[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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