[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
                           
                           
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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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