[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]






MIDTERM REVIEW AND UPDATE ON THE CORPORATE AVERAGE FUEL ECONOMY PROGRAM 
       AND GREENHOUSE GAS EMISSIONS STANDARDS FOR MOTOR VEHICLES

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

                             JOINT HEARING

                               BEFORE THE

           SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND TRADE

                                AND THE

                    SUBCOMMITTEE ON ENERGY AND POWER

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 22, 2016

                               __________

                           Serial No. 114-171


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]






      Printed for the use of the Committee on Energy and Commerce
                       energycommerce.house.gov

                                 ______

                         U.S. GOVERNMENT PUBLISHING OFFICE 

23-411 PDF                     WASHINGTON : 2017 
-----------------------------------------------------------------------
  For sale by the Superintendent of Documents, U.S. Government Publishing 
  Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; 
         DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, 
                          Washington, DC 20402-0001





























                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman

JOE BARTON, Texas                    FRANK PALLONE, Jr., New Jersey
  Chairman Emeritus                    Ranking Member
JOHN SHIMKUS, Illinois               BOBBY L. RUSH, Illinois
JOSEPH R. PITTS, Pennsylvania        ANNA G. ESHOO, California
GREG WALDEN, Oregon                  ELIOT L. ENGEL, New York
TIM MURPHY, Pennsylvania             GENE GREEN, Texas
MICHAEL C. BURGESS, Texas            DIANA DeGETTE, Colorado
MARSHA BLACKBURN, Tennessee          LOIS CAPPS, California
  Vice Chairman                      MICHAEL F. DOYLE, Pennsylvania
STEVE SCALISE, Louisiana             JANICE D. SCHAKOWSKY, Illinois
ROBERT E. LATTA, Ohio                G.K. BUTTERFIELD, North Carolina
CATHY McMORRIS RODGERS, Washington   DORIS O. MATSUI, California
GREGG HARPER, Mississippi            KATHY CASTOR, Florida
LEONARD LANCE, New Jersey            JOHN P. SARBANES, Maryland
BRETT GUTHRIE, Kentucky              JERRY McNERNEY, California
PETE OLSON, Texas                    PETER WELCH, Vermont
DAVID B. McKINLEY, West Virginia     BEN RAY LUJAN, New Mexico
MIKE POMPEO, Kansas                  PAUL TONKO, New York
ADAM KINZINGER, Illinois             JOHN A. YARMUTH, Kentucky
H. MORGAN GRIFFITH, Virginia         YVETTE D. CLARKE, New York
GUS M. BILIRAKIS, Florida            DAVID LOEBSACK, Iowa
BILL JOHNSON, Ohio                   KURT SCHRADER, Oregon
BILLY LONG, Missouri                 JOSEPH P. KENNEDY, III, 
RENEE L. ELLMERS, North Carolina     Massachusetts
LARRY BUCSHON, Indiana               TONY CARDENAS, California
BILL FLORES, Texas
SUSAN W. BROOKS, Indiana
MARKWAYNE MULLIN, Oklahoma
RICHARD HUDSON, North Carolina
CHRIS COLLINS, New York
KEVIN CRAMER, North Dakota

                                  (ii)
           Subcommittee on Commerce, Manufacturing, and Trade

                       MICHAEL C. BURGESS, Texas
                                 Chairman
LEONARD LANCE, New Jersey            JANICE D. SCHAKOWSKY, Illinois
  Vice Chairman                        Ranking Member
MARSHA BLACKBURN, Tennessee          YVETTE D. CLARKE, New York
GREGG HARPER, Mississippi            JOSEPH P. KENNEDY, III, 
BRETT GUTHRIE, Kentucky                  Massachusetts
PETE OLSON, Texas                    TONY CARDENAS, California
MIKE POMPEO, Kansas                  BOBBY L. RUSH, Illinois
ADAM KINZINGER, Illinois             G.K. BUTTERFIELD, North Carolina
GUS M. BILIRAKIS, Florida            PETER WELCH, Vermont
SUSAN W. BROOKS, Indiana             FRANK PALLONE, Jr., New Jersey (ex 
MARKWAYNE MULLIN, Oklahoma               officio)
FRED UPTON, Michigan (ex officio)
                                 ------                                

                    Subcommittee on Energy and Power

                                VACANCY
                                 Chairman
PETE OLSON, Texas                    BOBBY L. RUSH, Illinois
  Vice Chairman                        Ranking Member
JOHN SHIMKUS, Illinois               JERRY McNERNEY, California
JOSEPH R. PITTS, Pennsylvania        PAUL TONKO, New York
ROBERT E. LATTA, Ohio                ELIOT L. ENGEL, New York
GREGG HARPER, Mississippi            GENE GREEN, Texas
DAVID B. McKINLEY, West Virginia     LOIS CAPPS, California
MIKE POMPEO, Kansas                  MICHAEL F. DOYLE, Pennsylvania
ADAM KINZINGER, Illinois             KATHY CASTOR, Florida
H. MORGAN GRIFFITH, Virginia         JOHN P. SARBANES, Maryland
BILL JOHNSON, Ohio                   PETER WELCH, Vermont
BILLY LONG, Missouri                 JOHN A. YARMUTH, Kentucky
RENEE L. ELLMERS, North Carolina     DAVID LOEBSACK, Iowa
BILL FLORES, Texas                   FRANK PALLONE, Jr., New Jersey (ex 
MARKWAYNE MULLIN, Oklahoma               officio)
RICHARD HUDSON, North Carolina
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)


















                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Michael C. Burgess, a Representative in Congress from the 
  State of Texas, opening statement..............................     2
    Prepared statement...........................................     3
Hon. Janice D. Schakowsky, a Representative in Congress from the 
  State of Illinois, opening statement...........................     4
Hon. Pete Olson, a Representative in Congress from the State of 
  Texas, opening statement.......................................     5
    Prepared statement...........................................     6
Hon. Jerry McNerney, a Representative in Congress from the State 
  of California, opening statement...............................     7
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, opening statement....................................     9
    Prepared statement...........................................    10
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................    10
    Prepared statement...........................................    12

                               Witnesses

Janet McCabe, Acting Assistant Administrator, Office of Air and 
  Radiation, Environmental Protection Agency.....................    13
    Prepared statement...........................................    16
    Answers to submitted questions \1\...........................   193
Paul Hemmersbaugh, Chief Counsel, National Highway Traffic Safety 
  Administration.................................................    23
    Prepared statement...........................................    25
    Answers to submitted questions \1\...........................   194
Mitch Bainwol, President and CEO, Alliance of Automobile 
  Manufacturers..................................................    56
    Prepared statement...........................................    59
    Answers to submitted questions...............................   217
Peter K. Welch, President, National Automobile Dealers 
  Association....................................................    82
    Prepared statement...........................................    84
    Answers to submitted questions...............................   233
John D. Graham, Ph.D, Dean, School of Public and Environmental 
  Affairs, Indiana University....................................    89
    Prepared statement...........................................    91
    Answers to submitted questions...............................   238
John German, Senior Fellow and Program Director, International 
  Council on Clean Transportation................................   114
    Prepared statement...........................................   116
    Answers to submitted questions...............................   241
Mark Cooper, Ph.D., Director of Research, Consumer Federation of 
  America........................................................   140
    Prepared statement...........................................   142
    Answers to submitted questions \2\...........................   245
John Bozzella, President and CEO, Association of Global 
  Automakers, Inc................................................   156
    Prepared statement...........................................   158
    Answers to submitted questions...............................   246

----------
\1\ Ms. McCabe and Mr. Hemmersbaugh entered a joint response to 
submitted questions for the record. It begins on page 195.
\2\ Dr. Cooper did not answer submitted questions for the record by the 
time of printing.

                           Submitted Material

Statement of the American Chemistry Council, September 22, 2016, 
  submitted by Mr. Olson.........................................   188
 
MIDTERM REVIEW AND UPDATE ON THE CORPORATE AVERAGE FUEL ECONOMY PROGRAM 
       AND GREENHOUSE GAS EMISSIONS STANDARDS FOR MOTOR VEHICLES

                              ----------                              


                      THURSDAY, SEPTEMBER 22, 2016

                  House of Representatives,
Subcommittee on Commerce, Manufacturing, and Trade,
                             joint with the
                  Subcommittee on Energy and Power,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittees met, pursuant to call, at 10:06 a.m. in 
Room 210 of the Capitol Visitor Center, Hon. Michael Burgess 
(chairman of the Subcommittee on Commerce, Manufacturing, and 
Trade) presiding.
    Members present: Representatives Burgess, Barton, Shimkus, 
Blackburn, Latta, Harper, Lance, Guthrie, Olson, McKinley, 
Griffith, Bilirakis, Johnson, Long, Flores, Brooks, Mullin, 
Hudson, Upton (ex officio), Engel, Green, Schakowsky, Castor, 
Sarbanes, McNerney, Welch, Tonko, Yarmuth, Loebsack, Kennedy, 
and Pallone (ex officio).
    Staff present: Gary Andres, Staff Director; Grace Appelbe, 
Staff Assistant; Will Batson, Legislative Clerk, Energy and 
Power; Elena Brennan, Staff Assistant; James Decker, Policy 
Coordinator, Commerce, Manufacturing, and Trade; Graham 
Dufault, Counsel, Commerce, Manufacturing, and Trade; Blair 
Ellis, Digital Coordinator/Press Secretary; Melissa Froelich, 
Counsel, Commerce, Manufacturing, and Trade; Giulia 
Giannangeli, Legislative Clerk, Commerce, Manufacturing, and 
Trade, and Environment and the Economy; Tom Hassenboehler, 
Chief Counsel, Energy and Power; A.T. Johnston, Senior Policy 
Advisor; Ben Lieberman, Counsel, Energy and Power; Brandon 
Mooney, Professional Staff Member, Energy and Power; Paul 
Nagle, Chief Counsel, Commerce, Manufacturing, and Trade; 
Annelise Rickert, Legislative Associate; Chris Sarley, Policy 
Coordinator, Environment and the Economy; Dan Schneider, Press 
Secretary; Olivia Trusty, Professional Staff Member, Commerce, 
Manufacturing, and Trade; Michelle Ash, Democratic Chief 
Counsel, Commerce, Manufacturing, and Trade; Jeff Carroll, 
Democratic Staff Director; Timia Crisp, Democratic AAAS Fellow; 
Jean Fruci, Democratic Energy and Environment Policy Advisor.
    Mr. Burgess. The Subcommittee on Commerce, Manufacturing, 
and Trade will now come to order. I will recognize myself 5 
minutes for the purpose of an opening statement.

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE 
              IN CONGRESS FROM THE STATE OF TEXAS

    Congress established the Corporate Average Fuel Economy 
Program in 1975 to improve vehicle fuel economy, to reduce oil 
consumption, and to secure the Nation's energy independence. 
The National Highway Traffic Safety Administration was tasked 
with overseeing the program and empowered to set fuel economy 
standards for cars and trucks sold in the United States.
    Since the establishment of the Corporate Average Fuel 
Economy Program, it has undergone significant modifications and 
revision. Some changes were driven by fluctuating economic 
conditions and projected marketplace activity. Advancements in 
automotive technology have also played a part, and still other 
changes have been driven by political winds.
    Layer on top of that the National Highway Traffic Safety 
Administration and the Environmental Protection Agency and all 
the States setting up their own programs, and you have one very 
complicated regulatory scheme. As we gather today to discuss 
CAFE greenhouse gas emissions and the midterm review, I want to 
admit that I have serious concerns about the real-world impact 
that the National Highway Traffic Safety Administration's 
standards for model year 2022 to 2025, that are the standards 
that they will have on vehicles on our economy. I worry about 
the health of the auto industry and of course consumer welfare.
    I believe in fuel efficiency, I believe in energy 
independence, but I also believe in policy that is based upon 
the real world, and I really believe in consumer choice and 
consumer wisdom. In Texas we have big spaces and we like to get 
around those big spaces in big cars with big air conditioners, 
and technology and gas prices have allowed us to do that with a 
great degree of facility.
    I also believe strongly in the power of efficiency. Every 
summer I hold an Energy Efficiency Summit in the district when 
historically fuel and electricity prices are at their highest 
in a State like Texas, where temperatures exceed 100 degrees 
consistently through the summer.
    However, as strongly as I feel about energy efficiency, I 
feel equally as strongly that the Government should not be in 
the business of telling consumers what they can use and what 
they cannot purchase. The issue of a product's efficiency, 
whether it be a lightbulb or motor vehicle, should be between 
the manufacturer, the company that manufactures, and the 
consumer.
    For this reason I have introduced H.R. 4504, the Energy 
Efficiency Free Market Act, to repeal the Department of 
Energy's authority to mandate efficiency standards for all 
consumer products. That is not to say that I don't believe in 
purchasing the most efficient products available. I drive a 
hybrid, a strong hybrid, in the vernacular of today's 
witnesses. When I built my house I made certain the products we 
used were the most energy efficient we could obtain in off-the-
shelf items.
    But those were my choices. The Government wasn't and 
shouldn't be part of those decisions. What I don't want to see 
is the Government regulations and overly prescriptive mandates 
taking away consumer choice and putting the big hurt on the 
family budget.
    The auto industry is one of the few bright spots in our 
economy. It creates millions of jobs. It drives productivity. 
It drives innovation. It drives economic growth. It also allows 
for investments into lifesaving technologies that make our 
roadways safer and more secure for the driving public.
    I am deeply concerned that the planned fuel economy 
standards for future model years will significantly stall that 
progress and dramatically reduce consumer choice. I am 
concerned that in some cases it could even push consumers into 
less safe cars because they either have to buy a used car or 
because they can't afford the newest CAFE technology, and 
subsequently they do not avail themselves of the newest safety 
technologies.
    At a time of persistent economic uncertainty facing 
hardworking American families, we have a responsibility to 
ensure that this does not happen. In that vein, I look forward 
to discussing the assumptions of both the Highway National 
Traffic Safety Administration and the Environmental Protection 
Agency and how they are looking at these assumptions as they 
require ever-increasing fuel efficiency standards and how they 
further the National Highway Traffic Safety Administration's 
core mission in providing safe and secure vehicular travel for 
the American people.
    [The opening statement of Mr. Burgess follows:]

             Prepared statement of Hon. Michael C. Burgess

    Congress established the Corporate Average Fuel Economy 
program in 1975 to improve vehicle fuel economy, reduce oil 
consumption, and secure the Nation's energy independence. The 
National Highway Traffic Safety Administration was tasked with 
overseeing the program and empowered to set fuel economy 
standards for cars and trucks sold in the United States.
    Since the establishment of CAFE, the program has undergone 
significant modifications and revisions. Some changes were 
driven by fluctuating economic conditions and projected 
marketplace activity. Advancements in automotive technology 
have also played a part. And still other changes have been 
driven by political winds. Layer on top of that NHTSA, EPA and 
the States all setting up their own programs and you have one 
very complicated regulatory scheme.
    As we gather today to discuss CAFE, greenhouse gas 
emissions, and the Midterm Review, I have serious concerns 
about the real-world impact that NHTSA's augural standards for 
model year 2022 to 2025 vehicles will have on the economy, the 
health of the auto industry, and consumer welfare.
    I believe in fuel efficiency, and energy independence. But 
I also believe in policy that is based on real world data, and 
consumer choice. In Texas, we have big spaces and we like to 
get around those big spaces in our big cars. And technology and 
gas prices let us do that pretty easily.
    I believe so strongly in the power of efficiency, in fact, 
that I hold an annual Energy Efficiency Summit in my district 
every July, when historically fuel and electricity prices 
skyrocket in a State like Texas, where temperatures exceed 100 
degrees consistently through the summer.
    However, as strongly as I feel about energy efficiency, I 
feel equally as strongly that Government should not be in the 
business of telling consumers what they can and cannot 
purchase. The issue of a product's efficiency, whether it be a 
lightbulb or a motor vehicle, should be solely between the 
company and the customer. For this reason, I introduced H.R. 
4504, the Energy Efficiency Free Market Act, to repeal the 
Department of Energy's authority to mandate efficiency 
standards of consumer products.
    This is not to say I don't believe in purchasing the most 
efficient products possible. I drive a hybrid. When I built my 
house, I made sure the products we used were the most efficient 
we could obtain. But those were my choices. The Government 
wasn't and shouldn't have been part of those decisions.
    What I don't want to see is Government regulations and 
overly prescriptive mandates taking away consumer choice and 
putting a real hurt on the family budget.
    The auto industry is one of the few bright spots of our 
economy. It creates millions of jobs and drives productivity, 
innovation, and economic growth. It also allows for investments 
into lifesaving technologies that make our roadways safer and 
more secure for the driving public.
    I am deeply concerned that the planned fuel economy 
standards for future model years will significantly stall that 
progress and dramatically reduce consumer choice. I am 
concerned that in in some cases it could even push consumers 
into less safe cars, either because they have to buy used or 
because they can't afford the newest CAFE technology and the 
newest safety technologies.
    At a time of persistent economic uncertainty facing 
hardworking American families, we have a responsibility to 
ensure that does not happen. In that vein, I look forward to 
discussing the assumptions that NHTSA and EPA are looking at as 
they require ever increasing fuel efficiency standards and how 
they further NHTSA's core mission in providing safe and secure 
vehicular travel for the American people.

    Mr. Burgess. That concludes my opening statement. I will 
yield back my time and recognize the ranking member of the 
Subcommittee on Commerce, Manufacturing, and Trade, Ms. 
Schakowsky, 5 minutes for an opening statement, please.

       OPENING STATEMENT OF HON. JANICE D. SCHAKOWSKY, A 
     REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS

    Ms. Schakowsky. Thank you, Chairman Burgess. I am pleased 
to join you and my colleagues for this joint hearing of the 
Commerce, Manufacturing, and Trade and Energy and Power 
subcommittees.
    Over the past four decades, Corporate Average Fuel Economy, 
or CAFE, standards have been an important tool in improving 
fuel efficiency and reducing greenhouse gas emissions. Think 
about how much cars have changed in that time. They became 
lighter and more aerodynamic. Engines have gotten more 
efficient. And we have seen the emergence of hybrid, which I 
have, electric and alternative fuel vehicles.
    These technological advancements were driven, in part, by 
CAFE standards. CAFE standards were borne out of the energy 
crisis in the 1970s. We now face a different and larger crisis, 
the threat of global climate change. I am not here to debate 
science. The argument is settled. We need to think about how 
CAFE factors into our broader efforts to improve fuel economy 
and decrease carbon emissions that contribute to global climate 
change.
    The work of the National Highway Transportation Safety 
Administration and Environmental Protection Agency to set fuel 
efficiency and greenhouse gas emission standards is critical. I 
have heard the arguments that CAFE standards are ambitious, 
push the line limit of technology; that is a good thing. We 
must take meaningful steps to reduce fuel consumption, and 
strong standards push the auto industry toward greater 
efficiency and innovation.
    Today we examine CAFE standards as NHTSA and the EPA work 
to finalize their Technical Assessment Report, TAR, a step in 
evaluating standards for model years 2022 through 2025. 
Discussion of the TAR and the midterm review may seem technical 
but the purpose is simple, to determine what standards are 
feasible going forward. I want us to be ambitious but practical 
as we consider these standards. Those of us serving on these 
subcommittees have responsibility to reject hollow arguments 
put forth to justify lower targets.
    I want to clarify a few items from the start. NHTSA and EPA 
do not set a single fuel economy standard. Since 2007, the 
standards for each automaker have been customized to a 
vehicle's wheelbase and track width, the vehicle's footprint. 
That means that standards are already tailored to an 
automaker's unique fleet.
    Since 2008, vehicles have gotten bigger, meaning lower 
standards apply. We need to think carefully before providing 
further needless flexibility that allows for even lower fuel 
efficiency than an automaker would otherwise need to achieve
    On that note, I approach discussion of credits for meeting 
CAFE standards with what I think is a healthy level of 
skepticism. Should an eco-friendly sedan excuse a gas-guzzling 
SUV? That seems hard to justify when other automakers have 
manufactured an efficient SUV but a less efficient car. We 
should expect progress across all classes of vehicles. I find 
the proposal of credits for safety improvements especially 
disingenuous, and I see that suggestion again in some of the 
written testimony today.
    As ranking member of the Commerce, Manufacturing, and Trade 
Subcommittee, I am a strong advocate for auto safety. This is 
one of the key consumer protection issues we work on. Safety 
and fuel efficiency should not be presented as an either/or 
scenario. The automakers should not get a pass on fuel economy 
for making safety improvements that they have already committed 
to making.
    The argument for safety credits rests on a shaky premise 
that safety technologies lead to lower energy consumption by 
reducing congestion. The data shows otherwise. According to the 
Department of Transportation, more than 75 percent of 
congestion is caused by bottlenecks, construction zone, bad 
weather, poor traffic signal timing, and special events, not 
crashes.
    Contrary to some of the arguments we will hear today, 
safety technology will not help with this congestion, and will 
not increase congestion and will not improve fuel economy. 
Improving fuel economy is vital. I look forward to hearing from 
our witnesses on what standards are feasible to achieve this 
and how we can continue using CAFE standards to drive the 
automotive industry forward. And I yield back.
    Mr. Burgess. The gentlelady yields back. The Chair thanks 
the gentlelady. The Chair now would like to recognize the 
chairman of the Subcommittee on Energy and Power, Mr. Olson, 5 
minutes for an opening statement, please.

   OPENING STATEMENT OF HON. PETE OLSON, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Olson. I thank my friend from Texas for taking the lead 
in making this important joint hearing happen. This midterm 
review of Federal CAFE standards and GHG emissions is exactly 
what the American people expect from their Congress. It is 
timely, because when this process began our world and our 
economy were very different.
    Gasoline prices were only going up from record highs and 
interest rates were closer to ten percent instead of one 
percent today. Now America is deemed number one producer of oil 
and gas in the entire world which has lowered gasoline prices 
significantly. The Federal Reserve does not budge in increasing 
interest rates. As a result, certain assumptions have changed.
    This is mostly good news for consumers, but it changes 
their spending habits, their patterns. With this stagnant 
economy consumers are looking for the best value when buying 
new cars and looking long term, 5 to 10 years of ownership on 
average. The new technology automakers are developing to meet 
the CAFE and GHG standards cost more. Today we will look at how 
consumer choices impact the ability to meet these goals.
    The One National Program so far has been a good example of 
cooperation between the public and private sectors. In these 
situations, the public sector must speak with only one clear 
voice. When two agencies have conflicts no one wins. I worked 
hard to protect our Nation's electric grid by fixing a small 
glitch in Federal law that forced electricity producers to 
choose which Federal law they would violate due to competing 
and conflicting Federal agencies.
    The One National Program was designed to avoid this 
situation for automakers. This midterm evaluation is the best 
occasion to ensure that three different sets of rules do not 
conflict with one another. In reviewing the requirements of 
each program, there is a clear gap that can leave manufacturers 
in compliance with one set of rules and out of compliance with 
another set of rules. And that is just based on NHTSA and EPA's 
regs. It does not include the zero-emission vehicle program 
being developed by California.
    I also want to hear from the EPA about the benefits of the 
rulemakings. This is a very complex and expensive set of rules 
and we need to start with a very strong foundation. This 
midterm evaluation is a starting point where we can work 
together to avoid conflicts before they become a big problem.
    And it is not just automakers that suffer if we don't get 
this right. The American people will greatly be impacted by a 
patchwork system that increases costs while weakening the most 
important force for growth in a free-market economy, consumer 
choice. I hope that working together we can find a common 
ground to harmonize these standards and develop the real vision 
of the One National Program.
    Thank you, Mr. Chairman. I yield back.
    [The opening statement of Mr. Olson follows:]

                 Prepared statement of Hon. Pete Olson

    This Midterm Review of the Corporate Average Fuel Economy 
Program and Greenhouse Gas Emissions Standards is timely. When 
this process began, America was in a different world than we 
are today. Back then, gas prices were at a record high and 
assumed to go higher.
    Today America is the number one producer of oil and natural 
gas, which has lowered gas prices significantly. As a result, 
certain assumptions have changed considerably.
    While this is good news for consumers, it also changes 
their priorities. A stagnant economy and low gas prices have 
consumers looking for the best value when buying a car. The new 
technology auto makers are developing to meet the CAFE and GHG 
standards cost more. Today, we will look at how consumer 
choices impact the ability to meet these goals.
    Another important issue this committee has looked at 
closely is the ability of industries to meet goals set by 
Federal agencies. When two agencies have conflicting 
priorities, no one wins. I worked hard to protect our Nation's 
electric grid reliability by helping fix a critical glitch in 
Federal law that forced electricity producers to choose which 
Federal law they would violate due to competing priorities.
    The One National Program was designed to avoid a similar 
situation for auto makers. This Midterm Evaluation is the best 
occasion to ensure that three different sets of rules do not 
conflict with one another. In reviewing the requirements of 
each program, there is a clear gap that can leave manufacturers 
in compliance with one set of rules and not another.
    And that is just based on NHTSA and EPA's regs--it does not 
include the Zero Emission Vehicle program being developed by 
California.
    I am also interested to hear from EPA about the benefits of 
their rulemakings. This is a complex and expensive set of 
rules, and we need to start with a strong foundation.
    This Midterm Evaluation is a starting point where we can 
work together to avoid a similar situation to the one 
electricity producers faced--BEFORE it becomes a problem. It's 
not just auto makers who suffer if we don't get this right. The 
American people will be greatly impacted by a patchwork system 
that increases costs, when it could have been avoided.
    I hope that working together, we can find the common ground 
to harmonize these standards and develop the real vision of One 
National Program.

    Mr. Burgess. The Chair asks if you would be willing to 
yield Mrs. Blackburn the remainder of your time.
    Mr. Olson. Absolutely. You have my time, the gentlelady 
from Tennessee, Mrs. Blackburn.
    Mrs. Blackburn. Thank you, Mr. Chairman. I want to welcome 
all of our witnesses because it is so appropriate that we do 
take the time to go over the CAFE standards and to remember why 
these came about, and we have talked a little bit about that 
this morning. The '70s were a very different time, and there 
was a lot of emphasis on our vulnerabilities. You had the gas 
shortages of the '70s that brought that about. People paid 
attention to that. This past weekend we had gas shortages in 
Tennessee and people recalled those gas lines of the '70s.
    But CAFE came out of that, and it was set up to reduce our 
dependence on foreign oil, a worthy goal. But what we have to 
do is realize that we have these differences between EPA and 
NHTSA and we do need to move to harmonization for these 
standards in order for them to be effective.
    I have got a big presence of auto industry in my district. 
We have Nissan. We have GM. We have the Toyota Bodine plant. 
And everyone talks about the dilemma that this presents and the 
need to make certain that you are in compliance with each of 
these. One stop makes it easier, because on top of that then 
you have things like the California CARB program that you are 
also dealing with. Safety, security is important to us in these 
vehicles as well as looking at the environmental issues. We 
welcome you, look forward to the discussion. Yield back.
    Mr. Burgess. The gentlelady yields back. The gentleman's 
time has expired. The Chair now recognizes the gentleman from 
California, Mr. McNerney, 5 minutes for an opening statement, 
please.

 OPENING STATEMENT OF HON. JERRY MCNERNEY, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. McNerney. Well, I thank the chairman. I thank the 
witnesses for coming out here this morning. I am looking 
forward to your testimony. It is great to have this joint 
hearing today to receive an update from the agencies and 
industry stakeholders regarding the CAFE standards. It is an 
important subject and one in which I have a great deal of 
interest, both because it relates to our overall consumption of 
fossil fuels and our dependence on imported oil and because it 
has a significant impact on climate change.
    To date, the automotive industry and Government have worked 
together to reduce emissions and create safer and more 
efficient vehicles. This is a win-win for consumers and the 
environment, and I own a Camry hybrid so I personally know the 
benefits of these vehicles.
    CAFE standards have proven moderately effective, but there 
are factors beyond CAFE that are impacting the marketplace, the 
brokered agreement on greenhouse gas emissions, the lowering 
cost of gasoline, consumer preferences, and improving fuel 
efficiency of automobiles, and State emissions initiatives such 
as the Zero Emission Vehicle program in California that 
requires automakers to sell electric cars and trucks in 
California.
    California's EV penetration is about three percent compared 
to the national average of one percent. And Californians have 
22 different types of EVs to choose from. The market is there 
and California has shown that it can work. California has been 
a leader in programs that reduce emissions for both stationary 
and mobile sources.
    Mobile sources account for more than half of the emissions 
that contribute to ozone and particulate matter and nearly 40 
percent of the greenhouse gas emissions in our State. As a 
result of the improving technology and consumer choice, 
Californians continue to purchase zero-emission vehicles.
    Some regions of our State, including my own, will greatly 
benefit from the reduced emissions of low carbon vehicles, and 
EVs will have a significant impact on the Nation's electric 
grid. California's electric grid utilities recognize the 
importance of EVs to the 21st century grid infrastructure and 
are making the appropriate investments. This will help lead and 
transform the rest of the Nation.
    Now regions do differ in energy use patterns. However, 
reducing emissions is a national goal and increasing zero or 
low emission vehicles is good for our Nation. California is the 
leader in hybrid zero-emission vehicles and its EV program 
technology innovation is paramount. It leads to efficiency and 
it can lower costs for consumers and manufacturers and it is 
good for investment. We have in California by 2010 over $800 
million was invested in EV research and development. That was 
nearly three-quarters of the global investment at that time, so 
our policies are having an impact.
    We cannot discuss zero-emission vehicles without talking 
about their impact on the electric grid. EVs will play a 
tremendous role in the future of our grid from utility through 
end user. EVs play a role in storage and allow users to feed 
back to the grid or use stored power outside. These are things 
that the elements of a transforming grid and our Nation's 
future of distribution of energy.
    Thank you, Mr. Chairman. I yield back.
    Mr. Burgess. The Chair thanks the gentleman. The gentleman 
yields back. The Chair recognizes the chairman of the full 
committee, Mr. Upton, 5 minutes for an opening statement, 
please.

   OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Upton. Well, thank you, Mr. Chairman. You know, you 
don't have to come from Michigan to be concerned about the 
administration's motor vehicle fuel economy and greenhouse gas 
emission standards, because these provisions if they are done 
wrong would hurt car owners as well as car makers, big time.
    The good news is that the 2012 standards wisely included a 
do-over provision in the form of a midterm evaluation that does 
allow the EPA and NHTSA to adjust the future stringency of the 
standards in light of changed circumstances. And as I recall 
that was a revision that Carl Levin and John Dingell and myself 
worked very hard to include as part of those provisions so that 
we would have this opportunity, bipartisan.
    And circumstances certainly have changed. In particular, 
EPA and NHTSA assumed that gas prices would be headed towards 4 
and maybe even $5 a gallon by now, but instead they are 
actually somewhat stable at $2 a gallon at the moment. And at 
these prices, the added cost of hybrids or other highly 
efficient vehicles may never be earned back in the form of 
energy savings, and the sticker shock is far from trivial. EPA 
estimates a cumulative impact on vehicle prices of nearly 
$3,000 per vehicle by 2025, and some analysts believe that the 
actual cost is considerably higher.
    No question that improved vehicle fuel efficiency is a 
worthy goal, no question about it, but not if it reached in a 
way that harms consumers particularly the most vulnerable. And 
with the average cost of a new car at $34,000 and rising, we 
don't need any unnecessarily costly DC mandates, and we have 
got to be particularly sensitive to low-income households who 
may be getting priced out of the new car market altogether.
    So for Michigan I also worry about the impact that these 
standards could have on the long-term health of the auto 
sector. The industry is doing pretty well right now, thanks in 
large part to pent-up demand after the last recession and very 
low interest rates that make financing about as cheap as it has 
ever been. But these two temporary factors are not always going 
to last, and the industry will be stuck with these costly 
standards that perhaps will increase every single year.
    That is why I hope that EPA and NHTSA use this opportunity 
to adjust the targets for model years 2022 to 2025 to more 
reasonable and achievable levels. There are also more immediate 
problems that have to be addressed. This administration 
promised the auto industry one set of uniform national 
standards rather than a patchwork of inconsistent requirements. 
Several years into the program, it is clear that the two 
Federal agencies involved, EPA and NHTSA, are not always on the 
same page.
    So we need to make some changes including legislation if 
necessary to ensure that there is one set of rules for 
automakers to follow. Motor vehicles are getting more efficient 
and they are going to continue to do so, and that is a good 
thing. But we need to make certain that it happens in a way 
that maximize benefits for consumers and preserves the health 
of the automotive industry.
    But I know that today's hearing is going to help set us on 
that course, and I yield back. Thank you, Mr. Chairman.
    [The opening statement of Mr. Upton follows:]

                 Prepared statement of Hon. Fred Upton

    You don't have to come from Michigan to be concerned about 
the Obama administration's motor vehicle fuel economy and 
greenhouse gas emission standards, because these provisions, if 
done wrong, would hurt car owners as well as car makers.
    The good news is that these 2012 standards wisely included 
a ``do-over'' provision in the form of a Mid- Term Evaluation 
that allows EPA and NHTSA to adjust the future stringency of 
the standards in light of changed circumstances.
    And circumstances certainly have changed. In particular, 
EPA and NHTSA assumed that gasoline prices would be headed 
toward $4.00 a gallon by now, but instead they have continued 
to trend toward $2 a gallon. At these prices, the added cost of 
hybrids or other highly efficient vehicles may never be earned 
back in the form of energy savings. And the sticker shock is 
far from trivial--EPA estimates a cumulative impact on vehicle 
prices of nearly $3,000 per vehicle by 2025 and some analysts 
believe the actual cost is considerably higher.
    There is no question that improved vehicle fuel efficiency 
is a worthy goal, but not if it is reached in a way that harms 
consumers. With the average cost of a new car at $34,000 and 
rising, we don't need any unnecessarily costly Washington 
mandates. And we must be particularly sensitive to low income 
households who may be getting priced out of the new car market 
entirely.
    Being from Michigan, I also worry about the impact these 
standards could have on the long-term health of the auto 
sector. The industry is doing well now, thanks in large part to 
pent-up demand after the last recession and very low interest 
rates that make financing about as cheap as it has ever been. 
But these two temporary factors will not last, and the industry 
will be stuck with these costly standards that increase every 
year. That is why I hope EPA and NHTSA use this opportunity to 
adjust the targets for model years 2022 to 2025 to more 
reasonable and achievable levels.
    There are also more immediate problems that need to be 
addressed. The Obama administration promised the auto industry 
one set of uniform national standards rather than a patchwork 
of inconsistent requirements. But several years into the 
program, it is clear that the two Federal agencies involved, 
EPA and NHTSA, are not always on the same page. We need to make 
changes, including legislation if necessary, to ensure that 
there is one set of rules for automakers to follow.
    Motor vehicles are getting more efficient and will continue 
to do so, but we need to make certain that it happens in a way 
that maximizes benefits for consumers and preserves the health 
of the automotive industry. I hope today's hearing helps set us 
on that course.

    Mr. Burgess. The Chair thanks the gentleman. The gentleman 
yields back. The Chair recognizes the ranking member of the 
full committee, Mr. Pallone of New Jersey, 5 minutes for an 
opening statement, please.

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE 
            IN CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. Pallone. Thank you, Mr. Chairman. I am not saying this 
about Mr. Upton or the Michigan members, but I think that 
unlike the symbol of the Republican Party, the elephant, which 
has a long memory, many of my GOP colleagues have very short 
memories. Because I remember when the President was out there, 
you know, really trying to play up the need for a bailout for 
the auto industry and there were many Republicans including 
those in the leadership who didn't want to do it.
    So it is very nice for everybody to say that, you know, 
they want to help the auto industry, but that certainly wasn't 
the case.
    Mr. Upton. If the gentleman will yield momentarily.
    Mr. Pallone. It is not true for you, Mr. Chairman. I am not 
suggesting that for you.
    Mr. Upton. We like to use the word ``rescue plan'' versus 
``bailout'' because it was paid back. It was paid back.
    Mr. Pallone. Oh, rescue plan, OK. And anyway, I like 
elephants, but many of you don't live up to the elephant. But 
in any case, not true for you.
    Thank you for holding this hearing on the midterm review of 
the Federal greenhouse gas and fuel economy standards for 
light-duty vehicles. It has been some time since our committee 
held a hearing to examine the Corporate Average Fuel Economy, 
or CAFE, program. We have an excellent panel of witnesses here 
today. I particularly want to thank Assistant Administrator 
McCabe and Chief Counsel Hemmersbaugh for appearing before us 
today.
    There is no scientific doubt that the climate is indeed 
changing and we need to be more aggressive about controlling 
greenhouse gas emissions. Today the transportation sector is 
second only to the electricity sector in the production of 
greenhouse gas emissions. The vehicles regulated under the CAFE 
program account for 60 percent of the total emissions from the 
transportation sector, and these harmful emissions effect more 
than our climate. They also directly impact air quality and 
public health.
    The coordinated standards for greenhouse gas emissions set 
by the EPA and fuel economy set by NHTSA are a vital part of 
the effort to control harmful emissions. These standards will 
deliver multiple benefits including significant savings in fuel 
costs to consumers, improved air quality, and greater energy 
security. Compliance with these Federal standards will also 
ensure that automakers are in compliance with the greenhouse 
gas emission standards issued by California.
    Gasoline prices have come down. That is great. Lower fuel 
prices keeps more money in people's pockets. But we also know 
from past experience that prices can rise quickly, and when 
they do improved fuel economy provides an effective buffer from 
price spikes.
    In 2007, there were two major events that changed the 
regulatory landscape for vehicles. First, the Supreme Court 
ruled in Massachusetts v. EPA that the Clean Air Act required 
EPA to regulate greenhouse gas emissions. Second, Congress 
amended the Energy Policy and Conservation Act to provide 
automakers a more flexible regulatory program.
    The targets set by EPA and NHTSA are aggressive. The 
purpose of the midterm review is to answer two key questions. 
Can automakers meet the standards and can they meet them at a 
reasonable cost? And the extensive analysis presented in the 
Technical Assessment Report done by EPA, NHTSA, and California 
Air Resources Board indicates the answer to both of these 
questions is yes.
    Innovation is and always has been the driver for these 
advancements. We recognized that air pollution from auto 
emissions was a serious problem in Southern California as early 
as 1959, and at that time there were no pollution control 
devices for cars. Auto manufacturers said pollutants could not 
be controlled; that the technology didn't exist; and they 
claimed that even if it were possible it would be far too 
expensive to deploy the technology.
    Well, California passed laws requiring pollution control 
anyway. We all know the rest of the story. It was not 
impossible. It was not too expensive. We enacted the Clean Air 
Act and fuel efficiency standards, and of course people still 
bought cars. Not only did they buy cars, but today we have 
cleaner, more efficient cars than ever, and we also have much 
cleaner air thanks to regulation pushing technology forward.
    So the last phase of the coordinated regulations maintain 
the necessary pressure for further improvement, and I have no 
doubt that our auto industry can and will rise to the occasion. 
I would like to yield the remainder of my time to Mr. Tonko.
    [The opening statement of Mr. Pallone follows:]

             Prepared statement of Hon. Frank Pallone, Jr.

    Good morning. Thank you for holding this hearing on the 
mid-term review of the Federal greenhouse gas and fuel economy 
standards for light duty vehicles. It has been some time since 
our committee held a hearing to examine the Corporate Average 
Fuel Economy--or CAFE Program. We have excellent panels of 
witnesses here today and I particularly want to thank Assistant 
Administrator McCabe and Chief Counsel Hemmersbaugh for 
appearing before us today.
    There is no scientific doubt that the climate is indeed 
changing, and we need to be more aggressive about controlling 
greenhouse gas emissions. Today, the transportation sector is 
second only to the electricity sector in the production of 
greenhouse gas emissions.
    The vehicles regulated under the CAFE program account for 
60 percent of the total emissions from the transportation 
sector. And, these harmful emissions affect more than our 
climate, they also directly impact air quality and public 
health.
    The coordinated standards for greenhouse gas emissions set 
by the Environmental Protection Agency (EPA) and fuel economy 
set by the National Highway and Traffic Safety Administration 
(NHTSA) are a vital part of the effort to control harmful 
emissions. These standards will deliver multiple benefits 
including: significant savings in fuel costs to consumers; 
improved air quality; and greater energy security. Compliance 
with these Federal standards will also ensure that automakers 
are in compliance with the greenhouse gas emission standards 
issued by California.
    Gasoline prices have come down. That's great. Lower fuel 
prices keeps more money in people's pockets. But we also know 
from past experience that prices can rise quickly, and when 
they do, improved fuel economy provides an effective buffer 
from price spikes.
    In 2007, there were two major events that changed the 
regulatory landscape for vehicles. First, the Supreme Court 
ruled in Massachusetts v. EPA that the Clean Air Act required 
EPA to regulate greenhouse gas emissions. Second, Congress 
amended the Energy Policy and Conservation Act (EPCA) to 
provide automakers a more flexible regulatory program.
    The targets set by EPA and NHTSA are aggressive. The 
purpose of the midterm review is to answer two key questions: 
Can automakers meet the standards? And, can they meet them at a 
reasonable cost? The extensive analysis presented in the 
Technical Assessment Report--or TAR--done by EPA, NHTSA, and 
California's Air Resources Board indicates the answer to both 
of these questions is ``yes.''
    Innovation is and always has been the driver for these 
advancements. We recognized that air pollution from automobile 
emissions was a serious problem in southern California as early 
as 1959. At that time, there were no pollution control devices 
for cars. Auto manufacturers said pollutants couldn't be 
controlled--the technology didn't exist. And, they claimed that 
even if it were possible, it would be far too expensive to 
deploy the technology.
    Well, California passed laws requiring pollution control 
anyway. We all know the rest of the story. It was not 
impossible. It was not too expensive. We enacted the Clean Air 
Act and fuel efficiency standards and, of course, people still 
bought cars. Not only did they buy cars, but today we have 
cleaner, more efficient cars than ever. We also have much 
cleaner air thanks to regulation pushing technology forward.
    The last phase of the coordinated regulations maintain the 
necessary pressure for further improvement, and I have no doubt 
that our auto industry can and will rise to the occasion.

    Mr. Tonko. I thank the gentleman for yielding. Let's be 
clear. These standards protect consumers and reduce greenhouse 
gas emissions. This year, transportation surpassed the 
electricity sector as the largest source of greenhouse gas 
emissions in our country.
    Throughout her history America has engaged a pioneer 
spirit. That pioneer spirit was about meeting challenges. CAFE 
standards meet challenges and are an important aspect to 
reaching our emissions goals, and by so doing we are also 
saving consumers a lot of money at the pump. Consumers support 
more fuel efficient cars regardless of their feelings on 
climate change. I think that is important to note.
    And I would certainly offer caution to those who would seek 
to roll back standards because of today's gas prices. Even 
though gas prices may have been reduced, they won't stay that 
way forever and it is important for us to go forward with our 
stewardship of the environment to pass on to the next 
generation and even improved environment. With that I yield 
back.
    Mr. Burgess. The gentleman yields back. The gentleman's 
time has expired. That concludes Member opening statements. I 
do want to remind Members that, pursuant to committee rules, 
all Members' opening statements will be made part of the 
record.
    We do want to thank our witnesses for being here today, for 
taking the time to testify before the subcommittee. Today's 
hearing will consistent of two panels. Each panel of witnesses 
will have the opportunity to give an opening statement followed 
by a round of questions from members. Once we conclude with the 
questions of the first panel, we will take a very brief, 
underscore brief, recess to set up for the second panel.
    Our first panel of witnesses for today's hearing includes 
Dr. Paul Hemmersbaugh, the chief counsel, National Highway 
Traffic Safety Administration, and Ms. Janet McCabe, acting 
Assistant Administrator for the Office of Air and Radiation, 
Environmental Protection Agency. We appreciate both of you 
being here today. We will begin the panel, I guess, with you, 
Ms. McCabe. You are recognized for 5 minutes for an opening 
statement, please.

  STATEMENTS OF JANET McCABE, ACTING ASSISTANT ADMINISTRATOR, 
 OFFICE OF AIR AND RADIATION, ENVIRONMENTAL PROTECTION AGENCY; 
AND PAUL HEMMERSBAUGH, CHIEF COUNSEL, NATIONAL HIGHWAY TRAFFIC 
                     SAFETY ADMINISTRATION

                   STATEMENT OF JANET McCABE

    Ms. McCabe. Thank you very much, Chairman Burgess, Chairman 
Upton, Vice Chairman Olson, Ranking Members Schakowsky and 
Pallone, and other members of the subcommittees. I very much 
appreciate the opportunity to testify on the Environmental 
Protection Agency's greenhouse gas standards for light-duty 
vehicles and what we call the midterm evaluation process.
    A little over 3 years ago, President Obama announced his 
climate action plan. That plan called on the Federal Government 
to do everything possible to combat the urgent threat of 
climate change using our current laws and authority, and EPA 
has responded to that call. EPA has adopted several rules under 
our Clean Air Act authority to reduce greenhouse gas emissions 
including the focus of today's hearing, our rules that will 
significantly reduce GHG emissions from light-duty cars and 
trucks.
    The National Program for light-duty cars and trucks is the 
product of successful collaboration among EPA, NHTSA and 
California. The program was established with broad support and 
extensive input from the auto industry, and it is already 
driving substantial greenhouse gas reductions, oil savings, and 
savings for consumers.
    In the 2012 rule that established GHG and fuel economy 
standards for model years 2017 through 2025, the agency 
committed to conduct what we call the midterm evaluation 
through which EPA will determine whether the greenhouse gas 
standards for model years 2022 through 2025 are still 
appropriate.
    The first step in the midterm evaluation process was the 
preparation of a draft Technical Assessment Report, or TAR, 
which EPA, NHTSA, and California wrote jointly and released in 
July. The draft TAR is a comprehensive and robust technical 
analysis that delivers on our commitment to examine a wide 
range of factors relevant to the '22 through '25 standards.
    Those factors include things like developments in different 
CO2-reducing technologies and their penetration into 
the marketplace, whether there is consumer acceptance of new 
efficient technologies, trends in the vehicle fleet and many 
others. Significant analysis from EPA, NHTSA and California 
went into developing the draft TAR from state-of-the-art 
benchmarking testing of actual vehicles at EPA's lab to full 
vehicle computer simulations that look at how new technologies 
work together to reduce emissions.
    Throughout this process we have made it a priority to share 
information with stakeholders in real time, including the 
publication of numerous peer-reviewed technical reports. The 
draft TAR was also heavily informed by what we learned from 
extensive outreach to a wide range of stakeholders including 
automakers and technology suppliers.
    I would like to note a handful of the key initial findings 
from the TAR. First, the draft report shows that automakers are 
adopting CO2-reducing technologies very rapidly. The 
innovation we have seen means there are over 100 car, SUV, and 
pickup versions on the market today from many manufacturers 
that already meet 2020 or later standards.
    For consumers, this means that vehicles are getting cleaner 
and using less gas. Every single vehicle category from 
subcompacts to pickup trucks offers more fuel efficient, lower-
emitting choices for consumers now than in years past. 
Furthermore, the initial finding in the draft TAR is that car 
makers can meet the standards at similar or lower costs than we 
had anticipated in our 2012 analysis.
    Second, the agency's vehicle standards are working. The 
draft TAR briefly summarizes information showing how the 
industry has overcomplied with the GHG standards for each of 
the first 3 years of the program, and in 2014 they outperformed 
the standards by about 1.4 miles per gallon.
    Third, our draft analysis is consistent with a key finding 
from the 2012 rule, namely that the 2022 through 2025 standards 
can be met largely with more efficient gasoline powered cars. 
Automakers have a wide range of technology pathways from which 
to choose, but it appears that advanced gasoline technologies 
will continue to be the predominant technologies with modest 
levels of what we call strong hybrids and very low levels of 
full electrification needed to meet the standards.
    We believe that the analysis presented in the draft TAR 
underscores that the auto industry is well positioned to meet 
their customers' expectations while reaching significant new 
levels of environmental performance. As the comment period 
closes next week, we look forward to reviewing the public's 
input.
    EPA's next step will be to develop and make available a 
proposed determination which will provide another opportunity 
for public review and comment. After consideration of any 
additional information and input and as required by EPA's 
regulations, EPA will issue a final determination as to whether 
the model years 2022 through '25 standards are still 
appropriate no later than April 2018.
    Again, I thank you for the opportunity to serve as a 
witness at this hearing and look forward to your questions and 
the discussion. Thank you, Mr. Chairman.
    [The prepared statement of Ms. McCabe follows:]
    
    
  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
  
    
        
    Mr. Burgess. The Chair thanks the gentlelady. Mr. 
Hemmersbaugh, you are recognized for 5 minutes for an opening 
statement, please.

                 STATEMENT OF PAUL HEMMERSBAUGH

    Mr. Hemmersbaugh. Thank you, Mr. Chairman. Mr. Chairman and 
members of the committee, my name is Paul Hemmersbaugh. I am 
the chief counsel of the National Highway Traffic Safety 
Administration which Congress has charged with setting 
Corporate Average Fuel Economy, or CAFE standards. Thank you 
for the opportunity to testify.
    Today I would like to update you on the status of NHTSA's 
work on the midterm evaluation and answer any questions you may 
have. At the outset, I would like to emphasize a few points 
about two primary topics of this hearing--the midterm 
evaluation and the draft Technical Assessment Report, or TAR.
    First, the TAR is the initial step in the midterm 
evaluation process for CAFE and greenhouse gas standards for 
2022 to 2025. The TAR will be used to inform future decisions 
about the standards for those years. The TAR is not a decision 
document. It does not change the standards that are currently 
in place.
    Second, the administration's vehicle standards are working 
and consumers are accepting more efficient vehicles. While the 
TAR focuses on model years 2022 to '25, the stringency of the 
standards has been increasing steadily since model year 2012 
and manufacturers have been meeting those standards. At the 
same time, the automotive industry has seen 6 consecutive years 
of sales increases with a new all-time sales record in 2015. 
This means that consumers are buying and benefiting from more 
efficient vehicles with lower greenhouse gas emissions while 
saving money on fuel costs.
    Third, our analysis indicates that the standards can be met 
largely with more efficient gasoline powered cars and with 
modest levels of what we call strong hybrids, like a Prius, and 
very low levels of full electrification. While it is up to 
automakers what technologies they choose to use, advanced 
gasoline technologies can continue to predominate if that is 
what the market demands.
    As background, the Energy Independence and Security Act of 
2007, or EISA, directed NHTSA to set attribute-based fuel 
economy standards for both cars and trucks rather than the 
previous flat standards that prescribed a single miles per 
gallon value. This approach allows the CAFE program to be more 
responsive to changes in consumer demand.
    If a manufacturer builds larger vehicles because gasoline 
prices are low and U.S. consumers then thereby demand bigger 
cars and trucks, then that manufacturer's compliance obligation 
will be lower reflecting the footprints of the vehicles it 
builds. Fuel economy overall should continue to improve year 
after year because the footprint standards continue to increase 
in stringency every year.
    NHTSA and EPA issued a final rule in 2012, representing the 
second phase of what the agencies refer to as the coordinated 
National Program. The National Program refers to the way that 
NHTSA, EPA and the California Air Resources Board work together 
to create and coordinate standards and to accomplish the goals 
of energy conservation and emissions reduction.
    The midterm evaluation is an integral step to informing 
NHTSA's CAFE rulemaking process, and the TAR is the first step 
in that process, the TAR's comprehensive and robust report 
informed by extensive stakeholder outreach and substantial 
technical work by the agencies over the past several years.
    Public comment and input on the TAR will be used to inform 
and develop NHTSA's proposal for its de novo rulemaking for 
model years 2022 to '25 standards. NHTSA's subsequent 
rulemaking will consider all relevant information and conduct a 
fresh balancing of statutory factors in order to determine the 
maximum feasible CAFE standards for model years 2022 to '25.
    I would like to highlight a few additional key results of 
the TAR analysis. The TAR shows that automakers are adopting 
fuel economy technologies at unprecedented rates. These 
technologies are helping manufacturers meet, and in many cases 
exceed, applicable standards. In fact, many of today's vehicle 
models are already meeting future fuel targets.
    The TAR also includes a comprehensive update of the 
compliance costs of the program including a review of the 
numerous possible technologies that automakers may use to meet 
the standards. EPA and NHTSA modeling were done largely 
independently using different technology inputs and different 
modeling tools. This is a strength of the TAR. The independent 
and parallel analyses provide complementary and analytically 
robust results.
    NHTSA's assessment shows that the costs of meeting the 
augural standards for model years 2022 to '25 are comparable to 
what we found they would be in 2012 at approximately $1,200 per 
vehicle. At the same time, the average model year 2025 vehicle 
will save over 1,900 in fuel costs over its lifetime. In sum, 
the TAR delivers on the agencies' commitment to examine a wide 
range of factors that affect model years 2022 to '25 standards.
    The next step is reviewing the comments we receive on the 
TAR. NHTSA will continue to work with Congress and stakeholders 
as it seeks to meet its statutory requirements while 
implementing the National Program. Thank you again for the 
opportunity to testify today. I look forward to your questions.
    [The prepared statement of Mr. Hemmersbaugh follows:]
    
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    
       
    Mr. Burgess. The Chair thanks the gentleman. I thank you 
both for your testimony, and we will move on to the question-
and-answer portion of the hearing. I will recognize myself 5 
minutes to begin that questioning.
    Mr. Hemmersbaugh, one of the things I like so much when 
Administrator Rosekind comes before our subcommittee, he always 
brings the graph of how automobile fatalities have declined 
under the, really, the past 4 or 5 decades. But it does seem 
that there has been a little bit of a plateau or a break in 
that steady reduction, and it does raise the question what are 
the factors that are responsible for that.
    Can you just speak briefly to the balance between the 
investment that automobile manufacturers are going to have to 
make in meeting the new Corporate Average Fuel Economy 
standards and the investment in additional safety features in 
the automobiles that we buy?
    Mr. Hemmersbaugh. In the first instance I would like to 
emphasize that we are open to comments on our program on the 
augural standards that the--this is the first part, and so we 
are really gratified to have an opportunity to go through a 
transparent process whereby all different issues including 
safety issues are raised with respect to the CAFE standards.
    The CAFE standards currently take into account, in fact one 
of the 13 chapters of the TAR is dedicated to safety 
considerations. And we very much are concerned as a safety 
agency, safety is our middle name. We are very interested in 
preserving safety and not sacrificing safety in order to make 
fuel economy gains.
    So our models have built into them limitations on weight, 
what they call mass reduction, and we always consider safety, 
and we believe that manufacturers as well as responsible 
public, private agencies will take that into account as well. 
And so we don't think that there is a conflict between safety 
and fuel economy.
    Mr. Burgess. You know, last week we had a hearing on 
advanced robotics and it was a very interesting hearing. One of 
Chairman Upton's constituents, Dean Kamen, at the end of the 
hearing we talked a little bit about autonomous vehicles, and 
of course we are asking automobile manufacturers to work with 
your agency and work with the Congress on developing that 
technology.
    And Mr. Kamen had just a very interesting observation at 
the end of his testimony. He said there will be a time when we 
look back on this time and wonder why we didn't already have 
autonomous vehicles. And he referenced the fact that so many of 
us are too sleepy or whatever, impaired behind the wheel or 
texting or distracted, and really we ought to leave the driving 
to the robots and not to the driver.
    So it was an interesting philosophical approach. And that 
is one of the great things about this subcommittee is we do--
someone told me the other day, sometimes they look at this 
subcommittee as kind of being the think tank for the Energy and 
Commerce Committee in the future of commerce, manufacturing, 
and trade.
    But I really am concerned and I just want to stress that we 
do need to balance the investments that need to be made in 
future automotive safety.
    Golly, we lost two mothers and two daughters in a head-on 
collision back in my district a few months ago. A mom and her 
daughter were driving in one car; a mom and her daughter 
driving in the other car. Apparently a distracted driving 
situation where someone left their lane and went into the 
oncoming lane of traffic. And had a community that was 
devastated; two schools that were devastated. If there is 
technology that is just over the horizon that can prevent this 
type of accident from occurring, I mean, I am all for it. I 
want to see that day coming.
    I remember buying my first cars for my children, which now 
is many years ago, and philosophically I wanted to get the 
cheapest jalopy I could get for them because I was cheap, 
tight. And someone pointed out, you really don't want to put a 
teenager in a car without anti-lock brakes. And I think that 
same philosophy now fast-forwarded to whatever 3 decades, 4 
decades, and putting a teenager in a car without a lane 
departure warning or autonomous automatic braking will seem 
like something no thinking parent would do.
    So I mean, I recognize that the future is very involved as 
far as auto safety. We are going to hear from our manufacturers 
later. I mean, I want them to be developing the technologies 
that are going to keep the driving public safe. Of course, that 
is your agency's charge. So I just hope we are careful about 
balancing these two things as we go forward. I will listen to 
your observations on that if there are anything further you 
would like to add.
    Mr. Hemmersbaugh. Well, thank you. And we are indeed have 
safety uppermost in our mind in nearly everything we do at the 
agency. As you may have seen, we just earlier this week 
introduced an automated vehicle policy and we are very bullish 
on the safety prospects of that technology and we are doing 
what we can to encourage the development and to encourage the 
safe and responsible deployment of automated vehicles 
technology.
    And that is something that we are, as I said, really 
excited about the prospects for safety as well as increased 
mobility for people with disabilities. We just think there is a 
whole panoply of potential benefits. And if we can get this 
right and that is a big if, but if we can facilitate the safe 
deployment of these automated vehicles, I think we will have 
tremendous safety benefits and perhaps largely eliminate auto 
crashes as a source of loss of life in the United States.
    Mr. Burgess. The Chair thanks the gentleman, and the Chair 
recognizes Ms. Schakowsky of Illinois, 5 minutes for your 
questions, please.
    Ms. Schakowsky. First, I just wanted to comment that 
fortunately I think we have made great advances in auto safety 
as well as fuel efficiency, and that the two do not cancel out 
each other in any way, and all the evidence is in to say that.
    I wanted to ask Ms. McCabe a question. In 2009, EPA issued 
the finding that elevated concentrations of greenhouse gases in 
the atmosphere endangered human health and welfare. And since 
then, the climate has continued to change with new records 
being set for a number of climate indicators such as average 
temperature, vanishing arctic sea ice, carbon dioxide 
concentrations, and sea levels.
    So Ms. McCabe, the draft TAR, Technical Assessment Report, 
examined recent scientific literature related to climate change 
and the impact of increasing greenhouse gas emissions. What are 
some of the climate impacts discussed in the report?
    Ms. McCabe. Yes, thank you, Congresswoman, for that 
question. We do discuss that at great length in the TAR. There 
are also a number of other documents that the Federal 
Government has put out recently addressing these sorts of 
issues that maybe are a little bit more accessible to people in 
terms of the things that scientists are observing.
    One of the most accessible, I think, is temperature. So 
2015 was the warmest year on record. The last decade has been 
the warmest decade on record. 2016 is gearing up to set another 
record as well. So in terms of temperatures, in terms of 
increased droughts, storm severity, loss of ice in the arctic, 
rising sea levels, increased coastal flooding, those are a 
number of the kinds of impacts that scientists are seeing in 
the climate.
    Ms. Schakowsky. Thank you. Understanding the impact our 
emissions have on the atmosphere is particularly important for 
today's hearing since the transportation sector accounts for 
roughly a third of total greenhouse gas emissions in the U.S. 
with light-duty vehicles making up more than 60 percent of the 
emissions in that sector.
    So how have the light-duty standards helped curb greenhouse 
gas emissions in the United States and what level of emissions 
reductions can we expect to see when these standards are fully 
implemented?
    Ms. McCabe. This is a critical element of any program to 
mitigate greenhouse gases. As you acknowledge, this is a 
significant portion of the inventory. We predicted in 2012 that 
over the lifetime of this program that there would be about a 
six billion ton reduction in emissions from these vehicles. And 
the TAR that we have just completed, while it focuses in on the 
2022 through 2025 period we are in the same area of reductions 
over the lifetime of the program and in that last 3 to 4 years 
of the program it is about 540 million tons.
    These are substantial. I think we say a lot that it is 
going to take many, many things in order to address greenhouse 
gases because they come from a lot of sources, but when you can 
find a category that contributes this much and you can find 
cost effective ways of reducing those emissions it is really 
important to do that.
    Ms. Schakowsky. I really appreciate that focus. And 
finally, Ms. McCabe, what role do the light-duty standards play 
in meeting our Nation's climate goals, if you could reiterate 
that?
    Ms. McCabe. Yes. Well, we have been charged under the Clean 
Air Act to address air pollution that endangers the public 
health and welfare. It is clear that CO2 is one of 
those air pollutants. And so a major source of activity of ours 
under the Clean Air Act for 40 years has been reducing air 
pollution from the auto sector. And so these particular rules 
are a major element of our target, of our plan to reduce 
greenhouse gases as much as can reasonably and cost effectively 
and safely be done.
    Ms. Schakowsky. Thank you. I said that was the last but I 
have one more. We have heard the argument that in order to meet 
the next round of standards, automakers will have to add a 
large number of plug-in electric, plug-in electric hybrid and 
other zero-emission vehicles to their fleet.
    I support efforts to increase the number of electric and 
alternative fuel vehicles, but that is not really the issue 
here. This is about the National Program which aligns 
greenhouse gas standards with CAFE standards. And since these 
standards are based on each vehicle's footprint and not a 
universal average, this talk of requiring electric cars appears 
to miss the point.
    And I am wondering, Ms. McCabe, can you explain how each 
automaker is given a unique fleet average based on the 
individual footprint of the vehicles they sell, and would it 
therefore be possible for a manufacturer to produce exclusively 
light trucks, SUV, and crossover vehicles and still be in 
compliance with the upcoming light-duty standards?
    Ms. McCabe. Yes, absolutely. The standards, I wasn't around 
when these standards were initially designed so I can 
compliment them without complimenting myself. I just think they 
are very ingeniously designed in order to provide as much 
flexibility for the automakers and as much choice for the 
consumers as possible. So as you say, we don't set one 
expectation across the entire fleet. Every automaker, depending 
on the vehicles they produce, will have its own calculated 
target for what it should achieve.
    And going to your question about electric vehicles, what we 
found in the draft TAR is that due to the innovation and 
pioneering spirit as was said before, the automakers are just 
moving along like gangbusters in developing technologies that 
apply to gasoline engines.
    So what we found is that in order to achieve those 
standards, while electric cars and other zero-emitting vehicles 
are certainly welcome in the program they are not largely 
necessary to get each automaker to where they need to be. And 
as I say, each one will have a target tailored specifically for 
them based on the cars that they produce, which is based on 
what they believe they will be able to sell to the American 
public.
    Ms. Schakowsky. Right. Thank you so much. I yield back.
    Mr. Burgess. The Chair thanks the gentlelady. The 
gentlelady yields back. I now recognize the chairman of the 
Energy and Power Subcommittee, Mr. Olson from Texas, 5 minutes 
for questions, please.
    Mr. Olson. I thank the Chair. Welcome, Dr. Hemmersbaugh and 
Ms. McCabe. Ms. McCabe, it is great to have you here, because I 
know you are here for what I imagine is very difficult personal 
times. You spent some time in Boston as has your boss, 
Administrator McCarthy. You are probably fond of the New 
England Patriots. Now as you all know, my Houston Texans are 
going up there tonight, 7:25 kickoff, to crush the Patriots. 
But enough on--let's get serious.
    Mr. Tonko. May I have a point of order on that one?
    Mr. Olson. If I had more time. But being serious, the 
regulatory impact assessment of 2012, final rule, EPA 
ballparked that these vehicles standards reduced temperatures 
by 0.0074 to 0.0176 degrees Celsius by the year 2100, 84 years 
from now. You also said this reduces sea level rise by as 
little as 0.71 centimeters. We are looking at amounts too small 
to even verify.
    Given that the overall program has a very modest effect on 
global warming, wouldn't you agree that adjustments to the 
program like revising targets in the out years or harmonizing 
the training program would also have a modest impact on the 
environment? Would you agree with that?
    Ms. McCabe. Well, Congressman, first, while I cheer for any 
team that my boss is in favor of, I have to confess that I live 
in Indianapolis. So I am not sure when your team is going to 
play the Colts, but we can----
    Mr. Olson. Your quarterback came from Houston, Texas, by 
the way.
    Ms. McCabe. OK. Well, you have just exceeded my knowledge 
on football.
    To answer your question, sir--and we have had this 
conversation before--I think the fact is that climate change is 
a global problem and there are sources that are contributing 
from a wide variety of types of activities. And no one single 
activity is going to be what we need in order to address the 
threat of climate change. It is going to take the cumulative 
accomplishments of a number of different strategies from not 
only the U.S. but from countries around the world in order to 
make the difference that we need to see in the climate. And 
this is an important part of that strategy.
    Mr. Olson. So you agree that this is a modest environmental 
impact. So given that fact and the fact that these rules will 
cost over $200 billion, and that 2017 through 2025 standards 
alone come in at $157 billion making it the most expensive 
automobile regulations in history, are these modest gains worth 
the cost?
    Ms. McCabe. Well, Congressman, I wouldn't actually refer to 
this as a modest impact. I would refer to this as a significant 
impact given the significance of this sector. And I think that 
I would--we are welcoming all comments on the cost and the 
benefits of this program as people give us comments on the 
draft TAR and all that information is laid out. But what this 
TAR has found is that the costs are that we predict now for the 
out years of the program are in line with the costs that we 
predicted back in 2012 and there has been exhaustive research 
and updating of our information in order to reach that 
technical conclusion. But we welcome everybody's views on those 
points.
    Mr. Olson. Well, it is clear we disagree on the fact that 
the facts are the reduction of the temperatures, 0.0074 to 
0.016 degrees Celsius is not something significant in my humble 
opinion.
    But moving on, this is for Dr. Hemmersbaugh. In EPA's 
testimony they commented that these standards are achievable 
without, quote, significant use, unquote, of electric cars. 
That of course means consumers in a low gasoline price world 
want smaller and lighter vehicles. The automakers in Panel 2 
have some serious concerns about whether these assumptions are 
accurate. Can you talk about consumer acceptance and demand for 
super-efficient or electric cars and what trends you are seeing 
in that market in the real world?
    Mr. Hemmersbaugh. Initially, I would like to lay a little 
groundwork as to the way these standards work. And these 
standards as you know are footprint-based standards. So each 
different footprint of a vehicle has a different target fuel 
consumption, and it is the average over all the vehicles, all 
the fleet from the smallest to the largest truck that result in 
the Corporate Average Fuel Economy target or standard that each 
manufacturer has to meet.
    Manufacturers have great flexibility in determining what 
sorts of cars they choose to produce in order to meet those 
standards. Similarly, consumers have, consumer choice is 
preserved by these footprint standards that we didn't have 
before 2007. But when Congress amended the statute, you wisely 
provided a process and a standard and a framework that 
accommodates consumer choice.
    While I understand that the automakers have estimated that 
they may have to produce large numbers of hybrids in order to 
meet the standards in the years 2022 to 2025, which again as 
far as NHTSA is concerned there are no standards. We have to do 
an entirely new rulemaking before we make those standards, so 
we just have what we call augural standards. It is sort of a 
hypothetical projection of what those standards would be based 
on what we knew in 2012.
    All that said, the manufacturers are able to produce 
whatever mix of vehicles they wish in order to comply with the 
greenhouse gas standards and the fuel economy standards as 
well. So it is really up to what the consumer choice and what 
the manufacturer choice is as to what mix of vehicles they will 
build and sell.
    Mr. Olson. I am out of time. Go Texans. I yield back.
    Mr. Burgess. The Chair thanks the gentleman. The 
gentleman's time has expired. The Chair recognizes the 
gentleman from California, Mr. McNerney, 5 minutes.
    Mr. McNerney. Well, I thank the Chair. I don't really need 
to brag about California teams, so I won't do that.
    But industry usually squawks when emissions or safety 
standards are issued that the costs are going to go through the 
roof; that the sky is going to fall. But American innovation 
has proven established industry wrong time and time again. I 
don't think I even need to give examples.
    But now as I went over in my opening statement and as you 
all confirmed in your statements, American innovation is 
exploding again here. I was struck by the positive tone of both 
of your opening statements.
    So Mr. Hemmersbaugh, you mentioned that automakers are 
adapting at a great rate to the new regulations. I know that in 
California we are creating jobs. Tesla is there, battery 
manufacturing, and other manufacturing related to automobile 
are creating thousands of jobs. So how are these standards 
affecting employment in the rest of the country?
    Mr. Hemmersbaugh. I don't have a good answer for that or 
good data for that. I would be happy to bring it back to you if 
you want to submit a question for the record, or we can just 
send it back to you. But the employment impacts is not 
something that we closely track. We do consider economic 
effects overall in setting the standards, setting the maximum 
feasible standards, but we have not to my knowledge closely 
looked at specific employment, and certainly not specific 
regional employment effects.
    But as I said, we will be happy to respond to that when I 
am back at the office and can get my fingers on----
    Mr. McNerney. Well, that might be a good thing to include 
in your analysis. And you mentioned that the EPA and NHTSA's 
modeling were done independently. Could you describe the model 
a little bit, what is involved in it, how it works. Is it a 
computer model?
    Mr. Hemmersbaugh. They are computer models. They are 
extremely complex. The NHTSA's model starts out with modeling 
of technological effectiveness rates from a model developed and 
used by the Argonne National Laboratory, which is also by the 
way the model that most of the auto industry uses.
    That develops certain further inputs that are then input to 
the NHTSA CAFE model, or we sometimes call it the Volpe model 
because those are at the Volpe Center, the people who run that 
model for us. And then from that we generate the numbers and 
the analyses that we then slice and dice and figure out 
different effects and different costs.
    Mr. McNerney. And some of this is peer reviewed in papers, 
in academic papers and so on?
    Mr. Hemmersbaugh. Yes. Yes. The models have been peer 
reviewed. The Argonne Lab standard, I think, is pretty much the 
gold standard for this kind of modeling and it is something 
that we have used over time. Our CAFE standard is structured 
around our statute. The CAFE model is built to fit the 
statutory requirements and so forth, so it is a particularly, 
we believe, well fitting, tight fitted model that has benefited 
from not only peer review but a lot of stakeholder input over 
time.
    Mr. McNerney. Thank you.
    Ms. McCabe, again very positive. Automakers are adapting 
rapidly. They are meeting standards at lower costs than 
expected. They are outperforming standards and the auto 
industry is well positioned. Those are some of the statements 
you made. Could you expand on the statement that they are 
meeting standards at lower costs than expected?
    Ms. McCabe. Well, sure. And before I do I just want to note 
in response to a question you asked earlier, there is a 
discussion of employment impacts in the draft TAR, and we 
predict fairly modest employment increases related to the 
development of new technologies. But I also point out that 
there are record car sales for the last couple of years, and so 
things are going well in the industry.
    So what we did in developing the TAR was to gather as much 
information as we could about the technologies that automakers 
are using, expect to be using, and based on some of our own 
work of where we actually have vehicles in our lab and take 
them apart and put them back together and try different things 
out.
    So we were able to discern that some of the technologies 
that we expected not until later in the program are already 
being implemented in these early years, and that the cost of 
the vehicles are in line with what we expected out in the later 
years of the program at about between 900 and $1,100 per car 
when you get out to the end. So the technologies are clearly 
moving ahead more quickly than anybody anticipated.
    Mr. McNerney. And the savings in terms of gasoline or fuel 
consumption is greater than the initial cost?
    Ms. McCabe. Well, to the extent that there are more choices 
of cars that are beating where we expected the standards to be, 
every additional mile per gallon is money saved for that 
motorist.
    Mr. McNerney. Thank you, Mr. Chairman.
    Mr. Burgess. The gentleman yields back. The Chair thanks 
the gentleman. The Chair recognizes the gentleman from West 
Virginia, Mr. McKinley, 5 minutes for questions, please.
    Mr. McKinley. Thank you, Mr. Chairman. There are certainly 
a lot of issues we could go in this direction. I have heard 
some people speaking first about the global climate change and 
the impact, and I think we all realize that through the CAFE 
standards it is going to have virtually no impact on the global 
climate change. You and I both know that.
    And I think having the CAFE standards, the interesting part 
is that the thing apparently we are willing to do is ignore the 
cost of life and injuries that have occurred as a result of our 
efforts in America to reduce our consumption. That they have 
said in this report that 46,000 people have died in crashes in 
cars--if they had simply been driving a heavier car in that 
time. But people are trying.
    So in a feel-good mood to try to get our CAFE standard, get 
our less consumption, we are going to smaller, lighter cars. We 
know that 23 percent of the weight of a car has been reduced 
over the numbers of years. That has increased the number of 
rollovers and increased the number of deaths.
    So this feel-good attitude that I hear in Congress and 
through this administration of trying to enhance this, it is 
not going to affect the environment--we know that--and it is 
also putting the lives of people at risk. And I think we all, 
even from the National Highway, your own report has come out 
and said that for each 100 pounds that you reduce you are going 
to increase the accident or the death rate one percent of 
people driving cars.
    I don't accept all of that. I know it is fact like that but 
I am not accepting that that is the direction we should be 
going in. But we are going to lose that argument, we 
understand. The feel-good attitude from this administration and 
some folks here want to have us continue in that direction.
    What I am more, equally as concerned about are people in 
rural America that this cost that you are imposing on us is 
going to be passed on to the consumer. And we are seeing from, 
I guess it is from the National Highway, someone has come up or 
said that it is going to increase the price of cars somewhere 
in the neighborhood of $2,000 to $3,000 to make this 
achievement.
    But having said that how do we justify increasing that cost 
to people in low-income States like West Virginia or Arkansas 
or Mississippi, because we have to buy those cars too. It is 
one thing if you want to promote the car in Connecticut or 
Maryland, where there are $70,000 median family incomes, but in 
rural America it is in poorer States at $38,000, $39,000 or 
$40,000, that is a big discrepancy.
    But yet we are trying to buy the same car, and because of 
this feel-good attitude that we are having with it that this 
report that I have been given says that we are going to reduce, 
with this increase of the vehicles we are going to reduce, 
three to four million people aren't going to be able to buy a 
new car. And we are going to remove 5.8 to 6.8 million people, 
licensed drivers, to be able to buy a new car and we are 
forcing them to buy an older car. I am troubled with this.
    So how all would you respond? Do you think these reports 
are wrong from the insurance groups or the other entities that 
have put out reports about safety and cost? Who can answer 
that?
    Mr. Hemmersbaugh. I will start. With respect to the cost 
and the concern about pricing people out of the ability to buy 
cars, I want to give you a few numbers. The overall cost we 
estimate in the TAR, the overall cost of this rule by 2025 if 
we kept the same standards, which again we are going to revisit 
those standards, but if we kept the standards it would $87 
billion. At the same time, the overall benefits we estimate are 
$175 billion, so essentially----
    Mr. McKinley. Am I supposed to feel good in West Virginia, 
then? I can't buy a car, but health benefits are going to 
improve around the country? I want to get back to specifics. 
Don't talk at 30,000 feet to me. Get down to what, if that 
cost, the increase of that cost is going to be a car of $3,700, 
how is someone with a $36,000 median family income going to be 
able to afford a new car?
    Mr. Hemmersbaugh. I have a couple thoughts on that. One is 
let's bring it down to an average per car. We estimate in the 
TAR, we, NHTSA, estimates in the TAR that the average cost 
increase for a car by 2025 will be approximately $1,200. That 
$1,200 is more than completely offset by an estimated $1,900 in 
savings, in fuel savings, and that is just fuel alone. That 
doesn't take into account the climate benefits and the things 
about which some disagreement has been expressed.
    Mr. McKinley. I am sorry. My time is expired, but if I 
could reclaim it. It says based on the National Highway Traffic 
Safety it is $2,937, not 800-and-some dollars, sir.
    Ms. McCabe. Congressman, if I could clarify just a couple 
of things. I want to make clear that everybody understands 
that, given the design of the program, nobody is required to 
buy any particular car. The automakers in fact are and will be 
able to offer a wide range of cars going from very modestly 
priced cars as they do now to higher-end cars as they do now. 
And so there will be cars available for people in every income 
level, and they will save money immediately because of paying 
less for gas.
    I also wanted to clarify that the first comments you made 
before--and Mr. Hemmersbaugh may want to add to it as well--in 
terms of lightweight cars, the whole design of this footprint-
based approach to the cars is to make sure that we are not 
sacrificing safety for this environmental and fuel economy 
benefit. This program does not require cars to be made lighter. 
It allows the automakers to provide a range of cars so that 
they can fully take into account all of those considerations.
    Mr. Burgess. The gentleman's time has expired, so I thank 
the gentleman. The Chair recognizes the gentleman from New 
York, Mr. Tonko, 5 minutes for questions.
    Mr. Tonko. Thank you, Mr. Chair. Ms. McCabe and Dr. 
Hemmersbaugh, welcome, and thank you for your work, very 
important to our environment.
    Is it accurate that for each size or footprint of vehicle 
there is an individual fuel economy target set?
    Mr. Hemmersbaugh. Yes. That is correct.
    Mr. Tonko. And is it accurate that, instead of a uniform 
CAFE standard, each manufacturer now has a unique CAFE 
standard?
    Mr. Hemmersbaugh. Yes, each manufacturer has a Corporate 
Average Fuel Economy standard.
    Mr. Tonko. And that is based on what? Is it the vehicles 
that they manufacture and sell or----
    Mr. Hemmersbaugh. So as you rightly stated at the start, 
there are based on the footprint of each vehicle, or that is 
essentially the area defined by a square under the wheels of 
the car, for each footprint for area occupied by a car there is 
a different standard.
    So depending on the manufacturer's mix of vehicles, you 
average the target fuel economy into a single thing for each 
manufacturer's fleet which comes up to an average, or the 
Corporate Average Fuel Economy. So a manufacturer who chooses 
to build, for example, primarily larger vehicles, cars and 
trucks that are larger and heavier weight, will have a lower 
Corporate Average Fuel Economy estimate and similarly a 
higher--Ms. McCabe can speak to this--but similarly a higher 
carbon dioxide emissions.
    Mr. Tonko. Thank you for expanding upon that because I know 
it was talked about a little earlier. But I think it is fair to 
say today's CAFE system is much more flexible than it was in 
the 1970s and it is not the case that all vehicles must meet a 
set standard. The standard will adjust based on market trends 
and other factors.
    Can you explain how this flexibility helps both automakers 
and consumers?
    Mr. Hemmersbaugh. Well, the flexibility means that 
automakers can produce and consumers can demand or purchase 
vehicles of the size and other parameters that they want when, 
if we go back in contrast to how it was before 2007, there was 
a single flat average. And so if you built more larger vehicles 
there would have to be, the manufacturer would have to 
compensate on the other side by building more smaller vehicles 
that got better gas mileage.
    Today there are individual standards for each footprint of 
a vehicle, so that really advances consumer choice and 
manufacturer choice while at the same time ensuring that we 
have increasing stringency in the fuel economy standards year 
over year over year.
    Mr. Tonko. Thank you. So if I am understanding this 
correctly, this will ensure that all models will get more 
efficient over time and that automakers can comply even if 
consumers are opting for larger cars or trucks.
    Ms. McCabe, your testimony states that automakers are 
already ahead of schedule to meet standards for upcoming model 
years, and they are rapidly adopting technologies for 
greenhouse gas reductions. Did the TAR find that the targets 
for later model years can be met by mostly efficiency 
improvements to gas-powered engines?
    Ms. McCabe. Yes, it did. That there are technologies that 
are applied to advanced gasoline engines that will be the 
predominant pathways for automakers should they choose to go 
that way.
    Mr. Tonko. OK. And, you know, one of the more encouraging 
findings of the draft TAR was that technological innovation has 
moved the whole process with our automakers. As automakers 
continue to innovate does new technology give them more 
flexibility in how they meet the standards?
    Ms. McCabe. Oh, it certainly does. And this has been the 
triumph of the auto industry over decades in this country is 
that they continue to innovate and find new things and these 
standards go out 9 years ahead. And as the chairman mentioned 
before in talking about autonomous vehicles, we really don't 
know what everybody is going to invent between now and then, 
but we know they will because they always have.
    Mr. Tonko. Right. So with challenges continuing, with 
certain technology outperforming the agencies' expectations, is 
it possible that some current model year vehicles may already 
be compliant with projected standards for model year 2020 and 
beyond?
    Ms. McCabe. Oh yes, there are a number of model vehicles 
out there already complying with the 2020 year standards.
    Mr. Tonko. Then, so what do you think this says about the 
automakers' ability to meet the standards with currently 
available technology?
    Ms. McCabe. We think it is quite achievable based on the 
information that we have in the draft TAR. And as I have said, 
you know, we welcome everybody's views on that. But based on 
our information which is driven in a large part from our 
conversations with the automakers, because of course we have to 
be in very close communication with them, it is very 
encouraging.
    Mr. Tonko. Well, I thank you. As I said earlier in my 
comments, America has always stepped up to challenges, and with 
the intellectual capacity that we bear as a nation I think we 
are up for challenges and we respond well with our pioneer 
spirit. With that I thank you and yield back.
    Mr. Burgess. The gentleman yields back. The Chair thanks 
the gentleman and the Chair recognizes the gentleman from 
Illinois, Mr. Shimkus, 5 minutes for questions, please.
    Mr. Shimkus. Thank you very much, Mr. Chairman. I am over 
here. It is good to have you. You have already been probably 
told there are competing hearings, so we are bouncing back and 
forth. And it was easier when we are in the same building, but 
when we are in different buildings it takes a little bit 
longer.
    So Ms. McCabe, I want to follow up on actually some of the 
questions. In your testimony you were talking about the hundred 
cars, SUV, pickup versions that meet 2020. Can you provide us 
three pieces of information to follow up? Data is important. 
And it is not adversarial, it is just to help us analyze.
    What percentage of vehicle sales do those hundred cars, 
SUVs, and trucks represent so to get an idea of, you know, the 
market acceptance and those totals. What is the price 
differential versus the similarly situated cars, SUVs, and 
trucks because there is going to be a debate about how costly 
are cars and what is affordable.
    How many of the hundred also meet EPA and NHTSA 
requirements by 2025? So we have got 2020 which you have 
addressed, but does any of these hundred meet 2025? And that 
would be helpful for us if you can provide us with that. And I 
know Mr. Hemmersbaugh is taking notes too, so however you can 
work on those.
    Let me ask, has the EPA assembled any vehicles with the 
various technologies outlined in the draft Technical Assessment 
Report to see how they actually function in real-world driving 
conditions?
    Ms. McCabe. Well, we do have the ability to test out these 
technologies both by getting cars from manufacturers that have 
the technologies on them and then also working to build them in 
our lab as well. And part of the research that the automakers 
certainly do is to make sure that those technologies will be 
reliable, will last for many, many thousands of miles; that 
that is part of the routine QA and product development that the 
automakers do.
    Mr. Shimkus. So you are getting that information from the 
automobile dealers. You are not doing any of that research on 
your own? So a lot of us, I remember driving in Colorado and 
stopping at a convenience stop and there was this pickup truck. 
It was dark. It was black. It was kind of covered up in fabric 
and they were driving it all over doing real-world testing.
    Ms. McCabe. Yes. Yes.
    Mr. Shimkus. Which was then of course logos, no logos, all 
this top secret stuff----
    Ms. McCabe. Right, right.
    Mr. Shimkus [continuing]. To get real-world conditions. So 
what we are trying to just ascertain is, is that information 
just coming from the industry, or are you all doing based on 
what you perceive to accomplish in the technical review are you 
testing real-world standards?
    Ms. McCabe. We do do testing, confirmatory testing 
ourselves to check the performance of these vehicles.
    Mr. Shimkus. Because we found out our country is big and 
large and diverse and there is very, very cold and there is 
very, very hot and----
    Ms. McCabe. Absolutely. That is why our lab is in Michigan.
    Mr. Shimkus. That is right. Ms. McCabe, while the CAFE and 
the greenhouse gas standards are affecting cars and light 
trucks, the renewable fuel standard is transforming motor 
fuels. Are there potential conflicts between these two 
programs, and if there are how can they be addressed?
    Ms. McCabe. I am sorry. Conflicts between----
    Mr. Shimkus. The RFS which is kind of transforming the fuel 
mix----
    Ms. McCabe. Oh, the RFS. Sure.
    Mr. Shimkus [continuing]. And you have greenhouse gas and 
you have CAFE, so we have got these different programs. Are 
there conflicts?
    Ms. McCabe. No, not at all. Not at all. The RFS was 
established by Congress to encourage the use of non-fossil 
fuels which are good for the climate, and this program 
encourages the more efficient and better fuel economy which 
will reduce greenhouse gas emissions. And in fact if automakers 
are building flexible fuel cars that can use renewable fuels, 
there is a provision in the greenhouse gas program to give 
credit for that. So they are complementary.
    Mr. Shimkus. Right. So then, Mr. Hemmersbaugh, obviously 
one of the points of discussion will be how does a national 
program, how are you going to harmonize the agency standards 
when NHTSA and EPA have different credit-trading, credit 
transfer caps, and penalties for noncompliance? Are you all 
talking about this and trying to figure out how we are going to 
do this?
    Mr. Hemmersbaugh. Absolutely. We have worked very closely 
with NHTSA and EPA as well as with the CARB to try to harmonize 
the standards to the best of our ability within our separate 
statutory commands. And NHTSA has some statutory requirements 
that we don't have flexibility to change, but we have worked 
hard to have a single set of standards that a manufacturer can 
meet by designing a single fleet that will comply with all the 
standards. And I misspoke. I didn't mean a single set of 
standards, I mean a harmonized set of standards.
    Mr. Shimkus. Right. And I think--if I can just jump in, my 
time is running out--is that so there is a point being that to 
try to harmonize these there may be a need for some legislative 
change to help ensure that we actually have one set of 
standards that can harmonize, because it is our impression that 
you are handcuffed a little bit based upon current law. You 
have to do these certain things and you would need a 
legislative change to maybe be a little more flexible?
    Mr. Hemmersbaugh. We absolutely would be happy to look at 
any proposed legislation, provide technical assistance, 
whatever we can do.
    Mr. Slavitt. Great, thank you. I yield back, Mr. Chairman.
    Mr. Olson [presiding]. The gentleman's time is expired. The 
Chair calls upon another Houston Texans fan, Mr. Green, for 5 
minutes.
    Mr. Green. Thank you, Mr. Chairman. And since we are 
talking about vehicles, both my truck and my cars have our 
Texas license plates on them. But I appreciate--and hopefully 
they will do very well tonight. And I am sorry my colleague 
from Massachusetts, Mr. Kennedy, is not here so we could have 
some fun.
    I want to thank you for holding this hearing, because this 
is one of the first that we have had for a number of years and 
because we are in toward the end of the public comment period 
for the technical assistance. And I want to thank our witnesses 
before us today in providing the many perspectives we need to 
understand how this policy affects consumers, manufacturers, 
and the environment.
    The program affords manufacturers significant flexibility 
in how to meet the standards. It also is important to make sure 
consumers have choices to get a vehicle that meets our needs. 
For example, on my every day in Houston, Texas, I use a Malibu 
that gets decent mileage, but sometimes we do have a little 
flooding in there so I use a Tahoe that probably gets ten miles 
less per gallon. So consumers need that choice too. Typically 
in Texas we have, I used to hear the Suburban was the national 
truck of Texas.
    But one of the questions I have is that several witnesses 
on the second panel point out that EPA and NHTSA use different 
models to assess the technological feasibility and costs 
associated with these rules. My first question, does this 
hamper your ability to align the standards for these programs 
if the two agencies use different vehicles, different models?
    Ms. McCabe. Well, I will start and if Mr. Hemmersbaugh 
wants to add he certainly can. We actually think that the two 
agency using somewhat different models is a strength of the 
program, and as the TAR reflects our results are right in line 
with one another for the most part. And it makes sense that the 
two agencies would have different tools that they would use, 
different methodologies that they would use.
    All of this is information and material that we discuss 
widely with the industry and look forward to people's 
additional comments on it. But we think it actually strengthens 
the record for the findings that the agency will ultimately 
make.
    Mr. Green. That is interesting because, you know, it seems 
like we would want to, both agencies would want to use, you 
know, the same model so they could, because they have different 
requirements for each agency to look at. But anyway, do the 
conclusions of your analysis differ widely?
    Ms. McCabe. No, they don't. Well, one way in which they do 
differ is the choices that each model makes about the least-
cost ways for the automakers to be able to comply. And again I 
think that is a strength because it emphasizes that there are 
multiple pathways that automakers can choose. But when it comes 
to the ultimate conclusions about whether the technologies are 
available and the expected costs, the two analyses are quite 
well in line with one another.
    Mr. Green. Before I get to my last question before my 
colleague from Illinois, Mr. Shimkus, leaves, I am not so sure 
the RFS is good for the climate, but that is the subject for a 
different hearing we will have to have sometime.
    Mr. Shimkus. Well, ask the Administrator.
    Mr. Green. My last question is, does the use of independent 
analysis strengthen your confidence in the information and 
assumptions of the underlying rules?
    Ms. McCabe. I certainly think it does.
    Mr. Hemmersbaugh. I do too. And just getting back to your 
earlier question just to frame it slightly differently than Ms. 
McCabe, we believe that these two analyses are both robust and 
they are complementary and they allow for more comment on the 
different range of options. And that is what we are about right 
here in this midterm evaluation is putting out a lot of 
technical information and some different compliance options for 
the regulated community and other members of the public to 
comment on. So we think that is really a strength of the 
program.
    Mr. Green. Well, and like I said, whether I am driving a 
Malibu or a Tahoe, over the years I have done that, and both 
vehicles have improved their gas mileage.
    So Mr. Chairman, I will yield back. Thank you.
    Mr. Olson. The gentleman yields back. The Chair calls upon 
the gentleman from Texas, Mr. Barton, for 5 minutes, former 
chairman.
    Mr. Barton. Thank you, Mr. Chairman. I thank our two 
witnesses for being here this morning. I want to make a brief 
statement since I didn't make an opening statement, then I will 
ask a question or two.
    I personally think we could repeal the CAFE standards in 
their entirety. If there was a reason to have them back in the 
'70s and the '80s and the '90s, with gasoline prices where they 
are today I think the market could do it. So that is a subject 
for an entirely different hearing and we obviously need a new 
President. But you can make a good intellectual case to just 
repeal CAFE and let the market operate.
    But since we have it we obviously have this mish-mash going 
on. We have got California's standards and EPA's standards and 
National Highway Transportation Administration standards, but 
theoretically they are all supposed to be working together and 
we are supposed to have what is called One National Program. I 
will ask each of you briefly, what is the status of this One 
National Program?
    Ms. McCabe. I will start. We have one national program. The 
goal of the One National Program was that automakers would be 
able to build one fleet of vehicles that could be sold anywhere 
in the country, and they can. And the agencies work very, very 
closely together and we have and we will continue to do so, so 
that our programs are harmonized to the greatest extent 
feasible. And in fact they are harmonized to a very great 
degree, things like compliance testing and much of the 
obligations or flexibilities with respect to credits and that 
sort of thing are harmonized.
    Mr. Barton. The manufacturers don't agree that they are 
harmonized.
    Ms. McCabe. Well, they have identified a handful of issues 
that they brought to us in a petition which we are considering, 
both agencies are considering them. And if there are other 
opportunities for us to improve the way the programs work 
together we certainly want to----
    Mr. Barton. What is NHTSA's take? Do you agree with EPA or 
do you have a little different opinion?
    Mr. Hemmersbaugh. No, we generally agree with EPA that we 
are working hard to harmonize and to the greatest extent they 
can be harmonized we have done that. I can't comment on the 
pending petition right now, but I would except to note that 
automakers have presented a variety of different options for 
changing credits.
    Mr. Barton. Well, let me give you an example. These 
credits, both EPA and NHTSA use a credit program, right?
    Mr. Hemmersbaugh. Correct.
    Mr. Barton. OK. The EPA credits last how long?
    Mr. Hemmersbaugh. The EPA--well----
    Ms. McCabe. Five years. Five years except for credits 
earned in the first phase of the program we extended their 
life.
    Mr. Barton. Well, I am told that NHTSA's credits last 5 
years and the EPA credits last 11 years.
    Ms. McCabe. Well, right. Our----
    Mr. Barton. So that doesn't look like harmonization to me.
    Ms. McCabe. We had a one-time, as we transitioned from 
phase 1 of this program to phase 2 of this program we extended 
the length of credits earned during the first phase so that 
they last 11 years. But credits earned during the phase 2 of 
the program under EPA's rules last for 5 years. Does that 
clarify it?
    Mr. Hemmersbaugh. So beginning in 2016----
    Mr. Barton. If I was listening exactly, I am sure it would 
clarify it. I kind of got lost in a daydream there. But do we 
agree that we at least ought to harmonize how long the credits 
last? Is that, or maybe you all agree that they are harmonized.
    Mr. Hemmersbaugh. Yes, Mr.----
    Mr. Barton. Yes. Yes.
    Mr. Hemmersbaugh [continuing]. Barton. They are harmonized 
beginning in 2016.
    Mr. Barton. OK. Well, the last question on that particular 
thing: Shouldn't the credits, whether they are harmonized or 
not, be used by both programs?
    Ms. McCabe. Well, we think it is important that both 
programs have a crediting system, which they do.
    Mr. Barton. OK. But the credit system is a little 
different. I am just saying, if we are going to have a program 
and you are going to try to harmonize it, let's call it apples 
and apples and have it comparable. That is all.
    Mr. Hemmersbaugh. And we increasingly are harmonizing. We 
are getting to the point where most of the differences between 
the two programs are statutory and are things that we are not 
able to change without a change to the statute.
    Mr. Barton. So you are saying that there may be some things 
the Congress has to change the statute?
    Mr. Hemmersbaugh. You could evaluate and determine whether 
that made sense, yes.
    Mr. Barton. Well, see, I want to repeal the whole program, 
so that makes the most sense to me. But we probably don't have 
the--you know, Ms. Schakowsky is rolling her eyes over there. 
If Mr. Trump is President, Ms. Schakowsky, we will be back. 
With that I yield back, Mr. Chairman.
    Mr. Olson. The gentleman yields back. The Chair calls upon 
the gentlelady from Florida, Ms. Castor, for 5 minutes.
    Ms. Castor. Well, thank you, Mr. Chairman. First of all, I 
want to thank the National Highway Traffic Safety 
Administration. This summer you all came to Tampa. In fact, Dr. 
Mark Rosekind, the administrator, came himself and helped with 
outreach on child safety seats for many of my neighbors. He set 
up a whole section, a whole facility to make sure that folks 
know how to buckle in their kids and secure their seats, and 
highlighted the airbag recalls where it is especially important 
in a steamy, humid area like mine in the Tampa Bay area. So I 
really appreciate you doing that and highlighting the 
safercar.com Web site where people if they have questions about 
airbag recall they can go to get more information.
    And I appreciate you calling this hearing. I think it is 
overdue. But CAFE standards are a great example of American 
ingenuity and innovation. They are really paying off for 
American families and businesses of folks we represent back 
home. And fuel economy and greenhouse gas emissions controls 
now are vital at a time when we must tackle the increasing 
costs of the changing climate, so we can't lose sight of that.
    And I also appreciate all of the automakers, States, all of 
the environmental advocates coming together to make progress. 
And here at the end of the Obama administration, I want to say 
thank you to President Obama and everyone in the administration 
who has done a fabulous job for consumers when it comes to fuel 
economy.
    Ms. McCabe, how much have American consumers saved since, 
over the lifetime of the CAFE standards program which was 
originally adopted in 1975?
    Ms. McCabe. Oh boy, I don't actually have that number for 
you, Congresswoman, but we can certainly see if we can come up 
with that. I mean it is clear that cars across the range of 
big, little, in between, are much more fuel efficient than they 
were 10 years ago, 20 years ago, 30 years ago. Just absolutely 
no question.
    Ms. Castor. OK. Yes, please get that. And I bet a lot of 
the automakers and the advocates out there will have their 
estimates maybe on the next panel as well.
    You have recently released a Technical Assessment Report 
and asked for comments. In what we know so far is automakers 
have exceeded expectations on the miles per gallon and fuel 
economy. Over the history of the program goals have been very 
important, they have helped everyone focus on higher mileage 
standards. So what do you think at this point? If they have 
exceeded expectations will you press for higher standards?
    Ms. McCabe. Well, of course we have not put out any sort of 
proposal with respect to the regulatory decision that we have 
to make. The stage we are at right now is putting out the 
technical information. So we won't opine on that until we issue 
a proposed determination after we have seen everybody's 
comments.
    But I will say that the results to date are encouraging, 
and I would agree with you that goals are important to set. And 
I think when these standards were issued in 2012 with support 
from the industry, everybody recognized that they were 
challenging and that these were big challenges that we have to 
rise up to in this country and that people were up to doing it. 
But that is why we have this midterm review so that people can 
weigh in again.
    Ms. Castor. And one of the remarkable developments lately 
is the fact that gas prices are so low. I never thought that we 
would see prices, in the Tampa Bay area prices have been 
hovering just above $2 per gallon for many, many months. How 
does the fact that we have had these sustained low gas prices, 
how does that impact the technical review and the National 
Program for fuel economy?
    Ms. McCabe. Yes, it is clearly an issue of great interest 
in it, and as you say the prices, nobody expected them to be 
this low and we don't know what they will be 2 years from now, 
4 years from now. Nobody knows, given the way they have gone up 
and down. So we want a system that is robust and anticipates 
all of those eventualities.
    But it is the case that when gasoline prices go down people 
may choose larger cars because they are not feeling the cost of 
gasoline so much. However, no matter what car you buy and no 
matter what gas costs it is still better to pay less for it. 
And so a fuel efficient car even in a time of low gas prices is 
something that we know consumers care about.
    Ms. Castor. Thank you very much, and I yield back.
    Mr. Olson. The biggest fan of the Houston Cougars in 
Florida yields back. The Chair calls upon the gentleman from 
Ohio, Mr. Latta, for 5 minutes.
    Mr. Latta. Thank you, Mr. Chairman, and thanks for our 
panel for being here. I appreciate it. And I think the 
gentleman from Illinois said a little bit ago we have two 
different hearings going on, so we are kind of shuffling back 
and forth, so I am sorry I missed your opening statements.
    But if I could, Administrator, if I could start with my 
questions with you. When the EPA finalized the rule it granted 
multiplier incentives for electric vehicles, fuel cell 
vehicles, and natural gas vehicles. These incentives are useful 
to automakers in meeting the standards and encourages the 
production of these alternative fueled vehicles.
    However, it did not extend these multiplier incentives to 
propane powered vehicles. This exclusion puts propane vehicles 
at a regulatory disadvantage compared to those from the other 
alternative fuels. Could you explain why the propane vehicles 
weren't given the equitable treatment by the EPA when the rule 
was finalized?
    Ms. McCabe. You know, Congressman, I wasn't intimately 
involved in the development of the 2012 rule, so I would like, 
if I could, to get back to you with a specific answer to that 
question.
    Mr. Latta. Yes, if you could, because that is important. 
And kind of following up with that, with the midterm evaluation 
underway will the EPA continue to examine the application of 
the multiplier incentives or other compliance incentives at 
this time?
    Ms. McCabe. Well, the charge in our rule is to look at the 
standards themselves in 2022 through 2025 and determine whether 
they are still appropriate or whether they should be made less 
stringent or more stringent. We will see what comment we get 
from people on the draft TAR, and of course carefully consider 
any input that we get as we make that particular regulatory 
recommendation.
    Mr. Latta. OK, because that is kind of following up on the 
second point. I just want to make sure then, because you would 
be willing then to reconsider the exclusion of the propane from 
the current incentives in order to bring parity to the 
alternative fuel marketplace?
    Ms. McCabe. Well, I can't speak to it specifically today, 
Congressman, but certainly will take your concern back to my 
team.
    Mr. Latta. OK. But if I could hear back from you I would 
appreciate that.
    Ms. McCabe. Sure.
    Mr. Latta. Mr. Hemmersbaugh, the NHTSA just released the 
proposed guidelines for autonomous vehicles earlier this week. 
In making the announcement, the secretary said that your agency 
would be conducting a number of public meetings around the 
country, which I support. I think that that kind of 
transparency and public engagement is important.
    And one thing that would be tremendously helpful here would 
be if the NHTSA and the EPA would be willing to hold similar 
public workshops to review the Technical Assessment Report 
methodologies with technical experts. Especially given the 
significance of TAR, would the agencies be willing to commit to 
holding a public workshop or a series of workshops?
    Mr. Hemmersbaugh. As you may know, prior to publishing the 
TAR, we had a technical workshop, which we went through with 
all the experts and sort of walked through the technical 
concerns and features of the TAR. But we are--going forward, we 
are committed to getting as much public input as we can. We 
have, as you know, a comment period, but we are going to 
continue to take data and information in any way we can get it 
that we can reasonably accommodate it until we get to the 
proposed rulemaking for the NHTSA standard.
    So I can't say today that we necessarily will do X and Y 
field hearings or anything like that, but it is certainly 
something that we are open to and will consider.
    Mr. Latta. Well, maybe we can communicate on that again 
because I think it is very, very important that that occurs.
    Let me follow up. Throughout the TAR, the EPA and NHTSA use 
different inputs and assumptions. For example, the percentage 
of higher compression ratio naturally aspirated gasoline engine 
automakers are expected to deploy to meet the model year 2025 
standards differs by about 43 percent. Similarly, the percent 
of the turbo-charge in downsized gasoline engines differs by 
about 21 percent and the percent of the stop-start technology 
differs by 18 percent. Can you explain how we have such a 
discrepancy in all the different percentages there that have 
come out?
    Mr. Hemmersbaugh. I think no single reason explains, but 
there are several different reasons. One is that we use 
different models and those different models are each structured 
to the demands, the different demands of our statute. Another 
is that we use different inputs. As I was saying earlier, we 
use, we NHTSA, use the Argonne Labs' technology effectiveness 
model that then the outputs of that are the inputs to our CAFE 
model. EPA uses different models.
    So there are inherent differences both in the inputs and in 
the way that the models treat those inputs for purposes of 
meeting our slightly different statutory obligations. Another 
reason I think that maybe have some, account for some of the 
difference is that NHTSA used a different baseline year than 
EPA did. We used a 2015 baseline year and EPA used a 2014 
baseline year. So that accounts for some of the differences as 
well.
    But the main thing I would like to emphasize is that this 
provides a range of different options that people can look at, 
that commenters and look at and tell us where we are getting it 
right, where we are getting it wrong and what adjustments can 
be made. So this sort of, you know, array of different options 
is really a benefit to the commenting community.
    Mr. Latta. Well, thank you very much, Mr. Chair. My time is 
expired and I yield back.
    Mr. Olson. The gentleman's time is expired. The Chair calls 
upon the gentleman from New York, Mr. Engel, for 5 minutes.
    Mr. Engel. Thank you, Mr. Chairman. I want to thank the 
witnesses. You can see there is a lot of interest here. We have 
had a lot of members here. I have a few questions I am going to 
try to move on fast.
    Implementation of CAFE standards has been happening 
alongside the recovery of the auto industry. In 5 years into 
this implementation new vehicles are significantly more fuel 
efficient, consumers are buying automobiles at a record pace, 
and U.S. automakers have made a dramatic return to 
profitability. So aren't the standards working as proposed, 
even though my friend Mr. Barton wants to repeal the whole 
program? Aren't these working as proposed?
    Ms. McCabe. Well, we think they are, given the number of 
additional models that are available for customers to buy that 
get increasing fuel economy.
    Mr. Hemmersbaugh. Yes, we at the Department of 
Transportation and NHTSA believe they are working well and as 
intended.
    Mr. Engel. Thank you. In the past few years we have seen 
substantial new technologies come to market including advanced 
engines, improved transmission systems, light weighting of 
vehicles and more efficient tires. Do you think that the 
relaxation of CAFE standards would stifle additional 
advancements?
    Ms. McCabe. Well, I think that the standards do provide a 
goal and a challenge to the manufacturers, and I think that 
that kind of goal and expectation has been helpful to drive 
innovation over years in the auto industry as well as other 
industries. So I think it is important to have reasonable and 
achievable but ambitious standards given the stakes here, which 
is fuel economy, consumer choice, cost and the impact that 
greenhouse gases are having on our environment.
    Mr. Engel. Mr. Hemmersbaugh, do you agree?
    Mr. Hemmersbaugh. I agree.
    Mr. Engel. I agree. OK. I have been an advocate for many 
years of increased production of flex-fuel and alternative fuel 
vehicles. When car makers sell flex-fuel vehicles that are 
built to run on either gasoline or E85, they earn credits that 
help them to comply with the CAFE requirements.
    Can you explain how that works and share your thoughts on 
whether we should continue these credits, because only about 
two percent, I am told, of gas stations in the U.S. sell E85 so 
most flex-fuel cars run on gasoline and don't generate the 
intended benefits because they can't get it. Can we remedy 
that? Should we, and if so, how?
    Ms. McCabe. Yes. So there is a provision in the rule as you 
identify for flex-fuel vehicles to get credit in the 
calculation of fuel economy, and EPA keeps a watch on the very 
issue that you identify which is how often are those vehicles 
actually driving on E85. And we have the ability to adjust the 
credit that is currently in the rule to reflect real-world 
conditions.
    As we discussed earlier, we have this complementary 
program, the Renewable Fuel Standard, the major purpose of 
which is to try to increase the availability of renewable fuels 
including E85. And so there are significant efforts that not 
only EPA but USDA and others are putting into that effort. The 
more that that is successful, the more we will see these flex-
fuel vehicles actually operating on E85 and the CAFE standards 
and the GHG standards can accommodate that.
    Mr. Engel. Thanks so much. Let me see, in 2012 it was 
widely reported that about 60 percent of vehicle sales would be 
cars and 40 percent would be trucks and these numbers seem to 
have flipped, so it is now 60/40 the other way. Does that 
consumer choice impact industry's ability to meet their CAFE 
standards?
    Mr. Hemmersbaugh. No. Because the standards are designed 
based on the footprint of the vehicle, every size of vehicle 
has its own fuel economy target. So the manufacturers' mix of 
vehicles--and say that they are as you suggest. Our numbers 
suggest more like 50/50, light vehicles and, or trucks and 
light cars, but whatever the percentage is, the beauty of the 
standards is that each size of vehicle has its own fuel economy 
standard, so there is no need to have some corresponding offset 
in high fuel economy for small vehicle if they are building 
more larger vehicles.
    So that is really an important, and as Ms. McCabe said, 
ingenious innovation of the 2007 EISA statute to provide that 
we use these footprint standards.
    Mr. Engel. Thank you. My last question is that CAFE 
standards are often linked to the 54.5 mile per gallon 
projection, but that is not even close to the miles per gallon 
estimates that will be pasted on the windows of new cars in 
showrooms, let alone the fuel economy that drivers would 
experience on the road. Instead, the calculations take into 
account adjustments and credits for things like electric cars, 
flex-fuel vehicles, energy-efficient air conditioning, and 
rooftop solar panels. So the result is the 54.5 mile projection 
is the equivalent of about 37 to 40 MPGs on the sticker.
    So I am hearing arguments that additional CAFE credits 
should be awarded to the auto industry for safety improvements 
such as autonomous braking which in theory will prevent 
accidents, reduce congestion, and thus save energy and 
emissions. What are your thoughts on that?
    Ms. McCabe. This is an issue that we are certainly hearing 
about. I don't think we feel like the data are sufficiently 
robust to make decisions on this right now, but encourage and 
invite everybody to continue to look at that.
    Mr. Hemmersbaugh. I would just add that with respect to any 
proposals to change a program we would keep in mind our 
overarching goal of fuel conservation, and we would view with 
some skepticism any credit system or other changes to the 
program that could undermine the gains that we have had in fuel 
economy.
    Mr. Engel. Thank you. Thank you, Mr. Chairman.
    Mr. Olson. The gentleman's time has expired. The Chair 
calls upon the gentleman from the Commonwealth of Virginia, Mr. 
Griffith, for 5 minutes.
    Mr. Griffith. Thank you very much, Mr. Chairman. I 
appreciate you all being here today. Acting Administrator 
McCabe, my constituents tell me that the joint EPA-NHTSA 
rulemaking published in August imposes the compliance burden on 
the manufacturers of truck trailers to achieve reductions in 
greenhouse gases. Is that correct?
    Ms. McCabe. So you are speaking of the heavy-duty rule that 
we published this summer.
    Mr. Griffith. Yes, ma'am.
    Ms. McCabe. And it does address a variety of aspects of 
trucks that can contribute to lower greenhouse gases, including 
trailers.
    Mr. Griffith. OK. And so that brings my first question. The 
legal authority defines, that gives you all the right to do 
this on motor vehicles, defines motor vehicles to mean, and I 
am going to read from 42 USC 7550 paragraph 2. The term motor 
vehicle means any self-propelled vehicle designed for 
transporting persons or property on a street or highway.
    So recognizing that trailers are not self-propelled, they 
are not a part of the heavy truck; they are added to the heavy 
truck after the manufacture of the heavy truck, from whence 
comes your legal authority to regulate trailers?
    Ms. McCabe. Well, Congressman, we lay out our response to 
those comments and our legal analysis at great length in the 
rule, but I will tell you that without a trailer a truck is not 
transporting goods. And so we see the trailer as an integral 
part of the vehicle that is covered in the Clean Air Act.
    Mr. Griffith. And you and I are going to have these 
disagreements for years because we just see things differently 
and I recognize that. But in all due respect, one of the 
principles of law, and I understand that you are not an 
attorney and I am not----
    Ms. McCabe. I am, actually.
    Mr. Griffith. Oh, you are an attorney. OK. Well, there you 
go. One of the principles is--I was giving you credit. One of 
the principles is, is you go with the plain meaning of the 
words when Congress writes a statute. ``Motor vehicle'' means 
any self-propelled vehicle designed for transporting persons or 
property on a street or a highway.
    It would be my opinion, and I think based in well-settled 
law, that if you wanted to include trailers, you should have 
asked for an amendment to the code section as opposed to 
deciding on your own at the EPA, well, we see the truck can't 
be used without a trailer to haul goods, therefore we are going 
to make a determination. That is our job. And respectfully, you 
are not elected by folks. That is our job to make that 
decision.
    And maybe it is the right decision, but it is something 
that we should have decided as opposed to the EPA just deciding 
to rewrite the words in the code section. And so I find it very 
difficult to rectify. And while you may have a very lengthy 
clarification on how you get to that point, the plain meaning 
of the words are motor vehicle means any self-propelled vehicle 
designed for transporting persons or property on a street or 
highway. A trailer doesn't do anything.
    Furthermore, the manufacturers of those trailers are not in 
most cases, I don't know of any but maybe there are some, they 
are not the truck manufacturers. So they are completely 
different entities across the board. And I am not talking about 
wholly owned subsidiaries or anything like that. They are 
completely different companies. And so a person can go out and 
buy their truck from one of the manufacturers and then they can 
go buy their trailer from any number of manufacturers. And so I 
am having a hard time figuring out how you all came to that 
conclusion.
    Furthermore, and for many of my colleagues who may not be 
aware of it, there is a SmartWay program where you all 
encourage folks to do things on trailers and the SmartWay is 
currently voluntary, but appears from this new ruling that has 
come out that you all are making the SmartWay program 
mandatory. The problem that I have with that, Acting Secretary, 
is that helps on trucks that are going to be hauling across the 
highways, but it does not help in those situations where, which 
I am told about half of the trucks that are out there hauling 
things are in local traffic, sometimes congested areas, these 
additional costs and extra weight added to the truck by the 
SmartWay program which appears to now going to be basically 
mandatory, they don't give you any fuel efficiency for those 
trucks that are hauling things in a local setting.
    Now if you are on the interstate highway they clearly give 
you benefits and the SmartWay program is beneficial to the 
truckers. What do you say to that? Why does it have to apply to 
every trailer that is sold out there when you have got a lot of 
folks who don't want it to go that direction because it is not 
going to save them any fuel efficiency or give them any 
benefit?
    Ms. McCabe. Well, Congressman, of course I am not sure 
where you have concluded that the rule made the SmartWay 
program mandatory because it certainly doesn't. The rule sets 
expectations and standards for a large range of different kinds 
of trucks and it is very detailed and diverse based on the 
kinds of trucks. And we looked exactly at that question. 
Different standards are appropriate for vehicles that are on 
the highway operating at high speed, most of the time driving 
many, many miles, and other standards and other technologies 
are appropriate for vehicles that are used in urban settings 
and on smaller roads and stop and start and that sort of thing.
    So I think you will find, and I think the manufacturers 
find that we have been very responsive to exactly those sorts 
of things and have not made the SmartWay program mandatory.
    Mr. Griffith. OK. That is not what I am hearing. My time is 
up. I would say though that if you are talking about the 
averaging features that that doesn't kick in for years and a 
lot of the smaller manufacturers feel like they are going to 
have some real difficulties.
    With that Mr. Chairman, because time is up and 
notwithstanding lots of other questions, I yield back.
    Mr. Burgess [presiding]. The gentleman yields back. The 
Chair thanks the gentleman for his questions and recognizes the 
gentleman from Texas, Mr. Flores, 5 minutes for questions, 
please.
    Mr. Flores. Thank you, Mr. Chairman, and I appreciate the 
witnesses joining us today. We talk about One National Program, 
and we have had questions regarding the harmonization efforts 
that we have talked about. And as I have listened to the 
testimony and reviewed the briefing documents, it seems to me 
like there are four principal differences that keep us from 
absolute harmonization.
    So the first principal is with respect to the credit 
carryovers--5 years for NHTSA, 11 years for the EPA. The second 
one is the carryover transfer cap which allows a manufacturer 
to transfer part of their credits from one fleet to another, 
for instance, cars to light trucks and vice versa. For NHTSA 
there is a cap of 2 miles per gallon per year. EPA has no such 
cap.
    Then the third one has to do with off-cycle technologies, 
for instance start-stop technology, engine start-stop 
technology, louvers and things like that which are all pretty 
innovative. The EPA allows credits beginning in model year 
2014, however, NHTSA is not going to start recognizing those 
until 2017. And then the fourth difference is that the 
California Air Resources Board is requiring that 15 percent 
market penetration of zero-emissions vehicles by 2025, and 
there is no such standard for Federal.
    Do you all agree with those four principal impediments to 
harmonization, complete harmonization? I know you were writing 
real quickly.
    Ms. McCabe. Yes. Let me address the last one that you 
mentioned.
    Mr. Flores. And I need really quick answers.
    Ms. McCabe. Yes. So there is no disharmonization there. 
California has independent authority and has had a ZEV program 
for many, many years because of their air quality problems in 
California. But vehicles sold in California can absolutely 
satisfy requirements under the EPA and the NHTSA program.
    Mr. Flores. OK. So do both of you agree then the other 
three standards prevent Federal harmonization? Does that make 
sense?
    Mr. Hemmersbaugh. I would like to qualify that a little 
bit.
    Mr. Flores. OK.
    Mr. Hemmersbaugh. The credit lives as of 2016 for both EPA 
and NHTSA are 5 years.
    Mr. Flores. OK.
    Mr. Hemmersbaugh. It was only sort of a catch-up in the 
start that EPA had 10- and 11-year credits. Those will all 
expire by 2020.
    Mr. Flores. OK. But there is no statute that requires EPA 
to limit theirs to 5 years, right?
    Ms. McCabe. No. That is a regulatory matter, but they are 
the same age now.
    Mr. Flores. OK. OK, NHTSA's are 5 years by statute. EPA has 
no statute, correct? OK, so to the extent that Congress wants 
to harmonize, Congress needs to come up with a statute on that 
issue. The second one has to do with the carryover transfer 
cap. NHTSA's, by statute yours is two miles per gallon per 
year, right?
    Mr. Hemmersbaugh. Correct.
    Mr. Flores. OK. And EPA no cap, correct?
    Ms. McCabe. Across vehicles?
    Mr. Flores. Correct.
    Ms. McCabe. Correct.
    Mr. Flores. Across fleets.
    Ms. McCabe. Yes.
    Mr. Flores. Or from one fleet to another.
    Ms. McCabe. Right. That is right.
    Mr. Flores. OK. So if we want to harmonize that that is 
going to require legislative action and an update to the 
statute. And then lastly, on the off-cycle technologies, I 
don't gather that there is any statute that regulates that, 
that addresses this issue, right?
    Mr. Hemmersbaugh. My understanding of off-cycles is that 
they are things that the tests don't measure, the treadmill 
tests that we test for don't measure.
    Mr. Flores. Right.
    Mr. Hemmersbaugh. But do contribute to fuel economy and 
greenhouse gas reductions. So my understanding is there are, 
the statute, the NHTSA statute anyway is silent on that.
    Mr. Flores. Right.
    Mr. Hemmersbaugh. And we had previously----
    Mr. Flores. Which means there is no statute.
    Mr. Hemmersbaugh. Yes. Well, but we had previously 
interpreted that as meaning we weren't authorized to do it. We 
subsequently changed our interpretation such that now starting 
in 2017 we will consider off-cycle credits.
    Mr. Flores. All right. Ms. McCabe.
    Ms. McCabe. Yes. So our statute requires a two-cycle test, 
but it does not preclude the use of off-cycle credits.
    Mr. Flores. OK. So to entirely harmonize these we would 
need legislative action. All right. So I think we know what our 
job is now in terms of Congress coming up with a legislative 
fix for these three principal areas of harmonization.
    I have a quick question. You talked about E85 vehicles a 
minute ago. E85 fuel has fewer BTUs of energy per gallon and 
therefore the vehicles that are burning E85 get about a third 
lower miles per gallon. So what is the emissions impact? I know 
that some people claim ethanol has a lower emissions profile 
than vis-a-vis gasoline, but how much of that is offset by the 
fact that you are getting one third less miles per gallon?
    Ms. McCabe. When it comes to greenhouse gases, the research 
that the agency has done to date on this program shows that 
there is a benefit. There is a carbon benefit in using E85.
    Mr. Flores. So if you are burning 20 gallons of ethanol you 
have a lower greenhouse gas output than 12 1A\1/2\ gallons of 
gasoline. Is that what you are telling me?
    Ms. McCabe. I believe that is right, Congressman. We will 
double----
    Mr. Flores. Can you supplementally answer that?
    Ms. McCabe. Absolutely.
    Mr. Flores. And some of the statistics, too. I want to see 
the test.
    Ms. McCabe. Sure. Yes.
    Mr. Flores. And I have used up too much of my time, so I am 
going to stop. Thank you.
    Mr. Burgess. The gentleman yields back. The Chair thanks 
the gentleman. Seeing no further members wishing to ask 
questions of the first panel, I do want to thank our witnesses 
for being here today. This will conclude our first panel, and 
we will take a very, very brief recess to set up for the second 
panel. Thank you for being here today.
    [Recess.]
    Mr. Burgess. We will call the committee back to order. We 
may still be waiting on one witness to join us, but in the 
interest of everyone's time, why don't we go ahead and restart. 
I do want to thank everyone for their patience in being here 
today.
    Moving into the second panel for today's hearing, we will 
follow the same format for the first panel. Each witness will 
be given 5 minutes for an opening statement followed by a round 
of questions from members. For our second panel we have the 
following witnesses. You reversed order on me.
    We have Mr. Mitch Bainwol, the President and CEO of the 
Alliance of Automobile Manufacturers; Mr. Peter Welch, 
President of the National Automobile Dealers Association; Dr. 
John Graham, Dean of the School of Public and Environmental 
Affairs for Indiana University; Mr. John German, Senior Fellow, 
U.S. Co-Lead, the International Council on Clean 
Transportation; Dr. Mark Cooper, Director of Research from the 
Consumer Federation of America; and Mr. John Bozzella, 
President and CEO of the Global Automakers.
    We will go in reverse order. We will start with you, Mr. 
Bainwol, 5 minutes for questions.

  STATEMENTS OF MITCH BAINWOL, PRESIDENT AND CEO, ALLIANCE OF 
 AUTOMOBILE MANUFACTURERS; PETER K. WELCH, PRESIDENT, NATIONAL 
 AUTOMOBILE DEALERS ASSOCIATION; JOHN D. GRAHAM, PH.D., DEAN, 
SCHOOL OF PUBLIC AND ENVIRONMENTAL AFFAIRS, INDIANA UNIVERSITY; 
JOHN GERMAN, SENIOR FELLOW AND PROGRAM DIRECTOR, INTERNATIONAL 
 COUNCIL ON CLEAN TRANSPORTATION; MARK COOPER, PH.D., DIRECTOR 
OF RESEARCH, CONSUMER FEDERATION OF AMERICA; AND JOHN BOZZELLA, 
   PRESIDENT AND CEO, ASSOCIATION OF GLOBAL AUTOMAKERS, INC.

                   STATEMENT OF MITCH BAINWOL

    Mr. Bainwol. Chairman Burgess, Ranking Member Schakowsky, 
and members of the committee, thank you for this opportunity to 
testify today on behalf of 12 iconic OEMs from the U.S., from 
Europe, from Japan, who together represent about 75 percent of 
the domestic market. Automakers are investing a staggering $100 
billion a year--that is $100 billion with a B--to make today's 
cars the cleanest, safest, the most fuel efficient ever.
    Let me start by stipulating that we support the goals of 
increased CAFE and GHG standards and believe they will be 
achieved and ultimately surpassed. The question isn't yes or 
no, but rather how, when and at what cost to your constituents. 
OEMs strongly embrace two cornerstones of the 2012 joint rule. 
First, we supported the common sense idea of a midterm review 
to ensure that the underlying assumptions remain valid, and 
that is critical given the time horizon involved.
    Second, we embrace the administration's commitment to One 
National Program to minimize compliance costs and thereby help 
your constituents buy new cars. Now this is the TAR, this 
double binder is double-sided. It is obviously very long and 
very dense. This is the portion of the TAR that addresses 
consumer acceptance. It is short and, as you can see, not very 
dense, and that is a concern for us.
    The most critical fact about CAFE that it is effectively a 
mandate on consumption. It doesn't matter what we put into the 
showrooms, it matters what your constituents take out of those 
showrooms. Critically, CAFE was launched with an expectation of 
higher gas prices and it is being played out in a world of 
structural lower gas prices. That impacts consumer choice and 
is a game-changer.
    This first graph that I think you can see on the screens 
illustrates the materiality of the gap. You can see the gap is 
consistent over time and very large, so that in 2025 in 2010 
dollars the expectation was 3.87 and now the expectation is 
2.76. This next graph shows what happens to the purchase of 
alternative powertrains when gas prices fall. It kind of looks 
like synchronized swimming.
    And you see in the third graph that the market share of 
alternative powertrains is therefore sliding down. The 
regulators in Washington and in California want consumers to 
optimize. They want them to optimize fuel efficiency and carbon 
reduction, but consumers are making decisions that reflect a 
range of other priorities that are right for their families.
    So this next slide shows where fuel efficiency ranks, and 
there you go. And it is kind of hard to see, but it is item 
number 26 in the strategic vision assessment of 2016. Consumers 
are not saying the fuel efficiency isn't good or desirable, 
they like it. They are saying instead that they care about a 
range of attributes. And your constituents are not wrong. They 
are doing what is right for them, but they are not doing what 
planners want them to do.
    Now let's turn to One National Program. The short story is 
that it doesn't exist. There are now two separate consumption 
mandates, CAFE and ZEV. ZEVs run out of California and nine 
other States follow it. By 2025, the ZEV mandate effectively 
places a $356 tax on every car sold in America. This is 
important. It means California policy is raising the cost of 
every car your constituents buy in all of your districts.
    And the Federal program contrary to assurances is not 
harmonized. Complying with the more stringent EPA requirements 
does not equal compliance with NHTSA, thus counterproductively 
adding regulatory costs making cars less affordable and that 
especially hurts lower income Americans. It needs to be fixed 
sooner rather than later.
    To close, getting all this right really matters. If we jam 
standards that are inconsistent with consumer behavior we risk 
jeopardizing the health of this key industry leading to 
thousands of job losses, if not more, diminishing environmental 
gains and safety outcomes. We have to keep cars affordable to 
protect these social goals.
    Now I want to make one other point here since I have a 
little bit more time. The Center for Automotive Research 
released a study yesterday and it was significant in terms of 
it demonstrates that there is a risk to getting this equation 
wrong. As I understand it, the EPA and NHTSA analysis of the 
TAR analysis did not do a sensitivity analysis.
    What CAR did was they looked at nine different scenarios, 
three different gas prices, and three different costs estimates 
of the technology, and they ran the nine different scenarios. 
And they looked at what happens in terms of employment, sales, 
production, and it is kind of striking.
    Let me take a second and run through the range. Unit sales 
could rise by 410,000 or fall by as much as 3.7 million. 
Production could rise by 240,000 or fall by as much as 2.1 
million units. Auto employment could rise by 16,000 or fall by 
138,000, and with the multiplier in employment, employment 
could rise by 144,000 or fall by over a million jobs. That is 
in Michigan, it is Ohio, it is Texas, it is California, it is 
Illinois.
    This is profoundly important because it demonstrates that 
if we get this equation wrong, the implications for the economy 
are truly profound. Thank you and I look forward to answering 
questions.
    [The prepared statement of Mr. Bainwol follows:]
    
    
  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
  
    
       
    Mr. Burgess. The Chair thanks the gentleman. Mr. Peter 
Welch, you are recognized for 5 minutes for an opening 
statement, please.

                  STATEMENT OF PETER K. WELCH

    Mr. Welch. Chairman Burgess, Ranking Member Schakowsky, 
thanks for inviting me. I am Peter Welch--I am the other Peter 
Welch--the President of the National Auto Dealers Association. 
NADA represents more than 16,500 franchised new car and truck 
dealer members who sell new and used cars and trucks, arrange 
auto financing, perform routine repairs, warranty and recall 
work on millions of vehicles annually. Local dealerships 
collectively employ over 1.1 million Americans in good paying 
jobs and are located in every congressional district.
    In America motor vehicles are not luxury goods. Affordable 
transportation is critical to personal mobility and freedom, 
essential to economic empowerment and a key driver of national 
productivity. Cars and trucks open up employment and housing 
opportunities that many Americans would not otherwise enjoy.
    When it comes to decisions that affect the environment, 
local dealerships are providing their customers with 
unparalleled choices. In addition to incredibly efficient 
internal combustion engines, franchise dealers currently have 
on their lots over 75 different models of hybrid, plug-in 
electric and battery electric vehicles. Toyota dealers are even 
now selling fuel cell cars.
    Local dealerships consistently educate buyers on the value 
of these technologies and how to use these vehicles and how 
they can fit into their lifestyles. The number one priority at 
every new car dealership is to serve its customers by providing 
them with the choices they want and at prices they can afford. 
Every one of our customers deserves to be able to purchase a 
vehicle that is right for them.
    This means that during the midterm review careful thought 
needs to be given to keeping the cost of vehicles reasonable 
and to ensuring that people can still afford to buy a cleaner, 
greener, safer car or truck they really need or want. 
Washington should not make personal mobility so expensive that 
it is no longer available to the average American.
    Consumers finance more than 90 percent of all new vehicle 
purchases. When regulations drive up the price of vehicles, 
fewer of our customers will be able to qualify for a car loan. 
The average price of a new car is at an all-time high, $34,250, 
with an average monthly payment of $510. This is with 
historically low interest rates. Right now they are at like 
average 4.2 percent, but the terms keep getting longer and 
longer. They are stretched out to 68 months now, on average.
    Since 2005, the percentage of personal income necessary to 
purchase a new vehicle has risen from 9.5 percent to 12.4 
percent today. It is taking a bigger chunk out of the wallet. 
This already puts new vehicle purchases beyond the reach of 
millions of Americans. That is why affordability is everything. 
We need to ensure that people can buy the cars they want or 
need, and make it possible for average Americans to afford 
cleaner new cars and trucks.
    If moves here in Washington force our customers out of new 
cars because the technology needed to attain the 2022 to 2025 
regulatory targets raise loan payments by $50 or $60 a month, 
many of our customers will be forced to drive less safe, less 
efficient, dirtier used cars, and the CAFE greenhouse gas 
regulations will become counterproductive.
    Let me be clear about one thing. America's new car dealers 
are not on opposite sides of this debate. Dealers are in favor 
of national policies to reduce greenhouse gas emissions, 
increase fuel efficiency, and promote energy independence. What 
we are standing for is affordability and to make sure our 
customers, your constituents, are put first.
    An approach that enables more customers to purchase 
affordable new cars and trucks will produce a winning scenario 
for everyone--dealers, manufacturers and the driving public. If 
we work together we have a perfect opportunity in the midterm 
assessment to ensure that our customers have access to clean, 
efficient new vehicles at affordable prices. Thank you.
    [The prepared statement of Mr. Welch follows:]
    
 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
   
   
    
    Mr. Burgess. The Chair thanks the gentleman. The Chair 
recognizes Dr. Graham, 5 minutes to summarize your opening 
statement, please.

                  STATEMENT OF JOHN D. GRAHAM

    Dr. Graham. Thank you, Mr. Chairman. The theme of my 
testimony is that a new issue should be added to the midterm 
review, the need to coordinate the California Zero Emission 
Vehicle program with the Federal regulations. Specifically, I 
recommend that the Congress commission an independent, cost-
benefit study of the California regulation and compare it to 
the Federal regulations and look for harmonization options.
    My recommendation is based on three concerns. One, from a 
technology perspective, regulators in Washington, DC, and in 
Sacramento, California, are pushing the automakers in 
conflicting directions. The Federal regulators expect 
automakers to accelerate their investments in greener versions 
of the gasoline internal combustion engine.
    The regulators in California expect automakers in the same 
time frame to replace the gasoline engine with plug-in electric 
vehicles or fuel cell vehicles. Please note that when I refer 
to California, I include the nine other States mostly in the 
Northeast that have joined the California Zero Emission 
Program. In total, these 10 States account for about 30 percent 
of all new vehicle sales in the country.
    My second concern is that it has proven much more difficult 
to sell plug-in electric vehicles than many of us thought in 
2002 when this regulation was developed. California expects 
automakers to achieve an 18 percent penetration rate of plug-in 
electric vehicles by 2025, updated from a previous estimate of 
15 percent. But the sales of such vehicles actually declined in 
2015 compared to 2014. The sales raise now about 3 percent in 
California, and less than one percent in much of the country.
    In an excellent 2015 report, the National Research Council 
documented the numerous barriers to commercialization of plug-
in electric vehicles, but I would like to highlight three of 
them that are new today compared to when California adopted the 
regulation in 2012. First, gas prices as everybody has noted 
are much lower. Instead of $4 per gallon and going higher, they 
are projected to be under $3 a gallon all the way through 2025.
    Second of all, the Federal regulations are discouraging a 
consumer from purchasing a plug-in electric vehicle and that is 
because if there are plenty of gasoline vehicles on the market 
getting 40 to 60 miles per gallon, how can a dealer persuade a 
consumer to pay extra for a plug-in electric vehicle? So the 
Federal regulations are actually undercutting the California 
program.
    Third, the incentives offered by the Government are 
inadequate to spur commercialization of plug-in electric 
vehicles. The generous $7,500 Federal income tax credit is 
forecasted to expire before 2025 at least for several 
manufacturers. Some States such as Colorado and Connecticut 
have recently added incentives to purchase plug-in electric 
vehicles, but other States--Georgia, Illinois, and California--
have scaled back or eliminated entirely their cash incentives 
for electric vehicles.
    In fact, some States have added new taxes on electric 
vehicles because owners do not pay any gasoline tax to fund 
road repairs. Why should a consumer pay extra for an electric 
vehicle if the Government is going to turn around and add an 
extra tax on electric vehicles? This is not a single national 
program that is well coordinated, let me assure you of that.
    My faculty colleagues at Indiana University have recently 
issued a report on the many constructive policies that can be 
enacted to spur commercialization of plug-in electric vehicles, 
but if governments do not get serious about helping dealers 
sell electric vehicles, the California regulation which covers 
almost a third of the country is going to prove to be a very 
onerous regulation.
    I conclude with two questions that I pose to my students 
when we discuss this issue in class. One, if California 
regulators are right, why not eliminate the Federal regulations 
and convert the California Zero Emission Vehicle program into a 
national regulation; or two, if the Federal regulators are 
right, why not preempt the California regulations and let the 
marketplace determine what the most cost effective technologies 
are to comply with the regulation?
    In conclusion, I recommend during the midterm review that 
Congress commission an independent, cost-benefit study of the 
California regulations compared to the Federal regulations, and 
address this as soon as possible. Thank you very much for your 
time.
    [The prepared statement of Dr. Graham follows:]
    
    
 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
   
      
    Mr. Burgess. The Chair thanks the gentleman. The Chair 
recognizes Mr. German, 5 minutes to summarize your opening 
statement, please.

                    STATEMENT OF JOHN GERMAN

    Mr. German. Mr. Chairman, good morning. My name is John 
German. I am a senior fellow at the International Council on 
Clean Transportation with primary responsibility for 
technology, innovation and U.S. policy development. Thank you 
for the opportunity to appear before the committee, present our 
views on vehicles and technology and how they relate to the 
midterm review of the CAFE and greenhouse gas standards.
    I have been actively involved with vehicle technology and 
efficiency for 40 years, half of that time working for auto 
manufacturers Chrysler and Honda, the remainder with EPA and 
ICCT. Over the course of my career I have seen initial cost 
estimates for complying with emissions and efficiency 
requirements consistently overstated. Not some of the time or 
even most of the time, but all of the time.
    The reason, technology innovation that is left out of the 
forecast, in part because the direction, pace and cost of 
innovation is hard to predict, and in part because there is so 
much at stake that everyone involved has an incentive to focus 
on what is already known. In my experience, the single most 
important factor in the accuracy of cost-benefit projections is 
the use of the latest technology data. Using older data or 
implicitly assuming no further innovation will occur guarantees 
that the cost in meeting the standard will be overstated. This 
is even more true now because the pace of technology 
development is accelerating, driven by rapid advances in 
computer-aided design, computer simulations and onboard 
computer controls.
    In collaboration with engineers and analysts from major 
automotive suppliers, ICCT is producing a series of papers 
assessing technology development since the analyses for the 
2017 to 2025 standards were conducted 4 to 5 years ago. These 
assessments cover new and improved designs, cost of production, 
and consumer acceptance.
    The improvement in vehicle efficiency technology over the 
last 5 years has been astonishing. Significant technologies 
that were not included in the 2025 rule, but which automakers 
already have in production or have production plans for include 
naturally aspirated engines with higher efficiency Atkinson 
cycle and high compression ratios, dynamic cylinder 
deactivation that can deactivate each cylinder every other 
stroke, higher efficiency Miller cycle for turbo-charged 
engines, variable compression ratio, electric compressors to 
assist turbo-charged engines or eBoost, less expensive 48-volt 
hybrid systems, continuously variable transmission 
improvements, and major advancements in lightweight materials 
and part optimization. These developments will make it easier 
and cheaper to meet the standards that was projected in the 
rulemaking.
    The agencies extensively updated their technology analyses 
for the draft Technical Assessment Report released this past 
July. They also expanded their use of rigorous peer-reviewed 
teardown cost studies which is the method specifically endorsed 
in the 2015 National Academies of Science report. Still, 
despite all the updates the agencies did not include all of the 
technology improvements that are already happening in the 
market. Thus, the cost estimates in the TAR while much improved 
over the rulemaking are still somewhat overstated.
    The Novation Analytics study prepared for the vehicle 
manufacturers associations is an example of a study that 
implicitly assumes there will be no more innovation. While this 
is an excellent study of 2014 technology, evaluated only 
technologies included in the rulemaking 5 years ago, and it 
also assumed that the average vehicles in 2025 would be similar 
to the best vehicles in production in 2014.
    The older technologies that were considered by Novation 
ignores recent innovations and artificially restricts the 
improvements available from conventional technology, forcing 
additional hybrids and plug-in vehicles to make up the 
shortfall. Simply put, ICCT's analysis of advanced conditional 
technologies shows that automakers will not need to rely on 
hybrids and plug-ins to meet the 2025 standards. Moreover, the 
fuel savings from these conventional technologies will produce 
a net monthly gain for most consumers in the low gas price 
scenarios.
    And they come with other benefits that consumers value. 
Turbo-charged engines deliver more torque and better 
acceleration at low engine speeds, more transmission gears 
improve launch and are quieter on the highway, weight reduction 
improves acceleration, ride, handling, braking, and payload and 
tow capacity. This isn't merely theoretical. Ford's F-150 
buyers aren't being forced to take the V-6 EcoBoost engine over 
the V-8. Almost half of F-150 buyers willingly pay an extra 
$600 for it.
    To sum up, the agencies' technology forecast for the 2025 
rule have proved to be careful, prudent, and like all 
technology forecasts I have seen over the last 40 years a bit 
too conservative. The TAR though improved will most likely turn 
out the same. Thank you again for inviting me to testify here. 
I will be happy to answer any questions.
    [The prepared statement of Mr. German follows:]
    
 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
   
       Mr. Burgess. The Chair thanks the gentleman for his 
testimony. Dr. Cooper, you are recognized for 5 minutes.

                    STATEMENT OF MARK COOPER

    Dr. Cooper. Thank you, Mr. Chairman and members of the 
committee. The Consumer Federation of America has participated 
in hundreds of efficiency rulemakings and regulatory 
negotiations and legislative hearings involving large and small 
energy devices from automobiles to heavy trucks to computers to 
light bulbs. We participate in every round of comments on the 
light-duty standards since the passage of the Energy 
Independence and Security Act.
    Our technical expertise is not in the design and 
construction of products, but in the design and construction of 
minimum efficiency standards. We believe that learning how to 
build a good standard is as important to success as knowing how 
to build a good product. We do look at the technological 
assessments, economic analyses, and examine market behavior to 
make sure we understand what kind of program will be in the 
consumer's interest.
    I will briefly discuss seven points that I outline in my 
testimony and will do so before the agency. Under the base 
case, consumers are the big winners with total benefits in our 
view over five times the cost. Three-fifths of those benefits 
are direct consumer pocketbook benefits because the total cost 
of driving goes down.
    Second, low-income consumers benefit more than the average 
consumer because operating costs of vehicles are much more 
important in their total cost of driving than ownership cost. 
They buy used vehicles. And those used vehicles, it turns out, 
get a disproportionate share of the benefits of fuel savings 
because they are not fully captured in the resale price. They 
get the benefit of the second half of the life of the vehicle.
    And third, let's be clear. Low-income people suffer the 
most from environmental and pollution harm that results when we 
drive dirty cars. They suffer the most. They benefit the most 
from the indirect effects.
    Now the National Program is still strong in spite of 
dramatic reduction in the cost of gasoline for a simple reason, 
because the minimum efficiency standards were well designed, 
well written by Congress, a law signed by George Bush, I remind 
you, and implemented effectively by the Obama administration.
    We call these command but not control regulations. I am 
going to patent that--command but not control. Because what 
these regulations do is they address many market imperfections, 
but they harness the power of capitalism and the market to 
deliver the benefits at the lowest possible cost. They give 
producers the freedom to meet the standard in the best way 
possible to meet their interests. And just look at the array of 
options. There are hundreds of options available and consumers 
get the vehicles they want.
    Automakers have done a magnificent job in using their 
freedoms. They are overcomplying, the costs are coming down, 
innovation is raging, so the economics of the capitalist 
automakers are meeting these standards. Of course their 
political arms come to Capitol Hill and complain. But that is 
what they always do. They overestimate costs by a factor of 
three or four. It is not $50 a month, it is closer to 15 and 
that makes a big difference.
    If you look at the agencies, they have listened, 
identifying a dozen things that people said they should do and 
they have done it. They considered scenarios, dozens of 
scenarios to look at the impact, and they have concluded that 
this is a positive program that is working tremendously.
    Finally, you hear a lot about differences between them. 
Let's be clear, they agree this is the right direction. They 
are having a healthy debate about cost, but their debate is at 
a half or a quarter of what the industry says, and history 
shows the industry always overestimates the cost.
    Let me make a final point on the ZEV program which is not 
greatly implicated here. The chairman bubbled about the fact 
that he drives a strong hybrid. Hats off to you, sir. The 
single largest reason that you had that vehicle available was 
the California Low Emission Vehicle program. It was California 
that told the automakers you must find these vehicles. And they 
stood their ground and we now have hybrids because California 
came first. It is a perfect example of American federalism at 
its best.
    So before you mess with the leadership role that the clean 
car States--and it is the Northeast and the West. There were 30 
in the LEV program, there are eight in the ZEV program. They 
are the fifth-largest auto market in the world. Before you 
squash that leadership and that creativity, think hard about 
the benefits of having a leader and others to follow. Thank 
you.
    [The prepared statement of Dr. Cooper follows:]
    
    
   [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
 
        
    Mr. Burgess. The Chair thanks the gentleman for his 
testimony. Mr. Bozzella, you are recognized for 5 minutes, 
please.

                   STATEMENT OF JOHN BOZZELLA

    Mr. Bozzella. Thank you, Chairman Burgess, Ranking Member 
Schakowsky. Thanks for the opportunity to testify today. I am 
here on behalf of the Association of Global Automakers. I want 
to thank you for holding this hearing today and for the 
opportunity to be here as a representative of international 
automakers that design, build, and sell cars and light trucks 
in the United States.
     In 2009 and again in 2012, the auto industry, Federal 
Government, and the State of California committed to a unified 
program for fuel economy and greenhouse gas emissions. These 
goals are very important and we support them. But since this 
program set standards for vehicles more than a decade into the 
future, regulators are now beginning a midterm evaluation to 
assess the assumptions made in 2012 and to reexamine the path 
toward 2025.
    To get to the point, the question on everyone's minds at 
this hearing is this. Are the standards for 2022 to 2025 that 
were set almost 5 years ago too high, too low, or just right? 
The reality, the really only truthful, albeit unsatisfying, 
answer to that question is it depends. It depends on a number 
of factors. It depends on what customers want, and by want I am 
not talking about what is expressed in public opinion surveys. 
I am talking about what customers want as expressed by their 
actual purchases by the votes they cast with their wallets.
     Do they want electric vehicles, minivans, sedans, pickups, 
and how much are they willing or able to pay for what they 
want? It depends on price of fuel, because the price of 
gasoline has a direct impact on customer behavior. Gas has been 
cheap for the last few years and customers have reacted by 
buying trucks and SUVs which now account for more than half of 
U.S. vehicle sales. They have reacted by not buying hybrids or 
electric vehicles, sales of which compared to conventional 
vehicles have dropped despite the fact that customers have more 
and better hybrid and electric vehicles to choose from than 
ever before.
    And it depends on a regulatory program that recognizes this 
reality that we have to find a way to reconcile what the 
customer wants with our public policy goals. That is because 
when we are talking about a number, whether it is 54.5, 50.8, 
the fuel economy numbers that we achieve aren't solely 
determined by manufacturers or regulators or legislators. They 
are ultimately determined by the customer.
    In my written testimony I have described in greater detail 
our initial analysis of the Technical Assessment Report, and I 
don't want to use this time to go over that ground. Instead, I 
would like to emphasize a few points. First, if every American 
went out today and purchased a hybrid or electric vehicle and 
nothing but hybrids and electric vehicles, meeting or beating a 
target of 54.5 miles per gallon would be no big deal. But it is 
not that simple.
    Second, achieving our fuel economy and greenhouse gas 
emissions targets is not just about engineering and ingenuity, 
it is also about economics and politics. There are more highly 
efficient vehicles on the market today than ever, but we have 
two or three, actually, different regulatory schemes that 
manufacturers have to comply with. That creates inefficiencies 
and inconsistencies that needlessly waste resources and drive 
us to high cost and high price solutions.
    And third, we ought to be doing everything we can to 
encourage support and reward innovation. As we look to 2025 and 
beyond, we need to expand our options and choices. We are 
lagging woefully in building the infrastructure to support 
electric vehicles. Efforts to deploy connected vehicles that 
will be able to reduce congestion and save thousands of lives 
annually are being delayed by a fight over the spectrum 
dedicated to safety.
    We need to examine new models of mobility that could help 
us achieve our policy goals. Our concern at Global Automakers 
is that if we get locked into a discussion about what the 
numbers should be, a discussion that is, to be kind, a bit 
stale, we may miss opportunities that provide more effective 
and faster paths to our goals.
    For our part, we are ready and eager to have these 
discussions. We need to work together to get this right. Thank 
you again for the opportunity to testify. I welcome your 
questions.
    [The prepared statement of Mr. Bozzella follows:]
    
  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
  
    
        
    Mr. Burgess. The Chair thanks the gentleman. And that 
concludes the testimony, so we will move on to the question and 
answer portion of the hearing. I recognize myself for 5 minutes 
for questions.
    And Mr. Bainwol and Mr. Bozzella, perhaps I could start 
with you. We have heard a lot this morning on this panel and it 
has been a pretty informative, has been a very informative 
panel. But as you hear the testimony today and the testimony 
from our previous panel, what are some of the biggest errors in 
the assumptions that both the Environmental Protection Agency 
and National Highway Traffic Safety Administration make in 
doing their technical assessment, the draft Technical 
Assessment Review?
    We will start with you, Mr. Bainwol, and then we will go 
back to Mr. Bozzella.
    Mr. Bainwol. Sure. I will be submitting our TAR response to 
the agency. I think it is due next Monday, and that will be a 
more full response. There are several concerns we have got. One 
is that there was not a sensitivity analysis done. That is one. 
Two is that in contrast to what Mr. German had to say, we 
believe that the technology yields are not going to be what EPA 
and NHTSA suggest they will be, and we think they will be at 
higher cost. This, at the end of the day is an intellectual 
debate and only time will prove the answer, but I will give you 
a few examples.
    The TAR assumes that minivans in 2025 will be as 
aerodynamic as 2014 Ferraris. As a father of three, I wish I 
had one of those vans when I was a few years ago. The TAR 
assumes that the adoption of Atkinson engines will be, I think, 
at 43 percent in 2025 and we don't think that is practical. The 
TAR assumes that the low-hanging fruit which allowed us to 
overcomply, and much of the panel discussion at the beginning 
was how we are overcomplying and in fact we are, was on the 
basis of the low-hanging fruit, and we don't believe that it is 
a given that that low-hanging fruit will regenerate.
    So there are a lot of challenges here. And as I closed with 
my testimony with, the downside risk of being wrong is 
enormous. And so we have got make sure we do this right. We 
have got to work together, but the implications are definitely 
profound.
    Mr. Burgess. Thank you.
    Mr. Bozzella.
    Mr. Bozzella. Yes, Mr. Chairman. I agree with much of what 
Mitch said. I want to step back a second. I think the agencies 
worked very hard, and you heard about different models and 
different baselines, and it is a very complex analysis. And so, 
look, we appreciate the attention they are giving to it. We are 
working through the analysis. We also will file comments 
Monday, but we are going to keep that analysis going. We think 
that there is more work to be done and we appreciate a fact-
based and scientific analysis. We have to make sure. This is 
the point. This is their reality check to make sure we get it 
right.
    I think there are a couple of areas where we really need to 
understand the regulators' assumptions. I think the 
technologies required are an important set of assumptions to 
probe. There is not a single conventional fueled vehicle in the 
market today that meets the 2025 standards in any footprint, 
not a single one. So we have a lot of work to do.
    I am bullish on the industry's ingenuity. I have bet my 
family's security on it for 15 years or more, so I believe in 
it. But we have a task. Not a single gasoline, not a single 
conventional vehicle meets those standards today. Strong 
hybrids do, electric vehicles do, so there is a question. Is it 
true that we can meet this mostly with conventional 
powertrains? Obviously we are innovating in both places. Lots 
of innovation with regard to conventional powertrains and lots 
of innovations with regard to advanced technologies.
    But that is a really important question for the customer, 
right, because these technologies may require differences in 
driver behavior. And so this is, the customer needs to be at 
the center of this discussion.
    Mr. Burgess. Thank you. And just a personal observation, I 
mean, I do drive a strong hybrid. I got on the waiting list to 
buy that vehicle in 2003, long before the 2007 energy bill 
passed. It took awhile to get it, so I didn't actually take 
delivery until 2004.
    But my principal reason for buying was because I thought 
the technology was cool. I had heard about it in a Science 
Committee hearing in 2003, and I thought what a great idea. So 
when I put my brake on, it charges the battery that then I can 
then use to start the car, and when I stop in the drive-in 
window in Jack in the Box, my engine is not running while the 
clerk fills the order.
    So I respect very much what you said about the consumer. 
And my comments at the beginning, we ignore the consumer at our 
own peril both as a legislative body, sort of the regulators 
that were on the panel before, and you of course as the 
manufacturers and people who are supplying consumers what they 
want to buy. It is a powerful force, and we must not ignore it.
    I am going to yield to the gentlelady from Illinois, 5 
minutes for questions, please.
    Ms. Schakowsky. Thank you, Mr. Chairman.
    Dr. Graham, a quick question. Isn't it true in your 
supplemental testimony that you indicated that your program is 
funded by the automotive industry?
    Dr. Graham. Yes. We have a grant from the Alliance of 
Automakers.
    Ms. Schakowsky. Thank you.
    I wanted to ask Mr. German a question: Can you address how 
allowing for too many credits could undermine the goals of the 
CAFE standards? Put on your microphone, please.
    Mr. German. Yes. Let me specifically talk about off-cycle 
credits just to illustrate, and these are technologies that 
improve efficiency in the real world that do not appear on the 
official test cycles. And in theory it is a great idea and it 
is a concept that ICCT supports.
    But the devil is in how you do the calculations and how you 
award the credits. It is very easy to double count the credits 
so that some of the credits that occur on the cycle you also 
award them off-cycle. It is also very difficult to assess the 
amount of off-cycle credits that actually occur in the real 
world.
    And the reason for this is that we don't have any real-
world data on how consumers drive. We have it for isolated 
areas. EPA has some data from Kansas City. But if you want to 
give credits, you want to do this over the Nation, year-round 
basis, data doesn't exist. We are recommending that the agency 
cooperate with DOT and the manufacturers to do a program 
specifically to gather this data. This would also allow the 
off-cycle credits to be standardized. The manufacturers have 
petitioned for the off-cycle credits to be streamlined. This 
would be a great way to do it is get a national data set 
everybody can use and have the same credits for all.
    Ms. Schakowsky. Thank you.
    I wanted to move now to Mr. Cooper. Several witnesses in 
this second panel have discussed the impact of differing 
payback methods, payback periods rather, for fuel economy on 
consumers' choice of vehicle models and options. Regardless of 
the length of this period, consumers are indeed getting a 
payback; isn't that correct?
    Dr. Cooper. Sorry. I usually don't need a mike, I speak so 
loudly. Consumers actually say they accept the 5-year payback 
given this debate about how long the payback period should be. 
But the fundamental point is that EPA and NHTSA have both 
concluded that the payback is less than half the life of the 
asset, and we like to use that as the absolute bottom line. If 
there is that much savings, it means that people are likely to 
make money.
    Second of all, you have heard that most consumers would 
love to walk into the auto dealership and get paid back in 3 
years. That is not the world they live in. Ninety percent of 
them you heard finance them and so it is a cash flow world for 
the average consumer. And if you look at the cash flow impact 
even at the EPA and NHTSA standards, you will discover that 
under most assumptions, 75 percent of those assumptions, they 
are cash flow positive in the first year. That is because they 
lower the total cost of driving, and that is what these folks 
keep ignoring. They ignore it and they make it go away by 
assuming costs that are through the roof, two to five times as 
much as EPA and NHTSA.
    So now the difference comes down to do you believe their 
costs or do you believe the agencies' and history which has 
always shown that the capitalists do a good job? They are not 
dumb. They don't stand still. They put the least-cost things in 
the vehicles. So these are cash flow positive in the first 
year. They have a payback period of less than half the life of 
the vehicle, and that means they are good for consumers. It 
turns out they are especially good for low-income consumers who 
are driven by operating costs.
    Ms. Schakowsky. I think that is a really important point. 
Vehicle costs are rising due to many changes in new vehicles, 
not just fuel economy--enhanced performance, greater safety 
features, greater comfort, and other amenities. While all of 
these things have costs which can be estimated, only one has 
the benefit that is easily converted to a dollar value and 
directly results in monetary benefits to the person who bought 
the vehicle, and that is fuel economy.
    A consumer may be willing to pay for any or all of the 
other features, but none of them result in a direct payback to 
the consumer. Have the agencies received comments to indicate 
public support for strengthening the CAFE and greenhouse gas 
standards in accordance with these rules?
    Dr. Cooper. We have been surveying on these, the question 
of standards for 12 years. Prices are as high as 4.50 and as 
low as $2. Eighty percent of the respondents to our survey 
support standards. They understand that it is good for them. 
They hate the volatility. They hate high prices. But they also 
hate not knowing whether it is going to be $4 or $2. So we find 
consistent, strong support for the standards program.
    Ms. Schakowsky. Thank you. I yield back.
    Mr. Olson [presiding]. The gentlelady yields back. The 
Chair calls himself for 5 minutes for questioning. First of 
all, a warm welcome to all six witnesses and a special warm 
welcome to a fellow Rice University alumni, Mr. Bainwol. Owls 
always support Owls. It is good to have all of you here this 
afternoon.
    My first question is for you, Mr. Welch. Your opening 
statement expresses concerns that these rules will force 
dealers into a position where they won't be able to provide the 
cars and trucks that people want to buy at the prices they can 
afford. For example, a dealer back home, he has electric cars 
on his lot. They take up spaces, parking spaces on his lot. 
They sell for days, maybe weeks. Meanwhile, he is exploding 
with sales of pickup trucks and SUVs, but these sales are 
curtailed because he doesn't have the space on his lot because 
of these electric vehicles.
    So my question is, Do you think that is the exception or 
the rule going forward, Mr. Welch?
    Mr. Welch. I actually think it is the exception. There is a 
big misconception. Dealers actually buy the cars from the 
manufacturers. They pay for them on the railhead, and they put 
them in their inventory. Dealers are merchants. They stock, 
sell, and service what their consuming public want to buy, own, 
and drive. So it is a big misconception that we are going to 
buy a vehicle and put it in our inventory that isn't going to 
sell, because we are paying flooring on it on a monthly basis.
    So the dealers control, by and large, and they are required 
under their franchise agreements to stock representative 
vehicles for demonstration purposes and whatnot. But I think 
what a lot of people miss is that the buying process has 
changed so dramatically in the past several years.
    You know, there is a purchase funnel and, you know, we seem 
to get sort of a bad rap that we are not pushing electric cars 
and so on, when the fact of the matter is, is everybody is 
shopping on the Internet these days. The average car shopper 
spends 13 1A\1/4\ hours researching cars. That is for new cars. 
It is over 15 hours for used cars. A recent Autotrader study 
indicated that 72 percent of customers that come into the 
dealership have already decided which vehicle they are going to 
buy regardless of how good of salespeople we, quite frankly, 
retain on our lot.
    So to get back to your question, yes, we will have as many 
electric vehicles on stock as we anticipate. A dealer typically 
keeps a 60-day supply, is the general rule of the thumb, and 
whatever their 60-day supply of pickup trucks is going to be 
different than their 60-day supply of electric vehicles. Other 
than California, as it was pointed out here, the actual number 
of pure electric battery vehicles that we sell this year is 
only 0.4 percent on a national basis.
    Mr. Olson. The next question is for Mr. Bozzella and Mr. 
Bainwol. The industry was promised explicitly a uniform and 
harmonized set of national standards affecting fuel economy and 
greenhouse gas emissions, not a patchwork of conflicting 
requirements. Which one did you get?
    Mr. Bozzella. Well, certainly it was an aspirational goal, 
and we have not achieved that aspiration yet.
    Mr. Olson. So the patchwork. Mr. Bainwol.
    Mr. Bainwol. I will confirm that, and if I can take one 
second to----
    Mr. Olson. You bet.
    Mr. Bainwol [continuing]. Augment something Mr. Cooper 
said. We too found that 80 percent of the public supports the 
standards. The next question, though, is the one that I think 
is the essential crux of the challenge. We then asked how much 
would you pay in order to reach those standards? Fifty-three 
percent of the public said under a thousand dollars; 12 percent 
of the public said over $2,500. The delta is that or more. That 
is the fundamental math problem.
    There may be more value for the consumer, but that is not 
their perception. And at the end of the day, it is the customer 
who is making the choice, and this shows that the economics are 
really challenging for them.
    Mr. Olson. Yes. So a follow-up to what are some of the 
differences between EPA credit trading programs and NHTSA's 
program, and why this difference is a problem. Mr. Bozzella. 
Mr. Bainwol.
    Mr. Bainwol. There are differences in when they kick in, 
there is differences when they expire, and there are 
differences in how they get traded. And it is a problem, 
because at the end of the day when you comply with two 
different programs, and in this case you are complying with a 
more stringent EPA program, you still have additional costs to 
comply with a program that is not met. And that produces costs 
that get built into the vehicle and makes it harder for 
consumers to buy the product.
    Mr. Bozzella. Yes. And the only thing I would add to that, 
Congressman Olson, is that the point of these credits is to 
reward innovation and to encourage overcompliance. And so to 
the extent that we take our eyes off the ball and instead of 
having one streamlined set of rules for good competition and 
good racing and great results for the customer, we have to 
spend more time trying to understand how to move things around 
to comply. And so I think it has an impact on innovation.
    Mr. Olson. One final question. I am over time, but who can 
best fix this problem, either the midterm evaluation or 
Congress? And who is the best to fix this problem, because it 
is there it sounds like.
    Mr. Bainwol. I think it takes all parties. Congress will 
have to fix the harmonization piece, then everybody working 
together will have to make sure that the stringency is 
consistent with consumer behavior.
    Mr. Bozzella. I would agree with that.
    Dr. Cooper. Is that an open question for everybody?
    Mr. Olson. Yes, Dr. Cooper.
    Dr. Cooper. Well, look, you know, Congress could do it. 
Although I worked on EISA and so forth, the question is who is 
going to get it done faster and better? And it is not entirely 
clear that Congress is the best entity. If you look back at the 
acid rain program, we would have been better off if the agency 
had been allowed to raise the standard because the industries 
did such a good job of hitting the target by Congress. So it is 
debatable who will get it done faster and who will get it done 
better. And it is perfectly all right for everybody to talk 
about it, but EPA and NHTSA under the current law are going to 
have to do something in the time frame of the midterm review. 
Congress might.
    Mr. Olson. So industry first, Congress second is the 
preferred route.
    Dr. Cooper. I said let's have a good debate, but remember, 
EPA and NHTSA have to do something. And if you can produce a 
better solution here in that time frame then you will, and EPA 
can't stop you from doing that.
    Mr. Olson. You bet.
    Dr. Cooper. And so then that is fine. It is a good debate. 
But they have to do something because they have to write a new 
rule for the next round under the law.
    Mr. Olson. Thank you, Dr. Cooper, and I am out of time. I 
yield to the gentleman from New York, Mr. Tonko, for 5 minutes.
    Mr. Tonko. Thank you, Mr. Chair, and gentlemen, welcome. So 
Mr. Bozzella and Mr. Bainwol, what is the lead time for on 
designing your vehicles, and for instance when will plans be 
finalized for model year 2025?
    Mr. Bozzella. The lead time for vehicles is years, right. 
So, you know, this is why this discussion is really important, 
why we have to make sure that the assumptions built into the 
Technical Assessment Report about advanced technologies are 
accurate, because we are looking at technologies now, certainly 
in the case of electrification that do exist, but in the cases 
of internal combustion engines that don't necessarily exist in 
the marketplace yet. So we have a lot of work ahead of us.
    Mr. Tonko. Mr. Bainwol.
    Mr. Bainwol. Somewhere between 3 and 7 depending on car and 
truck and what is going on in life, but it is a long product 
cycle.
    Mr. Tonko. Is there a shorter period for the time for a 
car?
    Mr. Bainwol. I believe it is shorter for cars.
    Mr. Tonko. OK. And Mr. German, you mentioned a number of 
innovations being developed and deployed. In your opinion, what 
are the biggest technology advancements that have allowed 
manufacturers to exceed targets thus far?
    Mr. German. The study we focused and the technologies I 
mentioned were actually technologies that are just starting to 
hit the market now. And so they are going to provide additional 
benefits beyond those that were forecasted in the rulemaking 5 
years ago.
    As far as what is in the market now, certainly the biggest 
technology has been Mazda's SKYACTIV engine which is 10 to 15 
percent more efficient than naturally aspirated engines were 
previously. And so Mr. Bainwol referred to the 43 percent 
penetration for Atkinson cycle engines in the TAR, it was zero 
in the rulemaking because they didn't think naturally aspirated 
engines could compete. It has completely changed the whole way 
that EPA and NHTSA are viewing technology.
    And I will also point out that it shows that there is a lot 
of different ways to comply, so manufacturers will go naturally 
aspirated, some will go turbo-charged, some will choose other 
routes.
    Dr. Cooper. Can I make a point here about this 43 percent? 
Because I believe, I was very impressed to notice that NHTSA 
only has it at 18 and they still comply. And that is exactly 
the point. Now I need to check that. But, so EPA at 43, NHTSA 
18, and under both you comply. That is the flexibility of the 
act. Subject to check I want to put that in the record.
    Mr. Tonko. OK. Thank you for placing that in the record. 
Now back to Mr. German. That efficiency effort, the technology 
gains have been moving at a rather robust pace. Can we expect, 
do you expect that that pace will continue?
    Mr. German. Yes. I don't think there is any question about 
it, and it is because computers are actually the revolutionary 
technology. Computer simulations, computer-aided design is 
allowing things to occur in the development of all technologies 
that was never possible before. And it is particularly 
important for lightweight materials, because the simulations 
are getting to the point where the manufacturer can 
simultaneously optimize the shape, the size and the material of 
every part simultaneously. It has never been possible before.
    Mr. Tonko. And do you believe that these CAFE goals can be 
met with improvements primarily to the conventional internal 
combustion engine, or will electric vehicles and hybrids for 
instance need to become a much bigger part of our fleet mix?
    Mr. German. Well, one of the new trends that is happening 
is lower cost 48-volt hybrid systems. This stays below the 60-
volt lethal threshold which has some additional cost savings, 
and everything I am seeing from a lot of suppliers says that 
you can get over half the benefits of a full hybrid at only 
about a third the cost.
    So I do include 48-volt hybrids into conventional 
technology, but as long as we are willing to stipulate that 
some of these 48 volts are happening, then yes, with all the 
other technologies that are coming that are hitting production 
now that were not anticipated that is all that is going to be 
needed for the large majority of manufacturers to comply.
    Mr. Tonko. And these technologies that you mentioned, will 
they be available for the manufacturers for their final design 
time frame?
    Mr. German. Yes. I mean all of them I mentioned are in 
production now. Miller cycle just hit production, e-Boost just 
hit production. Mazda's engine has been in production for 2 
years now. And the other technologies I have talked about will, 
at least one manufacturer has announced production intent 
already. So yes, they will be readily available to all 
manufacturers by 2025.
    Mr. Tonko. I thank you. With that Mr. Chair, I yield back.
    Mr. Olson. The gentleman's time is expired. The Chair calls 
on the gentlelady from Tennessee, Mrs. Blackburn, for 5 
minutes.
    Mrs. Blackburn. Thank you, Mr. Chairman, and thank you all 
for your patience with our hearing today. I know you are fully 
aware we have got another hearing going on and it is over in 
the Rayburn Building, so we are having to jump back and forth 
while our hearing room, our main hearing room is remodeled and 
updated. But Chairman Upton says, don't worry, the room will 
still be Michigan green. That that part of the decor is going 
to change.
    I had appreciated the first panel and the opportunity to 
talk with them just a little bit about harmonization and 
looking at this program. And Mr. Bainwol, I think I want to 
come to you on this. When you look at the harmonization gaps 
between the National Program and, say, California's program, 
tell me how you think we go about addressing that. How do you 
fill in those gaps? What is the best way to kind of plug that 
in?
    And then I am going to come to you all in a consumer choice 
question too, so let me hear from you on that.
    Mr. Bainwol. Sure. The harmonization piece with California 
is really complex. California is able to do what it does under 
a waiver from EPA, and it is not clear to me whether Congress 
would choose to adjust that or not and we are not in a position 
where we are advocating that.
    What I would say is that the existence of two different 
consumption mandates produces some serious challenges. You have 
CAFE which requires fuel efficiency and carbon reduction, and 
you have ZEV in California and the other States that requires 
essentially electrification. And so there is an investment 
going in both in R&D for electrification and an investment 
going in to subsidize the moving of the metal for electrified 
products because they are not selling that well. And that is 
investment that could go into complying with CAFE.
    So the existence of two programs absolutely produces 
challenges and regulatory friction. And I would note that we 
talk a lot about not needing electrification and hybrids in 
order to comply with CAFE, but we have to produce electrics to 
comply with ZEV. So that is an academic point. We have to 
produce those to comply with ZEV, which means those costs are 
there. Those costs are not in the TAR.
    Chairman Olson, you asked about what was missing in the 
TAR. That is one of the challenges with the TAR, they didn't 
embrace or accept or talk about the cost of ZEV. That is a 
serious challenge.
    Mrs. Blackburn. OK. So all of this regulation, how much 
cost does it add to the price of an average vehicle?
    Mr. Bainwol. We don't have a locked in number yet. The TAR 
has been out obviously since July. We did not get an extension 
on the period to respond, but we are doing analysis. There is a 
range of estimates that go anywhere from, you know, $1,500 to 
over $6,000, but the critical point is that car prices are 
being moved not just by CAFE and not just by ZEV.
    ZEV as I said is $356 per car. It is also being moved by 
other very well intended and meaningful social objectives in 
the safety zone and elsewhere, in fuel quality. So the car 
price question is really critical because we want to make sure 
as Peter stressed that affordability remains paramount.
    Mrs. Blackburn. Yes. In my district in Tennessee with the 
presence of the auto industry and with the presence of many who 
have moved from California to Nashville that are connected to 
the auto industry, one of the things that comes up in our 
meetings regularly, town hall meetings or just discussions at 
civic clubs and things, is looking at the CAFE standards and 
looking at what that does to safety of the car, the changing of 
materials, going for lighter weight materials, and consumer 
choice comes into play in that.
    And I just think about the auto dealers who have to buy a 
certain amount of product, and yet it may be a product that the 
consumer does not like or does not want. And I wonder when we 
are going to hit that threshold on the efficiency issue and 
what the consumer likes or wants.
    And you mentioned consumer choice in your testimony, and I 
have got just a couple of seconds. I would like to hear just 
one little statement from you on it. Yes, go ahead. Mr. Welch.
    Mr. Welch. We have literally hundreds of models. And as I 
mentioned before, under our franchise agreements we stock every 
line, make and model so that we can have them for demonstration 
purposes. But the real issue is what do we reorder, OK. And 
virtually, as I mentioned again before, we are merchants. We 
are not much different than the hardware store. We have got 
bins of widgets and if they sell we restock them and what not.
    So it is complex. The issue really goes back to the 
affordability issue. We are so fortunate in our country that we 
have such a wide array of different options that we provide 
consumers based on the consumer, and every single sale is 
different. Every different person has a different budget 
constraint. They have a different utilitarian need for the 
vehicle. They have got different commute patterns. And we have 
got product, it is amazing the product of the manufacturers and 
we just take it for granted, quite frankly.
    But the fact of the matter is as manufacturers are 
effectively forced under these regulations, even though there 
is flexibility to add certain types of technologies, and once 
they make that decision 3 to 7 years in advance they have got 
to go through the manufacturing process. And, you know, if the 
demand and the consumer preferences are different 3 or 4 years 
from now and it may be based on a safety attribute, it may be 
based on a fuel economy attribute, but, you know, we are not 
clairvoyants when it comes to that.
    But it is the cost, it is the cost, it is the cost, the 
affordability and the utility that is offered to the consumer.
    Mrs. Blackburn. Thank you. I yield back.
    Mr. Olson. The gentlelady's time is expired. The Chair 
calls upon the gentleman from Texas, Mr. Green, for 5 minutes.
    Mr. Green. Thank you, Mr. Chairman, and again thank our 
panel for their patience. Dr. Cooper, according to the 2015 
American Community Survey, nearly 60 percent of our district 
qualifies as a low income. How does this program impact low-
income households?
    Dr. Cooper. Well, as we have explained in testimony and we 
explained in 2012, and EPA has followed up on that low income 
are much less likely to be in the new car market. They are in 
the used car market. And if you look at their expenditure 
pattern, their total cost of driving, the biggest component, 
the much bigger component is operating costs. Higher fuel 
economy lowers the operating cost so they get the benefit of 
that.
    It turns out when you buy a used car people will hold their 
cars the life of their loan, 5 years. They sell the car, it is 
going to last another 5 years. It is going to save gasoline for 
another 5 years. Does that savings get reflected in the resale 
price? Actually, only part of it does. So low-income consumers 
get a disproportionate share of the second 5 years. Low-income 
consumers also are the beneficiaries, as I say, of these 
indirect effects, environmental and public health, so they will 
be significant beneficiaries of that.
    The interesting thing is if you go to year 2022, which is 
what we are talking about now, almost every used car sold in 
2022 will have been subject to the rebooted CAFE standard. 10-
year life, the average car, they have all been covered by 
standards, and that means low-income consumers are benefiting 
from the reboot of the CAFE program. This is one of the great 
myths. Low-income people benefit because they benefit from 
lower operating costs, and this program is helping them as a 
class.
    Mr. Green. Well, I have to admit, and I have some older 
cars, but the older your car the more maintenance you have to 
do. And also if they keep it, then the CAFE standards are of a 
different generation than what may happen on the newer cars.
    Dr. Cooper. That is absolutely the case. But on the other 
hand, those cars were required to be more fuel efficient by the 
new standard and that is the remarkable thing by 2022.
    Mr. Green. In your testimony you point out that the 
industry has found lower-cost ways of complying with the 
standards than originally thought. What are some of the ways 
that this was accomplished?
    Dr. Cooper. Well, the most obvious one is the Atkinson 
engine. It wasn't even considered. The second of all, what 
happens is that when people are given a 10-year time frame they 
ain't dumb, they took a look at it and say what am I best at; 
what else will I be changing? And so what the regulators 
thought the cost would be is always too high. What the industry 
political arms said the cost would be is way too high. We have 
got dozens of studies of that.
    And so the natural process of capitalist markets, they 
bring the costs down, they learn the learning curve is very, 
very steep in the beginning, and so you can find specific 
technologies that came along like this aspirated engine. You 
can find the general process. But this has happened dozens and 
dozens of times over the last 3 decades as we have dealt with 
the issue of improving fuel economy.
    Mr. Green. Mr. German, the initial costs for estimates 
complying like what Mr. Cooper said is actually much lower than 
the manufacturers or even the agencies. In regards to this 
program, have compliance costs been overstated, and what is the 
primary factor in overstating this compliance?
    Mr. German. Yes. No, it is just innovation. I have only 
talked in my testimony about the major improvements you can put 
a name to, but in the series of reports that we are doing in 
cooperation with suppliers we have all kinds of small things 
that have happened that were not anticipated. Variable geometry 
turbo-charger from a diesel engine which is highly efficient, 
it doesn't work on a conventional gasoline turbo-charge, but it 
does if you add Miller cycle.
    So there are all kinds of little secondary benefits that 
the suppliers, and I am sure the manufacturers as well, are 
figuring out that taking little steps to improve efficiency and 
reduce cost and the cumulative effect of these things is quite 
large.
    Mr. Green. OK. And how should we project for the new 
technologies given the rate of new development and adoption? I 
mean do we have a crystal ball?
    Mr. German. Yes. I mean that is the single biggest problem 
with innovation. You can't project it. And that is why what I 
really try to push is the concept that the least you can do is 
to use the latest data possible and get as close you can, 
because if you are using older data you are guaranteed to be 
wrong. You are guaranteed to be missing innovation.
    Mr. Green. OK. Thank you, Mr. Chairman. I yield back.
    Mr. Olson. The gentleman yields back. The Chair now calls 
upon the gentleman from the Commonwealth of Virginia, Mr. 
Griffith, for 5 minutes.
    Mr. Griffith. Thank you very much, Mr. Chairman. I guess I 
am going to look first to Mr. Welch and Mr. Bainwol. Your 
responses, do you think the industry can get me a cheap car for 
my five-member family? And as you can tell by looking at me I 
am not small and my children probably aren't going to be small 
either. Can you get me a car that is $22-23,000 that I can fit 
them all into that is going to have all these technological 
advantages and get it to me at $23-24,000?
    Mr. Welch. For a new car, stripped models which most people 
want more accoutrements on, but----
    Mr. Griffith. Well, I am a stripped-model guy, but OK.
    Mr. Welch. Well, that is fine. But, you know, our least 
expensive car I believe that we have on the lots right now is 
the Nissan Versa that is just under $13,000, and of course they 
go all the way up.
    Mr. Griffith. I understand that. But can I get all five of 
those people in there comfortably? I don't think I can.
    Mr. Welch. No.
    Mr. Griffith. I have spent more hours, and somebody gave 
the statistic people spending 13 hours on the Internet. I have 
already spent more than that anticipating when I trade in my 
Volkswagen diesel and the deal gets approved.
    But I do think both of you made the point that price makes 
a difference, and it does make a difference. Because I looked 
any number of times when I was driving my older vehicle, the 
one that I traded in for the Volkswagen diesel, and I drove 
that for 376,000 miles before the axle broke and my wife said 
you have got to get rid it. I am tired of no hubcaps and the 
windows being held up with duct tape. So I am that cheapskate, 
but the price does matter.
    And I noticed, Mr. Welch, in your testimony you said even 
on a monthly basis, because I think it was Dr. Cooper who 
testified it is about the cost of maintaining the vehicle and 
so forth which includes the loan value or the loan cost that 
even $20 to $30 that your dealers would say that makes a 
difference on what car they are going to buy, or in the case of 
somebody like me whether or not I buy.
    And then Mr. Bainwol, you indicated--and you can correct me 
and jump in anywhere on this--but you indicated that TAR was 
going to add anywhere, in an average in talking with the 
gentlelady from Tennessee, 1,500 to 6,000. So I quickly pulled 
out the Internet loan calculator and figured 1,500 at 3 
percent, which I think would be fairly reasonable in the middle 
if there is not some special deal, and that hits your number, 
26. It comes back at 2,695 and that is right smack dab in the 
middle of the number where people start deciding they are going 
to get a different car or not buy at all.
    Am I accurate in those assessments that I have made that 
some people are going to walk away completely from the new car 
and some people are going to downsize?
    Mr. Bainwol. I would say that the fundamental point you are 
making is that you have to do a whole-car cost analysis. And we 
have a tendency in this town to look at policy from a silo, so 
today we are talking about CAFE and we have kind of brought in 
ZEV because that introduces more cost and it is related.
    But we also talk about things like V to V, and an issue 
that Congressman Schakowsky talked about, the rear visibility. 
There is lots of things that go into the price of a car that 
are great technologies that serve important social purposes, 
but at the end of the day they cost money. And when you load 
them all up and you do the whole-car cost analysis you are 
creating a world in which it becomes harder and harder to 
purchase a new car.
    And with all due respect to my friends on the panel, that 
disproportionately hurts and locks out of new cars low-income 
Americans who then do not get the benefits of the safety 
technologies that have been introduced in the last 5 to 10 
years.
    Mr. Griffith. Well, and let's face it, and I am going to 
ask you a question at the end of this, I could afford the more 
expensive car. But if it is so much more expensive that I walk 
away from the market, I am never selling the used car that Dr. 
Cooper wants me to sell to some low-income person at the end of 
5 years or 6 years or 8 years or even if I were able and could 
in my conscience spend that much money on a car and buy it, I 
am likely to drive it longer than the 5-year lifespan because I 
am getting good service or good mileage out of it and it is 
never going to be available, at least not mine. I understand I 
may not be typical, but it is never going to be available for 
the low-income person until the axle breaks and it is all 
falling apart and it is time to take it to the graveyard. I 
yield back.
    Mr. Olson. The gentleman yields back. And that is all for 
the members and their questions. On behalf of the Commerce, 
Manufacturing, and Trade and Energy and Power Subcommittees and 
this committee, thank you, thank you, thank you to our 
witnesses.
    I would like to ask unanimous consent to enter into the 
record a letter from the American Chemistry Council about this 
hearing. Without objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    I remind all Members you have 5--you have 10 legislative 
days for questions for the record. Without objection, this 
hearing is adjourned.
    [Whereupon, at 1:24 p.m., the subcommittees were 
adjourned.]
    [Material submitted for inclusion in the record follows:]
    
    
  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
      
                                   [all]