. We actually put out a Notice of Intent,
we put out a Technical Assessment Report, we put out a
Supplemental Notice of Intent----
Mr. Jordan. And you will get that all to the committee? Can
you get that to the committee?
Ms. McCarthy. Absolutely. It is in the public record.
Mr. Jordan. Okay. Okay.
Ms. Jordan. The only thing I would also say is I know that
one of the representatives you heard from this morning is
OOIDA, and I wanted to make it very clear to you that we
actually met with OOIDA extensively. They, early on, identified
seven issues that were of concern to them in our proposal, and
I can provide you direct information that indicated that their
comments led to significant changes in the final because we
took their comments into consideration.
In fact, I can provide you an email from OOIDA subsequent
to our meeting with them during the comment period in which
they went on effusively about how good EPA was to pay such
close attention to the interests of small business. So I don't
know who this representative was or how extensive an
involvement he had in the process, but clearly not working for
OOIDA, because the staff of OOIDA met with us, appreciated it,
and had an influence in the decision.
Mr. Jordan. All right.
Gentlelady from New York for a second round. We will go
real quickly second round.
Ms. Buerkle. Thank you, Mr. Chairman.
Just as a followup question to the chairman's question, Ms.
McCarthy, with regards to you sat there and you were quick to
tick off the benefits, savings 12 billion barrels of oil with
these new standards. Can you give us some idea of the costs?
Ms. McCarthy. Certainly. The costs are in the rulemaking
themselves, and let me talk to you a little bit about the
costs.
Ms. Buerkle. Just the amount. Just the amount.
Ms. McCarthy. Relative to 2012 to 2016, the cost for those
model years is $52 billion, the monetized benefits are $240
billion. For the estimated, we haven't proposed it yet. We
don't have any costs yet for the 2017 to 2025. But if you look
in the record, you will see that the Notice of Intent that we
put out actually references a wide variety of costs related to
different ranges of stringency in those rules. For the 2014 to
2016, heavy-duty vehicles, the cost is $8 billion, the
monetized benefits are $50 billion.
Ms. Buerkle. Okay, yes, if you could provide those for the
committee, that would be great.
Ms. McCarthy. Happy to.
Ms. Buerkle. Thank you.
Mr. Strickland, I want to go back a little bit because it
sounds to me like we are going to have three different
standards here.
Mr. Strickland. There are three different programs,
Congresswoman; it is one harmonized national program. There are
different authorities under the National Highway Traffic Safety
Administration, Clean Air Act authority under EPA, and then the
California Air Resources Board also has the ability, because of
the waiver and the endangerment finding, to issue their own
rules regarding greenhouse gas emissions. The key to it was to
harmonize those three different authorities. So while, yes,
there are three different regulatory actions happening, they
are jointly done and coordinated so you do have one harmonized
national program.
Ms. Buerkle. Can you comment, though? This California
waiver, doesn't that create--why was California given a waiver?
Doesn't that create confusion? This harmony, there are three
different sets of standards. It wasn't that way before 2009,
and I would like you to comment on that.
Mr. Strickland. Well, I will defer to Ms. McCarthy and EPA,
since they are the ones who have to process the waiver.
Ms. Buerkle. But my question is directed to you, Mr.
Strickland.
Mr. Strickland. Oh, certainly.
Ms. Buerkle. Then I will follow up with the other two.
Mr. Strickland. In terms of why I think there is--well,
clearly because California was given the waiver, they have the
authority, because of their endangerment finding, the
endangerment finding made by the Environmental Protection
Agency, to be able to issue greenhouse gas standards and,
therefore, under Mass. v. EPA, which gave the Clean Air Act
authority the right to actually oversee transportation sources,
we have a new regulatory environment that we have to deal with.
The White House and the President's leadership said for us
all that there were various statements of Presidential orders
to be able to work together to create one national harmonized
program, and that is what we did.
Ms. Buerkle. But I would like you to comment on the fact
that the EPA really, in issuing this waiver to California,
violated the State preemption, that California should not have
been given a waiver.
Mr. Strickland. I am not an expert on California waiver
issues. I would be happy to answer that for the record
specifically, but you have two experts to my left.
Ms. Buerkle. Well, but you are working with these groups
and it is of concern to me whether EPA had the authority to
grant this waiver to California, and now we end up in a
situation where we have three sets of standards where, in 2009,
we had one set, and that was NHTSA's standard, which appears to
be a more reasonable and less onerous and less burdensome on
the economy and on the folks, as you heard from this morning.
Mr. Strickland. We were given congressional authority under
EPCA in the mid-1970's and then modified by the Energy
Independence Security Act in 2007 we will carry out those
duties. Because of Mass. v. EPA and the Clean Air Act
authority, there is independent authority as well to also
regulate greenhouse gas emissions, and it is not our place to
evaluate the Environmental Protection Agency's legal authority.
Our responsibility under the Department of Transportation is to
actually deal with our statutory authorities, and our agency's
mission is to not only regulate fuel economy, which is one part
of our mission, but to find the best ways to save lives and
reduce injuries, which is what we do every single day.
Ms. Buerkle. I would disagree with you on the fact that you
should have knowledge and you should be concerned with the fact
that EPA violated the State preemption by granting California
that waiver, and that should be the place where you start. It
was in EPCA and there was a State preemption clause in there.
And that is why we are having this hearing. We are not saying
we don't want a clean environment, but we want to make sure
that this process that was followed is legal and is the right
way to go.
I yield back, Mr. Chairman.
Ms. McCarthy. Madam Vice Chairman, would you like me to
answer this question?
Mr. Jordan. Yes. I think the question is the statute seems
to indicate that you can't have preemption, yet the EPA said
you can have preemption. So what gives?
Ms. McCarthy. Actually, I believe that what you are
referring to are fuel economy regulations. What California is
regulating and what EPA is regulating are greenhouse gas
emission standards. And the only thing that I wanted to make
sure to point out is that Congress, in the Clean Air Act, in
Section 209, actually not only gave us the authority to grant
California waivers, but it gave us specific criteria that we
needed to follow. We applied those criteria to the letter; we
went through a public rulemaking process----
Mr. Jordan. I guess maybe here is a question. I am not a
legal scholar, but it seems, when you read the statute, it
talks about a regulation related to fuel economy standards, and
greenhouse gases are certainly related to fuel economy
standards, is that right?
Ms. McCarthy. They are closely aligned, but they are
different, Mr. Chairman.
Mr. Jordan. Then I think that proves the gentlelady's
point.
Ms. McCarthy. We actually take into consideration all
greenhouse gas emissions related to that vehicle, most notably,
the major differences, the air conditioning. And that makes a
very big difference in terms of the outcome of these rules.
EPA's regulation actually improves the amount of greenhouse
gases you can get and achieve through this joint rulemaking,
and it also helps improve fuel economy in the end. But we are
not driving fuel economy; we are actually regulating greenhouse
gases.
Mr. Jordan. I want to go back to where I was earlier,
because I wasn't quite clear. Is there one standard or are
there going to be two? Are there going to be 49 miles per
gallon and 54, are there going to be two numbers out there or
is there going to be just one number?
Mr. Strickland. Well, the easiest way to explain it is the
54.5 mile per gallon standard derived from the EPA's greenhouse
gas rules versus NHTSA's 49.6. They are actually harmonized;
they are the same number. We have different authorities. They
have more flexibilities----
Mr. Jordan. Mr. Strickland, only in Washington could you
say two numbers are the same number. I mean, I have seen all
kinds of things in budgeting----
Mr. Strickland. It is a harmonized----
Mr. Jordan. We are going to cut spending, but we are not
cutting spending; we are reducing the rate of growth. I have
seen it all and I have only been here 5 years. But I have never
had someone, a Federal agency say 49.6 is the same as 54.5. I
have just never seen it.
Mr. Strickland. There are different statutory authorities
and different flexibilities that the agencies have. When you--
--
Mr. Jordan. Well, will you at least admit this, that that
probably doesn't help the uncertainty that currently exists in
our economy where we have 9 percent unemployment? Would you at
least admit that?
Mr. Strickland. No, the exact reason why we needed----
Mr. Jordan. You wouldn't think so? Wow.
Mr. Strickland. The exact reason why we needed a harmonized
national program is to address exactly that, so the auto
manufacturers can actually address building one national fleet.
It is what the manufacturers wanted. It is the best
environmental policy and best economic policy. The reason why
we have undertaken this joint rulemaking in the first place is
to address that very question. Bottom line is----
Mr. Jordan. Would you ever have had to undertake the joint
rulemaking if California didn't have a different standard?
Mr. Strickland. Well, clearly the issue is----
Mr. Jordan. I mean, just be frank. You are under oath, so
just be frank. But for that, you wouldn't have had to do this,
would you?
Mr. Strickland. Well, before----
Mr. Jordan. We wouldn't have this whole convoluted
rulemaking process, special committee----
Mr. Strickland [continuing]. The only auto fuel regulator
was NHTSA. So you are asking a question which sort of bespokes,
and that isn't the current reality. The current reality is is
that the Supreme Court made the decision that the Clean Air Act
did cover mobile transportation sources and, frankly, not only
because of that legal decision, it frankly was the best policy
decision, because there are some things that the Environmental
Protection Agency, such as air conditioning, can reach which
actually strengthens our fuel economy policy, makes it more
consistent, and actually makes a more rigorous standard.
Mr. Jordan. I want to thank the witnesses. I do have to
run. I appreciate your coming in and I apologize I can't stay,
but I have to get to another meeting here. I will turn it over
to the gentlelady from New York.
Ms. Buerkle. And I just have a quick question for the three
of you. It is a yes or no question, if you wouldn't mind. Are
the greenhouse gas rules, either the EPA's or the California
rules, are they related to fuel economy? Mr. Strickland?
Mr. Strickland. They regulate----
Ms. Buerkle. Yes or no?
Mr. Strickland. No. They regulate greenhouse gas emissions.
Ms. McCarthy. They regulate greenhouse gas emissions.
Ms. Oge. They regulate greenhouse gas emissions.
Ms. Buerkle. So they are not related to fuel economy, under
oath?
Mr. Strickland. No. They are greenhouse gas emission
regulations.
Ms. McCarthy. We do not regulate fuel economy standards.
Ms. Buerkle. Okay. And all three of you agree with that?
Mr. Strickland. Yes.
Ms. Oge. Yes.
Ms. McCarthy. Yes.
Ms. Buerkle. Very good.
This hearing is adjourned. Thank you all for being here.
[Whereupon, at 12:15 p.m., the subcommittee was adjourned.]
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