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

     VOLKSWAGEN'S EMISSIONS CHEATING SETTLEMENT: QUESTIONS CONCERNING ZEV
                             PROGRAM IMPLEMENTATION

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

                                    HEARING

                                   BEFORE THE

                  SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                                     OF THE

                        COMMITTEE ON ENERGY AND COMMERCE
                            HOUSE OF REPRESENTATIVES

                        ONE HUNDRED FOURTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                DECEMBER 6, 2016

                                   __________

                               Serial No. 114-177

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

          Printed for the use of the Committee on Energy and Commerce

                            energycommerce.house.gov

                                   ____________

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                        COMMITTEE ON ENERGY AND COMMERCE

                              FRED UPTON, Michigan
                                     Chairman

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

                                     7_____

                  Subcommittee on Oversight and Investigations

                            TIM MURPHY, Pennsylvania
                                     Chairman
    DAVID B. McKINLEY, West Virginia     DIANA DeGETTE, Colorado
      Vice Chairman                        Ranking Member
    MICHAEL C. BURGESS, Texas            JANICE D. SCHAKOWSKY, Illinois
    MARSHA BLACKBURN, Tennessee          KATHY CASTOR, Florida
    H. MORGAN GRIFFITH, Virginia         PAUL TONKO, New York
    LARRY BUCSHON, Indiana               JOHN A. YARMUTH, Kentucky
    BILL FLORES, Texas                   YVETTE D. CLARKE, New York
    SUSAN W. BROOKS, Indiana             JOSEPH P. KENNEDY, III,
    MARKWAYNE MULLIN, Oklahoma               Massachusetts
    RICHARD HUDSON, North Carolina       GENE GREEN, Texas
    CHRIS COLLINS, New York              PETER WELCH, Vermont
    KEVIN CRAMER, North Dakota           FRANK PALLONE, Jr., New Jersey (ex
    JOE BARTON, Texas                        officio)
    FRED UPTON, Michigan (ex officio)

                                      (ii)

                                 C O N T E N T S

                                  ----------
                                                                       Page
    Hon. Tim Murphy, a Representative in Congress from the
      Commonwealth of Pennsylvania, opening statement................     1
        Prepared statement...........................................     3
    Hon. Marsha Blackburn, a Representative in Congress from the
      State of Tennessee, opening statement..........................     4
    Hon. Frank Pallone, Jr., a Representative in Congress from the
      State of New Jersey, prepared statement........................    31
    Hon. Diana DeGette, a Representative in Congress from the State
      of Colorado, prepared statement................................    33
    Hon. Janice D. Schakowsky, a Representative in Congress from the
      State of Illinois, prepared statement..........................    34

                                   Witnesses

    Cynthia Giles, Assistant Administrator, Office of Enforcement and
      Compliance Assurance, Environmental Protection Agency..........     5
    Janet McCabe, Acting Assistant Administrator, Office of Air and
      Radiation, Environmental Protection Agency \1\
        Prepared statement \2\.......................................     7
        Answers to submitted questions \3\...........................   123

                               Submitted Material

    Subcommittee exhibit binder......................................    35

    ----------
    \1\ Ms. McCabe did not offer oral testimony.
    \2\ Ms. Giles and Ms. McCabe submitted a joint prepared
      statement.
    \3\ Questions for the record were submitted jointly to Ms. Giles
      and Ms. McCabe.

     VOLKSWAGEN'S EMISSIONS CHEATING SETTLEMENT: QUESTIONS CONCERNING ZEV
                             PROGRAM IMPLEMENTATION

                                  ----------

                           TUESDAY, DECEMBER 6, 2016

                      House of Representatives,
          Subcommittee on Oversight and Investigations,
                              Committee on Energy and Commerce,
                                                        Washington, DC.
        The subcommittee met, pursuant to call, at 11:04 a.m., in
    Room 2322, Rayburn House Office Building, Hon. Tim Murphy
    (chairman of the subcommittee) presiding.
        Members present: Representatives Murphy, Burgess,
    Blackburn, Griffith, Bucshon, Flores, Mullin, Hudson, Collins,
    DeGette, Tonko, and Kennedy.
        Staff present: Grace Appelbe, Staff Assistant; Jennifer
    Barblan, Counsel, Oversight and Investigations; Elena Brennan,
    Staff Assistant; Blair Ellis, Digital Coordinator/Press
    Secretary; Charles Ingebretson, Chief Counsel, Oversight and
    Investigations; A.T. Johnston, Senior Policy Advisor; Dan
    Schneider, Press Secretary; Peter Spencer, Professional Staff
    Member, Oversight and Investigations; Rick Kessler, Democratic
    Senior Advisor and Staff Director, Energy and the Environment;
    Christopher Knauer, Democratic Oversight Staff Director;
    Elizabeth Letter, Democratic Professional Staff Member; Miles
    Lichtman, Democratic Professional Staff Member; Dan Miller,
    Democratic Staff Assistant; Matt Schumacher, Democratic Press
    Assistant; and Andrew Souvall, Democratic Director of
    Communications, Outreach, and Member Services.

       OPENING STATEMENT OF HON. TIM MURPHY, A REPRESENTATIVE IN
             CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

        Mr. Murphy. Good morning. This is the Oversight and
    Investigations hearing on Volkswagen's Emissions Cheating
    Settlement Concerning the ZEV Program Implementation. Here we
    will hear testimony to address the significant questions the
    Oversight Subcommittee has about a $2 billion investment
    program embedded in a recently approved partial consent decree
    to settle numerous claims against Volkswagen.
        Just over a year ago, VW admitted to Federal authorities as
    well as this subcommittee that it been thwarting Federal
    emissions tests for years. VW willfully and knowingly cheated,
    having installed engine software in 480,000 diesel vehicles to
    defeat emissions tests. This is a clear violation of Federal
    law. The reasons for VW's nefarious actions are now quite
    clear. Despite having committed to producing, quote, ``clean
    diesel,'' unquote cars, it couldn't meet the Clean Air Act
    standards without installing the software to cheat testing
    machines, and ultimately hundreds of thousands of consumers.
        It is also clear that VW deserved to be held to account for
    their illegal actions, for the harm to consumers, and the
    environment, and this violation of the public trust. In
    January, the United States sued VW for violations under the
    Clean Air Act. Hundreds of other parties brought actions. The
    cases were consolidated, and settlement talks commenced and
    eventually reached an agreement. In late October, a U.S.
    District Court approved a $15 billion partial consent decree
    resolving many claims concerning the 2.0 liter engines, and
    including buyback and modification provisions to address the
    economic harm to VW customers.
        Yet, a piece of this settlement raises the potential that
    VW's penalty for bad behavior may not be entirely without
    benefit for VW's own future operations. The settlement requires
    VW to invest a substantial amount of money in infrastructure
    and education to expand the market for Zero Emission Vehicles,
    such as plug-in electric cars, coincidentally just as VW was
    launching a new strategy to enter and grow its share in the
    electric vehicle market. Under this so-called ZEV investment
    commitment to the partial consent decree, VW must spend $800
    million over the next 10 years into infrastructure and market
    development in California to be overseen by the State of
    California, and $1.2 billion over the same period in the rest
    of the Nation to be overseen by the EPA.
        This works out to VW having to invest nearly $500 million
    every 30 months. To put this in perspective, the total market
    for U.S. electric charging infrastructure, including
    installation, has been estimated by industry to be up to $800
    million over the next 30 months. So VW has agreed to spend at a
    rate that would nearly double the size of this market. Think
    about the regulatory and oversight considerations if this
    massive influx of infrastructure investment was Government
    spending, like a stimulus package. The pace and scale of such
    investment would be of great interest to preexisting market
    players who would stand either to benefit from an enlarged
    market, or to suffer from public money that would crowd out
    competition.
        In many respects, VW's mandated investment threatens a
    similar situation, but the ZEV investment oversight provisions
    appear pretty thin, especially at the Federal level. Most
    notably, VW will apparently have the sole discretion for how it
    will invest these sums in a $1 billion national program
    overseen by the EPA, creating opportunity for VW to gain an
    enormous competitive advantage.
        Now, we are not here today to ask EPA to renegotiate the
    agreement. But now that it is final, we need to understand how
    it will work, how it will affect businesses already in the Zero
    Emission Vehicle marketplace, and what EPA's role is in
    administering this huge financial commitment. We wish there
    were more time, but EPA must make some decisions, even as we
    speak. And the big decision on VW's plan for spending the first
    $300 million will come early next year. It is against this
    backdrop that we wrote EPA in early November, and we asked EPA
    here today to help us build a record on the issues surrounding
    the ZEV program implementation, and the measures necessary to
    protect market competition as investment plans developed. I'm
    expecting to hear what EPA's oversight role will be, and given
    the enormous amount of money to be invested, how it will impact
    the policymaking landscape.
        I also want to hear what actions EPA will make to ensure
    programs like this do not encroach on congressional interests.
        VW betrayed the public trust with this cheating scandal,
    and we are here this morning to ensure the agencies responsible
    for developing and agreeing to this deal will ensure the public
    interest is protected.
        [The prepared statement of Mr. Murphy follows:]

                     Prepared statement of Hon. Tim Murphy

        Today the subcommittee will hear testimony from the
    Environmental Protection Agency to address significant
    questions the Oversight Subcommittee has about a two-billion-
    dollar investment program embedded in a recently approved
    partial consent decree to settle numerous claims against
    Volkswagen.
        Just over a year ago VW admitted to Federal authorities, as
    well as this subcommittee, it had been thwarting Federal
    emissions tests for years. VW willfully and knowingly cheated,
    having installed engine software in 480,000 diesel vehicles to
    defeat emissions tests. That is a clear violation of Federal
    law.
        The reasons for VW's nefarious actions are now clear:
    despite having committed to producing ``clean diesel'' cars, it
    couldn't meet the Clean Air Act standards without installing
    the software to cheat testing machines and ultimately hundreds
    of thousands of consumers.
        It is also clear that VW deserved to be held to account for
    their illegal actions, for the harm to consumers and the
    environment, and this violation of the public trust.
        In January, the United States sued VW for violations under
    the Clean Air Act. Hundreds of other parties brought actions,
    the cases were consolidated and settlement talks commenced and
    eventually reached an agreement.
        In late October, a U.S. District Court approved a 15-
    billion-dollar partial consent decree resolving many claims
    concerning the 2.0 liter engines-and including buyback and
    modification provisions to address the economic harm to VW
    customers.
        Yet a piece of this settlement raises the potential that
    VW's penalty for bad behavior may not be entirely without
    benefit for VW's own future operations. The settlement requires
    VW to invest a substantial amount of money in infrastructure
    and education to expand the market for zero emission vehicles,
    such as plug-in electric cars, coincidentally just as VW is
    launching a new strategy to enter and grow its share in the
    electric vehicle market.
        Under this so-called ZEV investment commitment in the
    partial consent decree, VW must spend $800 million over the
    next 10 years into infrastructure and market development in
    California, to be overseen by the State of California, and $1.2
    billion over the same time period in the rest of the Nation, to
    be overseen by EPA.
        This works out to VW having to invest nearly $500 million
    every 30 months. To put this in perspective, the total market
    for U.S. electric charging infrastructure (including
    installation) has been estimated by industry to be up to $800
    million over the next 30 months. So VW has agreed to spend at a
    rate that would nearly double the size of this market.
        Think about the regulatory and oversight considerations if
    this massive influx of infrastructure investment was Government
    spending, like a stimulus package. The pace and scale of such
    investment would be of great interest to pre-existing market
    players who would stand either to benefit from an enlarged
    market or to suffer from public money that would crowd out
    competition.
        In many respects, VW's mandated investment threatens a
    similar situation, but the ZEV investment oversight provisions
    appear pretty thin, especially at the Federal level. Most
    notably, VW will apparently have sole discretion for how it
    will invest these sums in the billion-dollar national program
    overseen by EPA--creating opportunity for VW to gain an
    enormous competitive advantage.
        We are not here today to ask EPA to renegotiate the
    agreement, but now that it is final, we need to understand how
    it will work, how it will affect businesses already in the zero
    emission vehicle marketplace and what EPA's role is in
    administering this huge financial commitment.
        We wish there were more time, but EPA must make some
    decisions even as we speak, and the big decision on VW's plan
    for spending the first $300 million will come early next year.
    It is against this backdrop that we wrote EPA in early November
    and we asked EPA here today to help us build a record on the
    issues surrounding ZEV program implementation and the measures
    necessary to protect market competition as investment plans
    developed.
        I'm expecting to hear what EPA's oversight role will be,
    and given the enormous amount of money to be invested, how it
    will impact the policymaking landscape. I also want to hear
    what actions EPA will make to ensure programs like this do not
    encroach on Congressional interests.
        VW betrayed the public trust with its cheating scandal. We
    are here this morning to ensure the agencies responsible for
    developing and agreeing to this deal will ensure the public
    interest is protected.

        Mr. Murphy. Now, we are waiting for the Democrats to come
    onboard. So is there another Member this side that would like
    to make an opening statement?
        I recognize the vice chair of the committee, Mrs.
    Blackburn, for 5 minutes.

    OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF TENNESSEE

        Mrs. Blackburn. I want to thank you all for being here. And
    as the chairman said, we have some questions about EPA and
    their role and their ability to oversee this. And also VW's
    participation in this. I think one of the things that I want to
    hear from EPA is how active, how passive is this role in
    monitoring going to be? What are your expectations? And then,
    do you have the necessary skill sets in order to do this?
        The second thing I'm going to want to know is about the
    data that is going to be collected when the cars are in these
    stations. Who owns that data? Is it VW? Is it going to be the
    EPA? Who's going to own this data? And then what are they going
    to do with that data? What are the restrictions on it? Who owns
    the transfer rights? Who is going to hold those transfer rights
    on this information? So as we get to questions, I will want to
    discuss that with you, because I think that as we look at this
    expansion and VW rolling out this, I think we need to have a
    discussion about that component of the data also.
        And, Mr. Chairman, I yield back.
        Mr. Murphy. Is there anyone on our side that has any other
    opening statements to begin with?
        Seeing none, we will move forward. Let me just mention a
    couple things:
        First of all, I ask unanimous consent that the Members'
    written opening statements be introduced into the record. And
    without objection, the documents will be entered into the
    record.
        I also want to explain the minority is delayed by a caucus
    meeting. They will be here as soon as they can be. And at that
    time, they will be able to make opening statements. But in the
    meantime, we will move forward with our panel.
        So let me introduce our two witnesses for today's hearing,
    both from the U.S. Environmental Protection Agency. First, we
    have Cynthia Giles, Assistant Administrator in the Office of
    Enforcement and Compliance Assurance at the EPA, and Janet
    McCabe, Acting Assistant Administrator in the EPA's Office of
    Air and Radiation. Both our witnesses come to us today with
    extensive experience in environmental service in the public,
    private, and nonprofit sectors. Thank you, Ms. Giles and Ms.
    McCabe, for being here today. And we look forward to hearing
    from you in this very important matter.
        You're aware the committee is holding an investigative
    hearing, and when doing so, has the practice of taking
    testimony under oath. And do you have any objections to
    taking--giving testimony under oath?
        Seeing no objections, the Chair would advise you that under
    the rules of the House and rules of the committee, you're
    entitled to be advised by counsel. Do you desire to be advised
    by counsel during your testimony today?
        And seeing none, then in that case, would you please rise
    and raise your right hand, and I'll swear you in.
        [Witnesses sworn.]
        Mr. Murphy. Thank you. You are now under oath and subject
    to the penalties set forth in title 18, section 1001 of the
    United States Code. We'll have you each gave a 5-minute summary
    of your written statement--we're just doing one statement? All
    right. Ms. Giles, you're recognized for 5 minutes.

    STATEMENTS OF CYNTHIA GILES, ASSISTANT ADMINISTRATOR, OFFICE OF
       ENFORCEMENT AND COMPLIANCE ASSURANCE, U.S. ENVIRONMENTAL
         PROTECTION AGENCY, AND JANET MCCABE, ACTING ASSISTANT
    ADMINISTRATOR, OFFICE OF AIR AND RADIATION, U.S. ENVIRONMENTAL
                           PROTECTION AGENCY

                       STATEMENT OF CYNTHIA GILES

        Ms. Giles. Thank you, Mr. Chairman and distinguished
    members of the subcommittee. I am Cynthia Giles. I am the
    Assistant Administrator of the Environmental Protection
    Agency's Office of Enforcement and Compliance Assurance. And
    I'm joined today by Janet McCabe, the Acting Assistant
    Administrator in the Office of Air and Radiation. Thank you for
    the opportunity to testify about the Volkswagen settlement
    achieved by EPA, the Department of Justice, and the California
    Air Resources Board.
        In close coordination with our partners, EPA achieved a
    groundbreaking settlement using the authority provided to EPA
    by Congress under the Clean Air Act. Our priority from the
    start was to remedy the damage VW caused when it sent half a
    million cars onto our roads emitting harmful pollution far in
    excess of reasonably achievable, cost-effective Federal
    standards. These standards are in place to protect the air we
    breathe. And through this settlement, we are upholding these
    standards and delivering on our obligation under the Clean Air
    Act to protect public health for all Americans.
        In October, the court formally approved the settlement
    agreement, partially resolving allegations that Volkswagen
    violated the Clean Air Act by the sale of approximately 500,000
    vehicles containing 2-liter diesel engines equipped with defeat
    devices. Through three key provisions, the settlement holds
    Volkswagen accountable and puts in place remedies for the
    violations. VW must offer to buy back or fix the violating
    cars; VW is required to pay $2.7 billion into a trust account
    to fund mitigation projects selected by the States; and VW will
    invest an additional $2 billion to promote the development and
    use of clean vehicle technologies.
        The subcommittee today has asked us to focus on the third
    element, investment in clean vehicle technology, which is just
    one part of this comprehensive partial settlement. Over the
    course of several years, Volkswagen sold vehicles in the United
    States that it claimed were green, lower-emitting, and clean
    diesel vehicles. Consumers looking to reduce air pollution
    purchased these vehicles on the premise that they were clean.
    But we now know that, in fact, they emit up to 40 times the
    allowable level of NOx pollution.
        VW's violations of the Clean Air Act undercut the market
    for truly green vehicles, resulting in illegal pollution and
    not the cleaner air that was promised. The zero emissions
    vehicle, or ZEV, investment requirement is a court-ordered
    remedy intended to address the harm that VW caused by requiring
    investments to accelerate the growth of clean transportation,
    and to advance cleaner air in America.
        The settlement requires Volkswagen to develop investment
    plans over a 10-year period, totaling $2 billion nationwide
    that will increase the necessary ZEV infrastructure, improve
    access to ZEVs, and promote education about ZEVs in the United
    States. ``ZEV'' means any zero emitting vehicle, including
    battery electric vehicles, fuel cell vehicles, and certain on-
    road plug-in hybrid electric vehicles. The settlement means
    more people have opportunities to use ZEVs without having to
    purchase or lease one, for example, through car sharing
    programs. More drivers of electric cars will find a charge when
    they need one. And there will be more brand-neutral public
    outreach efforts across the country about the benefits of ZEVs.
        The agreement also includes strong transparency and
    accountability measures. VW is explicitly required to solicit
    and consider input from States, municipalities, tribes and
    other Federal agencies, before it makes ZEV investment
    decisions. And it must make its investment plans available
    online.
        VW's ZEV infrastructure investments and its public outreach
    efforts must be brand neutral, meaning ZEV infrastructure must
    be accessible to all ZEV vehicles utilizing nonproprietary
    charging equipment, and not just the ones VW makes.
        The ZEV investment plan will be updated every 30 months,
    ensuring that the investments account for changes in ZEV
    technology and the market. And all Federal, State, and local
    laws will apply to Volkswagen as they do to any other company.
        EPA, working with DOJ, will ensure that VW follows the
    rules, that it satisfies the requirements for stakeholder
    engagement, that the investments are truly brand neutral, and
    that VW complies with all the terms of the settlement.
        This settlement ensures that Volkswagen finally delivers on
    the promise it made for cleaner air and a cleaner
    transportation future.
        Thank you for the opportunity to testify. And we would be
    happy to answer any questions.
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Murphy. Thank you. I now recognize myself for 5
    minutes.
        Ms. Giles--and I apologize for mispronouncing your name--in
    a few words, can you tell me the purpose of the ZEV investment
    commitment and the NOx mitigation trust in the Volkswagen
    matter?
        Ms. Giles. Both of those provisions are part of the three-
    part structure to remedy the harm caused by VW's violations to
    get the pollutant cars off the road, to mitigate the NOx
    pollution that they caused, and to invest in a clean
    transportation future.
        Mr. Murphy. Thank you. Now, part of the settlement requires
    Volkswagen to pay $2.7 billion into a NOx mitigation trust. The
    partial consent decree states, and I quote, ``The funding for
    the eligible mitigation actions provided for herein is intended
    to fully mitigate for total lifetime excess NOx emissions from
    the 2.0 liter subject vehicles where''--``or will be
    operated.'' Now, that sounds like to me, when you say fully
    mitigate total lifetime, that sounds like 100 percent. Am I
    correct on that?
        Ms. Giles. The mitigation trust is part, as I said, of a
    three-part remedy that is designed to address the different
    types of violations that VW had.
        Mr. Murphy. I understand that. OK. But tell us today the
    amount of the total lifetime excess NOx emissions from these
    vehicles?
        Ms. Giles. The mitigation trust, as you mentioned, is part
    of the three parts designed to remedy NOx emissions. And it
    sets up a trust that is run by a trustee to approve and oversee
    the expenditures by States of the funds that are allocated to
    them.
        Mr. Murphy. Well, let me come back to that in a second
    there.
        In your written statement, you talk a lot about how
    transparent the settlement agreement is. But I have a hard time
    seeing that transparency, if we can't see the basis on which
    you claim the total NOx emissions will be mitigated. Can you
    give us that?
        Ms. Giles. The only calculations we have done with respect
    to the NOx emissions were done in support of the enforcement
    case. And that enforcement case is not over. We still have the
    3-liter vehicles, we have civil penalties, and the ongoing
    criminal investigation. So your specific question is relevant
    to those ongoing portions of the case and not something we can
    talk about here.
        Mr. Murphy. But I'm still having a little trouble. I'm just
    trying to clarify this, that if we take your word that the
    total environment harm is mitigated by the NOx mitigation
    agreement, what's the purpose of the ZEV investment commitment?
        Ms. Giles. Those two components are designed to address
    separate harms. The mitigation portion is to make up for the
    pollution caused, and the ZEV portion is to address the fact
    that they sold dirty vehicles claiming they were clean.
        Mr. Murphy. Is that a penalty? Is that a penalty then?
        Ms. Giles. No, it is not a penalty. These are all part of
    the injunctive relief in the case.
        Mr. Murphy. So I've accepted there's a legitimate purpose,
    then, for the ZEV investment commitment. I'm still trying to
    find how I determine what that is. There are conflicting
    statements coming out of EPA and what the role of the ZEV
    investment commitment is, and what authority EPA has to ensure
    that it meets those goals. What does it mean to fully mitigate
    the total lifetime excess NOx emissions? Can you please define
    that for me?
        Ms. Giles. The NOx reduction provisions of mitigation are
    one part, as I've said, of a three-part strategy to address the
    violations. So we're addressing the cars on the road as one
    part, the NOx emissions from the vehicles as the second part,
    and the third part is to remedy the damage caused to the
    marketplace.
        Mr. Murphy. Yes, I hear that part. And those are noble
    causes. I just wonder if there's some double jeopardy here. So
    in your November 18 letter to the committee, you wrote, quote,
    ``The partial consent decree does not allow the EPA to
    substitute its preferences for choices made by Volkswagen.'' So
    that makes it sound like VW can pretty much invest in whatever
    it wants, which is concerning, given that VW has announced that
    it's going to have this brand-new business plan for electric
    vehicles. And a few months ago the head of the EPA's Office of
    Transportation Air Quality, Chris Grundler, was quoted as
    saying that EPA would have a much larger say in how VW spent
    the $1.2 billion for ZEV infrastructure. Mr. Grundler went on
    to state, ``We have work to do with the new team and with our
    colleagues at the Transportation and Energy Departments to come
    up with a collective vision for what infrastructure would look
    like nationally, so we can make an informed decision when
    Volkswagen comes in with their plan that is consistent with
    ours, so that the $2 billion is not wasted.'' Mr. Grundler also
    stated that he didn't want all the money to go to fast charging
    stations, and that there should be an emphasis on providing the
    charging station at multi-family dwellings. So which is it?
    Does the EPA have a limited but essential role where you will
    not be substituting your own preferences for Volkswagen, or is
    the EPA actually going to make VW's plan fit within EPA's
    vision of ZEV infrastructure?
        Ms. Giles. The consent decree clearly provides that the
    decisions are made by VW. They are in charge of the investment
    decisions. EPA has a limited but important role to make sure
    that VW complies with the consent decree.
        Mr. Murphy. So VW can make their own decisions on how this
    is going to go. I see. Well, we'll come back to that.
        I now will--my time is up. I now recognize Mrs. Blackburn
    for 5 minutes.
        Mrs. Blackburn. Thank you. Your answer to the chairman's
    question makes it sound like VW's going to have a lot of
    autonomy over this situation. So let's go to the issue of data,
    and the data that is coming in off of the charging stations.
    And let's talk specifically for a minute about who is going to
    collect it? Who's going to hold it? How are they going to be
    able to use it? Would VW be able to take that data and use it
    as a marketing plan for their cars? Would they be able to take
    that information and use it to incent sales? So talk to me
    about that data, and then, also, the transfer rights that
    should be accompanying or overriding that data.
        Ms. Giles. Well, there are a couple provisions that are
    relevant to your specific question. One is, as I mentioned
    briefly before, that VW has to comply with all of the laws that
    any other company in this marketplace would comply with. The
    specific----
        Mrs. Blackburn. Well, let me interject right there. We have
    no laws on the book that apply to transfer rights on data. And
    we do not have a data security law on the book. So go ahead.
        Ms. Giles. As to your specific question about the data, one
    of the essential parts of the transparency that is required by
    this consent decree is that VW is required to collect
    information about the charging stations that it installs, and
    to make that data available to the public as part of the robust
    transparency that we are building into this consent decree. So
    that information will be available to the public, to
    competitors, who will have quite a big window into VW's
    operations.
        Mrs. Blackburn. So then what we may want to do is look at
    something regarding timing on collection, and when that data is
    made public, so that they don't capture and hold that and then
    release it a year later or 2 years later, that everyone has
    access at the same time.
        Ms. Giles. So the consent decree specifically provides that
    VW has to file annual reports, which are public and posted on
    the Web, that will include the data from the charging stations
    that they have installed.
        Mrs. Blackburn. So then, in essence, what you're telling me
    is for a 365-day period, they will--and they and they alone,
    will have access to that data to manipulate it, to work with
    it, to advertise or to market. But it will be theirs. And then
    after that period of time, it will be made public. So would
    that be your understanding?
        Ms. Giles. Well, the consent decree provides that they have
    to make that data available to everyone annually. So----
        Mrs. Blackburn. Do you not see a little bit of a concern
    with this if there is no restriction that--see, one of the
    things that we've discussed in our communications and
    technology subcommittee and others here is looking at the data
    security issues and looking at who owns the virtual ``you.''
    It's a part of our privacy debate. It is something that
    encompasses much of what is transpiring in the Internet of
    things.
        And from what I'm hearing from you, it sounds as if you all
    do not have a clear understanding as to who is going to have
    first the right of refusal over that data. Is it the person
    that owns the vehicle? Is it the--is it Volkswagen, because
    they're the ones that are manning the stations? Within that
    365-day period of time, what are the restrictions on them? And
    what is their ability to use that prior to anyone else having
    access to that? You know, it's one thing to say--and we see
    this all the time when you look at patents and copyrights, you
    know. And if someone says, ``Well, you know, it's out there in
    the public domain''--but, yes, then what did that person do
    with it before it went to the public domain? So this is
    Volkswagen taking this data, and then they're going to have use
    of it for a year, and then at the end of the year, they're
    going to make a report as to what that data is. But in the
    meantime, it is theirs. So you could look at it and say, ``Wow,
    $2 billion. That was quite a settlement.'' But look what they
    bought.
        Ms. Giles. Well, every company in this market operates with
    a lesser degree of transparency than VW will do. VW has to
    solicit input on what this plan contains. Their investments
    specifically have to be brand neutral, and they have to update
    their plan every 30 months to account for changes in the
    marketplace, and they have to be very transparent. So they are
    going to be substantially more transparent than other companies
    in the----
        Mrs. Blackburn. After 365 days.
        I yield back.
        Mr. Murphy. Thank you. The gentlelady yields back.
        I now recognize Dr. Burgess for 5 minutes.
        Mr. Burgess. Thank you, Mr. Chairman. And I--this
    settlement that has been crafted and created is--I mean, it's
    the first time I've ever seen anything like this. I mean, the
    language. The language that's written in the court settlement
    is some of the most detailed and densely technical language
    that I have ever read.
        Just to carry on with Vice Chairwoman Blackburn's concerns,
    if I'm reading correctly in appendix C in the settlement that
    deals with the issue of data--yes, I think what the chairwoman
    is suggesting is very possible, that there would be almost a
    year's benefit to the company that has been monitoring the
    activity at their charging stations. I don't even know, does
    Volkswagen have an electric vehicle on the market?
        Ms. Giles. I believe they do. Yes.
        Mr. Burgess. So they will have almost a year's advantage on
    anyone else in that market space with their ability to monitor
    consumer behavior and consumer use of their charging stations.
    I don't begrudge them that, but that is a fact. And I don't
    think, again, as I read appendix C of the agreement, I don't
    see there's anything to prevent that. And if I were clever, and
    I have to believe the people at Volkswagen are, because they
    wouldn't be in this position if they hadn't been somewhat
    clever, that they'll be able to use and manipulate that data
    and use to it to their advantage. I would be surprised if they
    didn't, in fact. I don't know if there's any way that that can
    be dealt with differently, but just as I read appendix C,
    that's my takeaway.
        Who advised--this is written--this document is produced by
    the Federal district court. Is that correct?
        Ms. Giles. The settlement agreement was written by EPA and
    the California Air Resources Board with VW.
        Mr. Burgess. So it was your assets that then went into
    drafting this settlement?
        Ms. Giles. That's correct.
        Mr. Burgess. So it was people of the United States,
    essentially, who paid for the production of this very detailed
    document that we have in front of us. Is that correct?
        Ms. Giles. As with all EPA enforcement actions, yes.
        Mr. Burgess. I will confess to being a little bit concerned
    about the characteristics of the directors of that board,
    although they are spelled out of the--I don't know what you
    call them, the reviewers or the monitors, although it is
    spelled out in the agreement, and that they're not supposed to
    have any conflicts, and they're not supposed to go to work for
    the company within 2 years' time of having--what enforcement do
    you have over that? How do you prevent someone who says, you
    know, Volkswagen just cut me a real good deal. So I'm leaving
    the board and I know what it says in print, but what--how do
    you prevent that? What mechanism is at your disposal?
        Ms. Giles. Well, we certainly appreciate your careful
    reading of appendix C. That's great to hear. The independent
    financial auditor in the appendix C agreement that you've
    mentioned does have very clearly spelled out independence
    obligations. And their job as accountants is to look at the
    information that VW gives them, and to attest whether it meets
    the requirements that are very detailed for what counts as
    credible costs under the agreement. EPA retains, as we do in
    all our enforcement cases, the ability to make the decision of
    if the company has complied with the consent decree or not.
        Mr. Burgess. Is this settlement--I mean, it seems unique to
    me. But maybe I'm just naive. Is this a standard type of EPA
    settlement? I mean, do these things happen frequently?
        Ms. Giles. It is very typical for us to have enforcement
    cases where we require the company to fix the pollution problem
    and to redress the harms caused, and that's what we've done in
    this case.
        Mr. Burgess. But this creation of $2 billion of electric
    substation charging infrastructure, that seems a little unusual
    to me. But, again, I'll defer to the EPA on this. It's not
    something that I am familiar with encountering with 14 years on
    this subcommittee.
        Ms. Giles. Well, every enforcement remedy is tailored to
    the facts of a particular case. And in this case, as you know,
    we had very egregious violations of the laws that protect clean
    air in this country. This remedy----
        Mr. Burgess. Where did this idea originate--from where did
    it originate? Can you tell me that?
        Ms. Giles. That was part of our settlement discussions.
        Mr. Burgess. But who advised you on that?
        Ms. Giles. Well, I'm not in a position to talk about our
    settlement discussions, in part, because we have a court order
    prohibiting me from doing that.
        Mr. Burgess. At some point will those documents become
    public?
        Ms. Giles. I don't know the answer to that question. I can
    just tell you that right now, when the case is ongoing, we're
    not in a position to discuss the settlement negotiations.
        Mr. Burgess. So much for transparency. Mr. Chairman, I'll
    yield back.
        Mr. Murphy. The gentleman yields back.
        Dr. Bucshon, you're recognized for 5 minutes.
        Mr. Bucshon. Mr. Chairman, I don't have any specific
    questions. Can I yield my time to someone else?
        Mr. Murphy. Well, next would be Mr. Flores for 5 minutes.
        Mr. Flores. Mr. Chairman, I'll pass at this point, and
    maybe in the second round.
        Mr. Murphy. Thank you.
        Mr. Griffith.
        Mr. Griffith. OK. How many cars--do you know how many cars
    has VW purchased back?
        Ms. Giles. I don't know the answer to that question.
        Mr. Griffith. Do you know if they've purchased any back?
        Ms. Giles. I don't know.
        Mr. Griffith. Are you all doing anything to see if they're
    in compliance with that?
        Ms. Giles. We will be closely monitoring what they are
    required to do. There is no current obligation that cars
    already have been purchased back.
        Mr. Griffith. When--and I was just looking through the
    court order to see if I could find it--when do we expect that
    process to start? And let me say so that I'm not misleading
    anybody, I'm one of the people who gets compensated under this.
    I'm an owner of a Volkswagen diesel, and we filed our work, and
    I've got a constituent who is keeping me advised on their
    process. They filed all of their paperwork. She's already got
    her new car picked out and just waiting. And so I'm just
    curious. It's been closing in on 40 days since the court
    approved the agreement. You all reached an agreement, I think,
    in August. Court had to approve it. I get that. I'm just
    wondering if anybody's following up with Volkswagen to see that
    the consumers are, in fact, protected.
        Ms. Giles. Absolutely. So there is a very extensive process
    set up which you probably have been exposed to that was set up
    by the plaintiff steering committee and the FTC and others to
    figure out exactly what the schedule should be for implementing
    the consumer's choice of whether they prefer buyback or fix if
    one is approved. So there is an established process that is
    being followed.
        Mr. Griffith. All right. If you all would just follow up on
    that, I would greatly appreciate it.
        And then, I have some of the concerns that other folks have
    raised in regard to, you know, how active you all are going to
    be, and is this actually going to end up benefiting Volkswagen.
    Because while I've driven a lot of Volkswagens over the years,
    certainly don't condone their bad behavior in this
    circumstance. And--and so just want to make sure that this is
    all working out the way that it was intended to, and whether
    it's the data that we've heard about or whether it's making
    sure that they don't come up with a crafty plan that actually
    rewards them for that bad behavior, it's very important to us.
        Ms. Giles. The consent decree specifically provides, as you
    probably are aware, that VW's investments and their outreach
    must be brand neutral. So they have to make that accessible to
    any car with a standard plug, even if it's not the one that VW
    cars use.
        And as to your second point, EPA is going to be very active
    in making sure that VW follows the requirements of the consent
    decree.
        Mr. Griffith. All right. With that, Mr. Chairman, I have no
    additional questions at this time, and would yield back.
        Mr. Murphy. Would the gentleman hold for a moment?
        All right. I'll recognize myself for another 5 minutes,
    just follow up while the other Members are preparing their
    comments here.
        For Ms. Giles, it remains unclear how VW's going to fulfill
    the ZEV investment commitment under the terms of the partial
    consent decree. And nothing prevents VW from obtaining revenue
    from these investments. That's one of our bottom-line concerns.
    Can you point to some other examples in EPA settlements where--
    or enforcement actions that permit the party responsible for a
    violation to establish a new business or generate revenue as
    part of the settlement? Is there other models for this that you
    have?
        Ms. Giles. Every case has remedies that are uniquely
    tailored to the facts of that particular case. In this case,
    this is a part of the injunctive relief, it is not a penalty,
    it's part of the injunctive relief, it's an investment that VW
    is making in ZEV infrastructure. And there is no prohibition on
    them earning revenues from that investment.
        Mr. Murphy. Well, do you know if VW does, in fact, intend
    to pursue any revenue regeneration from these investments? Has
    that been part of your discussion?
        Ms. Giles. I don't know the answer to that question. It
    will be a decision that the company makes. I would say that
    some of the comments that we have heard from other companies in
    this business seem to be encouraging that VW should be making
    revenues from these investments.
        Mr. Murphy. So it would seem to me that would be part of
    the discussion, that if someone is being penalized but that
    penalty is going to allow them to actually make money, that
    would seem to be a bit of a contradiction and part of a
    discussion you might want to have with them.
        Ms. Giles. We would certainly agree if this were a penalty.
    This is not a penalty. This is part of the injunctive relief.
    The penalty portion of the case is still underway.
        Mr. Murphy. So--and I understand you can't discuss all
    those things, but just clarify for me. If there is a penalty,
    will that--is one of the options a fine?
        Ms. Giles. Yes. That--yes. It is.
        Mr. Murphy. And where will that money go if there's a fine?
        Ms. Giles. It goes to the Treasury.
        Mr. Murphy. Does it go to the EPA?
        Ms. Giles. No, it does not.
        Mr. Murphy. So you have no say-so at all on how that money
    is spent?
        Ms. Giles. The money goes to the Treasury.
        Mr. Murphy. OK. And now some have suggested this could also
    have a negative or anticompetitive effect on the existing ZEV
    infrastructure. Do you agree?
        Ms. Giles. We've heard a variety of opinions. Some of the
    people who are active in ZEV infrastructure think this is going
    to be a boon for this industry. Some are concerned about what
    the impacts could be. We have worked hard at trying to put
    sidebars on VW's investments here so that we will do as best we
    can to help preserve a fair and neutral market. So input from
    other people into what VW's plan should be, their requirement
    to be brand neutral, the requirement that it be updated, and
    the many provisions for public transparency and accountability
    that the agreement contains.
        Mr. Murphy. And I myself have seen some things from one
    company called EVgo that thinks it might be beneficial. Another
    one called ChargePoint thinks that it could be an antitrust
    issue. And so we will have to continue and follow up with
    those.
        Ms. McCabe, by most assessments, the ZEV infrastructure
    investments under the terms of the partial consent decree will
    most likely be into electric vehicle infrastructure such as
    charging stations. Do you agree that's the most likely thing,
    the charging stations?
        Ms. McCabe. We expect that to be significant.
        Mr. Murphy. Is the Office of Transportation and Air Quality
    aware of the size of the electric vehicle charging market? Can
    you tell us what that is?
        Ms. McCabe. I don't have a specific number for you,
    Congressman. But there's clearly a lot of interested inquiry in
    this from Members of Congress themselves about it. And we've
    got a big country here with a lot of people to serve.
        Mr. Murphy. Right. If you could get us that information,
    because I'm sure that would be of interest to this committee,
    to you as well, as understanding what that market is and the
    development of that and how this infrastructure investment
    might actually directly influence that.
        Ms. McCabe, according to an industry filing with the court
    in the partial consent decree, the market over the next 90
    months for installation, operation is approximately $800
    million. You heard us say that. Do you think this is in the
    ballpark of the market size, $800 million?
        Ms. McCabe. I really wouldn't want to opine on that,
    Congressman. But we'll provide you answers in follow-up.
        Mr. Murphy. OK. Thank you.
        And to both of you, last week the California Air Resources
    Board, called CARB, held a public input workshop regarding
    implementation of California's allocation of the ZEV investment
    commitment. Does the EPA intend to conduct a similar public
    outreach?
        Ms. Giles. VW is required to solicit public outreach. And
    you may have seen that VW put out a notice, I think earlier
    this week, saying that it intends to update the public on what
    the opportunities for public input are going to be.
        Mr. Murphy. I understand. But will EPA conduct this
    outreach as well?
        Ms. Giles. The consent decree puts that obligation on VW.
        Mr. Murphy. Will you have any kind of a role in that as
    well in how that data's collected, collated, responded to? Will
    you be there at the table in any way, or you'll wait for their
    report?
        Ms. Giles. VW's obligations under the consent decree are to
    conduct that outreach in accordance with a public outreach
    obligation. And we're going to make sure, through our oversight
    of the consent decree implementation, that they do comply with
    those obligations to conduct public outreach and to consider
    that in the development of their plan.
        Mr. Murphy. Thank you. Thank you. I'm out of time.
        Mr. Kennedy, are you ready for questions?
        Mr. Kennedy. Yes.
        Mr. Murphy. I'll recognize you for 5 minutes.
        Mr. Kennedy. I appreciate that, Dr. Murphy. Thank you.
        Ms. Giles, I understand that the Zero Emission Vehicles
    provisions of this settlement were designed to remedy some of
    the adverse environmental effects of VW vehicles emitting
    excess pollutants into the atmosphere. Is that correct?
        Ms. Giles. Yes.
        Mr. Kennedy. So the ZEV provision mitigates these harmful
    environmental effects by encouraging the development of clean
    technology. Is that right?
        Ms. Giles. That's correct.
        Mr. Kennedy. And a district court approved the settlement
    and said that it was substantively fair and would, quote,
    ``further the purpose of the Clean Air Act.'' Is that right?
        Ms. Giles. That's right.
        Mr. Kennedy. OK. So, Ms. Giles, EPA responded to Chairman
    Upton's request for more information on the settlement
    agreement in a November 18 letter. EPA's response explains,
    quote, ``The Zero Emission Vehicle investment requirement is
    not a Government program and is not an argument for any
    Government program. It is a remedy obtained from a Federal
    judge by DOJ on behalf of the EPA that partially resolves an
    enforcement of the case,'' end quote. So can you explain why
    this is not a Government program, or what it means that it does
    not, quote, ``augment any Government program''?
        Ms. Giles. So under the consent decree, it is VW's decision
    where and how to implement the investment for ZEV
    infrastructure. But they must do so within boundaries laid out
    by the consent decree. So EPA has a very limited role. We are
    not the deciders on the investment infrastructure. But we are
    going to oversee VW's conduct here to make sure that they fully
    and completely comply with the consent decree.
        Mr. Kennedy. And my understanding, Ms. Giles, is that those
    in the Zero Emission Vehicle industry are divided on this
    aspect of the settlement. Some feel like additional investment
    in the ZEV industry is welcome, and others fear that VW will be
    able to unfairly influence the market. Has EPA heard some of
    those reactions? And what's your response to those questions?
        Ms. Giles. We have heard from a wide variety of people with
    opinions about this aspect of the consent decree. I would say
    one thing that all of the commenters have agreed on is that
    investment in ZEV infrastructure is important and needed.
    They--I would say the other thing that is common to all the
    people we have heard from is that they each believe they have
    the best answer as to what VW should do for the ZEV
    investments. And we certainly encourage them to take advantage
    of the opportunity that they will have to provide those points
    of view to VW through the outreach effort.
        And I would say lastly, some of the folks we had heard from
    about these investments have taken the view that these
    additional investments will help everyone. As one commenter put
    it, a rising tide floats all boats.
        Mr. Kennedy. Right. Thank you for that.
        You note that in your November 18 letter to Chairman Upton
    that VW remains subject to all Federal and State laws regarding
    competitive behavior. I believe you say in your letter, quote
    ``If, in the course of making ZEV investments, Volkswagen
    unlawfully undermines competition in the market, it will be
    subject to enforcement under antitrust or other competition
    laws by appropriate State and Federal authorities responsible
    for overseeing such laws.'' So do I understand this to mean,
    Ms. Giles, that there are existing constraints outside the
    settlement agreement that prevent VW from engaging in an
    anticompetitive process?
        Ms. Giles. So the consent decree does provide that VW has
    to comply with all laws, Federal, State, and local, including
    laws about anticompetitive behavior. So if they engage in any
    such unlawful behavior, they would be subject to--held to
    account, in the same way any other company can.
        Mr. Kennedy. And what tools or mechanisms are in place to
    keep VW from pursuing unfair competitive practices when it
    comes to meeting those Zero Emission Vehicle obligations?
        Ms. Giles. Well, among other things, we have put a number
    of requirements in the consent decree: that their investments
    need to be brand neutral, and that their outreach must also be,
    and that they consider input, and they have an unprecedented
    level, really, of transparency of information that they are
    going to be required to provide to the public.
        Mr. Kennedy. Great. Thank you very much.
        And I yield back.
        Mr. Murphy. Thank you.
        I recognize Dr. Burgess for a second round, 5 minutes.
        Mr. Burgess. Thank you, Mr. Chairman. I just have a brief
    follow-up.
        I was able not to find in the settlement agreement, perhaps
    you can help me. Is there any stipulation or specificity as to
    where the power is purchased from that runs the charging
    station?
        Ms. Giles. No, there is not. That is part of VW's
    investment decision.
        Mr. Burgess. So different parts of country, there will be
    different availability of nuclear power, wind power, solar
    power. But the vast majority of it is going to be coal power.
    Is that correct?
        Ms. Giles. Whatever the power source is in the areas that
    they're installing the infrastructure.
        Mr. Burgess. Does the EPA have a general sense as to--
    assuming that the bulk of this power is generated from a coal--
    is purchased from a coal generation plant, what is the impact
    of that coal that is burned to produce the power to charge the
    vehicles? I mean, is there some correlation with--I don't even
    know how much it takes to charge a vehicle. So have you all
    done any study on this? Do you have a sense of what are the
    power requirements to charge one of these?
        Ms. Giles. Well, VW's going to be looking into that as part
    of their business investment, just like every other participant
    in the vehicle infrastructure market. So they will take
    advantage of the power that's available, and they'll make
    decisions about where those infrastructure investments best
    belong.
        Mr. Burgess. Well, but I assume that the EPA has had some
    experience with this. I mean, you guys have worked on this for
    a long time. Is there--is there a sense--I mean, we talk about
    an electric vehicle as being a Zero Emission Vehicle. Some
    emissions are encountered in the generation of the power,
    again, unless it's nuclear or solar or wind. But some emissions
    are encountered with the generation of the power. Do we have an
    idea of what the tradeoff is?
        Ms. Giles. Well, this enforcement settlement is about motor
    vehicles. The whole question of power generation is a different
    topic not covered under this consent decree.
        Mr. Burgess. OK. I can see I'm not going to get an answer.
    And, of course, this will probably come--this would be part of
    the--whatever the penalty phase is. But what is the cost per
    microliter of NOx that you would appropriately put into the
    environment? Does the EPA have a sense of that as what is the
    appropriate return for the penalty that's encountered, or the
    infraction that's encountered?
        Ms. Giles. There's a variety of factors laid out in the
    statute about what goes into determining what's an appropriate
    penalty. And that includes the seriousness of the violation,
    the egregiousness of the behavior, and many other factors as
    laid out in the--in the law.
        Mr. Burgess. Are there many metrics that you can share with
    us as far as estimates? I don't know even know what the unit is
    for nitrous oxide released into the environment. Is it
    microliters per day? Or is it micrograms or nanograms? I don't
    even know what it is. Can you share that with us?
        Ms. Giles. The amount of pollution is one factor, but it's
    only one factor that goes into the calculation of a penalty.
        Mr. Burgess. But do you know that information, I guess, is
    what I'm asking you?
        Ms. Giles. The only calculations that I mentioned before
    are the only calculations we've done with respect to the amount
    of NOx has been as part of our enforcement action, which is
    still ongoing, and which is relevant, as we just were
    discussing, to the calculation of penalty, and that matter is
    still ongoing.
        Mr. Burgess. But antecedent to this event, had EPA done--I
    mean, presumably you have done work--I mean, we've been
    concerned about NOx for a long time. So presumably you've done
    work on how much is generated, how much was generated from cars
    15 years ago, what are the improvements that have been made.
    Can you share any of that data with the subcommittee?
        Ms. McCabe. I'll take that one, Congressman. Certainly over
    the years, and in doing our clean air work and working with the
    States, we do lots of estimations and modeling to assess
    impacts and emissions from motor vehicles and from other
    sources of pollution, and we develop inventories over time that
    show improvements from various sectors of the economy----
        Mr. Burgess. I don't disagree with the improvement. I would
    stipulate that is a fact. But have we drilled down on the
    metrics on just what are the--and, again, I don't even know the
    units that you all talk about. Is it microliters or is it
    nanoliters? What is the metric that was used?
        Ms. McCabe. Generally, parts per billion or micrograms per
    cubic meter when we're talking about air pollution. NOx is an
    important pollutant because it's a precursor to ozone, which is
    measured in parts per billion, or to PM2.5 fine particles as
    measured in micrograms per cubic meter. And so we do have lots
    of information about those trends over time and would be happy
    to answer specific questions about that.
        Mr. Burgess. All right. Thank you, Mr. Chairman. I'll yield
    back.
        Mr. Murphy. Yes, I appreciate your line of questioning
    because we're just scratching our heads. So if someone has a
    violation of their individual car, and they're caught by the
    local law enforcement or the State, and says, ``Well, we know
    you violated the law. We're going to let you choose your
    penalty, and let us know when it's done. And by the way, you
    can supervise yourself. And it's OK if you open up a store and
    make money on the whole thing.'' It just doesn't make sense to
    us.
        Dr. Bucshon, you're recognized for 5 minutes.
        Mr. Bucshon. Thank you. Dr. Burgess, in the State of
    Indiana, 80 to 85 percent of electrical power is generated from
    coal, so when you plug in your electric car in Indiana, you
    have to take that into consideration.
        Ms. McCabe, Ms. Giles' response to the committee's November
    1 letter on the ZEV investment, she highlighted the stakeholder
    outreach VW's required to conduct under the terms of the
    partial consent decree has a means for ensuring transparency
    and accountability in VW's investment decisions. The response
    stated, and I quote, ``EPA intends to ensure Volkswagen conduct
    a robust process for public input and accept comment from
    relevant stakeholders before decisions are made. However, under
    the terms of the partial consent decree, VW is only required to
    seek input from States, municipal governments, federally
    recognized Indian tribes, and Federal agencies. And is under no
    obligation to act upon the suggestions it receives in the
    course of this outreach.'' So the question is: Are States,
    municipal governments, Indian tribes, and Federal agencies the
    only stakeholders relevant to EV infrastructure investments?
        Ms. McCabe. No. And VW, I believe, is conducting very broad
    outreach. They're making it broadly available so that any and
    all parties have the opportunity to weigh in.
        Mr. Bucshon. OK. Does the EPA expect VW to conduct outreach
    or accept input from, as you just said, other interested
    parties, even if they're not specifically required to under the
    terms of the partial consent decree? I guess you just answered
    that question. If so, how does the EPA intend to enforce this
    if your role is limited to determining whether the company
    satisfied the requirements of the partial consent decree?
        Ms. Giles. So I believe VW has recently announced their
    plan to make the input available to all who are interested to
    comment. So we are expecting that is what VW will do.
        Mr. Bucshon. OK. And if VW is not required to act on the
    comments received from the stakeholders, how does this
    stakeholder outreach provide any accountability? I mean, if
    people can comment but there's--it doesn't make any difference,
    I mean, it's fluffiness, right, that they took comments but
    they really don't have to--don't have to act on them or
    consider them, really.
        Ms. Giles. Well, the consent decree actually does say that
    not only do they have to solicit comment, but they have to
    consider it, and they have to describe in their plan how they
    considered the input.
        Mr. Bucshon. OK. Thank you.
        I yield back.
        Mr. Murphy. The gentleman yields back.
        I now recognize the ranking member of the committee, Ms.
    DeGette.
        Ms. DeGette. Thank you, Mr. Chairman. And thank you very
    much for your comity. The Democrats were all in a meeting with
    Vice President Biden this morning. And as often happens with
    the Vice President, he was extremely late. His excuse was that
    he was in a meeting with the President. So----
        Mr. Murphy. If I had a dime for every time I heard that.
        Ms. DeGette. I know. We were forced to accept it. So thank
    you very much, and thanks to our witnesses.
        I'll ask unanimous consent to put my opening statement into
    the record.
        Mr. Murphy. Without objection.
        [The prepared statement of Ms. DeGette appears at the
    conclusion of the hearing.]
        Ms. DeGette. And I also do have a few questions. I think we
    need to really put today's hearing into context. Let's remind
    ourselves that what VW did that necessitated legal action, and
    what the overall settlement was intended to accomplish.
        Ms. Giles, last year, it was discovered that VW installed
    defeat devices in various models that were emitting up to 40
    times the NOx levels allowed by law. Is that correct?
        Ms. Giles. That's correct.
        Ms. DeGette. And also, there were about half a million of
    these vehicles that were outfitted with these defeat devices,
    many of which are still on the road today. Is that correct?
        Ms. Giles. That's right.
        Ms. DeGette. Now NOx, one of the reasons why we regulated
    it is, it's a harmful pollutant to human health. Is that
    correct?
        Ms. Giles. Yes.
        Ms. DeGette. And, Ms. McCabe, you're nodding also.
        Ms. McCabe. Yes.
        Ms. DeGette. So here's my understanding of the partial
    settlement with VW. After discovering this massive cheating
    scheme, the Obama administration brought multiple parties to
    the table, including VW, the State of California, and the
    Federal Government, and they reached a partial settlement. This
    was approved by the Federal judge in October, and it will
    result in VW spending nearly $15 billion over the next decade.
    So I want to go through some of the key components of this
    agreement.
        Ms. Giles, the settlement requires that VW remove from
    commerce or modify at least 85 percent of the 2.0-liter
    vehicles that are still polluting the air. Is that correct?
        Ms. Giles. That's right. VW is required to offer all the
    consumers buyback or a fix, if one is approved, and damages for
    consumer harm.
        Ms. DeGette. And that part of the settlement which is
    designed to get the cars off the road and also to make
    consumers whole, that's the bulk of the deal. But that's going
    to cost about $10 billion to VW to accomplish that, correct?
        Ms. Giles. That's the estimated amount, yes.
        Ms. DeGette. And the other provisions of the settlement are
    intended to try to reverse the damage these vehicles caused to
    the environment. One provision mandates that VW spend nearly
    $2.7 billion to fund a mitigation trust fund to mitigate the
    excess air pollution from the 2-liter vehicles. And the other
    remaining part of the settlement requires that VW invest $2
    billion into Zero Emission Vehicles. Is that correct, Ms.
    Giles?
        Ms. Giles. That's right.
        Ms. DeGette. So the bulk of the settlement is either
    dedicated to fixing or replacing the cars, to stop the ongoing
    harm, and then about a third of the settlement is designed to
    mitigate or reverse the damage that these vehicles have already
    caused, or will continue to cause. That's the crux of the
    agreement. Is that right?
        Ms. Giles. Yes. It is.
        Ms. DeGette. That seems pretty reasonable to me.
        And, Mr. Chairman, I'm really happy that you're having this
    hearing, because I think we should have meaningful oversight to
    ensure that VW adheres to the terms of the settlement. I've got
    to say, you know this, Mr. Chairman, but when this first broke,
    I went out to one of my local dealerships in Denver. And I
    looked at these cars and I saw the--I mean, I'm no mechanic,
    but I saw what the situation looked like, and I was dubious at
    that time about what, if anything, could be done both to
    mitigate the harm to the consumers, and also to mitigate the
    damage to the environment.
        So I think this is a pretty good compromise. And we
    should--we should continue to oversee this to make sure that
    both that the consumers are made whole and that the environment
    is protected.
        I think this is probably our last hearing in this Congress,
    Mr. Chairman. And I just want to say we've had a lot of
    productive conversations, particularly among our mental health
    hearings that we had earlier in this Congress. And I know we
    worked together, sometimes in a little more contentious way
    than others. But in the end, we were able to work on that
    mental health bill that became part of 21st Century Cures. And
    I just want to thank you for your chairmanship. I don't know
    what you're going to be doing in the next Congress. But I've
    enjoyed, and I've also--I know my Members aren't here, but we
    have the A team over here on this side of the aisle, and we've
    had a good session. So thank you, Mr. Chairman. I yield back.
        Mr. Murphy. Thank you for your comments. I also want to say
    that the work you and Chairman Upton did on the 21st Century
    Cures is remarkable but predictable in terms of dedication that
    took place and the bipartisan work in this full committee that
    both the mental health bill and that bill came through this
    committee unanimous. And we're going to see the Senate vote on
    it tonight. And I think we'll see a strong vote there and on to
    the President's desk. It's going to make a big difference. And
    a lot of that stemmed out of the work of this subcommittee. So
    I thank you for your great work.
        Mr. Flores, you're recognized for 5 minutes.
        Mr. Flores. Thank you, Mr. Chairman.
        Ms. Giles, Ms. McCabe, you've talked anecdotally about the
    comments of the other parts of the ZEV industry with respect to
    the ZEV investment by VW. What detailed analysis did the EPA do
    to take a market that's just starting, and then to jam $2.7
    billion into it. What detailed analysis did the EPA do to see
    what impact that would have on the market?
        Ms. Giles. So you're referring to the ZEV investment?
        Mr. Flores. Correct.
        Ms. Giles. So the $2 billion ZEV investment, what we have
    heard from other people that are in this market----
        Mr. Flores. What detailed analysis did you do?
        Ms. Giles. We did not do a detailed----
        Mr. Flores. OK. That's fine. You didn't do a detailed
    analysis.
        Ms. Giles. Our purpose----
        Mr. Flores. So my question is this: Does it make sense to
    rigorously study this important question before requiring a
    defendant accused of cheating customers and the U.S. Government
    to flood a growing market with $2 billion of capital?
        Ms. Giles. So we--as you are aware, we put a number of
    provisions in this consent decree that are designed to put
    sidebars on VW's behavior----
        Mr. Flores. No, that's not the question. The question is:
    Doesn't it make sense to do some sort of detailed analysis on
    the market that you're getting ready to impact? Does it or does
    it not?
        Ms. Giles. We think that it makes sense to have VW, who is
    a player in this market, to make investment decisions
    consistent----
        Mr. Flores. So the cheating company gets to make all the
    investment decisions, and the EPA says, Oh, well, we got some
    anecdotal evidence. We didn't do any detailed study. We're
    going to just impose this on the market and just hope it turns
    out OK. Hope that VW does it a good way.
        Ms. Giles. That is not how we perceived it.
        Mr. Flores. Well, that's the way the American people are
    going to perceive it.
        All right. Moving on, EPA is currently conducting midterm
    evaluation on the fuel economy and emission standards for light
    duty vehicles. These so-called CAFE and GHG standards require
    annual increases in fuel efficiency reaching 54.5 miles per
    gallon by 2025. A nearly doubling over current fuel efficiency.
    At a September hearing before this committee, you informed us
    that these standards could be met without a substantial
    increase in the electrification of the Nation's vehicle fleet.
    Is that correct?
        Ms. McCabe. Yes. I did.
        Mr. Flores. OK. Just last week your agency issued its
    proposed conclusions to its midterm evaluation of these
    standards. And in it, your agency essentially says that
    automakers are on track to meet the greenhouse gas standards,
    and that no relaxation of targets in the outyears is necessary.
    Is that also correct?
        Ms. McCabe. That's correct.
        Mr. Flores. OK. So if the EPA believes that greenhouse gas
    standards for vehicles can be met without more electric
    vehicles, then what is the purpose of the electric vehicle
    provisions in the VW settlement?
        Ms. McCabe. Well, the greenhouse gas standards and the fuel
    economy standards set in 2012, projected out until 2025, are
    reasonably affordable and----
        Mr. Flores. Yes. We all got that.
        Ms. McCabe. OK. That doesn't mean that that's all and
    everything that the transportation sector or that the
    automotive industry intends to do. And there's a great desire,
    both in the automotive industry, and in places like California
    and other places around the country, for increasing technology
    innovations in the electric vehicle space and other zero
    emitting vehicles. And so it's entirely appropriate for those
    activities and those technologies to continue to develop, even
    if they may well go beyond----
        Mr. Flores. OK. All right.
        Ms. McCabe [continuing]. The reductions achieved by the
    2012 rule.
        Mr. Flores. And so EPA stated in that same September
    hearing that automakers are meeting all standards--meeting
    standards and will continue to meet them thanks to efficiency
    improvements and conventional internal combustion engines
    vehicles. And they expect these improvements to continue. Yet
    the VW settlement clearly forces VW in the direction of
    investments in electrification. So is there a risk that the
    agency is simultaneously pushing automakers in two directions
    at once, and that splitting company resources between the
    internal combustion engine efficiency improvements and
    electrification investments may not be the best long-term
    strategy?
        Ms. McCabe. I don't see that this puts the automakers in a
    difficult position at all. They're moving forward with advanced
    gasoline engines. They're moving forward with investments in
    electric vehicles. And the market wants both of those.
        Mr. Flores. OK. Thank you, Mr. Chairman. I yield back.
        Mr. Murphy. The gentlemen yields back. I now recognize Mr.
    Tonko for 5 minutes.
        Mr. Tonko. Thank you, Mr. Chair.
        And welcome to our guests, and thank you for your good
    work.
        As you know, VW was accused of installing cheating software
    on more than half a million of its vehicles. This has resulted
    in harms to both the environment and consumers in upstate New
    York and, indeed, across the country. Owners of VW's
    noncompliant vehicles are now stuck with cars they believed to
    be clean diesel, or lower-emitting vehicles. Now these
    consumers' vehicles have to be modified or taken off the road
    altogether. The rest of the public has also been harmed by the
    excessive pollutants these vehicles put into the air.
        Ms. Giles, Appendix D of the partial settlement requires VW
    to establish a $2.7 billion environmental mitigation trust
    fund, which will be administered by an independent trustee. Is
    that correct?
        Ms. Giles. That is correct.
        Mr. Tonko. Ms. Giles, the EPA has stated that the purpose
    of this fund is to support actions that will replace certain
    diesel emission sources with cleaner technology. This will
    reduce excess NOx emissions by the violating 2.0-liter cars.
        So, Ms. Giles, can you give us more information on the
    reasoning behind this mitigation trust fund?
        Ms. Giles. Yes. The mitigation trust fund was set up, as
    you mentioned, for the purpose of reducing NOx emissions in the
    future, and it will--it sets up a fund that is administered by
    a trustee, and allocates funds to individual States for them to
    make decisions about what types of pollution reductions make
    sense for their State.
        So they will apply to the trustee for funding on a public
    process with a lot of transparency, and the trustee will make
    the decision.
        Mr. Tonko. So, in your opinion, is there a greater value
    that these environmental mitigation projects have than simply
    having VW write a large check to the U.S. Treasury?
        Ms. Giles. Absolutely. So the purpose of mitigation is to
    make up for the pollution that they caused by their violations.
    And we think the mitigation trust, combined with the provisions
    for ZEV and the provisions for remediating the cars and getting
    the polluting cars off the road, will achieve that objective.
        Mr. Tonko. I understand that all 50 States, the District of
    Columbia, Puerto Rico, and federally recognized tribes, can
    potentially qualify for mitigation projects. Is that correct?
        Ms. Giles. That is correct. They have the election, whether
    they wish to participate or not.
        Mr. Tonko. OK. Thank you. And, Ms. Giles, each
    participating beneficiary will receive an allocation of funds
    from that total, $2.7 billion, based on the number of
    registered illegal VW vehicles within the boundaries of the
    beneficiary. Is that correct?
        Ms. Giles. That is correct. And so in the case of New York,
    that's about $117 million.
        Mr. Tonko. So a State like New York then would be--which is
    likely more impacted by noncompliant vehicles than a small
    State, would receive more money. Is that correct?
        Ms. Giles. The money is, as you said, roughly allocated
    based on where the unlawful vehicles are registered.
        Mr. Tonko. And, Ms. McCabe, I understand that possible
    mitigation projects could include, for example, efforts to
    reduce heavy-duty diesel sources near population centers, or
    even heavy-polluting school and transit buses. Is that correct?
        Ms. McCabe. That is correct.
        Mr. Tonko. OK. And what other projects might we expect to
    see qualify for some of these moneys?
        Ms. McCabe. Well, the document lays it out very
    specifically, so that this will be straightforward for the
    States to implement and for the trustee to oversee. So projects
    such as school buses, heavy-duty vehicles, equipment in ports
    that emit large amounts of NOx, these are very common sorts of
    equipment that can take a lot of resources to replace or
    retrofit. So these will have tremendous benefits in terms of
    reducing NOx.
        Mr. Tonko. And to either of you, when can States begin
    applying for this money and what is that process going to look
    like?
        Ms. Giles. As soon as the trustee is selected and the trust
    documents are finalized, the beneficiaries can register. And
    then there's a process laid out in the consent decree to begin
    applying for funding.
        Ms. McCabe. And, Congressman, if I might add----
        Mr. Tonko. Sure.
        Ms. McCabe [continuing]. We've been doing a fair amount of
    outreach to our State partners, so that they understand and can
    ask all the questions that they might have about the process,
    so they don't miss any opportunities and they're ready.
        Mr. Tonko. Have you had any interaction, any feedback from
    the States, or any of the beneficiaries in terms of the process
    you're doing, you're incorporating?
        Ms. Giles. Yes. States have been very supportive of the
    amount of information we're providing and the ability to ask
    questions and to fully understand what their opportunities are.
        Mr. Tonko. And, Ms. Giles, earlier you were asked about
    conducting analyses as a prerequisite to dealing with this
    issue, and I got the sense you had more to share with us.
        Ms. Giles. I did. So our intention on this was to put
    boundaries around what the behavior is that VW can engage in as
    part of the ZEV investment, so that we do protect the market.
    So the requirement to solicit input, the requirement to be very
    transparent, to collect and make data available, to be brand-
    neutral, to update the plan, all of these requirements are
    going to be constraints on VW; and EPA is going to be watching
    very closely to make sure that VW does comply with all of those
    requirements.
        Mr. Tonko. Well, let me conclude by thanking EPA and this
    administration for its outstanding work to bring this matter to
    a conclusion, and make both the public and the environment
    whole.
        And with that, Mr. Chair, I yield back.
        Mr. Murphy. Thank you. The gentleman yields back.
        I recognize the gentleman from Oklahoma, Mr. Mullin, for 5
    minutes.
        Mr. Mullin. Thank you, Mr. Chairman.
        And thank you both for being here. Obviously, we wish
    neither one of you guys had to be here with Volkswagen, and we
    understand the circumstances we're in. But, obviously, we're
    here to discuss, you know, about the penalties that are being
    assessed, and how they're being assessed. And I don't know
    which one wants to take the answer, so I'll just kind of ask
    it.
        The authority to assess the ZEV, I guess--is that how we're
    pronouncing it?--penalty was based, according to you-all's
    testimony about the Clean Air Act, that you guys had the
    authority to assess it through the Clean Air Act. Is that
    correct?
        Ms. Giles. That's correct. But let me just clarify. It's
    not a penalty. What we have done under this partial consent
    decree is to fashion a remedy for the harms caused by VW's
    violations of the Clean Air Act.
        Mr. Mullin. So that would be considered a fine?
        Ms. Giles. No. The penalty portion of the case is not yet
    completed. All that has been done so far is what we call the
    injunctive relief. So what does the company have to do to
    address the cars on the road and to compensate for the harms
    and pollution it caused through its violations?
        Mr. Mullin. So I guess the question that I have then is,
    where does that authority come from through the Clean Air Act?
    I mean, that's kind of a broad explanation that you get the
    authority through the Clean Air Act. I guess, I'm kind of
    curious of how Congress has delegated you to do that through
    the Clean Air Act?
        Ms. Giles. So the Clean Air Act lays out specific
    requirements, and EPA is tasked with enforcing.
        Mr. Mullin. What are those specific requirements?
        Ms. Giles. Requirements to meet the standards that are set
    forth for cleaner cars in this particular instance.
        Mr. Mullin. But I mean where--I get that, but where does it
    give you authority to have such a massive penalty or fine, or
    whatever you want to call it, to VW? I'm not saying they're in
    the right or the wrong. I'm not defending VW's actions. I'm
    just concerned here that the EPA is maybe reaching a little far
    underneath the powers that were delegated to you by Congress,
    and I just--I don't want to use a broad sweep here, and I'm
    really trying to understand where you're coming from.
        And, by no means, think that I'm trying to ask you a got-
    you question or anything. I really am--under what I've read,
    the letter that you responded back to this committee, it was
    very vague, and I'm not understanding exactly still yet where
    you come up with the authority to be able to assess whatever
    you want to call this. But either way, it's a fine or it's a
    penalty, because it's to remedy their emissions that they lied
    about, and it's somehow supposed to offset that, according to
    your letter.
        Ms. Giles. Well, the DOJ filed a complaint on our behalf,
    which lays out the violations of the Clean Air Act that VW
    committed by its conduct in this matter. And the Clean Air Act
    also gives EPA the authority to take enforcement actions to
    remedy violations of the Clean Air Act, and that's what we've
    done here.
        Mr. Mullin. But through the ZEV Act, to say that you have a
    $2 billion deal where they're supposed to invest in
    infrastructure, and then a $2 billion fine that was supposed to
    equally offset--according to the provisions of the settlement,
    that's intended to address the adverse effects of VW's
    violation on the quality by supporting the technologies that
    are actually clean. The first $2 billion was supposed to fully
    offset those emissions.
        The second $2 billion for the infrastructure investment,
    what is that offsetting?
        Ms. Giles. So the settlement contains three elements to
    remedy the violations of VW here: First is getting illegal cars
    off the road; the second is making up for the pollution they
    caused; and the third is to invest in clean vehicle technology
    to address the harms from selling dirty vehicles, claiming they
    were clean.
        Mr. Mullin. That third one is the one that I'm having a
    problem understanding. Where did we delegate you the authority
    to say that they have to invest in that technology?
        Ms. Giles. The authority is to enforce the terms of the
    Clean Air Act and to fashion remedies that address violations.
        Mr. Mullin. That is without question. But to say that the
    $2 billion is supposed to invest in technology is specifically
    what you said. The third was to invest in technologies. Where
    does the Clean Air Act give you authority to force a company to
    invest in clean technology? I don't think you find that in the
    Clean Air Act.
        Ms. Giles. What the Clean Air Act does is gives us
    authority to fashion remedies to fit the circumstances of each
    individual case.
        Mr. Mullin. Remedies. But investing in an infrastructure is
    totally different, and I think that's where we are outside the
    scope. And I appreciate what you guys are trying to do here,
    but I really feel like that this is outside the EPA's authority
    to be able to force a company to invest in clean technology.
    That's over and beyond what the Clean Air Act authority gave
    you.
        I yield back, Mr. Chairman.
        I'm sorry, I'm out of time.
        Mr. Murphy. The gentleman is out of time, yes.
        Ms. DeGette, you had a quick comment?
        Ms. DeGette. I just want to say a couple quick comments in
    closing. Number one, this was not the EPA forcing VW to do
    this. It was part of a settlement that both parties agreed on.
        Correct, Ms. Giles?
        Ms. Giles. That is correct.
        Ms. DeGette. So VW agreed this would be something they
    could do proactively to begin to mitigate this.
        Ms. Giles. That's right.
        Ms. DeGette. Mr. Chairman, I just want to--now that we do
    have these two witnesses today, I already told you about how I
    enjoyed working with you and the committee this year.
        I also want to tell these two EPA witnesses that I think
    we've made extreme advances with the EPA the last few years.
    And Congress hasn't always been a willing partner, but I think
    that creative thinking and cooperation is really what we need,
    moving forward, in making sure that we enforce our
    environmental regulations.
        When I talk to my constituents, what they want is they want
    clean air, they want clean water, they want safe drinking
    water. And your agency always gets vilified, but, actually,
    you're trying to achieve those goals for the American people. I
    just want to say thank you.
        And I yield back. Thank you.
        Ms. Giles. Thank you.
        Mr. Murphy. The gentlelady yields back.
        And we all share those concerns too.
        Let me just say this is our last hearing of this session
    for this Subcommittee on Oversight and Investigations. I want
    to thank all the members of this committee on both sides of the
    aisle for their dedication. We have had some remarkable
    hearings, provided some tremendous oversight, and shined a
    bright light on many Federal agencies and companies out there,
    and I think that's been to the great benefit of the American
    people. It's been an honor to serve as your chairman.
        In conclusion, I ask unanimous consent that the contents of
    the document binder be introduced into the record and authorize
    staff to make any appropriate redactions. Without objection,
    the documents will be entered into the record with any
    redactions the staff determines are appropriate.
        [The information appears at the conclusion of the hearing.]
        And I want to thank the witnesses today and the Members
    that are here that have been part of today's hearing. And I
    remind Members they have 10 business days to submit questions
    for the record. We'll have some other questions for the record
    we'll submit to you, and I ask the witnesses all agree to
    respond promptly to those questions.
        And, with that, this committee is now adjourned.
        [Whereupon, at 12:17 p.m., the subcommittee was adjourned.]
        [Material submitted for inclusion in the record follows:]

                 Prepared statement of Hon. Frank Pallone, Jr.

        This is one of the final hearings of the Energy and
    Commerce Committee in the 114th Congress. Over the last 2
    years, we have worked together on several large bipartisan
    legislative victories, from a permanent SGR fix to TSCA reform
    to 21st Century Cures. Unfortunately, I do not believe the
    Republican majority on this committee has properly prioritized
    many of the environmental challenges that plague our Nation and
    our planet.
        Today, we have before us two witnesses from the
    Environmental Protection Agency (EPA). I would like to
    congratulate both of you on the significant and meaningful
    environmental accomplishments of the EPA and the Obama
    administration. And I regret that the Republican majority has
    not often supported you in these endeavors.
        I would like to build upon what others have said about
    these environmental achievements:
        In 2015, President Obama and the EPA announced the Clean
    Power Plan, the first-ever national carbon pollution standards
    for power plants. The Plan armed states with flexible, cost-
    effective tools to cut carbon pollution from power plants.
    These efforts could prevent thousands of premature deaths and
    tens of thousands of childhood asthma attacks by reducing air
    pollution.
        In addition to efforts to reduce air pollution from power
    plants and vehicles, the Obama administration has updated
    drinking water standards and taken steps to ensure both urban
    and rural communities have access to clean drinking water. I'd
    like to see us do more in this area by updating the Safe
    Drinking Water Act.
        The Obama administration played a central role in the
    historic Paris Agreement. The strong international support for
    this agreement demonstrates the commitment to fight global
    climate change, adapt to new conditions and to accelerate the
    shift to a clean energy economy. In addition to this agreement,
    the U.S. also formed partnerships with a number of nations to
    reduce global greenhouse gas emissions and transition to
    renewable energy sources. This includes an agreement with China
    for both countries to reach targets to reduce greenhouse gas
    emissions in the coming decades. The U.S. has also dedicated
    funds to reducing carbon pollution and strengthening resilience
    in developing nations.
        The Obama administration also set new energy efficiency
    standards for a variety of appliances and equipment. These will
    result in significant cuts to consumers' electricity bills and
    will lead to a reduction of more than two billion metric tons
    of carbon emissions by 2030.
        And then there's the topic we are here to discuss today:
    the settlement agreement for Volkswagen's two-liter vehicles.
    VW has committed to removing harmful vehicles from the road or
    reducing their emissions by 2019. The company must also fund a
    $2.7 billion mitigation trust fund and invest $2 billion in
    Zero Emission Vehicle-charging infrastructure and in the
    promotion of Zero Emission Vehicles. This agreement holds VW
    accountable for its Clean Air Act violations and secures
    significant investments for clean air and clean cars.
        This list is just a small sample of the environmental
    accomplishments we have seen in the last 8 years. These efforts
    are improving air quality, reducing childhood asthma attacks,
    and reducing premature deaths. They are also creating jobs for
    American workers and new economic opportunities for American
    businesses.
        A responsible Congress and President would take advantage
    of this forward progress and continue to build on these
    efforts. Unfortunately, I fear the next administration will not
    build upon that progress, but try to reverse much of it to the
    detriment of public health and the environment.
        The President-elect campaigned on the promises to do away
    with the Clean Power Plan and to withdraw from the Paris
    Agreement. He also said that he plans to dismantle
    environmental rules around coal power, open public lands to oil
    and gas drilling, and weaken fuel economy standards. Finally,
    he has vowed to abolish the EPA, or at least, dramatically
    limit its ability to regulate.
        Unfortunately, I fear that we cannot count on the
    Republican-led Congress to work with us to stop these
    destructive plans. House Republicans have passed bills to cut
    EPA funding, cut research funding for renewable energy, and
    block implementation of rules that would aid our environment
    and public health. The Senate Republicans have similarly
    proposed legislation to cut EPA's budget and block critical
    environmental regulations.
        This is alarming. Every day, we see the signs that climate
    change is harming the world around us. And the longer we fail
    to act, the worse the consequences will be. According to a
    Gallup survey earlier this year, concern in the U.S. about
    global warming is at an 8-year high.
        We need to send a clear and unambiguous message that we are
    committed to working with the rest of the world to combat
    climate change. Such a commitment would help us leave our
    children a healthy and sustainable planet, and help us embrace
    the deployment of newer, cleaner and cheaper technology that
    will grow our energy economy.
        There is so much work to be done, and we cannot afford to
    take steps backwards.
        I again thank both of our witnesses for being here today
    and for their longtime dedication to protecting our
    environment. We need committed public servants like you in this
    fight.
        I yield back.

                    Prepared statement of Hon. Diana DeGette

        Thank you, Mr. Chairman.
        This is the last EPA hearing this committee will hold with
    the Obama administration.
        The EPA has not always received the support it deserves
    from Congress. Even as the Agency has worked to fulfil its
    mission of protecting human health and the environment, it has
    faced criticism and attack.
        Despite sometimes unfair opposition, EPA has commendably
    responded to unprecedented environmental challenges facing the
    country and the planet. I would like to highlight some of the
    agency's accomplishments. Under the Obama administration:
         The EPA has helped bring more than 190 countries
    together to adopt the Paris Agreement, now considered the most
    ambitious climate change agreement in history;
         The EPA has set new standards to reduce mercury
    and other pollutants from industrial air pollution, including
    boilers, cement plants, and large waste incinerators;
         The EPA has enacted the first-ever fuel economy
    standards for medium and heavy-duty trucks and put in place new
    fuel standards for passenger vehicles by the year 2025;
         And, the EPA has developed the Clean Power Plan,
    which will play a major role in reducing carbon pollution and
    enhancing air quality.
        I would like to thank both of our witnesses for your
    agency's work.
        I would also like to commend both of you for your work on
    the Volkswagen settlement agreement, which we are here to
    discuss today. I am supportive of efforts to scrutinize this
    agreement and ensure that VW is held accountable, and I want to
    ensure that is the purpose of today's hearing.
        We are here because of VW's decision to cheat. For years,
    VW put tens of thousands of cars on the road that emitted
    nearly 40 times the NOx levels allowed by law. VW's decision
    hurt not only its own customers, who thought they were buying
    clean cars, but all Americans now faced with dirtier air.
        The California Air Resources Board, the EPA, and the
    Department of Justice quickly brought action against VW. Their
    aim was to both make VW's customers whole and to mitigate the
    effect that these cars are having on the environment.
        The Obama administration recently reached a partial
    settlement with VW to accomplish a mitigation strategy. The
    settlement, which addresses only 2.0-liter diesel vehicles,
    requires that VW spend nearly $15 billion to settle allegations
    of cheating emission tests and deceiving customers. It also
    orders VW to remove from commerce in the United States or
    perform an approved emissions modification on the vast majority
    of the affected vehicles. Finally, it requires VW to designate
    a $2.7 billion mitigation trust fund to pay for NOx reduction
    projects and invest $2 billion in charging infrastructure for
    Zero Emission Vehicles.
        I applaud EPA for its work. They have taken meaningful
    steps to make consumers whole and reverse the harm that was
    caused to the environment.
        As I said, I support efforts to investigate this
    settlement. But I believe we cannot fully understand the issues
    if VW is not represented here. They were the perpetrators of
    the fraud that necessitated this action in the first place. We
    need to hear how they will be following through on their new
    commitments to do right by their customers and the American
    people. I would encourage the committee to hold a future
    hearing with VW at the table, possibly joined by some other
    companies and individuals affected by this settlement.
        I want to conclude with a message about the next Congress.
    As we are all aware, the President-elect has not been
    supportive of the EPA's mission. He has promised to abolish the
    agency and to back out of global treaties to reduce greenhouse
    gases. He has declared climate change a hoax.
        These statements should give us pause. There is undeniable
    proof of climate change. Our planet is getting hotter. Natural
    disasters are more frequent and more severe. Sea ice is at
    record lows. We need a strong EPA to address these challenges
    and to work with our international partners to ensure the whole
    world takes these problems seriously.
        So as this year winds down and we look toward the 115th
    Congress, it is incredibly important that this committee
    support the EPA in its critical role. This committee has the
    tradition of working in a bipartisan way to work in the public
    interest. This should include addressing environmental
    challenges before it's too late. I hope we can work together to
    accomplish this mission.
        I thank our witnesses for being here today and for your
    agency's work. I applaud your work on this settlement to ensure
    consumers and the environment are protected. And more broadly,
    I thank the Obama administration as a whole for its work in
    prioritize environmental issues and make the world safer and
    healthier for future generations.
        Thank you.

                Prepared statement of Hon. Janice D. Schakowsky

        Over a year ago, this subcommittee held a hearing after
    revelations that Volkswagen had cheated on emissions testing
    and defrauded American consumers. I had several questions in
    that hearing for Michael Horn of Volkswagen about how quickly
    its cars would be repaired and how the company would make its
    customers whole again.
        I would like to follow up on those questions today.
    Unfortunately, I cannot because--while this is a hearing on a
    settlement in the Volkswagen cheating scandal--no one from
    Volkswagen is here to testify. In fact, of the four parties in
    the settlement (Volkswagen, Department of Justice, California
    Air Resources Board, and Environmental Protection Agency), the
    Republican majority only invited the EPA.
        This should not be our last hearing on the Volkswagen
    scandal, and I hope the relevant parties will be better
    represented in future hearings.
        Cheating on emissions test has real consequences for
    Americans' health. We must hold Volkswagen to account. I want
    to thank EPA for its ongoing efforts to mitigate the problems
    caused by Volkswagen vehicles.

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