[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
VOLKSWAGEN'S EMISSIONS CHEATING ALLEGATIONS: INITIAL QUESTIONS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
OCTOBER 8, 2015
__________
Serial No. 114-85
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
___________
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COMMITTEE ON ENERGY AND COMMERCE
FRED UPTON, Michigan
Chairman
JOE BARTON, Texas FRANK PALLONE, Jr., New Jersey
Chairman Emeritus Ranking Member
ED WHITFIELD, Kentucky BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois ANNA G. ESHOO, California
JOSEPH R. PITTS, Pennsylvania ELIOT L. ENGEL, New York
GREG WALDEN, Oregon GENE GREEN, Texas
TIM MURPHY, Pennsylvania DIANA DeGETTE, Colorado
MICHAEL C. BURGESS, Texas LOIS CAPPS, California
MARSHA BLACKBURN, Tennessee MICHAEL F. DOYLE, Pennsylvania
Vice Chairman JANICE D. SCHAKOWSKY, Illinois
STEVE SCALISE, Louisiana G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio DORIS O. MATSUI, California
CATHY McMORRIS RODGERS, Washington KATHY CASTOR, Florida
GREGG HARPER, Mississippi JOHN P. SARBANES, Maryland
LEONARD LANCE, New Jersey JERRY McNERNEY, California
BRETT GUTHRIE, Kentucky PETER WELCH, Vermont
PETE OLSON, Texas BEN RAY LUJAN, New Mexico
DAVID B. McKINLEY, West Virginia PAUL TONKO, New York
MIKE POMPEO, Kansas JOHN A. YARMUTH, Kentucky
ADAM KINZINGER, Illinois YVETTE D. CLARKE, New York
H. MORGAN GRIFFITH, Virginia DAVID LOEBSACK, Iowa
GUS M. BILIRAKIS, Florida KURT SCHRADER, Oregon
BILL JOHNSON, Ohio JOSEPH P. KENNEDY, III,
BILLY LONG, Missouri Massachusetts
RENEE L. ELLMERS, North Carolina TONY CARDENAS, California
LARRY BUCSHON, Indiana
BILL FLORES, Texas
SUSAN W. BROOKS, Indiana
MARKWAYNE MULLIN, Oklahoma
RICHARD HUDSON, North Carolina
CHRIS COLLINS, New York
KEVIN CRAMER, North Dakota
7_____
Subcommittee on Oversight and Investigations
TIM MURPHY, Pennsylvania
Chairman
DAVID B. McKINLEY, West Virginia DIANA DeGETTE, Colorado
Vice Chairman Ranking Member
MICHAEL C. BURGESS, Texas JANICE D. SCHAKOWSKY, Illinois
MARSHA BLACKBURN, Tennessee KATHY CASTOR, Florida
H. MORGAN GRIFFITH, Virginia PAUL TONKO, New York
LARRY BUCSHON, Indiana JOHN A. YARMUTH, Kentucky
BILL FLORES, Texas YVETTE D. CLARKE, New York
SUSAN W. BROOKS, Indiana JOSEPH P. KENNEDY, III,
MARKWAYNE MULLIN, Oklahoma Massachusetts
RICHARD HUDSON, North Carolina GENE GREEN, Texas
CHRIS COLLINS, New York PETER WELCH, Vermont
KEVIN CRAMER, North Dakota FRANK PALLONE, Jr., New Jersey (ex
JOE BARTON, Texas officio)
FRED UPTON, Michigan (ex officio)
(ii)
C O N T E N T S
----------
Page
Hon. Tim Murphy, a Representative in Congress from the
Commonwealth of Pennsylvania, opening statement................ 1
Prepared statement........................................... 3
Hon. Diana DeGette, a Representative in Congress from the State
of Colorado, opening statement................................. 4
Prepared statement........................................... 6
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, opening statement.................................... 7
Prepared statement........................................... 8
Hon. Frank Pallone, Jr., a Representative in Congress from the
State of New Jersey, opening statement......................... 10
Prepared statement........................................... 11
Witnesses
Michael Horn, President and Chief Executive Officer, Volkswagen
Group of America............................................... 13
Prepared statement........................................... 16
Answers to submitted questions............................... 104
Christopher Grundler, Director, Office of Transportation and Air
Quality, Office of Air and Radiation, Environmental Protection
Agency......................................................... 54
Phillip Brooks, Director, Office of Civil Enforcement, Air
Enforcement Division, Office of Enforcement and Compliance
Assurance, Environmental Protection Agency \1\
Prepared statement \2\....................................... 57
Answers to submitted questions \3\........................... 121
Submitted Material
Subcommittee memorandum.......................................... 77
Comments by Vermont residents regarding Volkswagen cheating
allegations, undated, submitted by Mr. Welch................... 83
Article of September 28, 2015, ``Who's Minding the Cars?,'' by
Kellie Mejdrich, CQ Weekly, submitted by Ms. Castor............ 88
Letter of September 18, 2015, from the Air Resources Board to
Volkswagen AG, et al., submitted by Mr. Murphy................. 89
Letter of September 18, 2015, from the Environmental Protection
Agency to Volkswagen AG, et al., submitted by Mr. Murphy....... 92
Letter of September 29, 2015, from Mr. Upton, et al., to Michael
Horn, President and Chief Executive Officer, Volkswagen Group
of America, submitted by Mr. Murphy............................ 98
Letter of September 29, 2015, from Mr. Upton, et al., to Gina
McCarthy, Administrator, Environmental Protection Agency,
submitted by Mr. Murphy........................................ 101
----------
\1\ Mr. Brooks did not make an oral statement for the record.
\2\ Mr. Grundler and Mr. Brooks submitted a joint written
statement for the record.
\3\ The Environmental Protection Agency answered questions
submitted to Mr. Grundler and Mr. Brooks.
VOLKSWAGEN'S EMISSIONS CHEATING ALLEGATIONS: INITIAL QUESTIONS
----------
THURSDAY, OCTOBER 8, 2015
House of Representatives,
Subcommittee on Oversight and Investigations,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:01 a.m., in
room 2123 Rayburn House Office Building, Hon. Tim Murphy
(chairman of the subcommittee) presiding.
Members present: Representatives Murphy, McKinley, Barton,
Burgess, Blackburn, Griffith, Bucshon, Flores, Brooks, Mullin,
Collins, Upton (ex officio), DeGette, Schakowsky, Castor,
Tonko, Yarmuth, Clarke, Kennedy, Green, Welch, and Pallone (ex
officio).
Staff present: Gary Andres, Staff Director; Sean Bonyun,
Communications Director; Leighton Brown, Press Assistant;
Rebecca Card, Assistant Press Secretary; Karen Christian,
General Counsel; James Decker, Policy Coordinator, Commerce,
Manufacturing, and Trade; Andy Duberstein, Deputy Press
Secretary; Brittany Havens, Legislative Associate, Oversight;
Ben Lieberman, Counsel, Energy and Power; Paul Nagle, Chief
Counsel, Commerce, Manufacturing, and Trade; John Ohly,
Professional Staff Member, Oversight and Investigations; Tim
Pataki, Professional Staff Member; Mark Ratner, Policy Advisor
to the Chairman; Chris Santini, Policy Coordinator, Oversight
and Investigations; Dan Schneider, Press Secretary; Peter
Spencer, Professional Staff Member, Oversight and
Investigations; Dylan Vorbach, Staff Assistant; Greg Watson,
Legislative Clerk; Christine Brennan, Democratic Press
Secretary; Jeff Carroll, Democratic Staff Director; Tiffany
Guarascio, Democratic Deputy Staff Director and Chief Health
Advisor; Meredith Jones, Democratic Director of Communications,
Member Services, and Outreach; Rick Kessler, Democratic Senior
Advisor and Staff Director, Energy and Environment; Chris
Knauer, Democratic Oversight Staff Director; Una Lee,
Democratic Chief Oversight Counsel; Elizabeth Letter,
Democratic Professional Staff Member; and Adam Lowenstein,
Democratic Policy Analyst.
OPENING STATEMENT OF HON. TIM MURPHY, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA
Mr. Murphy. Thank you, and good morning. We now convene
this hearing of the Oversight and Investigations Subcommittee
on Volkswagen Emissions Cheating Allegations: Initial
Questions.
Let me start off by saying my first car was a Volkswagen.
It was a 1976 Volkswagen Beetle. I learned a lot about cars and
internal combustion engines. I could take that thing apart and
put it back together, and it actually continued to work. I did
all the maintenance myself, because the Beetle and the
Volkswagen had a legacy as the people's car, to be people-
friendly.
I loved that car, loved it a lot, not so much as to call it
Brad, but I loved that car.
[Laughter.]
But I trusted the car to get me around, and I trusted that
Volkswagen would continue to build a reliable car. That word
``trust'' alone, as you know, is a key factor in building
customer loyalty, and that trust is what helped the Volkswagen
because we believed this company looked out for customers
first.
Then, just three weeks ago, car owners around the world
were shocked to learn that Volkswagen AG, the world's largest
automaker, admitted that it installed software for a number of
years in millions of its diesel models that effectively
defeated emissions controls during routine driving. This news
followed the Environmental Protection Agency's public
announcement on September 18th that it had sufficient evidence
to support allegations that VW was cheating on its emissions
tests.
As EPA reported at the time, when the cars were subject to
emissions testing, the diesel vehicles switched into an
operational mode designed specifically to pass the test and,
then, switched back to a different mode during normal driving,
a mode that emitted nitrogen oxides up to 10 and 40 times the
Federal limits.
In the United States alone, some 482,000 Volkswagen and
Audi models were affected by the cheating software. Worldwide
the software was used in an estimated 11 million vehicles
involving several VW lines.
In the wake of this apparently massive deception, the
Energy and Commerce Committee opened a bipartisan investigation
to get answers for the American public. This investigation will
seek to understand the facts and circumstances surrounding the
VW actions, the impact of its decisions, and related issues
about emissions compliance generally.
At this morning's hearing we will receive testimony from
the head of Volkswagen's American operations, Mr. Michael Horn,
and from EPA officials tasked with ensuring the automobiles on
American roads meet Federal environmental standards.
In addition, this subcommittee intends to pursue answers to
critical initial questions concerning the troubling revelations
about VW's actions, what happened, who was involved, and, most
importantly, why.
Let me acknowledge that Mr. Horn is appearing before us
voluntarily today, and I can say that I expect that he and the
Volkswagen organization will continue to cooperate with our
inquiry. This means providing documents and information to the
committee as quickly as possible, including documents that have
already been discussed publicly in connection with Volkswagen's
various Board meetings in Germany.
As I said before, there are a number of core questions that
we will begin to pursue today, both for Volkswagen and for the
EPA, most critically, what happened, who was involved, why were
these actions taken. We also have a number of questions
concerning the impact of these decisions on customers, family-
owned dealerships, and the American public.
I hope today Mr. Horn can provide some important context
for us and expand upon the facts he represents in his
testimony. We will look to him to explain the current
understanding of VW executives about what exactly was done to
these engines and was it done to deliberately deceive
Government regulations and regulators. And what is VW doing to
fix the problem and make whole those who have been affected by
the actions.
At some point prior to 2009, VW made a choice to move
forward with engines that evidence now suggests were not
compliant with U.S. emissions standards. The illegal software
was initially deployed in the first generation of these diesel
engines, which account for approximately 340,000 of the
affected vehicles. However, despite apparent advancement in
their emissions control systems in two future generations of
these engines, the software remained in place. And if the
technology was improving, what did the company understand about
the software cheat and what does this mean for fixing these
vehicles? Will some be easier than others?
Of course, for EPA, we have questions about its compliance
and recall programs. I hope we can get some clear answers today
from that agency. Why did EPA standard compliance tests and
audits fail to detect problems, especially in older technology?
What is EPA doing to ensure any fix it requires of the
automaker does not negatively affect vehicle performance?
There is some need for a sense of proportion regarding this
matter. The 480,000 or so VW vehicles implicated in this
scandal represent only .2 percent of the cars and light trucks
on the United States highways. And so far, we have no evidence
that the software similar to what was used by VW is present in
any other U.S. vehicles.
The EPA's ongoing testing will help address this question,
but I hope our witnesses from VW and EPA can understand where
confidence has been shaken. At root, the behavior to which VW
admitted represents a fundamental violation of public trust,
and reverberations of this violation can be seen across the
United States and across the world, as people grapple with the
implications.
We need to develop a clear understanding of the facts and
circumstances surrounding this case, and this hearing will be a
first important step towards that goal.
[The prepared statement of Mr. Murphy follows:]
Prepared statement of Hon. Tim Murphy
Just under three weeks ago, car owners around the world
were shocked to learn that Volkswagen AG, the world's largest
automaker, admitted that it had installed software for a number
of years in millions of its diesel models that effectively
defeated emissions controls during routine driving.
This news followed the Environmental Protection Agency's
public announcement on September 18th that it had sufficient
evidence to support allegations that VW was cheating on its
emissions tests.
As EPA reported at the time, when the cars were subject to
emissions testing, the diesel vehicles switched into an
operational mode designed specifically to pass the tests, and
then switched back to a different mode during normal driving-a
mode that emitted nitrogen oxides up to 10 and 40 times the
Federal limits.
In the United States alone, some 482,000 Volkswagen and
Audi models were affected by the cheating software. Worldwide,
the software was used in an estimated 11 million vehicles,
involving several VW lines.
In the wake of this apparently massive deception, the
Energy and Commerce Committee opened a bi-partisan
investigation to get answers for the American public. This
investigation will seek to understand the facts and
circumstances surrounding VW's actions, the impact of its
decisions, and related issues about emissions compliance
generally.
At this morning's hearing we will receive testimony from
the head of Volkswagen's American operations, Mr. Michael Horn,
and from EPA officials tasked with ensuring the automobiles on
American's roads meet Federal environmental standards. In
addition, this subcommittee intends to pursue answers to
critical initial questions concerning the troubling revelations
about VW's actions-what happened; who was involved; and most
important, why?
Let me acknowledge that Mr. Horn is appearing before us
voluntarily today and say that I expect that he and the
Volkswagen organization will continue to cooperate with our
inquiry. This means providing documents and information to the
committee as quickly as possible, including documents that have
already been discussed publicly in connection with Volkswagen's
various board meetings in Germany.
As I said before, there are a number of core questions we
will begin to pursue today, both for Volkswagen and for EPA.
Most critically: what happened; who was involved; and why were
these deceptive actions taken? And we also have a number of
questions concerning the impact of these decisions on
customers, family-owned dealerships, and the American public.
I hope today Mr. Horn can provide some important context
for us and expand upon the facts he represents in his
testimony. We will look to him to explain the current
understanding of VW executives about what exactly was done to
these engines, and was it done to deliberately deceive the
Government regulators? And what is VW doing to fix the problem
and make whole those who have been affected by its actions?
At some point prior to 2009, VW made a choice to move
forward with engines that evidence now suggests were not
compliant with U.S. emissions standards. The illegal software
was initially deployed in a first generation of these diesel
engines which account for approximately 340,000 of the affected
vehicles. However, despite apparent advancements in their
emissions control systems in two future generations of these
engines, the software remained in place. If the technology was
improving, what did the company understand about the software
cheat? And what does this mean for fixing these vehicles? Will
some be easier than others?
Of course, for EPA we have questions about its compliance
and recall programs. I hope we can get some clear answers today
from that agency. Why did EPA's standard compliance tests and
audits fail to detect problems, especially in the older
technology? What is EPA doing to ensure any fix it requires of
the automaker does not negatively affect vehicle performance?
There is some need for a sense of proportion regarding this
matter. The four hundred eighty thousand or so VW vehicles
implicated in this scandal represent only .2% of the cars and
light trucks on U.S. highways and so far we have no evidence
that software similar to what was used by VW is present in any
other U.S. vehicles. EPA's ongoing testing will help address
this question. But I hope our witnesses from VW and EPA can
understand why our confidence has been shaken.
At root, the behavior to which VW admitted represents a
fundamental violation of public trust. And the reverberations
of this violation can be seen across the United States and
across the world as people grapple with the implications. We
need to develop a clear understanding of the facts and
circumstances surrounding this case. And this hearing will be a
first, important step towards that goal. I now recognize the
ranking member of the subcommittee, Ms. DeGette, for 5 minutes.
Mr. Murphy. I now recognize the ranking member of the
subcommittee, Ms. DeGette, for 5 minutes.
OPENING STATEMENT OF HON. DIANA DEGETTE, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF COLORADO
Ms. DeGette. Thank you, Mr. Chairman.
In the spirit of bipartisanship of this investigation, I
will tell you my first car was also a Volkswagen. It was a 1960
VW Beetle with a ragtop sunroof that I inherited from my
grandmother. And I will tell you that that 1960 Beetle, I still
miss that car. It didn't have any lines of computer code
required to operate that vehicle.
In this situation, fast forward to today, we know some
things, but we don't know enough. And that is why I am glad we
are having this investigation.
We know that in May 2014 West Virginia University published
a study commissioned by the International Council on Clean
Transportation that found that on-road emissions from
Volkswagen cars were well above VW standards. They also did not
match the emissions outputs found under testing conditions.
We know that VW tried to justify this discrepancy to
regulators with explanations of technical issues and unexpected
in-use conditions. We know that in December 2014 VW initiated a
voluntary recall of nearly half a million vehicles to resolve,
among other things, the emissions issues. Yet, when the
California Air Resources Board tested the fixed vehicles, they
found that the emissions were still above the legal standards.
And we know that, by July of this year, the EPA and CARB
told VW that they would not approve the company's 2016 model
year diesel vehicles for sale unless the emissions could be
explained. VW was essentially forced to come clean, and they
ultimately confessed that they had installed a defeat device in
their diesel cars designed to circumvent EPA emission standard
for certain air pollutants.
We know that this defeat device sensed when the vehicles
were undergoing emissions testing and ensured emissions control
systems were operating to pass. And we know that during normal
road use the emissions controls were reduced and the cars were
producing up to 40 times more nitrogen oxide than is allowed by
emissions standards. We know that almost half a million cars in
the United States might be affected by this.
Now, Mr. Horn, I am glad you have come today to testify
here because, while we know all of the things I just talked
about, there are a lot more things we don't know and that we
need answers for. For example, VW hasn't revealed how the
defeat device affects the engine, why it was installed, and how
it was able to evade emissions tests. You haven't revealed when
and how the engines equipped with this defeat device will be
fixed. You haven't told us whether this fix will affect fuel
economy or performance of the vehicles.
You haven't revealed what Volkswagen told regulators over
the last year, as EPA and the California Board were trying to
figure out why the vehicles' emissions were out of compliance.
You haven't revealed whether the voluntary recall that VW set
in place in 2014 was just merely a ruse. Was the VW Group of
America actually trying to find out what was wrong with the
cars and fix them or did VW know that the cars had defeat
devices on them and were only trying to buy time with the
regulators?
You haven't revealed who is responsible for this scheme. We
don't know if it came from Germany and who knew about it in the
United States.
Now we have all seen the press reports, and we can all
speculate about what happened here and why. But, until
Volkswagen comes forward with some answers and provides some
assurances that we can trust about what they are saying, the
American people, the regulators, and Congress are all left in
the dark. So, I hope, Mr. Horn, that you come prepared to
answer some of these questions, and I also hope that VW will be
prepared to work with this committee as we move forward.
Hundreds of thousands of owners invested money and trust in
VW. Many of them bought those cars specifically because they
were seeking environmentally friendly vehicles. Now they are
left with cars with much higher levels of pollution. They don't
have any answers about when or how their car will be fixed or
what kind of car they will be left with.
Earlier this week, I visited a Volkswagen dealership in
Denver. I saw the pollution control equipment on VW diesel
vehicles firsthand. These cars account for almost 25 percent of
the sales at that particular dealership and a significant
percentage of sales at VW dealerships in Colorado and across
this country.
Now, because they can't sell them, these cars are just
sitting on the lots, which is a scene that is being repeated
across the country. So, as, Mr. Chairman, you say, it is a
small percentage of all the cars on the road in the U.S., it is
a tremendous economic impact to these dealers and, also, to the
consumers who don't know what is going to happen to their cars.
And so, that is perhaps the key answer that I am looking for
today: what do we do moving forward?
Now, Mr. Chairman, this subcommittee has been here before.
In the last 15 years, we have had Ford and Firestone, Toyota,
GM, and Takata before this committee. We were able to get
information from all these companies to help us understand what
happened. But, most importantly, we have used this information
to chart a path forward and to help the consumers affected by
this event.
I hope that Volkswagen can similarly tell us today what is
happening, and I hope that they will get beyond this series of
terrible decisions and do something to restore the public
trust.
Thank you, and I yield back.
[The prepared statement of Ms. DeGette follows:]
Prepared statement of Hon. Diana DeGette
Mr. Chairman, thank you for calling this important hearing.
Here is what we know so far:
We know that in May 2014, West Virginia University
published a study commissioned by the International Council on
Clean Transportation that found that the on-road emissions from
Volkswagen's cars were well above EPA standards. They also did
not match the emissions outputs found under testing conditions.
We know that VW tried to justify this discrepancy to
regulators with explanations of technical issues and unexpected
in-use conditions.
We know that in December 2014, VW initiated a voluntary
recall of nearly 500,000 vehicles to resolve, among other
things, the emissions issues. Yet, when the California Air
Resources Board tested the ``fixed'' vehicles, they found that
the emissions were still far above the legal standards.
We know that by July of this year, EPA and CARB told VW
that they would not approve the company's 2016 model year
diesel vehicles for sale unless these emissions issues could be
explained.
VW was forced to come clean, and they ultimately confessed
that they had installed a ``defeat device'' in their diesel
cars designed to circumvent EPA emissions standards for certain
air pollutants.
We know that this defeat device ``sensed'' when the
vehicles were undergoing emissions testing and ensured
emissions control systems were operating to pass. We know that
during normal road use, the emissions controls were reduced and
that the cars were producing up to 40 times more nitrogen oxide
than is allowed by emissions standards.
We know that almost half a million cars in the United
States may be affected.
VW hasn't revealed how the defeat device affects the
engine, why it was installed, and how it was able to evade
emissions tests.
You haven't revealed when and how the engines equipped with
this defeat device will be fixed. And you haven't told us
whether that fix will affect the fuel economy or performance of
the vehicles.
You haven't revealed what Volkswagen told regulators over
the last year as EPA and CARB were trying to figure out why
these vehicle's emissions were out of compliance.
You haven't revealed whether the voluntary recall that VW
set in place in 2014 was really a ruse. Was VW Group of America
actually trying to find out what was wrong with the cars and
fix them, or did VW know that the cars had defeat devices on
them and were only trying to buy time with the regulators?
You haven't revealed who is responsible for this scheme. We
don't know who knew about it in Germany and who knew about it
in the United States.
We have all seen press reports and we can speculate about
what happened here and why. But until Volkswagen comes forward
with some answers--and provides some assurances that we can
trust what they're saying--the American people, the regulators,
and Congress are left in the dark. So Mr. Horn, I hope you have
come prepared to answer some of these questions today.
Hundreds of thousands of owners invested money and trust in
VW. Many bought them seeking environmentally friendly vehicles.
Now they are left with cars belching much higher levels of
pollution. They don't have any answers about when or how their
car will be fixed or what kind of car they will be left with.
Earlier this week, I visited a Volkswagen dealership in
Denver. I saw the pollution control equipment on VW diesel
vehicles firsthand. These cars account for a significant
percentage of sales at VW dealerships in Colorado. Now, scores
of these cars are just sitting on lots--a scene repeated across
the country.
Mr. Horn, I hope you have answers for drivers and for
dealers about what they should do with these cars moving
forward.
Mr. Chairman, this subcommittee has been here before. In
the last fifteen years, we have hauled Ford and Firestone,
Toyota, GM, and Takata before this committee. We were able to
get information from all those companies to help us understand
what happened in their vehicles. But more importantly, we have
used this information to chart a path forward and help the
consumers affected by these events.
I hope that Volkswagen can similarly tell us today what is
happening in their diesel cars and how they intend to fix it.
Volkswagen made a series of terrible decisions and has
broken the public trust. Today, we need some answers so we can
ensure that this will never happen again.
Mr. Murphy. The gentlelady yields back.
I now recognize the chairman of the full committee, the
gentleman from Michigan, Mr. Upton, for 5 minutes.
OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr. Upton. Good morning. Thank you, Mr. Chairman.
Fahrvergnugen, it makes a car a Volkswagen. That ad
campaign swept the Nation in the '90s. VW has long enjoyed an
almost cultish following, dating back to the Beetle, VW Van,
and the Rabbit. But, through the years, something apparently
became rotten in Wolfsburg, and cheating and betrayal became
part of that game plan.
There is a lot that we don't know about VW's actions or
their motivations in attempting to skirt emission standards.
But, regardless of intent, they have betrayed the trust of
regulators, dealers and suppliers, and, most important, the
driving public.
Probably the most famous congressional hearing question is,
``What did you know and when did you know it?'', asked by
Senator Howard Baker back in the seventies at Watergate. Now we
learn that you knew some 18 months ago. So, we add, what did
you really do to fix it and come clean versus simply going
along?
Ultimately, this saying rings true: cheaters never prosper.
And that is why we are here today. We have many questions about
how we got here and the road ahead. Why would one of the
world's largest automakers go to such lengths to avoid
emissions requirements? Who was responsible for these decisions
and why did they for years, even as the technology improved,
continue that path?
If they were willing to cut corners here, what else have
they done? How will you fix the flaw and when? Will the fix
affect the performance of these vehicles? Unraveling these
questions will take time, and I don't expect that we are going
to discover all the answers today. But if VW is serious about
rebuilding this broken trust, its leaders will need to
demonstrate a serious commitment to answer these and many other
questions prompted by its actions.
This requires transparency, cooperation, and clear,
consistent communication not only with this committee, the EPA,
and other ongoing investigations, but also with its customers,
suppliers, dealers, and the general public. VW will inevitably
pay a steep price for this dirty little secret. How it responds
to the failure will go a long way to rebuilding or further
eroding the public's trust.
VW must also consider what implications these actions have
for the thousands of Americans that it employs, including their
facility in Auburn Hills, Michigan. Every single one of us who
has ties to Michigan is proud of our rich tradition that is so
closely intertwined with the success of the automobile. In
fact, Michigan is one of several States that have launched
their own investigations. All automakers must advance by
imagination and innovation, not by gaming the system and
breaking the law.
We will get some additional insight today, but the
committee's investigation is just beginning. This hearing is an
important step. As we receive documents and information, new
details are certain to emerge. I look forward to getting to the
bottom of this issue as quickly as possible.
I take this very personally. As the author of the TREAD Act
to protect the public, Congress was very clear in our work to
protect consumers from abuses from automakers, which included
steep fines and, yes, criminal prosecution.
VW has betrayed a nation, a nation of regulators,
loyalists, suppliers, and innocent customers. It is time to
clean it up or get off the road.
[The prepared statement of Mr. Upton follows:]
Prepared statement of Hon. Fred Upton
Fahrvergnugen--it's what makes a car a Volkswagen. That ad
campaign swept the Nation in the 1990s. Volkswagen has long
enjoyed an almost cultish following dating back to the Beetle,
VW van, the Rabbit. But through the years something apparently
became rotten in Wolfsburg, and cheating and betrayal became
part of the VW game plan.
There is a lot we still do not know about Volkswagen's
actions, or their motivations, in attempting to skirt emissions
standards. But regardless of intent, they have betrayed the
trust of regulators, dealers and, most importantly, the driving
public.
The most famous congressional hearing question is: ``what
did you know and when did you know it?'' asked by Senator
Howard Baker. Now we learn you knew some 18 months ago. So we
add: What did you really do to fix it and come clean versus
simply going along? But, ultimately, the saying rings true:
cheaters never prosper. That's why we are here today.
We have many questions about how we got here, and the road
ahead. Why would one of the world's largest automakers go to
such lengths to avoid emissions requirements? Who was
responsible for these decisions and why did they for years,
even as the technology improved? If they were willing to cut
corners here, what else have they done? How will you fix this
flaw and when? Will the fix affect the performance of these
vehicles?
Unraveling these questions will take time and I do not
expect we will discover all the answers today. But if VW is
serious about rebuilding this broken trust, its leaders will
need to demonstrate a serious commitment to answer these and
many other questions prompted by its actions. This requires
transparency, cooperation and clear, consistent communication--
not only with this committee, the EPA, and other ongoing
investigations, but also with its customers, suppliers,
dealers, and the general public.
VW will inevitably pay a steep price for its dirty little
secret. How it responds to this failure will go a long way to
rebuilding, or further eroding, the public's trust. VW must
also consider what implications these actions have for the
thousands of Americans it employ, including at their facility
in Auburn Hills, Michigan. Every single one of us who has ties
to Michigan is proud of our rich tradition that is so closely
intertwined with the success of the automobile. In fact,
Michigan is one of several States that have launched their own
investigations. Recent reports are sickening, and cannot be
tolerated. All automakers must advance by imagination and
innovation--not by gaming the system and breaking the law.
We will get some additional insight today but the
committee's investigation is just beginning. This hearing is an
important step. As we receive documents and information, new
details are certain to emerge. I look forward to getting to the
bottom of these issues as quickly as possible. I take this very
personally. As the author of the TREAD Act to protect the
public, Congress was clear in our work to protect consumers
from abuses from automakers.
Volkwagen has betrayed a nation--a nation of regulators,
loyalists, and innocent customers. Either clean it up, or get
off the road.
Mr. Upton. I yield the balance of my time to Marsha
Blackburn, the vice chairman.
Mrs. Blackburn. Thank you, Mr. Chairman.
Mr. Horn, thank you for being here, and I think it is
completely appropriate that you come before the committee, that
you apologize for the actions, and that you and VW take full
responsibility for what has transpired. It is disappointing.
I am fully aware that our Governor has been at the
Chattanooga facility. And I know that the Governor, State
legislators, the other members of the congressional delegation,
and I are quite concerned about this. You have got a lot of
hard-working, honest Tennesseans who were at that Chattanooga
facility, and we are quite concerned about the actions of a
few, a few VW employees, not Chattanoogans and not Tennesseans.
We are going to be very precise with you and VW. It is, as
the chairman said and as Chairman Murphy has said, it is
basically the who, what, when, where, how, and why. Why you did
it, how you did it, when you did it, when you knew, who carried
this out. Where did this take place? Did it go across the
brands? Was it pointed at EU regulations? Was it pointed at
some of the climate regulations? Is the EPA to overburdened to
have noticed this?
This is a systemic failure. And I will also point out some
want to say it is a safety issue. No, sir, this is an issue of
integrity.
So, we appreciate that you are here. We look forward to
hearing from you.
And I want to yield the balance of my time to the vice
chair of the subcommittee, Mr. McKinley.
Mr. McKinley. Thank you.
And thank you, Mr. Chairman, for ordering this meeting.
Others of you have talked about the car. My first was a 1957
Volkswagen. I think I have got everybody beat on that.
But, listen, there should be zero tolerance for this
unethical behavior and flagrant disregard of the U.S. laws,
public health, and the consumer. That is why this hearing is
important to us today. The impaired people need to understand
what happened, how it happened, and how it will be resolved.
And they feel in West Virginia that they have been
deceived. So, on Monday there was action taken by the attorney
general to file action against this.
I also just want to touch on the University. At West
Virginia University they use a fraction of the money that we
spend with EPA, just a fraction of the money, to make this
discovery. And they found out, as you know, that one of the
cars that they tested was 15 to 35 times more emissions than
they were allowed. Another was 5 to 20 times more emissions.
So, Mr. Chairman, I want to touch on the fact that this
opportunity about WVU and what its research, how research
dollars can work. And this is what happened--not the EPA, but
this was a university that was able to accomplish this.
So, I am looking forward to this hearing and getting some
clarity as to what this is. I thank you very much for holding
this session----
Mr. Murphy. Thank you.
Mr. McKinley [continuing]. And look forward to the
conversation.
Mr. Murphy. Thank you.
We now recognize the ranking member of the committee, Mr.
Pallone, for 5 minutes.
OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Pallone. Mr. Chairman, thank you for holding this
hearing.
We are here today because Volkswagen lied. They lied to
regulators, they lied to their customers, and they lied to the
American people.
We all have many important questions that deserve answers.
What did Volkswagen do to its cars? Why did they do it? And who
knew this was happening, both in Germany and here in the United
States?
This whole scheme makes me question how much we should
trust Volkswagen. To be honest, this committee's investigations
over the last 5 years make me question how much we should trust
the auto industry in general.
Let me remind the committee of the difficult history the
American driver has had with the auto industry in recent years.
In 2010, this committee investigated Toyota's recall of 9
million vehicles worldwide for unexplained cases of sudden
unintended acceleration. Dozens of people died in accidents
linked to runaway Toyota vehicles. Our committee held multiple
hearings and, in the end, it was determined that Toyota knew
about certain problems with their vehicles that, if fixed
early, would likely have saved lives.
In early 2014, we launched an investigation of General
Motors' ignition switches that killed many people. Our
committee's investigation found that individuals within GM knew
about the deadly ignition defect for nearly a decade before the
company initiated a recall.
Later in 2014, we learned of the exploding Takata airbags
installed in vehicles made by at least 11 auto manufacturers.
The recalls for airbag problems began as early as 2008. Yet,
Takata and NHTSA continued to investigate whether additional
recalls are still necessary, and Takata still has not
determined the root cause of the defect, which has killed a
number of people worldwide and injured hundreds more.
And now, we have Volkswagen, a company that told regulators
that their vehicles met emission standards, but had actually
installed defeat devices to bypass emission controls.
Over the past 5 years, the world's three largest automakers
have come before this committee to admit that they have cheated
the system and lied to American customers. This seems to be a
pervasive culture of deception in the auto industry, and it has
to stop now.
Mr. Chairman, the American people need to know that they
are safe on our roads, and they need to know that when they
decide to buy a car, they are actually getting what they paid
for. The auto industry has deliberately chosen to perpetuate
lies and mislead consumers, but the American public are not
crash-test dummies and cannot be treated as such.
Mr. Horn, I understand that you won't have all the answers
here today, but please don't hide behind an internal
investigations excuse. It is time for Volkswagen to be
forthcoming with its customers, regulators, and Congress about
what you did to these cars and why. We deserve an explanation.
[The prepared statement of Mr. Pallone follows:]
Prepared statement of Hon. Frank Pallone, Jr.
Mr. Chairman, thank you for holding this hearing. We are
here today because Volkswagen lied. They lied to regulators.
They lied to their customers. And they lied to the American
public.
We all have many important questions that deserve answers.
What did Volkswagen do to its cars? Why did they do it? And who
knew this was happening, both in Germany and here in the U.S.?
This whole scheme makes me question how much we should
trust Volkswagen. And to be honest, this committee's
investigations over the last 5 years make me question how much
we should trust the auto industry.
Let me remind the committee of the difficult history the
American driver has had with the auto industry in recent years.
In 2010, this committee investigated Toyota's recall of
nine million vehicles worldwide for unexplained cases of sudden
unintended acceleration. Dozens of people died in accidents
linked to runaway Toyota vehicles. Our committee held multiple
hearings and in the end, it was determined that Toyota knew
about certain problems with their vehicles that if fixed early
would likely have saved lives.
In early 2014, we launched an investigation of General
Motors' ignition switches that killed many people. Our
committee's investigation found that individuals within GM knew
about the deadly ignition defect for nearly a decade before the
company initiated a recall.
Later in 2014, we learned of the exploding Takata airbags
installed in vehicles made by at least 11 auto manufacturers.
The recalls for airbag problems began as early as 2008, yet
Takata and NHTSA continue to investigate whether additional
recalls are still necessary. Takata still has not determined
the root cause of the defect, which has killed a number of
people worldwide and injured hundreds more.
And now, we have Volkswagen. A company that told regulators
that their vehicles met emission standards, but had actually
installed defeat devices to bypass emission controls.
Over the past 5 years, the world's three largest automakers
have come before this committee to admit that they have cheated
the system and lied to American consumers. There seems to be a
pervasive culture of deception in this industry and it is has
to stop now.
Mr. Chairman, the American people need to know that they
are safe on our roads. And they need to know that, when they
decide to buy a car, they are actually getting what they paid
for. The auto industry has deliberately chosen to perpetuate
lies and mislead consumers. But the American public are not
crash test dummies and cannot be treated as such.
Mr. Horn, I understand that you won't have all the answers
here today. But please don't hide behind an internal
investigations excuse. It is time for Volkswagen to be
forthcoming with its customers, regulators, and Congress about
what you did to these cars and why. We deserve an explanation.
I yield my remaining time to Rep. Schakowsky.
Mr. Pallone. And I would like to yield, Mr. Chairman, my
remaining time to Ms. Schakowsky.
Ms. Schakowsky. Thank you for yielding, Mr. Ranking Member.
We will hear a lot from Volkswagen today. We will hear
apologies, I'm sure, for Volkswagen's deliberate deception of
the American people and Federal and State public health
agencies. We will hear a pledge to get to the bottom of this
issue without delay and to fully cooperate with investigators.
We will hear how the use of so-called defeat devices is
incompatible with Volkswagen's corporate culture. And I want to
tell you, Mr. Horn, I don't buy it.
The American people, the EPA, and their counterparts around
the world have been defrauded by Volkswagen. The company's word
isn't worth a dime.
The only thing I want to hear today is exactly how will
Volkswagen make this right by consumers. Saying it will take
time to design and implement a fix is insufficient and I think
unacceptable. People shouldn't have to wait to get the fuel
economy, the low emissions, and performance that they already
paid for. If they wanted, every Volkswagen clean diesel vehicle
owner should be able to get their money back, all of it.
The American people deserve answers. Yes, there are a lot
of questions, but there are also thousands of owners of clean
diesel Volkswagens out there, and what they are wanting to know
is what are you going to do for them and when. And I say now.
So, I expect those answers to be provided today.
And I yield back to the ranking member of the full
committee.
Mr. Pallone. Thank you, Mr. Chairman.
Unless anyone else on this side would like the time, I am
going to yield back. I yield back, Mr. Chairman.
Mr. Murphy. Thank you. The gentleman yields back.
I also ask unanimous consent that the written opening
statements by other members of the committee be introduced into
the record, and without objection, the documents will be
entered into the record.
You are aware that the committee is holding an
investigative hearing, and when doing so, has the practice of
taking testimony under oath, Mr. Horn. Do you have any
objections to testifying under oath?
Mr. Horn. No.
Mr. Murphy. Thank you.
The Chair then advises you that, under the rules of the
House and the rules of the committee, you are entitled to be
advised by counsel. Do you desire to be advised by counsel
during your testimony today?
Mr. Horn. No.
Mr. Murphy. Then, in that case, will you please raise your
right hand and I will swear you in? Stand and raise your hand.
[Witness sworn.]
Mr. Murphy. Thank you.
Let the record show the witness answered yes. You are now
under oath and subject to the penalties set forth in Title 18,
Section 1011 of the United States Code.
You may now give a 5-minute summary of your written
statement. If you will please make sure your microphone is on
and pull it close to you, so we can hear you? You have to press
the button. Is it on?
STATEMENT OF MICHAEL HORN, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, VOLKSWAGEN GROUP OF AMERICA
Mr. Horn. Thank you very much, Chairman Upton, Chairman
Murphy, Ranking Member Pallone, Ranking Member DeGette, other
members of the committee. Thank you for inviting me here today
to testify before the committee.
My name is Michael Horn, and I am president and CEO of
Volkswagen Group of America, a subsidiary of Volkswagen AG,
headquartered in Germany, in Wolfsburg.
I volunteered to come here before this committee at the
very outset of these inquiries in an effort to show our
commitment to cooperation. We have not had the opportunity to
review all aspects of this matter. Indeed, the investigation is
just beginning. Therefore, my testimony and my answers to your
questions will, by necessity, have to be considered preliminary
and based on my best current recollection and information.
On behalf of our company and my colleagues in Germany and
me personally, I would like to offer a sincere apology, sincere
apology for Volkswagen's use of a software program that served
to defeat the regular emissions testing regime.
In the spring of 2014, when the West Virginia University
study was published, I was told that there was a possible
emissions noncompliance that could be remedied. I was informed
that EPA regulations included various penalties for
noncompliance with the emissions standards and, also, that the
agency could conduct engineering tests on their own which could
include analysis on defeat devices or other auxiliary
equipment.
Let me be very clear about this: While I was told about the
EPA process, I was not then told, nor did I have any reason to
suspect or to believe, that our vehicles included such a
device.
I was also informed that the company engineers would work
with the agencies to resolve the issue. Later in 2014, I was
informed that the technical teams had a specific plan for
remedies to bring the vehicle into compliance and that they
were engaged with the agencies about the process. And you
mentioned this, also, in your statements.
On September 3rd, 2015, Volkswagen AG disclosed at a
meeting with the California Air Resources Board and the U.S.
Environmental Protection Agency that emission software in four-
cylinder diesel vehicles for model years 2009 until 2015
contained a defeat device in the form of hidden software that
could recognize whether a vehicle was being operated in a test
laboratory or on the road. The software made those vehicles
emit high levels of nitrogen oxides when the vehicles were
driven in actual road use rather than laboratory testing.
In Volkswagen's recent, ongoing discussions with the
regulators, we described to the EPA and CARB that our emissions
control strategy also included a software feature that should
be disclosed to and approved by them as an Auxiliary Emissions
Control Device, which is also called AECD, in connection with
the certification process. As a result, in order to show that
we acted immediately, we have withdrawn the application for
certification for all model year 2016 vehicles and we are now
working with the agencies to continue the certification
process.
These events--and I fully agree on this--are deeply
troubling. I did not think that something like this was
possible at the Volkswagen Group. We have broken the trust of
our customers, dealerships, employees, as well as the public
and the regulators. And let me be very clear. We at Volkswagen
take full responsibility for our actions and we are working
with all the relevant authorities in a cooperative way.
I am here to offer the commitment of Volkswagen AG to work
with this committee to understand what happened and how we will
move forward. EPA, CARB, the U.S. Department of Justice, State
attorneys general, as well as other authorities are fulfilling
their duties to investigate this matter, and we are determined
to make things right.
This includes accepting the consequences of our acts,
providing a remedy, and beginning to restore the trust of our
customers, dealerships, employees, the regulators, and the
American public. We will rebuild the reputation of a company
that more than 2 million people worldwide, including dealers
and suppliers, rely upon for their livelihoods.
Our immediate goal is to develop a remedy for our
customers. While much work is still to be done, I would like to
talk today about how we get from where we are now to that goal.
First, we are conducting investigations on a worldwide
scale on how these matters could have happened. Responsible
parties will be identified and held accountable. Thorough
investigations have already begun, but any information
development at this stage is preliminary. We ask for your
understanding as we complete this work.
Second, it is important for the public to know that, as the
EPA has said, these vehicles do not present a safety hazard and
remain safe and legal to drive.
Third, technical teams are working tirelessly to develop
remedies for each of the affected group of vehicles. These
solutions will be tested and validated and, then, shared with
the responsible authorities for approval.
There are three groups of vehicles involved, each
containing one of the three generations of the two-liter diesel
engine. Each will require a different remedy, but these
remedies can only be our first step to our customers.
Fourth, we will examine our compliance processes and
standards at Volkswagen and adopt measures to make certain that
something like this cannot happen again.
Fifth, we commit to regular and open communication with our
customers, dealers, employees, and the public as we move
forward. And as first steps, we have set up a designated
service line, Web site, micro-site, to be a channel for this
communication. And I have sent a personal letter to every
affected customer.
I can offer today this outline of a path forward towards
the goal of making things right. Nevertheless, Volkswagen knows
that we will be judged not by our words, but clearly by our
actions over the coming weeks and months.
These events are fundamentally contrary to Volkswagen's
core principles of providing value to our customers,
innovation, and responsibility to our communities and our
environment. They do not reflect the company that I know and to
which I have dedicated 25 years of my life. It is inconsistent
that this company involved in this emissions issue is also a
company that has invested in environmental efforts to reduce
the carbon footprint in our factories around the world, where
our plant in Tennessee is the best factory in this respect.
In closing, again, I apologize on behalf of everyone at
Volkswagen. We will fully cooperate with the responsible
authorities. We will find remedies for our customers and we
will work to ensure that this will never happen again.
Thank you again for allowing me to testify today, and I
look forward to your questions. Thank you.
[The prepared statement of Mr. Horn follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Murphy. Thank you, Mr. Horn.
I now recognize myself for 5 minutes of questioning.
On September 3rd, 2015, VW admitted to CARB and EPA that it
had installed defeat devices in certain model year 2009 and
model year 2015 vehicles. To the best of your knowledge, did VW
install this software for the express purpose of defeating
emissions controls?
Mr. Horn. To our understanding--and this is also part of
the investigation--it was installed to this purpose, yes, for
this purpose.
Mr. Murphy. Now in your written testimony you noted that
you were made aware of potential emissions compliances in the
spring of 2014.
Mr. Horn. Uh-hum.
Mr. Murphy. You also noted discussions at the time about
penalties for noncompliance and the EPA's ability to test for
defeat devices. At that time were you aware or informed that
these vehicles contained defeat devices?
Mr. Horn. No.
Mr. Murphy. When did you first learn, then, that VW
vehicles contained a defeat device?
Mr. Horn. Around the September 3rd meeting, a couple of
days before.
Mr. Murphy. And then, why were you having discussions about
defeat devices in the spring of 2014, then, if there was no
knowledge or at least a concern that these vehicles contained a
defeat device?
Mr. Horn. So, the University of West Virginia made the
study. There was a Jetta and Passat in there and another off-
road vehicle. I don't want to name the brand now. And the
results were communicated. In this context, I was told by our
experts in the Auburn Hills office--and it was also, you know,
just four months into this market--that, of course, you know,
not complying with emission standards is relating to fines, and
hefty fines, specifically here in the U.S., and that those
experts, including the German Technology Department, will check
on the study and the study results.
As you also mentioned, it was a small team. Results have
been published with all the emissions, which went overboard,
and that they will check this, point 1.
Point 2 is they would also look with all the responsible
departments, and there was a number of experts at the
Department in Germany, and then, how to possibly fix this. And
then, there was the notion in this communication that, also,
the EPA or the agencies could check also on their own, which to
my degree is normally around the world that agencies check once
in a while on their own, for auxiliary devices, including
defeat devices.
At that point of time, I had no understanding what a defeat
device was and I had no indication whatsoever that a defeat
device could have been in our cars.
Mr. Murphy. So, let me go back. Mr. Horn, the new Chief
Executive, Volkswagen, Mr. Mueller, has been quoted in media
reports this morning saying that only a few people were
involved with the deception. Now I have to say that I don't
take much comfort in that, especially knowing that Volkswagen
has been known for superb engineers and mechanics, who I wonder
shouldn't they have picked up on this. But isn't it true that
the technology was installed in the automobiles at least
initially because the cars could not meet the new, more
stringent emissions standards for diesel engines?
Mr. Horn. Yes, to your last question, this appears to be
this way, and to newspaper articles about possible quotes of
Mr. Mueller, I don't want to quote this.
As I said, also, the investigations are preliminary. One
week our group revision did the investigation from September
22nd to October 1st. And then, the entire investigations on
this matter is turned over to an external agency, a law firm
called Jones Day, an American company, which is now going
through the systems, outside advice, outside counsel.
Mr. Murphy. I think what we find amazing is that West
Virginia University discovered this, and your army of brilliant
engineers and talented mechanics didn't know something was
amiss. And I am sure we will have more questions about that.
But I want to ask you this: in terms of VW's status for
remedying these defeat devices, who is responsible for
developing and testing the solution?
Mr. Horn. The responsibility for developing and testing the
engine and drivetrain software lies within the Engine and
Drivetrain Division in Germany, in Wolfsburg, for the two-
cylinder, for the four-cylinder TDI engines.
Mr. Murphy. Now will this require a software patch or
changes to the actual vehicle's architecture and hardware?
Mr. Horn. Yes, thank you for this question. I think we have
to do a different change now into the three groups of cars.
You've mentioned that roughly 500,000 cars are affected. Out of
those, round about 430,000 cars are the Gen 1 vehicles, which
were the very early vehicles, started here in 2009. For those
cars, we believe that a software-only solution will not be
possible because, also, to be quite frank and logic, you know,
if it would have been possible, they would have done it in the
first place.
So, for those cars, we are working on both software and
hardware solutions, and there are different strategies about an
additional NOx catalytic converter as well as an SCR Urea Tank.
But this is something which is hardware engineering, which is a
little bit--it's complex and it takes time to develop and to
test this. This is one of the strategies.
The Generation 2 vehicles, which is just the Passat model,
I feel there are 90,000 cars here in the U.S. This will be most
probably a software solution. This is tested now, and could
involve one or the other, let's say, sensor. But whatever I
explain to you now, anyway, this is being discussed in a timely
manner now in the next couple of weeks with the California Air
Resources Board and the CARB.
For the Generation 3 vehicles, so the actual----
Mr. Murphy. Can I ask, because I have gone way over time--
--
Mr. Horn. Sure, sure.
Mr. Murphy. I am sure other colleagues are going to be
asking some more detailed questions that we will get today.
Mr. Horn. OK.
Mr. Murphy. But I now need to yield 5 minutes. I recognize
Ms. DeGette for 5 minutes.
Ms. DeGette. Thank you, Mr. Chairman.
Now, Mr. Horn, your company acknowledged that it installed
these defeat devices on a number of models dating back to 2009,
correct?
Mr. Horn. Sorry, I have a problem understanding with all
this noise stuff.
Ms. DeGette. Oh, Mr. Chairman, Mr. Chairman, can you please
have quiet in the room, so Mr. Horn can understand me?
Mr. Murphy. Yes. Thank you.
The room will please be quiet, especially upfront. Thank
you. So, you are not distracted. Thank you.
Ms. DeGette. All right. I will ask that again. And if I can
have the clock reset to 5 minutes?
Mr. Horn, your company has acknowledged that it installed
these defeat devices on a number of models back to 2009, yes or
no?
Mr. Horn. Yes.
Ms. DeGette. And do you know how the various defeat devices
installed in the cars actually work at this point?
Mr. Horn. Personally, no, I'm not an engineer.
Ms. DeGette. Does someone at VW know how these defeat
devices work?
Mr. Horn. I believe this is also within the investigations,
and I believe that----
Ms. DeGette. Can you please give us the information when
you find out?
Mr. Horn. We will. We will if we have it.
Ms. DeGette. Thank you very much.
Now you mentioned this West Virginia University study that
was conducted in May of 2014 which found that there real NOx
submissions on several Volkswagen vehicles exceeded EPA
standards by as much as 35 times. Following publication of that
study, VW represented to the California Air Resources Board, or
CARB, and to the EPA that the increased emissions were due to
technical issues and unexpected in-use conditions. Correct?
Mr. Horn. I'm sorry, you guys cough here all the time, and
I have trouble----
Ms. DeGette. All right. I will ask the question again.
Mr. Horn. Thank you.
Ms. DeGette. After that study by West Virginia University,
isn't it true that VW told the EPA and the California Board
that the increased emissions were due to technical issues and
unexpected----
Mr. Horn. Yes.
Ms. DeGette [continuing]. In-use conditions?
Mr. Horn. Yes.
Ms. DeGette. Yes.
Mr. Horn. True.
Ms. DeGette. And those representations at that time were,
in fact, incorrect and false, weren't they, sir?
Mr. Horn. Yes.
Ms. DeGette. Yes, they were.
Now, to your knowledge, did anybody at the Volkswagen Group
of America know at that time that, in fact, those discrepancies
were due to these defeat devices when they made those
representations to the regulators?
Mr. Horn. To my knowledge at this point of time, no.
Ms. DeGette. No one in the U.S. did?
Mr. Horn. No.
Ms. DeGette. OK. Now, in December 2014, VW proposed a
recall of 500,000 vehicles to resolve the, quote, ``technical
issues''. Is that correct?
Mr. Horn. Uh-hum.
Ms. DeGette. And, in fact, a number of those vehicles were
recalled. Is that correct?
Mr. Horn. Yes, most of them.
Ms. DeGette. But, after they were recalled, the California
regulator still said that that fix did not work, isn't that
correct?
Mr. Horn. That is correct.
Ms. DeGette. Now, to your knowledge, did anyone at the
Volkswagen Group of America know about the existence of these
defeat devices when the company announced that recall in
December of 2014?
Mr. Horn. To my best knowledge today, no.
Ms. DeGette. Mr. Horn, when did you personally learn of the
defeat device and under what circumstances?
Mr. Horn. Around the meeting on September 3rd with CARB and
EPA.
Ms. DeGette. OK. Now you talked, when the chairman asked
you about these cars--I am concerned about what we are going to
do about the 500,000 cars we have on the road in the U.S. And
the first thing is, as you just testified, about 430,000 of
those cars cannot be fixed by a software-only solution. Is that
correct?
Mr. Horn. Yes.
Ms. DeGette. And that is because of the way that the engine
is designed in these vehicles. Correct?
Mr. Horn. I would say not the engine is designed, but all
the after-treatment systems.
Ms. DeGette. Right. And I have got to say, I have got to
acknowledge my wonderful dealer Fred Emich, who is here today.
And he let me come and talk to his wonderful mechanics on
Monday. They gave me this chart right here. I tried to take the
card itself, but it was too heavy and they told me I would have
to probably pay them $2,000 if I lost it. So, I decided to take
the chart instead.
This is the chart of the exhaust on these 430,000 cars. And
as I could clearly see, you can't do a minor little fix to fix
this problem. So, what is VW going to do for these 430,000
cars, so that the users can use them and so that they can pass
the emissions test?
Mr. Horn. So, from this distance, I can't see the chart,
but I believe it is maybe something out of our service
literature or customer literature.
Ms. DeGette. It is the exhaust system for these cars.
Mr. Horn. Yes, but----
Ms. DeGette. What can be done to fix that?
Mr. Horn. There's two scenarios next to the software
adjustments and one scenario----
Ms. DeGette. But these are for the cars that can't have,
that the software adjustments will not work.
Mr. Horn. We are talking now about Generation 1 cars, the
430,000 cars.
Ms. DeGette. That's right.
Mr. Horn. The picture you have shown and the treatment,
software alone doesn't work because, otherwise, they would have
done it right in the first place.
Ms. DeGette. Right. So, what are you going to do for those
cars?
Mr. Horn. Two technical scenarios. Either a Urea Tank, SCR
Tank, to put, add glue in there, or a specific catalyzer for
the NOx. Two technical scenarios.
Ms. DeGette. OK, but those cars don't have the Urea Tank
right now?
Mr. Horn. No. That's why it has to----
Ms. DeGette. So, this would be a major fix, correct?
Mr. Horn. Yes, ma'am.
Ms. DeGette. Now what is the timeframe VW has set for that
fix?
Mr. Horn. We are still working on the timeframe, and it's
too early to say when this fix exactly is going to take place.
Ms. DeGette. When are these dealers going to be allowed to
sell these cars?
Mr. Horn. The dealers, the issue with the dealers, as Fred
Emich told you, is that we have not the model year '16
certified and we have stopped sale on our own, on our own----
Ms. DeGette. Right. When is that going to be fixed?
Mr. Horn. The model year '15----
Ms. DeGette. So you are going to be able to sell those
cars?
Mr. Horn. There are two scenarios. A scenario, we are now
trying to get a conditional approval with the EPA until we have
the final software fix beginning of next year.
Ms. DeGette. The beginning of next year? And in the
meantime, what are the dealers and the customers supposed to
do, the ones who have these cars?
Mr. Horn. Well, in the meantime, no customer can buy a car
because it's not available for them. And with the dealers, we
have very early started a program to work with them to also
help them financially and to communicate with them----
Ms. DeGette. OK, but the 430,000 cars that are already on
the road, what are those customers supposed to do? Their cars
cannot pass the emissions test.
Mr. Horn. The EPA has said, and they have repeated this
also in their statement, that these cars are legal and safe to
drive.
Mr. Murphy. Thank you.
Mr. Horn. Until now, there's no indication that they didn't
pass any emissions test.
Mr. Murphy. Thank you. The gentlelady's time has expired.
Now we need to recognize the chairman of the full
committee, Mr. Upton of Michigan, for 5 minutes.
Mr. Upton. Thank you, Mr. Chairman.
I want to go back to the specifics of the defeat device.
So, I live in Michigan. Where I live we don't need to test our
cars for emissions on an annual basis, as many States require.
Certainly, in this region here in DC I know they do.
So, how is this defeat device actually set up, so that it
was different when an individual drove it down the road versus
taking it to a service station and getting the emissions
sticker that is often required in the States that require such?
Mr. Horn. So, I'm----
Mr. Upton. I've been told a couple of things, but I just
want to know if you can walk----
Mr. Horn. I can't tell you----
Mr. Upton [continuing]. Me through how that could change
the emissions system. What happens?
Mr. Horn. I can share my best knowledge, but I'm not an
engineer, neither a software engineer.
Mr. Upton. Well, I----
Mr. Horn. But let me try to explain. Let me try to explain.
My understanding at this point of time is that the software was
designed that the vehicle or the software could detect whether
it was on a dyno, in a testing laboratory environment, or
whether it was on the street.
And one example of this, as experts have explained to me,
is that the software could detect whether the steering wheel
made an angle. So, there might have been and there will be
other parameters, like maybe speed and, then, change of speed
and those things.
Mr. Upton. Maybe the weight of the driver in the driver's
seat?
Mr. Horn. I don't think so, but maybe. I don't know.
Mr. Upton. So, wouldn't it be easy to develop the software
that would just remove that?
Mr. Horn. Yes. This will be, this software will be ready--
--
Mr. Upton. But, of course, when that happens, the car isn't
going to meet the emissions test.
Mr. Horn. Regarding the model year '16 and '15, which were
the Generation 3 cars, which we are discussing right now with
the agencies, the defeat device will be either switched off,
and from January onwards will be completely taken out of the
car. And those cars will pass the emissions test.
Mr. Upton. So, how many vehicles will not pass the
emissions test, or the ones that you have identified?
Mr. Horn. Now, I mean, my question----
Mr. Upton. So, you will be able to do that with the later
versions, right?
Mr. Horn. We have----
Mr. Upton. But not the earlier versions of the vehicle?
They won't be able to pass? By turning off the device, the
defeat device, there will be a number of cars that, in fact,
will not meet the current standards. And that is your big goal.
Mr. Horn. The burn standards, yes, you're right.
Mr. Upton. And how many of those vehicles are there on the
road?
Mr. Horn. Well, we have a total of 500,000: 430,000
Generation 1 vehicles, 95,000 Generation 2 vehicles, and then,
it's around 70,000 Generation 1 vehicles. And so, you know, all
of these cars are out of the legal compliance, clearly. But, as
EPA has said, all these cars are legal and safe to drive for
the owners. So, we are not selling the cars, but the owners can
legally drive and safely drive their cars.
Mr. Upton. So, your dealers across the country, they have
their finance plans, where they have quite an inventory, I
would guess, of cars that they are now unable to sell. They
have paid in advance for those under the financing plan that
dealers have, and they are not going to be able to sell them
for a number of months, perhaps even as long as six months at a
minimum, until the fixes can be done.
What type of remedies are you offering the dealers in terms
of financial incentives, knowing that they have paid for these
cars and, frankly, lost a boatload, I would imagine?
Mr. Horn. Yes, and this is also----
Mr. Upton. That inventory has got to be a pretty big loss.
Mr. Horn. This is also one of the things which troubles me
personally very much because the last one, yes, we've worked
very hard and we've brought profitability up and all of those
things.
But I'll tell you exactly. On Friday, the 18th, the Notice
of Violation was communicated. We had a call with the National
Dealer Counsel. Some of the folks are sitting behind me. On
Monday, we issued our first financial relief aid. So, we put
all the TDIs, used cars, CPO cars, and new cars on free
flooring. We took all the bonus thresholds out for car sales.
So, we paid maximum bonus for each car sold, and we took also
out the customer satisfaction targets objectives and we paid
maximum customer satisfaction bonus on those cars. And this is
more than $1,000, $1,500 per car.
Coming towards October now, we provided every dealer around
the U.S. with a discretionary fund, with a discretionary fund
which was explained to them through the District Managers, the
Sales Operations Managers, and which was wired to the dealers
on October 1st.
I don't want to call out the number, but it is a
significant amount of money in order for them to have
flexibility. So, no accountability towards us; flexibility to
solve the most urgent customer cases or to invest or to put the
money where they think it would be fit.
And now, when I come out of this congressional hearing, on
Friday we look at the next programs in order how can we help
the dealers with the cashflow of their cars, for the cash
position. Because one thing is very, very clear--and I'm damned
sincere about this--the dealer profitability of this country is
my first objective. And I said this on January 1st and I
continue to say this. So, this is one part.
And also, on Friday we look very intensively into the
customer remedies and what we need to do to the customers. And
there will be the first scenarios on the table.
Mr. Murphy. All right. Thank you. The gentleman's time has
expired.
I now recognize the ranking member of the full committee,
Mr. Pallone, for 5 minutes.
Mr. Pallone. Thank you, Mr. Chairman.
Mr. Horn, your statements so far don't give me much
confidence that we are ever going to see a fix for these
vehicles that are impacted. You know, you say that you can't be
fixed by a software-only solution. You don't have the necessary
timetable as to when the fix is going to begin.
Have you been given enough information about how the defeat
device affects the engine to actually make informed judgments
on whether the fix will actually work? I mean, how do we know
that what you are proposing to do is actually going to work?
Mr. Horn. Whatever I tell you here today is agreed and is
coming from the Technical Engineering Department in Wolfsburg.
And alongside our actions in Europe, we have to have our
actions in the U.S. And the technical----
Mr. Pallone. No, I understand, but is it fair to say that
you really don't know whether you can fix these vehicles to
achieve the emissions standards?
Mr. Horn. We know that we can fix these vehicles to achieve
emission standards.
Mr. Pallone. All right. But, then, what happens with regard
to other things like fuel economy, engine performance? You
know, people bought these vehicles thinking that they were
going to meet the emissions standards. They were going to have
good fuel economy. They were going to have good engine
performance. Can you guarantee that any fix you make to the
vehicles doesn't affect fuel economy or engine performance or
both?
Mr. Horn. At this point of time, my understanding is, if we
correct the nitrogen oxide emissions to the emissions
standards, the customer will get the MPG on the Monroney label.
That's my current understanding. Whether the full performance
of the car--and this is something also our chairman, Matthias
Mueller, or CEO, Matthias Mueller, said in Germany--maybe on
top speed they might be, 1 or 2 miles per hour might be
missing, but this is, of course, something which we will share
with the agencies. But current understanding is that the
customer will keep the Monroney label miles per gallon.
Mr. Pallone. I mean, the concern I have is, you know, when
you buy one of these cars, you are relying on not only the
emissions standards, but the fuel economy is good and the
performance is good. I think you get to the issue of damages
here. In other words, if I am an owner and the fix doesn't
achieve good performance, good fuel mileage, then I am going to
expect to be compensated in some way if that is not the case.
And I just remain concerned that any fix is going to
substantially change the cars and that it is unfair to the
consumers who bought the cars and relied on them because they
expected them to perform a certain way. But you are telling me
that the fix will guarantee good performance and will guarantee
good fuel economy?
Mr. Horn. I said, to my current understanding, in achieving
the emissions standards, the Monroney label miles per gallon
will be achieved. There might be a slight impact on the
performance. And this is naturally not only the discussions
with the agencies, but, of course, we will look into
compensating our customers. And, of course, if there would be
significant differences, this would be part of the discussion.
Mr. Pallone. Well, let me get to another issue. What about
the impact on clean air? I mean, we know that there's all kinds
of health impacts, asthma, other respiratory illnesses that can
seriously affect people, send them to the hospital that get
sick because of NOx and these other problems. I mean, you
obviously agree that NOx pollution can result in serious health
and environmental effects. I would assume you would agree with
that.
Mr. Horn. I have also read the EPA statement, that in
general, and not specifically to Volkswagen, they have
indicated that there might be respiratory problems which could
also lead--I mean, I am quoting yesterday, basically--to
hospital visits.
Mr. Pallone. Well, what are you going to do to rectify
that? How do you plan to mitigate the harm caused by this
excess pollution emitted into the air over the last 7 years? My
understanding is that the NOx emissions from the affected
vehicles are up to 40 times the allowable limit. So, what are
you going to do with regard to this excess pollution and the
impact it may have had?
Mr. Horn. I think there's, first of all, many different
studies. And so, I would like to go back to the EPA yesterday,
of what they said. I think it will be part of the discussion.
But I would also like to point out that, if you look at 100
percent of nitrogen oxide emissions in the U.S., the car and
truck industry is having 5 percent. Our group here in the U.S.
has 4 percent of the 5 percent, which is .2 percent. And of
this, 20 percent is TDI, which is .05. And now, we can multiply
this, which is not belittling this and it's clearly
unacceptable. But, within this context, clearly, the discussion
will come up and needs to be addressed.
Mr. Pallone. All right. Thank you.
Thank you, Mr. Chairman.
Mr. Murphy. I now recognize Ms. Blackburn for 5 minutes.
Mrs. Blackburn. Thank you, Mr. Chairman.
Mr. Horn, you said profitability is your top priority when
you were speaking of the dealers and----
Mr. Horn. For the dealers, yes.
Mrs. Blackburn. Yes. I would hope that safety, quality,
integrity are top priorities, and profitability comes along
there as a part of that picture.
Let me ask you about this. Are you going to buy back the
inventory that the dealers have?
Mr. Horn. No, our plan is not to buy back----
Mrs. Blackburn. No?
Mr. Horn [continuing]. The inventory.
Mrs. Blackburn. Not to buy back? OK.
Mr. Horn. Our plan is to fix the cars.
Mrs. Blackburn. OK. Let me move on with you. Have you
identified the individual or group of individuals that are
responsible for the defeat device?
Mr. Horn. These investigations are ongoing.
Mrs. Blackburn. You have known about this since the spring
of 2014, a year and a half.
Mr. Horn. We know about this since September 3rd, that the
violation is there. And since this time and since the September
18th Notice of Violation, the Board has acted and has asked
Jones Day to investigate.
Mrs. Blackburn. But you have known that there was some
activity around this defeat device since the spring of 2014,
correct?
Mr. Horn. No, I did not know. As I have said----
Mrs. Blackburn. OK. So, you did not know it in the spring--
--
Mr. Horn. No.
Mrs. Blackburn [continuing]. Of 2014?
Mr. Horn. No, again.
Mrs. Blackburn. So, you just learned about it September
3rd, 2015?
Mr. Horn. Around the September 3rd events, yes.
Mrs. Blackburn. OK. All right. Let's go to your six-point
remedy plan. You have talked some about point 3, which is that
they are developing remedies. And I would assume, if this
landed on your plate September 3rd, that you all have put all
efforts and energy into this plan, correct, into the remedies?
Mr. Horn. Yes, correct.
Mrs. Blackburn. Very good.
All right. Then, let's go to point No. 1. You state that
Volkswagen will examine its compliance processes and standards
and adopt measures to make certain that something like this
cannot happen again.
Mr. Horn. Uh-hum.
Mrs. Blackburn. So, why don't you give us a little bit of
specificity on that and what, if any, steps are currently
underway to handle these compliance issues? What did you start
as of September 3rd, 2015 and what is your timeline? How long
is it going to take you to bring this into compliance?
Mr. Horn. So, as I am the CEO of Volkswagen Group of
America, I can only report to you on what is managed by
Volkswagen headquarters worldwide at this point of time. And as
I've said, it's Jones Day. They manage all the investigations
in terms of who did what, when, how, and why, and what do we
need to do in order to rectify this for the future in terms of
process adjustments and compliance adjustments.
Mrs. Blackburn. So, then, you are saying that, as of now,
you do not have a plan?
Mr. Horn. As of now, we are still in the investigation
phase.
Mrs. Blackburn. OK. When can we expect you to have a plan
to handle compliance, to make the owners of your vehicles
whole, if you will, to make the dealers that have trusted in
you, to make them whole? Also, the individuals that are
employed by your facilities, when are they going to have some
certainty as it relates to the jobs?
So, you all say you are still investigating. So, on your
timeline, when do you expect that you are going to be able to
say this is the way forward?
Mr. Horn. You mentioned six points, and we started with the
first point, compliance. I don't have a timeline for this yet.
Mrs. Blackburn. OK.
Mr. Horn. We are working instantaneously with the dealers
and developing plans by the week as we go, as we go. And you
can ask those folks behind me on whether this works or not.
And for the customer, it depends on the technical remedies.
So, again, this is Generation 3. January this year, January
next year--sorry--we will start to give the software to the
agencies. Generation 2, the middle of the year. Most probably,
Generation 3, due to the technical complexity, will be a little
bit later. So, there's different timings, and I apologize not
for having a full-fledged plan of the Board by Volkswagen
company right now here in my pocket.
Mrs. Blackburn. So, you are certain it is going to be a
multiyear plan?
Mr. Horn. Excuse me?
Mrs. Blackburn. You are certain the remedy will end up
being a multiyear approach?
Mr. Horn. Yes. If you look alone at 430,000 cars and the
repairs might take 5 to 10 hours even in order to fix this, you
know, technical fixes, and if you look at your recall history
in this market, also with NHTSA, then these actions take, you
know, 1 or 2 years minimum--minimum--when the fix is available
for everybody, including parts and discussed with the agencies
and agreed to.
Mrs. Blackburn. OK. Let's see, my time has expired.
I do have one other question about point 2 in your remedy
plan. Mr. Chairman, I will submit that and yield back the time.
Mr. Murphy. Thank you. Thank you very much.
Now I recognize Ms. Castor for 5 minutes.
Ms. Castor. Well, thank you, Mr. Chairman, for calling the
hearing.
Mr. Horn, according to reports, VW's defeat device is found
in nearly 500,000 vehicles. Are you confident in that number?
Could it be more? Could it be less?
Mr. Horn. We are very confident in this number.
Ms. Castor. Pardon me?
Mr. Horn. We are very confident in this number.
Ms. Castor. OK. Have you calculated the loss in value to
customers, car owners?
Mr. Horn. No, not yet. That's a matter of not only the
investigations, but the calculations are ongoing. And on
Friday, we will look at the first scenarios.
Ms. Castor. OK. You have called your investigation
preliminary, but you have known about this for a year and a
half. The problems first came to light in May 2014, is that
correct?
Mr. Horn. No, this is not correct. As I explained, the
study was published, and I had no reason to believe that there
was a defeat device in those cars.
Ms. Castor. Well, you found out, according to reports, in
2014 that there was an issue, isn't that correct?
Mr. Horn. An emissions issue, yes, that's correct.
Ms. Castor. So, what did you do at that point in time?
Mr. Horn. At that point of time, a plan was asked for from
the engineers. And in July 2014, middle of the year, they
presented a plan to me which was--and this is very important
also--which was agreed and discussed with the Product Safety
Committee worldwide. And these are those guys who manage all
the recalls, all the service actions worldwide, including
technical, procurement, legal, service, and those things.
They came back with a plan, first of all, acknowledging
that those results were correct and, secondly, with a clear
timing on when those cars would get a software fix, which was
also mentioned in one of the opening statements, as of the end
of last year.
Ms. Castor. Do you feel like you have been personally
deceived now, after you found out subsequently that the defeat
devices----
Mr. Horn. Yes. Yes, and----
Ms. Castor. Explain that.
Mr. Horn. Look, I worked 25 years for this company. And
beyond my personal objective of dealer profitability,
integrity, quality, you know, and not cheating, was always for
me a given for this company.
Ms. Castor. And another----
Mr. Horn. When I learned this, I am as touched and moved--
sorry--as my employees and as my----
Ms. Castor. Another group feeling the effects of the VW
defeat device defrauding are the VW dealers and their hard-
working employees all across this country, in addition to
consumers. A recent Associated Press article noted that dealers
are facing, quote, ``a lot of angry calls, emails, et cetera,
from Volkswagen owners'' who feel betrayed because they
believed they had bought a car that polluted less without
sacrificing all the good gas mileage and the performance that
comes with a diesel engine.
Mr. Horn, how many VW dealerships are there in the U.S.?
Mr. Horn. We have round about 650 VW dealers and 350 Audi
dealers.
Ms. Castor. And on average, how much of a VW's business do
these diesel models----
Mr. Horn. Twenty-five percent.
Ms. Castor. And these dealers are now the frontline----
Mr. Horn. Yes.
Ms. Castor [continuing]. For unhappy customers who feel
betrayed by the Volkswagen brand. And a media account yesterday
quoted one dealer as saying, ``This is the biggest fraud I've
ever seen.'' What do you have to say in response to that? What
do you tell these business owners and their employees whose
livelihoods depend on----
Mr. Horn. I went immediately out with the Dealer Counsel on
a call. I made a dealer video which was sent out, and the
dealers even showed it to their children, and their families,
and their employees, because they said that's the right thing
on what we are approaching this.
Ms. Castor. So, detail for us how VW is informing dealers
about the defeat devices and the solutions to fix cars that
feature these defeat devices.
Mr. Horn. As soon as we have the information necessary
already and have discussed this with EPA and CARB about the
timing or alongside, the dealers will be naturally informed.
Ms. Castor. They are not getting any information right now?
Mr. Horn. No, of course, they get information.
Ms. Castor. So, detail that for us.
Mr. Horn. First of all, they get the information that we
financially help them through this crisis. Secondly, the first
thing is we took the bonus thresholds out. They have free
flooring. They got the discretionary fund. We have increased
the incentives by $2,000 for a loyal customer, for loyal
Volkswagen customers, you know, a loyalty program.
Ms. Castor. What does that mean?
Mr. Horn. That means we get them started and don't let them
dry out in the field.
Ms. Castor. Is that a direct payment to customers or to
dealers?
Mr. Horn. The first two points, the bonus payments and the
floor plan, is directly to the dealers. The discretionary funds
is directly to the dealers. And the incentives are, for them,
this is a certain cash incentive that they can manage to bring
loyal customers in, whether that is a TDI customer or a gas
customer.
Ms. Castor. So, is the intention there for the dealers,
then, to contact customers who have purchased cars since the
model year 2009?
Mr. Horn. Yes, as one of the possibilities, sure, yes.
Ms. Castor. Well, VW is not giving any direction to dealers
and their employees on contacting customers at this point in
time?
Mr. Horn. No, of course, we are having--we have set up
frequently asked questions. We are guiding the dealers with
real-time the same information we have, and which goes to all
call centers as well, because those, you know, I have visited
the call center in Auburn Hills. Those people are also
frontline. They need the same information, and as soon as we
have it, the other people get it as well.
Ms. Castor. All right. What has VW told dealers about how
existing Volkswagen models will be affected, cars that dealers
have already sold and cars that are now sitting on the lots?
Mr. Horn. We've informed the dealers directly on September
18 in a call to the National Dealer Counsel. We followed up
with letters and videos to do this.
Mr. Murphy. Thank you.
Ms. Castor. OK, I am out of time.
Mr. Murphy. The gentlelady's time has expired.
I now recognize Mr. Barton for 5 minutes, from Texas.
Mr. Barton. Thank you, Mr. Chairman. And thank you and Ms.
DeGette for organizing this hearing.
I am not a Registered Professional Engineer anymore, but at
one time I was. I still am an engineer by training. My daughter
drives a Volkswagen Beetle. My former stepdaughter drives a
Volkswagen Jetta. I don't think they are diesel. I think they
are gasoline-powered, but they are both Volkswagens.
I have always had the highest respect for Volkswagen. I
think it is a fine company engineering-wise, you know, product-
wise. But I must tell you, sir, that it is extremely
disappointing to look at the--I don't know the right word to
use--immorality of the corporate decision to knowingly and
willfully cheat on U.S. emissions standards.
I mean, Volkswagen is one of the premiere name brands of
auto manufacturing in the world, and it is a reputation that
has been gained over the last 50 or 60 years. And to have a
company of your stature knowingly and willfully make a decision
at the highest levels of the company to put a software program
in your products that are meant intentionally to deceive or to
cheat on U.S. emission standards, to me, I wouldn't have
believed it if it wasn't factually proven.
So, my first question to you is, I am told that this was a
decision made in Germany at the corporate level. Is that
correct?
Mr. Horn. Two answers to this. First of all, the
investigations are ongoing, but this was not a corporate
decision, from my point of view. To my best knowledge today,
the corporation in no Board meeting or no Supervisory Board
meeting has authorized this, but this was a couple of software
engineers who put this in, for whatever reasons. And I would
also like to find out, and I fully agree to your other
statement.
Mr. Barton. And this is an oversight hearing, so I assume
that you are testifying under oath, is that correct?
Mr. Horn. I am under oath. I understand this, sir.
Mr. Barton. OK. So, what you are saying is that the senior,
the president of Volkswagen International did not know about
this when it happened?
Mr. Horn. What I said was, to my understanding, this was
not a corporate decision. This was something individuals did.
Mr. Barton. OK. Now that is not what I was led to believe,
but I take you at your word. So, I will ask the second
question.
When did senior management, i.e., the president of
Volkswagen International, the executive vice present, whoever
your senior day-to-day corporate officers are, when did they
learn of this action?
Mr. Horn. To my understanding, also around the September
3rd notification of the agencies.
Mr. Barton. But it occurred years ago.
Mr. Horn. Yes, sir.
Mr. Barton. Do you really believe, as good, as well-run as
Volkswagen has always been reported to be, that senior-level
corporate managers/administrators had no knowledge for years
and years?
Mr. Horn. I agree it's very hard to believe.
Mr. Barton. Yes.
Mr. Horn. And personally, I struggle as well, yes.
Mr. Barton. That is an honest answer. I appreciate that.
Well, I don't know what to do, but I do know that you can
have an honorable disagreement about emissions standards, and
we have had that on this committee. But, as somebody who voted
for the Clean Air Act Amendments and as a conservative who
believes that, if it is the law, it should be implemented, and
corporate, especially international corporations should honor
those laws, your company has not. I don't know what the penalty
should be, but it should be more than just a slap on the wrist.
I mean, I am going to listen to the rest of the testimony
and the questions and the staff recommendations, but in every
other case since I have been a Congressman, when we have had
problems with manufacturers, automobile manufacturers, in every
case it has been something happened that was really a mistake,
an accident, that they just didn't foresee it. That is not the
case here.
Mr. Horn. Yes.
Mr. Barton. There was a knowingly and willful decision to
deceive in one of the most important markets in the world, and
that, sir, is just wrong.
And with that, I----
Mr. Horn. We agree.
Mr. Barton. Thank you, sir.
Mr. Murphy. Thank you.
I now recognize Mr. Kennedy for 5 minutes.
Mr. Kennedy. Thank you, Mr. Chairman.
Mr. Horn, thank you for being here today.
I understand you have said several times your testimony is
preliminary and there are investigations ongoing. So, I
appreciate that and I recognize that.
I do want to go back to what a number of my colleagues has
gone to with regard to the timeline here. My understanding, and
from your testimony, was that in the spring, I think
specifically May of 2014, was when Volkswagen became aware that
there was some issue with regard to emissions, is that right?
Mr. Horn. Yes.
Mr. Kennedy. And then, it was from May to December that
CARB and EPA launched investigations into those, the emissions,
and the company itself, VW, started an investigation as to what
led to the oddities, if you will, with regard to the emissions
testing, right?
Mr. Horn. I can't answer this really. I mean, I know that
the actions to remedy these findings were discussed with CARB
and EPA. Whether they have undergone their own investigations
between May 2014 and December 2014, I don't know. I know they
did this afterwards, when we started to flesh the cars with the
new software.
Mr. Kennedy. So, oK. If I tell you that EPA and CARB
continued an investigation after that preliminary report from
May and they continued their investigations, then December 2nd,
2014, VW shared test results with EPA and CARB and proposed a
recalibration fix, is that accurate?
Mr. Horn. Yes.
Mr. Kennedy. And then, VW initiated a voluntary recall of
approximately 500,000 vehicles to try to deal with that
recalibration issue. In May, CARB commenced testing, May 6th, I
believe, 2015, CARB commenced testing to discern whether the
fix that VW had proposed adequately and accurately fixed the
underlying issue.
Mr. Horn. Uh-hum.
Mr. Kennedy. May 6th through July 2015, CARB conducted
laboratory and on-road testing to confirm the efficacy of the
recall. What I am getting at here, sir, is July 8th CARB shared
test results with VW and the EPA, prompting a series of
technical meetings, from my understanding. And according to
CARB, in the course of those meetings, VW disclosed that there
were several issues, that Gen 1, Gen 2, and the 2015 model of
the improved SCR vehicle known as Gen 3 had a second
calibration intended to run only during confirmatory testing.
So, there was some knowledge at least in July of this year that
there was some manipulation of software code with regard to the
testing, was there not?
Mr. Horn. This meeting you're referring to, I don't know. I
can tell you that the first issue that got back to me and to my
attention was on the 20th of July when my people of Product
Marketing came to me and said we don't get the model year '16
diesel certified.
And then, I immediately wrote a letter or an email to Dr.
Jakob Neusser, the EDP for Research and Engineering in
Wolfsburg, and I escalated this. And the explanation was
twofold: (A) There were new systems, and I don't know whether
this is right; and (B) there is still information missing. So,
also my teams in Herndon with the National Science Company did
not have this information. And then, only in the weeks
afterwards it started to unfold.
Mr. Kennedy. And so, sir, if I am understanding kind of the
broad aspects of your testimony correctly, this is something--
as you have said a number of times, this was not a company
decision. This was a decision made by a number of individuals
yet to be ascertained underneath at some other levels of the
company that does not affect a corporate decision by the Board,
by yourself. Is that accurate?
Mr. Horn. That's my understanding, yes.
Mr. Kennedy. So, as of now, at least according to press
reports as of this morning, there's four individuals that have
been suspended. Is that right?
Mr. Horn. I don't know. This is press reports.
Mr. Kennedy. To your knowledge, has anybody been suspended
to this point?
Mr. Horn. I can't share names with you. There is no
information----
Mr. Kennedy. I am not asking for names. Has there been
anybody that has been suspended at this point? Has anybody, as
of now, after Volkswagen, for knowing at least of some
inconsistencies with test reports for the past 18 months, has
anybody been suspended or lost their job?
Mr. Horn. To my understanding, there have been three people
suspended, but I cannot share the names here, due to German
law.
Mr. Kennedy. And I am not asking for the names, sir.
You mentioned the figures, roughly, that this would take 1
to 2 years, 5 to 10 hours per car, in roughly 430,000 cars. Do
you have any estimate at this point as to what the direct
losses for Volkswagen would be because of this incident?
Mr. Horn. I think the losses are depending (A) on the fines
we will get and we will have to pay, and then, also, (B), on
how much money it takes to fix those cars, and (C) on how much
money we will have to pay to compensate the customers for what
we did. And this is a whole lot of money, I'm quite sure.
Mr. Kennedy. And so, sir, I think the overall question that
you are sensing from myself and colleagues is that I understand
that this was a decision that you are indicating was made by
people underneath you. It does get to the overall corporate
integrity of the company. And so, what, if you can say, is
going to be done to restore faith in the overall corporate
structure of Volkswagen?
Mr. Horn. First, a very important clarification. It was not
done by people under me. I'm the CEO, president and CEO of
Volkswagen Group of America. And those things have been
developed in the relevant software departments in Germany,
which is totally out of my jurisdiction or steering.
And the second, to get your answer hopefully in the right
way, with the compliance investigations, we have to streamline
our processes and this company has to bloody learn and use this
opportunity in order to get their act together. And 600,000
people worldwide have to be managed in a different way. This is
very, very clear.
Mr. Kennedy. Thank you, sir.
Mr. Murphy. I recognize the vice chair of the full
committee, Mr. McKinley, for 5 minutes.
Mr. McKinley. Well, thank you, Mr. Chairman.
Several things. First, you opted not to challenge the WVU
decision, the research that was done. So, you have not
challenged the research that was done. Everyone has recognized
you did knowingly, then, violate, is that correct?
Mr. Horn. I don't understand this question, sir. I'm sorry.
Mr. McKinley. You opted not to challenge or appeal the
findings from the WVU. So, does that mean----
Mr. Horn. From?
Mr. McKinley [continuing]. That you knowingly violated?
Mr. Horn. No. No, sir.
Mr. McKinley. You did challenge and appeal the WVU
findings?
Mr. Horn. I did not challenge because software actions,
recalls, service complaints, in the millions for this company,
is normally doing business. I was worldwide Service and Parts
executive for Volkswagen worldwide. I've been to the Product
Safety Committee. I know how the system is working with all the
experts and that we got a seal of approval onto those actions,
and I'm not the technical experts.
Mr. McKinley. OK.
Mr. Horn. It has enough people in the system----
Mr. McKinley. Let me get to the crux more of my question. I
know the EPA fines. We just had a situation where a small
poultry farm was fined $17,000 a day because they were allowing
dust to come out of their chicken house out into the neighbor.
And we have seen steel mills being fined $3, $5, $7 million
daily until they clean up their discharge into a river. We have
seen coal mines and other operations.
So, there has to be, I think you can understand there ought
to be consequences for this violation. So, I am curious, I
assume you are accruing something on your financial sheets for
what could be a fair, what could be an expected penalty for
having violated the laws here of the United States. Can you
share with us or will you share with us what you are accruing
on your balance sheet for penalties, expected penalties?
Mr. Horn. Yes, yes. For the time being, I mean, there an
official information that the company has accrued directly 6.5
billion euros in the first step in this year. Maybe this is
enough; maybe this is not enough. I don't know. And the rest
will have to be worked out with the specific experts, as we
have hired enough experts, I can tell you.
Mr. McKinley. Thank you.
Now, when you import your vehicles in, you have to provide
a Certificate of Conformity with the EPA standards. And from
what I understand, the defeat device was not included in that
Certificate of Conformity, is that correct?
Mr. Horn. That's my understanding, yes, sir.
Mr. McKinley. Can you share with us why someone tried to
deceive the American Government, why that wasn't included in
the application of conformity?
Mr. Horn. Because those people who did the applications
most probably did not know, did not know that it was in there.
Mr. McKinley. Can you share with us who is responsible for
this failure to include a description? Is this limited to one,
two people?
Mr. Horn. We have an office which is called EEO in Auburn
Hills which is directly linked to the German Research and
Development Department. They work together. They get all the
informations, all the results testing things, technical
specifications, and then, they file the applications for
conformity and all those.
Mr. McKinley. Mr. Horn, thank you for testifying before us.
Just one question is, we have all, many of us have been
talking about this defeat device. For the American public to
understand what this is, can you explain what this defeat
device is and how it functions?
Mr. Horn. Yes. To my understanding, the defeat device is
not a device, but it's a software code in the engine and
exhaust system management which detects, this software detects
whether a car is on the dyno testing environment or whether the
car is on the road being driven.
And one example, for instance, is the steering wheel angle
and how many times it has been changed. Because once a car is
on the dyno, it is on the dyno. Nothing changes. And if the car
is on the street, the steering wheel changes. And that since
there's so many sensors in there, these are one of the examples
people gave me on how this device, which is a software code
again, worked, but hidden in millions of software codes. So, if
you don't know this, it is very difficult to detect, from my
limited technical understanding.
Mr. McKinley. Thank you. I yield back my time.
Mr. Murphy. Thank you. The gentleman yields back.
I now recognize Ms. Schakowsky for 5 minutes.
Ms. Schakowsky. Thank you, Mr. Chairman.
I have in my hand a letter from Volkswagen that was sent to
one of my senior staff because she is an owner of your car. I
remember when she bought the car and how excited she was about
the clean diesel.
The letter says, ``Your vehicle remains both safe to drive
and legal to drive. You do not need to take any action at this
time. All we ask is for your patience.''
I have to tell you, if I were a driver of one of these
vehicles that is contributing up to 40 times the amount of
emissions, I would want that addressed right away. I have a son
and a grandchild who regularly uses an inhaler. I am not
excited about contributing to or driving a car that has that
kind of emissions.
So, how much patience is my staff supposed to have? What is
the timeline here? What is the best scenario and the worst
scenario in terms of timeline for fixing this?
Mr. Horn. For the Generation 3 cars, this is model years
'16 and '15, the timeline is beginning of next year a complete
fix. For the Generation 2 cars, it's still under development.
This won't start, from my judgment, before the middle of next
year. And for the Generation 1 cars, which is the biggest feat,
I cannot give you a date right now, but within the next couple
of weeks we will start discussing those scenarios with EPA and
CARB, and alongside the development guys will have to do that--
--
Ms. Schakowsky. So, these cars unfixed could be on the road
for more than a year, let's say?
Mr. Horn. Yes.
Ms. Schakowsky. Or 2 years?
Mr. Horn. More than a year, definitely.
Ms. Schakowsky. I wanted to follow up on a question that
Mr. Pallone asked. It sounded like you were saying that the fix
could manage fuel economy, engine performance, and emissions,
that all of that could be fixed. If that is so, why didn't
Volkswagen do that initially? Why wouldn't you make a car that
would achieve those goals?
Mr. Horn. I think it's a great question.
Ms. Schakowsky. I mean, I can only assume that maybe
cheating was cheaper?
Mr. Horn. To my understanding, what I've learned, some
people have made the wrong decisions in order to get away with
something which will have to be found out.
Ms. Schakowsky. Let me ask you this: have you considered
financial compensation--for example, allowing customers to
actually return the car for what they paid for it?
Mr. Horn. This is one of the areas we're looking into right
now in terms of how to compensate our customers, yes.
Ms. Schakowsky. Providing rebate for lost value of the car?
Mr. Horn. Sure.
Ms. Schakowsky. And what about right now, if I had one of
those cars and I wanted a loaner, would you compensate the
dealer to give me a loaner instead of having to drive that
polluting car?
Mr. Horn. We would have to discuss and consider this. Right
now, I would say no, honestly, because the EPA has said these
cars are legal and safe to drive.
Ms. Schakowsky. And so, even you know that there is up to
40 times more pollution, if I went to my dealer, who might
because they are in a fix right now say, ``OK, well, we will
give you a loaner,'' the company would not do anything to make
ultimately your customer happy?
Mr. Horn. So, there's a general policy, and this is exactly
the reason why we gave the dealers the discretionary funds
which they could use at their discretion in order to help
customers, very significant cases. And whether they do a loaner
car program for the specific customer or whether they take them
out of the car, or whatever they think is best in this specific
customer's situation, they can do it with this money. No
questions asked, yes.
Ms. Schakowsky. But there is no policy that dealers could
say that loaners would be available? I realize 500,000 loaners
would be probably a hard thing to do.
Mr. Horn. Right.
Ms. Schakowsky. But you see how that would be a desirable
remedy for many people?
Mr. Horn. I understand your point, yes.
Ms. Schakowsky. Yes. Well, I just want to tell you, as a
consumer advocate all of my life, this is pretty shocking for
people to find out that a company--we have had a number of
recalls. I have had a recall on one of my cars. But to find out
that a company has deliberately cheated, it seems to me that
asking customers for patience is just really not sufficient.
I heard people on the radio who were repeatedly saying, ``I
just want you to take back my car and give me the amount of
money that I paid for it. I don't want that car. I don't want a
fix because it may not provide exactly what I thought I was
buying in the first place.'' I would hope that your company
would consider that as a primary remedy.
And I yield back.
Mr. McKinley (presiding). Thank you.
The Chair recognizes Dr. Burgess for his 5 minutes of
questioning.
Mr. Burgess. Thank you, Mr. Chairman.
And let me just stress that I am as far ideologically from
Jan Schakowsky as possible, and I am not here to provide you
advice, but I think she is giving you good advice. I have been
on this subcommittee for over 10 years.
I have been through Toyota. I have been through General
Motors. And now, we are doing this investigation. And let me
just suggest to you, and let me just suggest to your corporate
structure in Germany, that being dismissive and minimizing the
problem that is faced by consumers, dealers, suppliers is not
in your best interest and it will hurt you. So, I would be
aggressively compliant and aggressively trying to make it right
for your customers, dealers, and suppliers because in the grand
scheme of things I actually believe that will be less costly in
terms of dollars, in terms of reputation, and just in terms of
the endurance of the brand in the United States, which you have
already heard from members of this committee is significant.
Our histories with your company all are significant. They go
back a significant way.
Now that I have gotten that off my chest, let me just ask
you once again--you have been asked before--but are these
vehicles safe to drive?
Mr. Horn. Yes. Yes, the EPA has said these vehicles are
safe to drive.
Mr. Burgess. So, this is unlike some of the other recalls
that we have talked about in this subcommittee, problems with
airbags, problems with electronic throttle controls. These do
not pose an immediate jeopardy to the life of the driver or the
passengers?
Mr. Horn. I trust the judgment of the EPA, yes.
Mr. Burgess. Now, trusting judgment, that is what we are
doing here today, is we are talking that trust factor has been
eroded.
Let me just ask you, when you stress that you are the CEO
for Volkswagen of America, is that correct?
Mr. Horn. Yes, sir.
Mr. Burgess. But do you travel back and forth to Germany
from time to time?
Mr. Horn. Too often right now not much.
Mr. Burgess. Yes, well, have you been in the month of
September?
Mr. Horn. Yes, usually once a month, yes.
Mr. Burgess. Usually once a month? So, as this problem has
evolved or the information about this problem, have you gone to
the engineers over in Germany and said, ``Guys, what's up here?
How did this happen?'' Have you looked at any lines of software
code where someone has identified for you this has happened or
have you held in your hand a defeat device that was added to an
automobile?
Mr. Horn. Personally, I have taken out Mr. Mueller of
conference rooms, Dr. Diess out of conference rooms, and
personally talking intensively to the engineers on how we make
this right. And to other questions, you know, ``How is this
possible?'', ``Who has done what?'', they said, ``We didn't
know ourselves.''
Mr. Burgess. Yes, but do you understand how that just
defies credulity? I mean, here is a software program----
Mr. Horn. Yes.
Mr. Burgess [continuing]. That wasn't just written, I mean,
I am suggesting here it was written by one person in their
basement in the dark of night. I mean, this had to be a team of
people who were working on this.
You have got these rascals over here at the EPA in the
United States, and they are just hard to deal with. So, we want
to do something that we will be able to sell our cars, and we
will just trick them. We will just trick them. And then,
somehow you are going to integrate that into the supply chain
of a multinational corporation, and nobody knows a darn thing
about it? I mean, that is what you are asking us to believe.
And you understand why, and you have heard it from a number of
members, the incredulity that that could, in fact, happen in a
large multinational corporation.
Mr. Horn. I fully agree, sir.
Mr. Burgess. Have you asked that question to the people----
Mr. Horn. Yes.
Mr. Burgess [continuing]. Who are superior to you at
Volkswagen in Germany?
Mr. Horn. Who was superior to me, the guy is not on board
any longer. He is called Christian Klingler. He resigned due to
other reasons.
Mr. Burgess. Well, I almost just don't know what to say.
Apparently, in the public domain in the early or middle part of
the last decade there was some suggestion that Volkswagen, in
an effort to try to sell its diesel high-mileage vehicles in
this country, was in the process of leasing software to deal
with this emissions problem from another company, is that
correct? Blue Tech Software, I believe, is the name that is
used.
Mr. Horn. I have read this in the newspapers, yes.
Mr. Burgess. OK. So, it is in the newspapers. Have you,
yourself, looked at why did they look at this and, then, stop
those negotiations for those leases? What changed? Did we
develop some technology at Volkswagen? Did we develop a defeat
device at Volkswagen? I mean, these are some of the questions
that are just going have to be answered.
Mr. Chairman, let me just say that I recognize and I
appreciate Mr. Horn being here. I think that we are doing this
hearing prior to the time that your document production
deadline expired. So, we recognize that you are here
voluntarily and it is your sincere effort to comply with the
wishes of the committee.
But let me just say, all of us represent dealers,
consumers, suppliers, and their lives and livelihoods are
extremely important to us. And that is what we have got to keep
first and foremost.
I yield back, Mr. Chairman.
Mr. McKinley. Thank you.
And the Chair recognizes the gentleman from Texas, Mr.
Green, for 5 minutes.
Mr. Green. Thank you, Mr. Chairman.
And for our witness, we have other subcommittees going on.
So, you will see members come in and out during the day.
When I first heard about it, I was amazed that a company
that is as great as Volkswagen could let this happen, and even
to the executives maybe who didn't know, because the image of
the company, not only in our country, but in Europe and around
the world, is so great.
Our committee wants to get some answers, and I would like
to understand more about Volkswagen's own investigations in
your efforts to find the cause of the debacle. News reports
discuss several internal and external investigations initiated
by Volkswagen. Mr. Horn, please explain Volkswagen's own
investigations into this incident and how they are different
from each other.
Mr. Horn. The investigations started--I talked yesterday to
our head of Group Revision--on September 22nd, this year, went
on with our own Group Revision Department, Group Compliance
Audit Department until September 29th, for one week. And then,
all the documents, all the preliminary documents were turned
over to the American law firm Jones Day, who is investigating
this on behalf of our Supervisory Board.
Mr. Green. OK. News reports have discussed several internal
and external investigations. So, that was the only one you had,
that was the auditors from September the 22nd to the 29th? Are
there any other investigations Volkswagen is conducting?
Mr. Horn. To my understanding, after the Notice of
Violation, and from September 18th, from CARB and EPA, these
investigations have started right away. And this is what I have
told you, to my best knowledge. I don't know of any other
investigations.
Mr. Green. Do you know if the actions are in the United
States or Germany or in both or everywhere where Volkswagen has
sold these vehicles?
Mr. Horn. Worldwide.
Mr. Green. OK. Would you commit to sharing these
investigations with the committee, the results of these
investigations?
Mr. Horn. I commit to get as much information as possible
to this committee, yes.
Mr. Green. OK. Thank you.
Last week one news outlet reported that, quote, ``The
Steering Committee of the carmaker's Supervisory Board met last
Wednesday to discuss the preliminary findings of the probe into
the scam.'' And that is a quote. What were these preliminary
findings that were revealed last Wednesday?
Mr. Horn. Sorry, I'm still a little bit confused by those
folks here down there clicking all the time. Could you please
repeat your question, please?
Mr. Green. OK. There is a quote, ``The Steering Committee
of the carmaker's Supervisory Board met last Wednesday to
discuss preliminary findings of an internal probe into the
scam.'' What were these preliminary findings that were released
last Wednesday?
Mr. Horn. Our own Supervisory Board of Volkswagen AG. I
don't have access to these preliminary findings.
Mr. Green. Can you get a copy of it and share it with our
committee?
Mr. Horn. I can definitely try, sir.
Mr. Green. Pardon?
Mr. Horn. I can try, sir.
Mr. Green. OK. You are the CEO.
Mr. Horn. I am the CEO of this company, and then, there's
the Supervisory Board and there's a group of people who are
quite above me in Germany, and the Supervisory Board has to
make this decision.
And I think, you know, with the commitment that our company
has, there is a very good chance that the company will provide
at one point of time the necessary documents to provide more
clarity into these facts here and to this issue.
Mr. Green. Again, like my colleague, I appreciate you being
here voluntarily, but it would be great if we could actually
get that in our committee for our investigations.
According to a September 30th news report, Volkswagen's
Supervisory Board member Olaf Lies said, quote, ``These people
who allowed to this happen or who made the decision and saw
this offer, they're acting criminally. They must take personal
responsibility.'' Mr. Horn, do you agree with that?
Mr. Horn. Yes, sir.
Mr. Green. OK. Do I have your commitment to full
cooperation in finding and addressing the roots of the
deception?
Mr. Horn. Sure. Yes, sir.
Mr. Green. And again, our committee is ongoing, our
investigation. And I appreciate your being here.
Mr. Chairman, I will yield back my time.
Mr. McKinley. Thank you. Thank you.
For the rest of the members with questions, I know we have
got a break here in 20 minutes, but we have got 7 people that
want to speak. So, we are going to be very short on the
timeframe with this.
But the Chair recognizes Mr. Griffith for a short list of
questions.
Mr. Griffith. Thank you. I appreciate it.
As you have heard from others who have owned cars and
learned to drive, I am one of those as well. My mother was able
to afford her first new car, which was a Volkswagen Squareback.
And that is what I learned to drive on. It was a manual. I have
inherited my grandmother's 1972 Super Beetle, which I still
have.
In the eighties I drove a Rabbit. In the nineties, I bought
a gas-powered Jetta. When it got close to 200,000 miles, my
mother convinced me that even Volkswagens couldn't go on
forever. She might have been wrong. I sold that car and bought
a 2003 gas-powered Passat, which I drove until this summer and
got 376,225 miles. And the people who bought it from me are
going to tell me when it crosses 400,000. They think that there
won't be any problem in doing that.
As a backup to my 2003 Passat that was going and going and
going like the Energizer rabbit or bunny, I bought a 2012
Volkswagen diesel. So, everybody else is talking about what are
consumers thinking. You are looking at him. I am your consumer.
I am your Volkswagen driver who has always trusted your
company, and I am very disappointed.
So, what are we going to do? First, you have indicated--and
there could be some differences in understanding in language--
you have indicated that you have notified the customer. I have
checked with the previous owner. I bought the car from a
friend. They have not received any notice that this 2012 diesel
Passat is affected. When you go to the Web site, it says that
you all received notice from the EPA that some of your two-
liter, four-cylinder TDI vehicles don't comply, and among the
included vehicles, of course, is the 2012.
Because I am not skilled like Chairman Murphy, I am not
skilled and I couldn't take a car apart. I had a hard enough
time figuring out how to get the top off, the plastic lid off
of the engine to try to take a look at it.
But, when you see that and it says some of the cars are
affected, and here's one, and the original articles referenced
the '14s and '15s, but didn't say anything about the '12s and
the '13s, and then, you see a Volkswagen document that says
discrepancies relate to vehicles with Type EA 189 engine, and I
am looking in my manual and I am looking at things on the
engine block, and it doesn't say anything about an EA 189
engine.
Now the team on the committee here and, then, my staff have
figured out I am affected. We know that. But this was done at
great trouble. I have received no letter. I can't tell for
sure.
And I will tell you what was interesting was we found that
there was actually a site in the UK--and I know you are just
America and I am just talking about America--where you can
actually plug in your VIN number and it will tell you if you
are affected. I would encourage you to consider that because,
while you may think you have notified everybody, not everybody
is capable of taking apart the engine and figuring out if they
are an EA 189.
And then, the other big question is, am I Generation 1 or
Generation 2? They tell me I am Generation 2, which I found
surprising based on the numbers that you have testified here
today. Can you confirm that I am a Generation 2?
Mr. Horn. If you have 2012 Passat, I would think so now,
right.
Mr. Griffith. OK.
Mr. Horn. Yes.
Mr. Griffith. And so, this is something else that you might
want to put into your--it is a pretty simple Web site that
takes the VIN numbers that are affected and says you are
Generation 1, you are Generation 2. Because it sounds like the
fix, as I am listening today, the fix to the Generation 2 is
more simple than the fix to the Generation 1. Am I correct in
hearing that today? It is a simpler fix for Generation 2 than
for 1?
Mr. Horn. Yes.
Mr. Griffith. And then, I would have to echo what
Representative Schakowsky and Dr. Burgess had to say. You know,
when you buy a vehicle, even if you bought it used, and you are
looking in the manual and it says, ``Under Federal Emissions
Control System Defect Warranty, was designed, built, and
equipped so as to conform at the time of sale with all
applicable regulations of the United States Environmental
Protection Agency (EPA), and is free from defects in
material,'' et cetera, I believe that I was sold something that
was different than what it was purported to be.
And my friend didn't do the defrauding. It was the
Volkswagen company. I think you are much better off to come up
with a program that buys these cars back because, you know, I
understand it wasn't your folks in Chattanooga that made this
mistake, it was the folks in Germany. But you have got to
restore trust, and one of the ways to do that is to stand
behind your vehicle.
One of the reasons that I have liked the company is that on
my 1990s version something was wrong with the paint. No
questions asked. When I took it into First Team Auto Mall in
Roanoke, they said, ``Not a problem. We'll take care of it.''
And it was done. Never had another problem.
This is a much bigger problem, but Volkswagen needs to
stand up and say, ``OK, we understand. We will buy your car
back at what the fair market value of that vehicle was prior to
this notice coming out.''
With that, I see my time is up and I yield back.
But thank you for being here.
Mr. McKinley. Again, thank you again. We have now 12
minutes. So, I am asking those again, please, to keep their
questions short.
The Chair recognizes Mr. Yarmuth from Kentucky.
Mr. Yarmuth. Thank you, Mr. Chairman.
Thank you for appearing, Mr. Horn.
I suspect that I should be feeling a sense of schadenfreude
here today because Ford Escapes and Lincoln MKCs are made in my
district, and presumably, we will be selling some more of those
while you are out of the marketplace. But I am not really
taking any joy in any of this.
I just have a couple of quick questions. The article I read
said that there were about 11 million vehicles worldwide
affected by this.
Mr. Horn. Yes.
Mr. Yarmuth. So, they contain the defeat device. I guess
there is no added cost to put it in since it is just a line of
computer code. Would that be right?
Mr. Horn. It seems very logic, sir, yes.
Mr. Yarmuth. Yes. So, my question is, how many countries
that these 11 million vehicles were sold in have emission
standards that would have been defeated by this device? I mean,
if the United States we are talking about a half a million
cars, roughly, out of 11 million, what are Germany's emission
standards, for stance? Are they stricter than the United
States?
Mr. Horn. I mean, there's many countries affected. All the
countries in Europe are affected. The emission standards for
diesel cars in Europe are different to the U.S. You have
currently the E05 and going into E06 here. You have been 5.
And there's two differences. First of all, nitrogen oxides
are much more stringent here. It's 5 grams, I think, per mile,
or whatever. And in Europe it is now 30 to 40. So, this is
quite--it is higher. It is higher in Europe, but in Europe what
is stricter is the diesel part of the particle filter
emissions. There are these little diesel particle filters
coming out. On that, the European laws are much stricter than
the U.S.
Mr. Yarmuth. My question is, would this defeat device that
is 11 million vehicles have helped deceive the European
countries' standards as well?
Mr. Horn. I can only give you my understanding at this
point of time. But, as you know, there are lots of European
countries investigating this, and we are working with those
agencies, also with the German KBA, which is the responsible
agency. People had to report there, and this is being
investigated.
Since the standards are different, my understanding is that
the defeat device is in those cars as well, but to what degree
it is really affecting the emission laws, I don't know.
Mr. Yarmuth. OK. I appreciate that answer.
And I just want to say before closing that it is very
refreshing to hear my colleagues from the other side defend the
Clean Air Act and talk about emissions. I appreciate that. It
is a rare occurrence.
I yield back.
Mr. Murphy (presiding). Mr. Collins is recognized for 5
minutes.
Mr. Collins. Thank you, Mr. Chairman.
Since I am always, and again this time, one of the last to
question you, I guess what I have picked up here, and I hope
you can relay back to your Board, the folks running Volkswagen
back in Germany, is that the response so far is inadequate.
I would tell you from my perspective it is a sign of
arrogance. It is a sign of not admitting yet the severity of
your problem.
I will tell you I am an engineer, and I have a way of
thinking. And I cannot accept VW's portrayal of this as
something by a couple of rogue software engineers.
I would begin by saying, isn't intellectual property and
patented work a very important part of what makes VW, VW? You
are constantly looking for breakthrough technology that you can
patent? That is a big part of your company, isn't it? You pride
yourself on that engineering.
So, you are having us believe--and I think this is the way
an engineer's mind works--back in 2009 you were trying to
figure out a way to have clean diesel, top performance, and
your engineers got stumped. The NOx emissions were not even
close. Would that be true?
Mr. Horn. What is stumped?
Mr. Collins. Stumped, confused. They couldn't get through
it. It was an insurmountable roadblock. They couldn't give
performance and emission control at the same time. They were 40
times over the NOx emissions.
Mr. Horn. It seems to be logic, what you are saying----
Mr. Collins. Right.
Mr. Horn [continuing]. But I don't know.
Mr. Collins. So, then, if I am working in VW engineering
and I am always looking for intellectual property that I can
patent and give me a competitive advantage--and I know this is
a problem, and I have to tell you this problem was going way up
the chain. ``We can't do it. The NOx standards in the U.S. are
not what they need to be. We can't do it.''
``Well, go work harder. Go find a solution.''
People are coming back. ``We still can't find a solution.''
The Engineering Manager, ``We can't find a solution.''
And then, all of a sudden, two software engineers, like
they found pixie dust, come in and say, ``We found a solution.
We've got it. We fixed it.''
Now you are telling me these two engineers snuck that
computer code into the software and no one said, ``This is
breakthrough technology. I think we need to run this up the
ladder with our attorneys and our engineers. We need to patent
this. This is intellectual property that is going to give us an
advantage. We can meet the NOx standards and the performance
standards, and we had a breakthrough. We went from 40 times the
emissions to we met the emissions''?
And VW is trying to get the United States of America to
believe these are a couple of rogue engineers? I categorically
reject that. Either your entire organization is incompetent
when it comes to trying to come up with intellectual property--
and I don't believe that for a second--or they are complicit at
the highest levels in a massive coverup that continues today.
Because just the very 5 minutes that I have been here, and
as an engineer, and I am not a Ph.D., my mind immediately
jumped to, with this being true, why didn't we look for
patents? Why didn't we ask the questions what the pixie dust
was? They have fixed this thing miraculously. This didn't
happen in one day. This didn't happen in one month. Your
engineers were looking at this, I can tell you, for many
months. They were stumped. They couldn't come up with it.
And then, all of a sudden, the solution is there, and VW is
trying to tell us in the United States of America, in this
Congress, that it was a couple of rogue engineers. Well, if
that is true, then your entire Patent Department should be
terminated, because this would have been massive breakthrough
technology that would have given VW a true advantage, not by
cheating, but a true advantage in clean diesel technology.
I would like you to take that back to your Board and have
them ask that question: What was going on in the patent world?
What was going on in the engineering world? Because I can tell
you personally I categorically reject everything that VW is
saying about a couple of rogue engineers. And I can tell you
that suspending three folks, it goes way, way higher than that.
And what I would like to conclude with, sir--again, I am
also a financial guy, I am an entrepreneur--I would suggest
that you be honest to your shareholders. Six point five billion
euros is off by an order of magnitude. Five hundred thousand
vehicles at $40,000 apiece, if you were to buy those back--and
I would suggest you start doing that tomorrow--that is 20
billion there. I would suggest you are off by an order of
magnitude. And if you had told us today you had set aside $68
billion, I would say you are probably in the ballpark. Six
point eight, not even close.
With that, Mr. Chairman, I yield back.
Mr. Murphy. The gentleman yields back.
I now recognize Mr. Welch for 5 minutes.
Mr. Welch. Thank you very much.
Sir, thank you for coming in. But I just want to express to
you some of the things that I have been hearing from
Vermonters.
First of all, we have got VW customers, we have got VW
dealers in red States and in blue States, and they are mad as
hell. Some of the questions that came to me from Vermonters,
and I want to submit this to the record and ask you, VW, to
answer these questions from Vermonters.
[The information appears at the conclusion of the hearing.]
But let me just give a reflection of what these say.
Number 1, ``What will''--you, VW--``be reading [when you
are] in jail?''
Number 2, ``I just wonder what the hell [you] were
thinking.''
Three, ``How can we help out Vermonters who got these
lemons?''
Four, ``Why should the U.S. allow you to sell vehicles in
this country?''
Five, ``VW is the Lance Armstrong of the ... industry.''
These questions go on and on and reflect the white-heat
anger that folks have about the deception.
One last question, ``How do you sleep at night? ... How
[do] you call yourself a member of the human race when you
knowingly ... poison the planet?''
And then, I talked to some of our VW dealers. They care
about their customers, and I know you individually do as well.
And one of the dealers said this is on the scale of Enron and
Bernie Madoff. That is how deceitful and unnecessary and
willful it was.
They will stand by their employees, our VW dealers, but
this is going to be an expense to them because they are not
selling cars that are bringing in profits. So, they are going
to have to pay out of their own pocket, and they will do that
because they are loyal to their employees.
But I have one major question. Just last week, BP reached a
settlement with the Justice Department over the massive 2010
Gulf oil spill that killed 11 workers and devastated the
environment and the economy of the Gulf Coast. That settlement
allowed BP to shift more than half of its $21 billion fine to
the American taxpayer by taking advantage of a loophole in the
U.S. Tax Code. In my view, that is wrong. The wrongdoer, not
the taxpayer, should pay all of the settlement.
And the question I have is this: Will you commit here today
under oath that VW will not use this loophole to write off any
future settlement payments related to the fraudulent and
deceptive activity to which VW has already admitted, sir?
Mr. Horn. If you want a clear answer under oath, I would
have to really understand these tax loopholes, and I don't
understand them. But I----
Mr. Welch. Let me explain it very simply. BP got to write
off about half of the cost of that, and that shifts the burden
to the taxpayer instead of their shareholders.
Mr. Horn. My understanding is that we will work very hard
in order to get this right and that there should not be a
burden to the taxpayers--should not be.
Mr. Welch. Thank you.
Another question, taking up where Mr. Collins was, I know
you individually are appalled at what happened at VW, and you
have asked your question, ``How did it happen?'' Someone
somewhere made a decision to make it happen.
Mr. Horn. Uh-hum.
Mr. Welch. Someone somewhere implemented that decision. You
have asked yourself how that happened, correct?
Mr. Horn. Yes, sir.
Mr. Welch. And your answer to yourself is what?
Mr. Horn. My answer to myself is that I do everything--and
I don't sleep at night--to help our dealers, to help our
customers, and to be there for my company and my employees to
get us through this crisis here in the U.S.
Mr. Welch. I appreciate that, and I know that is true. You
individually have a very good reputation, sir.
Mr. Horn. Thank you.
Mr. Welch. But I asked you another question. You know the
company. You have asked yourself who and how. And in your own
mind, I am asking you to share with us your own view about who
and what, that it could happen in the corporate structure of
VW.
Mr. Horn. I think this is a speculation if I would start
now. But, you know, I'm reading newspapers, as well, and
there's been lots of articles around there. And from my
personal feeling, this was pressure in the system to get
resolutions and, also, in conjunction with cost pressure as
well. This was discussed already here in one of the other
instances.
And I think it is dead wrong if you put corporate profits
before people, and I think we have to get to the point that we
put people first and not the pressure and corporate profits.
Mr. Murphy. Thank you.
Mr. Welch. What people in what department--my time is up?
Mr. Murphy. Yes, your time is up.
Mr. Welch. I yield back.
Mr. Murphy. Thank you.
I now recognize the gentleman from Texas, Mr. Flores, for 5
minutes.
Mr. Flores. Thank you, Mr. Chairman.
Mr. Horn, thank you for joining us today in an obviously
tough situation for your company.
VW's actions damaged the trust of the American people as
well as the environment for billions around the globe. They
have also economically damaged their customers, their dealers,
and their shareholders. And I hope that VW will continue to
work on the correct and fair resolution of those issues.
I want to get more in the weeds now to try to go through
and fill in the blanks in the record on some dates and the who,
what, where, when, as we have talked about before.
In May of 2014, independent researchers published a report
that first identified higher-than-expected on-road emissions in
VW vehicles, which prompted the investigations by CARB and the
EPA.
So, question No. 1 is, when did VW first become aware of
this research?
Mr. Horn. The end of April when it was published. To my
knowledge, it was published the end of April. Mid-May I got
information about this.
Mr. Flores. OK. What steps did VW take to evaluate the
conclusions of the research at that time?
Mr. Horn. First of all, to acknowledge that emission
violations or higher emissions are not legal. Secondly, the
engineering departments were supposed to recheck those testing
results on our own equipment in order to validate this. And
then, thirdly, to correct this with respect to software actions
which have been implemented in the end of last year.
Mr. Flores. OK. Now where was this done? Was this done
Volkswagen Germany or Volkswagen U.S.? And who did that? Who
was responsible for that?
Mr. Horn. The software applications management for the
engines and, also, for the exhaust systems are being done in
Germany at the Engine and Drivetrain Department within the
Research and Development Division.
Mr. Flores. OK. The EPA and CARB both described a series of
presentations or discussions with VW in the wake of the
research in May of 2014. Who for VW was interacting with EPA
and CARB? Were those individuals part of VW America or VW AG or
both?
Mr. Horn. That's something I would have to check, and maybe
this is also in the records provided to you next week.
Mr. Flores. OK. Great.
What did VW America understand about the cause of the
higher on-road emissions between May of 2014 and the voluntary
recall in December 2014? In other words, what did you and your
team at VW America know what was going on? What had VW Germany
told you?
Mr. Horn. That they have, to my understanding, validated
those test results and developing software fixes in order to
get this back in line, and three different tech talk versions
which I didn't understand, to be also very honest, in order to
bring this in the car.
But, also, as I said, all these things are vetted through
this Product Safety Committee which is worldwide responsible
for this and which is also looking at the track, for instance.
And in this context, I trusted those guys and those processes,
that everything was according to the book 100 percent.
Mr. Flores. OK. So, at that time, nobody in VW America knew
that there was cheating going on in the software design?
Mr. Horn. To my understanding, no.
Mr. Flores. OK. Then, in December of 2014, VW conducted a
voluntary recall that, at least in part, sought to address the
higher on-road emissions in the model year 2009 through model
year 2014 vehicles that were subject to the allegations. Would
you explain what you understand this recall was intended to do?
Mr. Horn. To correct the studies of the University, I think
the results of the study of the University of West Virginia,
our retesting to bring the cars, all the cars, back into
compliance.
Mr. Flores. OK. But that fix to the emissions problems that
was implemented as part of that recall didn't resolve the issue
of higher on-road emissions. So, the question is, who was
responsible for developing that technical solution that was
implemented in December of 2014?
Mr. Horn. The same Engine and Drivetrain Division within
the Engineering and Development Department or Division in
Germany.
Mr. Flores. The folks in Germany? OK.
And so, what role did VW of America have in developing or
validating that solution?
Mr. Horn. We just have this office in Auburn Hills who do
the applications. There's also a testing facility in Oxnard in
California who also had those folks in testing, but, to my
understanding, dyno testing, as far as the legal situation was
concerned.
Mr. Flores. OK. So, just to be clear, VW America did not
develop the solution or played no part in development of the
solution?
Mr. Horn. No.
Mr. Flores. OK. It may have helped validate the solution?
Mr. Horn. I don't think so.
Mr. Flores. OK. You don't think so? OK.
And at that time, did you or anyone in VW of America have
any knowledge of the alleged defeat device?
Mr. Horn. At which point of time?
Mr. Flores. At the time, December of 2014----
Mr. Horn. No.
Mr. Flores [continuing]. When you were beginning to roll
out the recall solution, did you have any knowledge of the----
Mr. Horn. No.
Mr. Flores. Anybody in VW America, to the best of your
knowledge?
Mr. Horn. To my understanding, not, because, otherwise, I
would have hoped that they would inform me about this.
Mr. Flores. Thank you. I yield back.
Mr. Murphy. Thank you.
I now recognize Ms. Clarke of New York for 5 minutes.
Ms. Clarke. Thank you, Mr. Chairman.
And I would like to thank you, Mr. Horn, for taking the
time and giving us as much background and as much knowledge of
what has taken place, to the best of your ability.
I have heard a couple of my colleagues on the other side of
the aisle refer to what has occurred as cheating, but I would
like to say to you that I believe it was an intentional
deception. And I think we need to say it as it is. This wasn't
a game. This was an intentional deception to bring something on
the market that did not meet standards.
I want to go back to something my colleague just raised
about your testing center at Oxnard. I understand that, for the
better part of the past year, VW was interacting with CARB
about discrepancies related to the high emissions that were
discovered in 2014 involving your vehicles. What is the purpose
of the Oxnard facility? And is it, as the article suggests,
developed to help Volkswagen meet emission standards?
Mr. Horn. To my understanding, yes, and it's directly
connected to the Research and Development Department in Germany
to help them to get the cars into legal compliance and to the
U.S. standards.
Ms. Clarke. How many employees are there?
Mr. Horn. Oh, I would have to guess this number.
Ms. Clarke. OK. If you could just provide us with that?
Mr. Horn. Just everything----
Ms. Clarke. What was the role of the Oxnard facility in
understanding the test results presented by CARB showing
unexpectedly high on-road emissions? What was its role once it
had that information?
Mr. Horn. At this point of time, I can't answer this. I
don't have the understanding. I only know that our Department
in Auburn Hills was interfacing with CARB and EPA for the
compliance, for the applications and everything.
Ms. Clarke. So, as you have mentioned Auburn Hills, what is
the role of that office?
Mr. Horn. Excuse me?
Ms. Clarke. What is the role of the Auburn Hills office?
Mr. Horn. And to do the compliance and the application for
certification with the U.S. authorities, and they work directly
on a working level, on a management level, on a daily basis
with EPA and CARB.
Ms. Clarke. And so, do the Oxnard and Auburn Hills
facilities work together?
Mr. Horn. Now, yes, there's a structural change in terms
of----
Ms. Clarke. So, prior to the unveiling of this deception,
they were separate entities? They didn't interface?
Mr. Horn. Well, I think they worked together. My
explanation is about the structure of the situation of these
facilities. And they are now under one roof.
Ms. Clarke. OK, but they collaborate?
Mr. Horn. I hope so.
Ms. Clarke. They are collaborators? Because, you know, my
concern is that, if we have these facilities designed
specifically to address the issues of emissions, of testing,
and they failed, that speaks to a whole other level of perhaps
collusion with respect to this whole software debacle.
Have you looked at or done any internal investigation with
respect to these facilities?
Mr. Horn. That's part of the internal investigation, but my
understanding is they're just testing on the basis of the legal
test requirements.
Ms. Clarke. So, the engineers would not have known software
code? Is that what you are saying?
Mr. Horn. I think that they have tested the dyno situation
for the cars and they didn't do independent road tests. That's
what I allude to.
Ms. Clarke. OK. Let me jump to the whole idea of the
environmental impact. How seriously does Volkswagen take its
commitment to the environmental responsibility?
Mr. Horn. This is deeply--also, maybe it's difficult to
understand now in this context--but it is deeply embedded in
our corporate culture. We have three values which is
innovative, valuable, and responsible, and responsible towards
our employees and the environment.
Our plant in Tennessee is a Platinum LEED certification.
This is the most clean and energy-efficient plant in the world.
And all of our plants have a commitment to reduce carbon
footprint by 25 percent in 2018. And whether these plants are
in India, newly built, or in China, they are always up really
to the highest Volkswagen standards, which go beyond sometimes
conventional standards.
Ms. Clarke. So, if this is part of the corporate culture--
--
Mr. Horn. Yes.
Ms. Clarke [continuing]. I am assuming that that is
throughout, including your engineers and scientists, that this
is sort of a part of the ethos. How do you explain this
deviation, a massive deviation?
Mr. Horn. Myself and the majority of all Volkswagen
employees, which is 600,000, asked the same question, the same
question, and it's a relevant question. And I hope that these
investigations will definitely find out what drove those
people, beyond newspaper articles and what we read out there,
what drove those people into these decisions, into these
actions.
Ms. Clarke. Hope it won't be profits.
I yield back, Mr. Chairman.
Mr. Murphy. Mr. Tonko is recognized for 5 minutes.
Mr. Tonko. Thank you, Mr. Chairman.
Mr. Horn, these vehicles promised unrivaled fuel economy
and performance without the NOx emissions usually associated
with diesel. I know other members have asked about how
Volkswagen intends to make consumers whole, and I do want to
lend my voice to that briefly.
Because consumers, including people in my district,
purchased a car believing it would be a clean, environmentally
friendly choice, they have every right to feel defrauded.
Consumers were sold a bill of goods that simply does not exist.
And I think it is likely that whatever fixes to comply with
emissions standards will hurt the vehicles' performance in
other ways. This is not what consumers thought they were
buying, and it is not what dealers thought they were selling.
Worse still, the resell value on these vehicles, which I am
sure was a selling point, has certainly been destroyed. So,
Volkswagen has a lot to think about, I believe, in terms of how
it intends to make right by consumers.
Now let me ask, typically, when deciding whether to issue a
recall and develop a solution, does Volkswagen conduct its own
emissions testing?
Mr. Horn. Yes.
Mr. Tonko. And did you try to recreate or confirm the
results of the ICCT study from May of 2014?
Mr. Horn. I can't speak to this, what they specifically
tested. In July 2014, I was informed that they have basically
acknowledged the testing results and were developing those
fixes in order to bring those cars back into compliance.
Mr. Tonko. Now a lot was said about defeat devices, and we
are talking about a defeat device here. Has the Volkswagen
operations been impacted by defeat devices in the past?
Mr. Horn. I have, in the context after September 3rd,
understood that there was an issue, for instance, here in 1974,
yes. That's what I understand.
Mr. Tonko. And so, what measures were taken by the company
to make certain that there was better scrutiny, better
oversight of the potential for defeat device application?
Mr. Horn. At that point of time, that's a great question,
and I can't get you the answer now.
Mr. Tonko. But was something done?
Mr. Horn. In 1974, I was 12 years old. I don't know.
Mr. Tonko. Well, history is history. We missed some of
that. So, we reach to the books and read about it. What was
done, if anything----
Mr. Horn. Yes.
Mr. Tonko [continuing]. To address defeat device
application?
Mr. Horn. And I think the investigations will go back into
this time and----
Mr. Tonko. Well, I don't think we need to investigate that.
Did a corporate measure get put into play to address defeat
devices?
Mr. Horn. Back then, I don't know the answer, no, sir.
Mr. Tonko. I would hope you could provide that to the
committee. I am certain the record will be open.
Mr. Tonko. And if I could just confirm some of the
information we have received, Volkswagen initiated a voluntary
recall in December of 2014 that was intended, in part, to
address the issue of excess NOx emissions, is that correct?
Mr. Horn. Excuse me. Could you repeat the question, please?
Mr. Tonko. Right. Volkswagen initiated a voluntary recall--
--
Mr. Horn. Yes.
Mr. Tonko [continuing]. In December of 2014?
Mr. Horn. That's correct, yes.
Mr. Tonko. That's correct? Who at Volkswagen proposed the
recall?
Mr. Horn. The Technical Engineering Department in
conjunction with the Product Safety Committee worldwide, which
is steering all the recalls campaigns and voluntary recall
actions out of Wolfsburg essentially for all the markets.
Mr. Tonko. And what explanation was given to consumers
about why that December 2014 recall was necessary?
Mr. Horn. I would have to look into the document on what we
wrote to those consumers. I don't know now.
Mr. Tonko. You will provide that to the committee, please?
Mr. Horn. Definitely. It's public. It's public anyhow.
Mr. Tonko. And what explanation was given to regulators
about why that December 2014 recall was necessary?
Mr. Horn. That's also something we will have to provide in
the document, with the documents.
Mr. Tonko. And what fix did the Volkswagen organization
implement for cars brought in under that recall?
Mr. Horn. All have been software fixes. New software
versions have been fleshed into the specific onboard steering
units.
Mr. Tonko. And who at Volkswagen developed that fix?
Mr. Horn. The Engine and Drivetrain Development, Software
After-Treatment Departments in Germany, Wolfsburg.
Mr. Tonko. And did they know at the time that it would not
work?
Mr. Horn. I don't know that. My understanding was that it
would work and, otherwise, also the work by the Product Safety
Committee wouldn't have released this version for application
in the markets.
Mr. Tonko. Well, I thank you for your responses. I look
forward to the additional information you owe to the committee.
And again, I would say on behalf of the consumers of the
20th Congressional District of New York, those of the country,
and around the world impacted by this, they deserve a sound
explanation and a fix that will respond to the environmental
damage done here and the consumer fraud.
Mr. Horn. Yes, sir. Thank you.
Mr. Murphy. Thank you.
Ms. DeGette has one final question real quick, and then, we
have got to leave.
Ms. DeGette. First, Mr. Chairman, I ask unanimous consent
to put Mr. Welch's document into the record.
Mr. Murphy. So ordered.
Ms. DeGette. I just have oen last question, Mr. Horn,
because you told a whole bunch of us on this committee that,
after that West Virginia University study in May of 2014,
everybody was running around trying to figure out what was
going on with these cars and why there was a discrepancy
between the tasks, that your engineers didn't know the answer.
But, in fact, the discrepancy was because of a willful act of
some engineers in Germany in the first place, correct?
Mr. Horn. That's my understanding, yes.
Ms. DeGette. And those people, that information about that
discrepancy never made it to Germany, so they could tell your
people what was wrong? Is that what you are testifying to here
today?
Mr. Horn. I don't understand what you're trying to say.
Ms. DeGette. Well, you said your people were trying to
figure out why there was a discrepancy.
Mr. Horn. Right.
Ms. DeGette. But there were some people who knew, and those
were the people who wrote that deceptive code in the first
place. Are you telling me that they never told your U.S. people
what the problem was and why there was a discrepancy?
Mr. Horn. The people who investigated the study in detail
and developed those software fixes were also the colleagues in
Germany. Of course, they were informing their U.S. colleagues
in Auburn Hills.
Ms. DeGette. So, did they tell the U.S. colleagues that
there was this deceptive code and that was what was causing the
discrepancy, yes or no?
Mr. Horn. I don't think so. I don't think so.
Ms. DeGette. Thank you.
Mr. Horn. Otherwise, we would be much earlier here.
Mr. Murphy. Thank you.
Mr. Horn, that concludes our questioning for now. This
hearing is not over, but we would appreciate--more questions
will be coming from committee members--we would appreciate a
quick and honest response to those as well.
Mr. Murphy. This hearing is going to adjourn for a couple
of hours while the Republican Conference is meeting. We will
reconvene about 15 minutes after the call of the Chair after
that meeting.
Thank you much. We will be back.
Mr. Horn. Thank you.
Mr. Murphy. And thank you.
[Whereupon, at 12:18 p.m., the subcommittee recessed, to
reconvene at 1:39 p.m. the same day.]
Mr. Murphy. All right, we reconvene this Subcommittee on
Oversight and Investigations hearing on Volkswagen's Emissions
Cheating Allegations: Initial Questions.
We have Mr. Grundler and Mr. Brooks here as witnesses.
And let me just go into this, as we reconvene this hearing.
You are aware that the committee is holding an
investigative hearing, and when doing so, has the practice of
taking testimony under oath. Do you have any objections to
testifying under oath?
Mr. Brooks. No.
Mr. Grundler. No.
Mr. Murphy. Both witnesses say no.
The Chair then advises you that, under the rules of the
House and the rules of the committee, you are entitled to be
advised by counsel. Do either of you desire to be advised by
counsel during your testimony today?
Mr. Brooks. No.
Mr. Grundler. No.
Mr. Murphy. Both witnesses indicate no.
In that case, would you please rise and raise your right
hand, and I will swear you in?
[Witnesses sworn.]
Mr. Murphy. Thank you.
For the record, both witnesses have indicated yes. You are
now under oath and subject to the penalties set forth in Title
18, Section 1001, of the United States Code.
We will now allow you each to give a 5-minute summary of
your opening statement.
Mr. Grundler, you may begin.
STATEMENT OF CHRISTOPHER GRUNDLER, DIRECTOR, OFFICE OF
TRANSPORTATION AND AIR QUALITY, OFFICE OF AIR AND RADIATION,
ENVIRONMENTAL PROTECTION AGENCY, ACCOMPANIED BY PHILLIP BROOKS,
DIRECTOR, OFFICE OF CIVIL ENFORCEMENT, AIR ENFORCEMENT
DIVISION, OFFICE OF ENFORCEMENT AND COMPLIANCE ASSURANCE,
ENVIRONMENTAL PROTECTION AGENCY
Mr. Grundler. Chairman Murphy, Ranking Member DeGette, and
other members of the subcommittee, we appreciate the
opportunity to testify on the matter of the Environmental
Protection Agency's Notice of Violation issued to Volkswagen.
I am Chris Grundler and I direct the EPA's Office of
Transportation and Air Quality, which is responsible for EPA's
Air Pollution Compliance Program for all mobile sources,
vehicles, engines, and equipment, including cars, trucks, and
fuels.
I am joined today by my colleague Phil Brooks, Director of
the Office of Civil Enforcement's Air Enforcement Division.
EPA's Civil Enforcement Program develops and prosecutes civil
administrative and judicial cases.
On September 18th, 2015, EPA sent a Notice of Violation, an
NOV, of the Clean Air Act to Volkswagen, including Volkswagen
AG, Audi AG, and Volkswagen Group of America, Inc., alleging
that four-cylinder Volkswagen and Audi diesel cars sold in the
U.S. for model years 2009 to 2015 include software that
circumvents EPA's emissions standards. Volkswagen manufactured
and installed software in the electronic control module of
these vehicles that sensed when the vehicle was being tested
for compliance with EPA emissions standards. Put simply, these
cars contain software that turns off or significantly reduces
the effectiveness of emissions controls when driving normally
and turns them on when the car is undergoing an official
emissions test.
This is known as a defeat device. This design feature
results in the cars emitting up to 40 times the emissions that
are allowed to ensure public health is protected. These devices
contain essentially a switch that senses whether the vehicle is
being tested or not based on various inputs, including the
position of the steering wheel, vehicle speed, the duration of
the engine's operation, and barometric pressure. The NOV that
EPA issued covers roughly 482,000 diesel cars.
All new cars sold in the United States must have an EPA-
issued Certificate of Conformity demonstrating that the car
meets applicable Federal emissions standards to control air
pollution. By making and selling vehicles with defeat devices
that allow for higher levels of air emissions than were
certified to EPA, VW violated multiple important Clean Air Act
provisions. These violations are very serious not only because
the illegal defeat device results in excess emissions many
times the allowable standard, but also because, after the high
emissions were discovered, VW concealed the facts from EPA, the
State of California, and from consumers.
These vehicles are emitting more nitrogen oxides, or NOx,
than regulations allow. NOx pollution contributes to ground-
level ozone and particulate matter. We know that exposure to
these pollutants has been linked with a range of serious health
effects, including increased asthma attacks and other
respiratory illnesses that can be serious enough to send people
to the hospital.
We are in the midst of an ongoing investigation into VW's
actions. We will be working closely with the U.S. Department of
Justice throughout this investigation, and determinations
regarding potential penalties and other remedies will be
assessed as part of the investigation. However, at this point
we are unable to provide further details of the investigation
because the release of such information could jeopardize this
ongoing enforcement investigation.
EPA will continue to work closely with the California Air
Resources Board during the investigation. CARB led and
contributed much of the effort to get us to this point. Our
agencies work very closely together on the implementation and
oversight of the Vehicle Emissions Programs.
As part of the investigation, we intend to assess the scope
of VW's liability under the Clean Air Act and whether there are
additional vehicles with defeat devices. We also intend to
assess the economic benefit to VW of noncompliance and pursue
appropriate penalties, as well as to assess the excess
pollution from VW's violations and the appropriate ways to
mitigate them.
While our enforcement authority concerns air pollution, we
are acutely aware of the impact of these violations on
consumers, and we have provided frequently asked questions and
answers for consumers on our Web site, such as whether the cars
are safe to drive and whether EPA is officially recalling the
vehicles at this point.
On September 25th, my office sent a letter to all auto
manufacturers notifying them that we are stepping up our
testing activities in response to these alleged violations.
Over the 40-plus-year history of our program, we have
continuously updated and adapted our approaches to compliance
oversight as technologies and situations have changed. We take
very seriously our responsibility to oversee the implementation
and enforcement of our regulations.
It is this oversight that ensures the benefits of clean air
emissions standards are realized and that the industry is
competing on a level playing field, and that consumers are
getting what they pay for.
Again, thank you for the opportunity to appear as witnesses
this morning. We welcome your questions.
[The prepared statement of Mr. Grundler and Mr. Brooks
follows:]
[GRAPHIC] [TIFF OMITTED] T9793.004
[GRAPHIC] [TIFF OMITTED] T9793.005
[GRAPHIC] [TIFF OMITTED] T9793.006
Mr. Murphy. Thank you.
Mr. Brooks, you don't have a statement? You issued a joint
statement, correct?
Mr. Brooks. That is correct.
Mr. Murphy. OK. Thank you.
Now I am going to recognize myself for 5 minutes.
When you speak, just make sure you turn the mic on and
bring it as close to your mouth as possible.
So, Mr. Grundler, in December of 2014, VW conducted a
voluntary recall to address the on-road emissions, as you know.
What information did VW convey to you about the cause and the
proposed solution for the higher emissions in advance of that
recall?
Mr. Grundler. Thank you, Mr. Chairman.
Throughout 2014, once California and EPA learned of these
excess emissions, there were numerous technical conversations
between the California Air Resources Board and Volkswagen.
California took the lead on exploring what the problem was with
these vehicles, and my understanding is that they received
multiple different stories, plausible reasons why these
vehicles may not be performing as they are supposed to,
chemical-based reasons, physical-based reasons.
At the end, the remedy that was proposed was described to
fix a problem with the vehicle concerning how it is operated
under different temperatures, what kind of dosing sensors were
used to make the emissions control system work properly, and
that they were confident in the fix.
At the time, they were told by the State of California to
proceed, but that California was going to test these vehicles
to make sure that the fix was effective. And it was not
effective, based on the subsequent testing by the California
Air Resources Board.
Mr. Murphy. Thank you.
Did you conduct any further evaluation of their conclusions
and proposed solutions in advance of the recall? So, what was
the operational process you had in interacting with them,
discussions/conversations that go back and forth?
Mr. Grundler. So, EPA and California have a very strong
partnership when it comes to oversight and compliance.
Sometimes California takes the lead on these matters. Sometimes
EPA takes the lead on these matters. For example, last year we
had the lead with respect to the Hyundai/Kia investigation and
subsequent action. California volunteered to take the lead on
this matter.
And what happened during 2014 is essentially what is
happening right now as we speak, which is trying to determine
what is the right recall solution to address these excess
emissions. It was VW's responsibility to identify what was
wrong and to propose a fix. They did so. That fix did not work.
So, most of these interactions were between California and
the company. EPA, my team, participated in some of them. We
became much more actively involved in 2015, when California
produced their test results on the supposed fix of these
vehicles and that data showed that there still remained very
high and unexplained excess emissions.
Mr. Murphy. Who did you have these conversations with, with
VW, going back and forth, communicating while they are working
or they are talking to you about these results? Do you recall
who that was?
Mr. Grundler. So, I want to be clear. I was not part of
those conversations. It was my team and the California
counterparts. My understanding is those conversations included
both officials from VW of America as well as officials from
Germany.
Mr. Murphy. Do you know their names for the record?
Mr. Grundler. I do not.
Mr. Murphy. Can you identify those? Are those things you
could get for us?
Mr. Grundler. Yes.
Mr. Murphy. Would you please do so? That would be
important.
Mr. Murphy. Now I have a technical question. I am not sure
if either of you can answer this. So, here is this switch that,
when it is in one position for an emissions test, it made a
change in how this was operational, so the emissions would be
lower. In the other position, the emissions were quite high. Is
it possible to just keep that switch in the position of low
emissions, and then, they could be in compliance or does that
damage the engine or reduce power significantly? Do you have
any idea?
Mr. Grundler. Well, those are exactly the same kind of
questions we are asking Volkswagen right now. It's not actually
a switch, sir. It is what we call a dual-calibration strategy.
So, the vehicle is programmed to work two different ways. And
when the vehicle senses when it's on a test, it very quickly
goes into clean mode, and when it does not sense the very
specific parameters that are specified in our Federal test
procedures, it goes into a high-pollution mode.
So, I think what you're asking is----
Mr. Murphy. Yes, that's what we----
Mr. Grundler [continuing]. Can you just take this software
and will the vehicle operate normally? And we don't know yet.
We're asking those questions. And the answers will depend, as
you heard this morning, on which generation of diesel engines
we're talking about. We believe that the newer generation, the
so-called Generation 3 engines, will be much easier to fix than
the older versions.
Mr. Murphy. Thank you. I am out of time now.
Ms. DeGette, 5 minutes.
Ms. DeGette. Thanks.
Just to continue along, the newer versions, they have these
Urea Tanks.
Mr. Grundler. Right.
Ms. DeGette. And so, it is a system that you can both
adjust the NOx filters and the Urea Tanks? And in fact, the VW
dealer, the dealer in Denver and also their mechanics told me
they feel like it would be a pretty easy adjustment, even just
in the codes, to fix it in the 2015 and 2016 models. Is that
your understanding, Mr. Grundler?
Mr. Grundler. I don't want to speculate that.
Ms. DeGette. Yes.
Mr. Grundler. That seems logical to us.
Ms. DeGette. Right.
Mr. Grundler. We want to see the software. We want to test
the vehicle before----
Ms. DeGette. Obviously, yes.
Mr. Grundler [continuing]. Any further action is taken.
Ms. DeGette. Yes, obviously.
Mr. Grundler. You can imagine that we're skeptical.
Ms. DeGette. But it is the agency's position that these
vehicles do need to be fixed, right?
Mr. Grundler. Absolutely.
Ms. DeGette. I mean, they are noncompliant under both
Federal law and California State law?
Mr. Grundler. That is correct.
Ms. DeGette. You know, I think some of the impressions
given by Volkswagen is, well, you know, they are safe to drive.
They might be safe to drive, but they don't comply with the
emissions standards, right?
Mr. Grundler. That's right.
Ms. DeGette. So, for the cars between 2009 and 2014, the
fix is a bigger problem because they don't have the Urea
Containers. And so, it is harder to see how, without major
structural changes to these cars, how they could be brought
into compliance? Is that your understanding?
Mr. Grundler. That is correct. They will require a more
substantial engineering solution.
Ms. DeGette. They are either going to require installation
of a Urea System or different NOx filters or both. So, that is
going to be quite elaborate. I am not a mechanic, and I don't
pretend to be one, but I went over and looked at this. And it
looked like a very knotty problem to me.
Mr. Grundler. What California and EPA have directed
Volkswagen to do is to present more than one option on how to
address these excess emissions. And we want to look at these
options very carefully, particularly with respect to what
impacts they will have on the owners.
Ms. DeGette. Right. And have you given VW any kind of a
deadline for coming up with that fix or have they indicated to
you when they might be able to come up with this? This is
something that really concerned the panel in the earlier
conversations today.
Mr. Grundler. I can assure you we have a very strong sense
of urgency. We are pressing Volkswagen for that plan and for
those solutions. We're meeting with them on practically a daily
basis. We hope to get a proposal very, very soon. But we want
to make sure that it's effective. So, there's some risk in
rushing, but we expect to see something as early as next week
with respect to the Generation 2 vehicles.
Ms. DeGette. And has the company told you that they believe
they can fix the affected vehicles without affecting fuel
economy, engine performance, or both?
Mr. Grundler. They have not said so.
Ms. DeGette. OK. So, I just want to say one last thing,
which is oftentimes we have the EPA in here, and sometimes it
is not the most pleasurable experience testifying. But in this
case the Director of the International Council on Clean
Transportation, which was the organization that commissioned
the West Virginia study, said, quote, ``This is a powerful
affirmation of U.S. Federal and California vehicle emissions
regulations and of the agencies. Clear protocols, in-use
requirements for the useful life of vehicles, clear enforcement
follow-through, the authority to fine and force recalls, these
are the best practices that regulations worldwide should
incorporate, and today's announcement shows why.'' End quote.
So, thank you and your agency for your efforts here.
I want to ask you, Mr. Grundler, in light of VW's
deception, are you adjusting testing going forward?
Mr. Grundler. Yes, and we already have.
Ms. DeGette. And what have you done?
Mr. Grundler. Well, we have learned from this episode for
sure. We wish we had found it sooner. As soon as we learned of
this data, CARB and EPA focused----
Ms. DeGette. So, how are you adjusting the testing going
forward?
Mr. Grundler. The bottom line, madam, is that we are going
to be unpredictable. What is required for a robust compliance
and oversight program is both testing of new vehicles in the
lab, testing of what we call in-use vehicles in the lab as on-
road measurements.
Ms. DeGette. Thanks. I don't have much time.
Mr. Brooks, are you adjusting enforcement efforts going
forward and, if so, how?
Mr. Brooks. Thank you for the question. The answer is yes,
although I think the prosecution, the investigation of this
matter will proceed along our normal path. I think what we will
see is we will be getting a lot more phone calls from people.
And so, in that way, it will change. We will have more to
respond to.
Ms. DeGette. Thank you.
Thank you very much, Mr. Chairman.
Mr. Murphy. I think Mr. Griffith is next. Mr. Griffith, you
are next for 5 minutes.
Mr. Griffith. Thank you very much, Mr. Chairman.
And I appreciate you all being here and appreciate the
questions that have already been asked.
Obviously, there are a number of us, if you were listening
to the previous testimony, you know I am one of the people who
owns one of the diesel Volkswagens. And so, I have some
questions in that regard.
I think it is important that you change your testing
methods. The first question I am going to ask you is, do you
think it might be helpful in doing your job if we passed some
legislation that would allow a portion of the fine money in a
fraud case like this to go to the university that discovered
it? I mean, WVU discovered the problem. You all didn't.
Believe it or not, I don't think the EPA can and should do
everything, and that this might be of some assistance. Just
like we do with certain bad actors in other criminal-type
settings who are committing fraud on consumers or selling
drugs, we take some of their ill-gained goods. We take it away
from them, and the Government gives it back to some of the
folks who helped discover it, law enforcement and prosecutors.
Do you think that might be a helpful piece of legislation for
us to take a look at? Either one of you, or both.
Mr. Brooks. Well, I don't think I could comment on what
legislative changes might be necessary. I do understand that in
the criminal context those kinds of remedies have been imposed
before.
Mr. Griffith. So, the question is, if you have that power
now, please tell us.
Mr. Murphy. Excuse me one second.
Could you speak close to the mic? None of us can hear you.
You are going to have to sit forward and into the mic.
Mr. Griffith. If you currently have that power, then let me
know that. But, if you don't have that power, in other words,
whenever you come up with the fine that is appropriate for
Volkswagen, it would seem to me--and I don't know that you have
that authority now--to give WVU, West Virginia University, that
uncovered this problem part of the fine to help them continue
their research. I mean, that is what we do with prosecutors. We
do that with law enforcement agencies who uncover crime. We do
that in some securities cases. There are different ways that is
done.
Do you all think that would be an authority that would be
helpful for the people of the United States of America?
Mr. Brooks. Well, I can take that back and we can respond
in writing.
Mr. Griffith. All right.
Mr. Griffith. It sounds like a good idea to me, I will just
tell you.
It is interesting that WVU found it and that you all did
not, but I understand you can't do everything. And you have
answered some questions about how you are going to go forward.
Let's go to the other side of this. Now I will, whatever
you all come up with and whatever Volkswagen comes up with, I
will get my car fixed. Or, if they do a buy-back program, I
will have to debate whether it is better to fix it or to sell
it back to the company because it is not doing what it is
supposed to.
But I am just curious, at some point--and right now, I
understand you are not doing that right now--but, at some
point, am I going to be subject, or other consumers in my
shoes, are they going to be subject, to penalties from the EPA
for driving a vehicle that doesn't meet the standards that were
supposed to be in place when they bought the vehicle?
Mr. Grundler. That question depends on where the particular
owner of a Volkswagen, of one of these vehicles, lives. If you
live in an area that does regular emissions tests, that the
State conducts these inspections, emissions inspections, some
States require that, in order to re-register the vehicle, if it
is subject to a recall, to show that the fix has been made.
Other States do not have that requirement. It depends on where
you're living.
Mr. Griffith. OK. So, for some people who may not be paying
attention to whatever notices they might get or, for whatever
reason, aren't following the news--and believe it or not,
there's a whole bunch of those folks out there who don't follow
day-to-day news--they could actually end up with some kind of a
penalty from their State. But, currently, there is nothing
nationally?
Mr. Grundler. That's right.
Mr. Griffith. Would you anticipate that the EPA would go in
the direction of some kind of a national program if enough of
the cars did not get bought back or fixed after a certain
number of months?
Mr. Grundler. We certainly will be encouraging consumers
to----
Mr. Griffith. I understand that. You are going to get the
word out as best you can?
Mr. Grundler. That's right, but----
Mr. Griffith. But they don't get the message. There's still
a million cars, or 100,000 cars, I think.
Mr. Grundler. I would not anticipate----
Mr. Griffith. You would not anticipate that?
Mr. Grundler [continuing]. EPA going after individuals.
Mr. Griffith. But it is a possibility?
Mr. Grundler. I don't think that's a possibility under the
Clean Air Act.
Mr. Griffith. Because let me tell you one of my concerns
is--and it doesn't have anything to do with you all, and it is
a rhetorical question, so you don't have to answer it. I will
tell you that upfront. But yesterday we had an EPA official in
and we were talking about the Clean Power Plan and the cap-and-
trade scheme, which they didn't call it the cap-and-trade
scheme, they kept resisting that. But it talks about putting a
limit on emissions and, then, being able to make trades. So, it
sounds like cap-and-trade.
And what was interesting about it was that I had a list of
quotes from Lisa Jackson in 2011, Gina McCarthy 2011, Gina
McCarthy 2013, Gina McCarthy 2014, that said they were never
going to consider--and, in fact, it wasn't allowed under the
law--to do a cap-and-trade scheme. And then, I am looking at
some cap-and-trade scheme.
So, I am a little concerned, not for me. I am going to do
what I need to do to make my car right or get rid of it. But
there are going to be a lot of folks out there who may be
caught, and I just want to make sure that the EPA isn't
doubling down on their damages, because every one of us that
bought one of these vehicles is damaged in some form or
another.
So, I appreciate you listening to that. If you want to
answer, I will give you a chance to answer. Mr. Brooks looks
like he wants to answer.
Mr. Brooks. I will assure you that I am aware of absolutely
no provision of the Clean Air Act which would allow a
prosecution for the things that you are talking about.
Mr. Griffith. And that is exactly what Lisa Jackson told us
2 or 3 years ago, but that is OK. We will move on.
You know, last but not least----
Mr. Brooks. I'll say it won't happen.
Mr. Griffith. Yes. On Gen 1 cars, I have read somewhere
that it is going to take--it is a more complicated fix, we
heard this morning, but it is also going to take up some of the
space probably in the trunk area of the vehicle. Have you all
heard that?
Mr. Grundler. Sir, that would depend completely on what the
remedy would be. And as I said earlier, we are going to take a
very careful look at what impact this is going to have on
owners and consumers. That will be central to how we review the
options that Volkswagen comes forward with. So, we don't know
that yet.
Mr. Griffith. All right. I appreciate it very much. Thank
you all for being here.
I yield back.
Mr. Murphy. The gentleman yields back, and I recognize Mr.
Pallone for 5 minutes.
Mr. Pallone. Thank you.
Mr. Grundler, one of the concerns that I raised with Mr.
Horn earlier was this concern about whether we might find these
defeat devices or similar problems with other cars. So, I
wanted to ask the question, do you have the tools and authority
you need to ensure there are no other cheaters out there?
Mr. Grundler. Yes, we do.
Mr. Pallone. But I am also concerned about--and maybe this
is for Mr. Brooks--about the comments that Mr. Horn made where
he suggested, you know, there were a couple of rogue engineers
that may have done this, but suggested that there was no
corporate responsibility.
Is it the EPA or is it the AG? Who goes after the
individuals, corporate or otherwise, that might be responsible
for this? Or do you at some point envision even bringing
charges, you know, like criminal charges against the
corporation itself for this intentional deceit?
Mr. Brooks. Thank you for the question. I can't speculate
now as to exactly what course all the enforcement actions will
take. I can tell you that my office has already taken the
initial enforcement action, and I can tell you that we are
working with the Department of Justice on these matters.
Mr. Pallone. But I guess what I am asking--and I won't keep
repeating, but one more time--you know, we keep talking about
the fines because of what happened. But does this rise to
individual responsibility for those responsible? And is there
such a thing as criminal action against the corporation? I
mean, I know I am speculating, but are those possibilities?
Mr. Brooks. Let me be careful in answering that. First of
all, I think that the concern that has been expressed here by
Members is exactly our concern: Who, what, when, where, why,
how? And so, I'm quite certain that the investigations that are
ongoing and that will be begun will get into exactly that.
I think it would be unfair for me to say much more about
what the end result might be.
Mr. Pallone. But it is a possibility?
Mr. Brooks. Certainly it is a possibility.
Mr. Pallone. OK. You know, I was glad that Mr. Horn
actually said that he understood the impact of these emissions,
and they could have health and safety impacts. I mean, he did
say that.
But does it go beyond that? I mean, in other words, you
know, he is admitting that this took place and that there could
be some health and safety impacts because of the increased
emissions. How does the EPA hold Volkswagen responsible for the
environmental effects of their decision to evade emissions
standards? In other words, does the EPA consider, is it
possible that they could be held responsible for the impact on
essentially dirtier air, not just fix the cars, but that there
might be some damages or some kind of payment that would have
to be made because the air was made dirtier or that people's
health and safety were impacted?
Mr. Brooks. Thank you for that question. The answer to that
is yes. While it may go by different names, we tend to talk
about it in terms of mitigation, but the concept there is
exactly what you articulated. We're looking for the
opportunities, the ways in which the damage that has been done
to the environment, and which consequently has impacts on
public health, can be addressed.
Obviously, we can't go back in time and take that pollution
back out of the air, but many of our settlements look forward
and ask the question, how is it that we can make air quality
better than what the law minimally requires in any given
instance? And that additional reduction in pollution is what we
refer to as mitigation, and we have many, many consent decrees
that go about doing that in many different ways.
Mr. Pallone. So, for example, you could impose some
penalties that might be used to mitigate air pollution in other
ways possibly, not by VW, but, you know, that the EPA would use
that money somehow to mitigate air pollution in some other way?
Just give me an example, and then, I will stop asking, because
my time is almost up anyway.
Mr. Brooks. OK. A lot of the power plant cases we have had
projects, for example, where the company has had to go out and
find a third party to implement a wood stove changeout program,
so that cleaner burning stoves, more efficient wood stoves are
substituted for dirtier stoves. And that has a direct impact on
air quality in communities because there are lots of
communities out there, as I'm sure you know, that rely very
heavily on wood-burning devices. So, that's one example.
Mr. Pallone. All right. Thank you very much.
Thank you, Mr. Chairman.
Mr. Murphy. The gentleman yields back.
I recognize Dr. Burgess for 5 minutes.
Mr. Burgess. Thank you, Mr. Chairman, and I apologize for
being out of the room for part of the hearing. So, I am going
to ask a couple of questions. If they have been asked before,
please bear with me and try to give an answer that is
consistent with how you answered previously.
First off, what is the budget for the EPA currently?
Mr. Grundler. I don't have the budget for the entire EPA. I
can give you the budget for my organization.
Mr. Burgess. Sure, we will take that.
Mr. Grundler. So, it's roughly $100 million a year and 340
full-time people that work in my organization.
Mr. Burgess. The overall budget for the EPA--and I am just
relying on memory, which is dangerous--but I think it is close
to $15 billion. So, the EPA has resources available. It has
funding available.
Mr. Grundler. I do want to correct that. I think EPA's
budget is around $7 billion and about 15,000 people, roughly.
Mr. Burgess. Nevertheless, West Virginia University had a
budget for this research project, my understanding is, around
$50, $60, $70 thousand, is that correct?
Mr. Grundler. We are extraordinarily grateful for the work
that West Virginia University and the ICCT did. And I am not
going to blame our budget for the fact that we missed this
cheating.
I do think we do a very good job of setting priorities at
EPA. Once we learned of these excess emissions, we focused on
it. We didn't ignore it. And then, we have also immediately
changed how we are doing our testing regime to be more
unpredictable, so this doesn't happen again in the future.
Mr. Burgess. Well, with all due respect, just looking at
the situation, I think the American people ought to ask that we
fire you and hire West Virginia University to do our work. They
certainly are much more cost-effective than this part of the
Federal agency.
Let me ask you this: I sit on another subcommittee. We have
jurisdiction over the National Highway Traffic Safety
Administration. So, I am familiar with safety recalls, but we
heard Mr. Horn testify earlier today that this is not a safety
issue with these cars as they are driven. There are emissions
issues, but there are not safety issues. Is that correct?
Mr. Grundler. That's correct.
Mr. Burgess. So, does EPA do its own kind of recall that is
separate and apart from the National Highway Traffic Safety
Administration?
Mr. Grundler. We do.
Mr. Burgess. And would this be www.recalls.gov that is the
Web site that consumers can go to, to find out information
about the recall or the possible recall on their vehicle?
Mr. Grundler. We have not ordered a recall yet. When we do,
we will provide that information for sure.
Mr. Burgess. That information will be on your Web site?
Mr. Grundler. Yes.
Mr. Burgess. So, I went to the Web site. In truthfulness,
staff went to the Web site. They printed it off for me. I am
very grateful for that.
You can get information about pesticides, pesticide Web
sites, EPA emissions recalls where I assume this would fall. Is
that correct?
Mr. Grundler. Yes.
Mr. Burgess. When you click on that link, you get a ``Page
not found. Website improvements underway.'' So, can you let
consumers know when they are likely to be able to get that
information off of your Web site?
Mr. Grundler. Again, sir, we have not ordered a recall. So,
there is no recall information. We have information on our Web
site that talks about our Notice of Violation, what vehicles
are covered, and what consumers need to know today, which is
that they can drive these cars. These cars are safe to drive.
They will not be held responsible for any repairs. That would
be the responsibility of the company.
Mr. Burgess. Let me ask you this because Mr. Pallone was
asking you things about payment and damages, and because of the
issue that the air was dirtier and health and safety have been
impacted. So, it is, in all likelihood, Volkswagen of America
is going to face some significant fines and penalties by the
Environmental Protection Agency, are they not?
Mr. Grundler. I think that's very likely.
Mr. Burgess. And you heard my admonition to the CEO of
Volkswagen of America: ``Don't be dismissive. Don't run from
the fact that this has happened. You need to be aggressively
compliant.'' And I hope they will be.
But I have got to tell you, this summer I went to
Silverton, Colorado, on my own dime and looked at what had
happened to the Animas River, went to the Gold King Mine. And
that was entirely created and caused by the Environmental
Protection Agency.
So, I have had a lot of people ask me that, if a private
company had done that and turned the Animas River yellow, they
would be held--the same thing we are talking about here--there
would be fines, there would be mitigation costs. Does the EPA
hold itself to the same standard to which it holds private
corporations and, if not, why not?
Mr. Grundler. Are you asking me to testify about the Gold
King Mine situation?
Mr. Burgess. Just in general. The EPA causes a problem.
Should they be held to the same standards? And, no, I am not
asking you to testify.
In fact, Mr. Chairman, I think we should have a hearing on
that as a separate issue.
But just answer the question. Should EPA be held to the
same standards to which you are going to hold a private
corporation?
Mr. Grundler. All I can say, sir, because I'm not familiar
with all the details, is I certainly have seen and read that
the Administrator has taken full responsibility for that
situation and we're acting accordingly.
Mr. Burgess. It looked like a scene out of
``Ghostbusters.'' I will just tell you that.
Thank you, Mr. Chairman. I will yield back.
Mr. Murphy. I do want to acknowledge that the gentleman
from Virginia and the gentleman from Texas are both touting my
neighboring State, West Virginia University, a rival of Pitt,
but it is nice to see them get the accolades for doing such
good work.
I now recognize Ms. Castor for 5 minutes.
Ms. Castor. Thank you, Mr. Chairman.
Gentlemen, on September 18th, the EPA issued a Notice of
Violation against Volkswagen. The notice alleges that certain
Volkswagen and Audi diesel cars for model years 2009 to 2015
include software that circumvents EPA emissions standards for
certain air pollutants. According to EPA, the software produced
by Volkswagen is a defeat device, as defined by the Clean Air
Act.
Mr. Grundler, I understand that VW admitted in August to
installing defeat devices on their vehicles. That is correct?
Correct? It is accurate?
Mr. Grundler. I would describe it in mid-to-late August,
California and we got a heads-up that they had, in fact,
installed a defeat device, and we were officially notified on
September 3rd.
Ms. Castor. From Volkswagen?
Mr. Grundler. Correct.
Ms. Castor. And what specifically did VW tell EPA they had
done to the engines to circumvent emissions standards?
Mr. Grundler. We were informed that the vehicles had a
dual-calibration strategy on their engine control units which
allowed the vehicle to operate one way when it sensed it was
being tested by the EPA and in a completely different way when
the vehicle was on the road.
Ms. Castor. And has VW provided EPA with an engine map that
shows specifically how the defeat device works for each model
car in which it was installed?
Mr. Grundler. That is my understanding, but I would like to
double-check that for you.
Ms. Castor. OK. I understand the affected vehicles fall
into three generations based on the model and the year. The
defeat devices may work differently for each of these
generations of vehicles.
Mr. Grundler, at this point, does the EPA have a full
understanding of how the defeat devices work in each of these
generations of vehicles?
Mr. Grundler. We do not. We still have many questions for
Volkswagen to answer.
Ms. Castor. OK. So, what else do you need and has VW been
helpful? What else do they need to provide EPA to give you the
information that you need?
Mr. Grundler. The information that we're focused on now
like a laser is what are they going to do to address these
excess emissions and take this software off these vehicles, so
that they comply. We don't need to know specifically how they
cheated with each line of code. We have got some information on
that, but I think the most important thing going forward is
that those defeat devices are removed, that these vehicles are
addressed in a way that will work for consumers and the
environment.
Ms. Castor. But you have said you have learned some lessons
here.
Mr. Grundler. We have.
Ms. Castor. Does EPA have the expertise right now in-house
or do you hire consultants that----
Mr. Grundler. We do. We don't need to unpack 100 million
lines of code to find these defeat devices. The bottom line is
testing them in unpredictable ways, so that we activate these
devices. That's the bottom line, is what's coming out of the
tailpipe and does it meet our standard?
Ms. Castor. Are you taking broader action now that you have
learned these lessons about how software code can be
deceptively used to avoid emissions standards? Do you have the
expertise now to go and look at other code in other automobiles
and trucks?
Mr. Grundler. Yes, we do.
Ms. Castor. Are you going to do that?
Mr. Grundler. We are.
Ms. Castor. Can you explain that a little bit further?
Mr. Grundler. Yes. So, we have a number of different kinds
of testing we do. So, we test every new model of vehicle. I'm
sorry. We require the manufacturers to test every new model of
vehicle and submit that data to us, which we review along with
design. We audit a certain percentage of those by testing them
in our laboratory on prescribed test cycles. And we also audit
by measuring real-world emissions using these mobile devices.
And it is going to be, going forward, a combination of both
laboratory testing, activity testing--we know how to download
this software--as well as this real-world monitoring.
Ms. Castor. And back to VW, does EPA know yet whether VW
can successfully fix the cars here in the U.S.?
Mr. Grundler. We don't know that yet.
Ms. Castor. OK. And VW has a number of ongoing internal and
external investigations. Has Volkswagen committed to sharing
the results of those investigations with EPA?
Mr. Grundler. They have not.
Ms. Castor. Have you asked them----
Mr. Grundler. Let me defer to my colleague here to confirm
that.
Ms. Castor. OK. So, have you asked them for that
information?
Mr. Grundler. They have not agreed at this time.
Ms. Castor. Don't you think that would be a good--have you
asked them whether or not they would share that information
with EPA?
Mr. Brooks. We have outstanding official document requests,
and we will be promulgating more of those. Today we learned
from this morning's session about one particular investigation,
and that is certainly one that we----
Ms. Castor. OK. Will you let the committee know if VW does
not provide the results of their internal investigation?
Mr. Brooks. Yes, we will.
Ms. Castor. Thanks.
And to Representative DeGette and Representative----
Mr. Murphy. I'm sorry, we have a vote coming up, although
if you have another question----
Ms. Castor. I just wanted to make one point here and submit
this with unanimous consent. Drew Kodjak, the executive
director from the International Council on Clean
Transportation, the nonprofit that discovered the issue, said
the easiest solution is to give EPA more resources so it can
perform the real-world testing, which may be more expensive,
but he said, ``You don't want to rely on the happenstance
investigation of a small NGO to trigger one of the largest
global recalls around.'' So, that is the last thing for all of
us.
Mr. Murphy. Without objection.
[The information appears at the conclusion of the hearing.]
Mr. Murphy. We have got three members who need to ask
questions. I have got 8 minutes and 50 seconds. Let's do it.
So, if you can shorten your questions out of respect for the
other members, please do. So, that takes us down to zero.
How many votes do we have?
Ms. DeGette. Two votes.
Mr. Murphy. Two votes?
All right. Dr. Bucshon?
Mr. Bucshon. Yes, on September 25th, 2015, the agency
announced that it would be conducting additional testing to
evaluate use of defeat devices in all vehicles. What is the
current status of the testing?
Mr. Grundler. Thank you for that question. Our first
priority is to test all light-duty diesel vehicles. We are in
the midst of that testing. We have teamed up with California
and Environment Canada, both who have the capabilities, as we
do.
Mr. Bucshon. And how many vehicles have you tested so far?
Do you know?
Mr. Grundler. We are still testing the first batch of
vehicles.
Mr. Bucshon. OK. What are you seeing so far?
Mr. Grundler. I have not seen any data yet, sir.
Mr. Bucshon. OK. And what criteria are you using and what
is the procedure for implementing the testing, this testing?
Mr. Grundler. We're being careful not to share with the
automakers how we're going to do this new testing because we
want to be unpredictable. But it will be a combination of both
these five cycles that we test on today, what we call off-cycle
dyno testing as well as this real-world onboard monitoring.
Mr. Bucshon. And does this include all light-duty vehicles
or just diesel technology?
Mr. Grundler. We're starting with diesels.
Mr. Bucshon. And then, would you be willing to commit to
keeping the committee informed of your progress and provide us
associated details regarding the testing procedures, data, and
results?
Mr. Grundler. Yes.
Mr. Bucshon. And do you think that this is an isolated
incident or do you have concerns with diesel technology in
general?
Mr. Grundler. I don't have concerns with diesel technology
in general. I don't expect to find widespread problems, but we
are going to be taking a very close look.
Mr. Bucshon. OK. I yield back, Mr. Chairman.
Mr. Murphy. Ms. Schakowsky is next, yes.
Ms. Schakowsky. Thank you.
Mr. Murphy. And we had asked members if you don't have a
lot of questions to ask because we only have 6 minutes to get
to the floor.
Ms. Schakowsky. OK.
Mr. Murphy. Thank you.
Ms. Schakowsky. Mr. Grundler, whose job is it to make
consumers whole?
Mr. Grundler. We are not the Consumer Protection Agency.
There are other Federal agencies and State agencies that have
that responsibility. But, as I testified earlier, the consumer
is going to be central to how we are reviewing the options to
address these excess emissions.
Ms. Schakowsky. So, let me ask you about the excess
emissions now are violating the EPA standards, right?
Mr. Grundler. Correct.
Ms. Schakowsky. But we just heard testimony from
Volkswagen, and I have a letter sent to owners that says you
can still drive them. So, under what authority, then, does the
EPA say that these cars that are emitting 10 to 40 times the
allowed amount to continue to be on the road?
Mr. Grundler. Well, the responsibility and the liability
for those excess emissions lies with Volkswagen, and that's why
we're conducting this investigation and learning what the
remedy is, and then, pursuing mitigation to address the
environmental harm.
Ms. Schakowsky. But you already said that some States, if
they were to bring their car in and for some reason that defeat
device were not on, then the consumer actually could be
responsible for the increased emissions. Is that right?
Mr. Grundler. It's our understanding and belief that this
defeat device will also defeat those State inspections. So, we
do not expect these vehicles, were they to be called in for an
annual or biannual inspection, to fail.
Ms. Schakowsky. So, in the meantime, though, there are half
a million cars running around that are emitting greater
emissions.
Mr. Grundler. Yes.
Ms. Schakowsky. So, what, then, does the EPA do? We heard
it could be for a year, maybe more than a year, before there is
any real fix.
Mr. Grundler. So, I don't know how long it is going to take
to get the real fix, but the goal of our enforcement action
will certainly be to make the environment whole. That is our
job.
Ms. Schakowsky. OK. So, you know already that there are
half a million cars----
Mr. Grundler. Yes.
Ms. Schakowsky [continuing]. That consumers are told they
can legally drive that are emitting more than your rules say?
Mr. Grundler. Right.
Ms. Schakowsky. So, what is happening now to hold them
accountable for that? You don't have to test them. You know
that they are already over the line.
Mr. Grundler. The owners of these vehicles are innocent in
this matter.
Ms. Schakowsky. Right.
Mr. Grundler. And we are working intently with California
and the company to identify how to make these vehicles
compliant. Once we are confident that we have the right remedy,
we will order those recalls, and it will be the company's
responsibility to fix those vehicles.
Ms. Schakowsky. And in the meantime, will they be penalized
for having these noncompliant cars?
Mr. Grundler. The consumers?
Ms. Schakowsky. No.
Mr. Grundler. The company?
Ms. Schakowsky. The company.
Mr. Grundler. No. No, that will be the result of our
ongoing investigation. That's what will be determined by the
ongoing investigation.
Ms. Schakowsky. What part of this don't you know already?
What part don't you know already? You know that all those cars
are exceeding your rules. I don't get it.
Mr. Grundler. Well, there are many things we don't know. We
don't know the why, the what, the where, who was responsible.
Ms. Schakowsky. No, you know the fact of it, though.
Mr. Grundler. But we know the fact. The fact is that
Volkswagen designed and installed illegal software on----
Ms. Schakowsky. And the consequence you know, that they are
emitting all these extra emissions?
Mr. Grundler. We have not done that calculation yet, but we
know that they can be anywhere from 10 to 40 times.
Ms. Schakowsky. Right.
Mr. Grundler. We have not done the math to figure out what
those excess tons are and how we are going to mitigate them.
Ms. Schakowsky. I yield back.
Mr. Murphy. The gentlelady yields.
Right now, Ms. Clarke, you are recognized for 5 minutes.
Ms. Clarke. Thank you, Mr. Chairman.
Gentlemen, I would like to pick up on the point just raised
by my colleague Ms. Schakowsky with respect to the emissions
testing. New York State is one of those States that requires
emissions testing. And typically, if your vehicle fails an
emissions test, you can be fined, right? So, we know that,
because of the defeat device, most likely those vehicles would
not be detected?
Mr. Grundler. Correct.
Ms. Clarke. However, that doesn't change the fact that
under normal circumstances these vehicles would not be
permitted on the road. So, to have your agency say, ``Well,
because it's not your fault, you can continue to drive,''
doesn't it sort of undermine the State's requirement for
certain emissions levels to be contained? For you to then
undermine that with the ability for people, notwithstanding the
fact that it is not their fault, most people, when their
vehicle has an emissions problem don't recognize it and don't
typically think it is their fault, either. However, we have to
remedy it before we can take our vehicles on the road.
Otherwise, we are fined. We receive stickers, and those
stickers indicate whether our vehicles are in compliance.
Here we have these stealth vehicles running around in
certain jurisdictions that do fail that, that would fail that
under normal circumstances. How do you reconcile that?
Mr. Grundler. The fines are a matter of State law.
Ms. Clarke. Right.
Mr. Grundler. The way to reconcile that is to identify an
effective remedy, and once that remedy is fixed, those vehicles
will pass those State inspections and those owners will not be
subject to fines.
Ms. Clarke. The challenge is the fact that this has been
happening with vehicles since 2009. We have no idea when this
remedy is going to be cooked up. We don't know whether the
remedy is going to be hard and fast, something that we can rely
on. We are hoping, but there is going to be testing. There is
going to be concerns going forward because of the deception of
how all of this occurred. I mean, we are talking about software
here, right?
Mr. Grundler. That's right.
Ms. Clarke. How do we reconcile that? And let me ask, in
addition to that, are we able to determine those States that do
require--we know California, for instance. There are probably
other States with emissions testing. How many vehicles, how
many of the 500,000 vehicles are resident within those States,
and what the effect or the immediate impact would be to the
environment of the people that reside in those States? Have we
been able to get a sense of that?
Mr. Grundler. That's all going to be determined as a result
of our investigation. It is knowable where these vehicles are
registered----
Ms. Clarke. Yes.
Mr. Grundler. --and where they reside. It is not knowable
yet how it is going to be fixed. We want to have the confidence
that it will be effective, but that will require some time.
Ms. Clarke. Do you anticipate that you will be hearing from
States' attorneys general and other concerned entities within
these States, probably their own environmental protection
organizations at the State level, to try to get a handle around
this? Because, you know, there are certain areas where this
type of emission exacerbates already troubled circumstances for
individuals who have health compromised. I mean, do we see a
sense of urgency for really dealing with this?
Mr. Grundler. We've already heard from both State attorneys
general and State environmental----
Ms. Clarke. I'm sure.
Mr. Grundler. I met with all the State environmental
directors just this week in New Orleans. The air directors,
they are concerned. They want to help and they are very
anxious, as are we, to identify how these excess tons, this
excess air pollution will be mitigated. And that will all go
into part of how we are going to resolve this once and for all.
We want to get to the bottom of it.
Ms. Clarke. In closing, Mr. Chairman, when you have been
able to complete your analysis, if you can get to this
committee a breakdown by State, that would be very helpful. We
may have seen spikes in public health issues that have been
exacerbated in some form or fashion based on clusters and where
these cars reside. And we would like to be able to attribute
that in some form or fashion to maybe the changes that occurred
in the atmosphere as a result of maybe a cluster of ownership
in a particular jurisdiction. I think that is going to be very
important for us to know.
Mr. Grundler. I understand, and we will do whatever we can
to serve the committee's work here.
Ms. Clarke. Very well.
I yield back, Mr. Chairman.
Mr. Murphy. Thank you.
I just want to add, on top of the questions Ms. Clarke just
gave, if you gather information with regard to State rules,
with regard to antitampering laws, fines, and also whether it
is criminal penalties and other aspects along those lines, we
would appreciate that, as you are gathering this information
for us. This would be helpful for the committee.
I want to say I ask unanimous consent that the contents of
the documents to be introduced into the record and authorize
staff to make any appropriate redactions. So, without
objection, the documents will be entered into the record, and
any redactions that staff determines are appropriate.
[The information appears at the conclusion of the hearing.]
Mr. Murphy. And I want to thank the witnesses for coming
today. We appreciate your time and your attention in this
difficult matter, but it is important to us. And thank you for
the testimony and to the members for their devotion to this
hearing today.
The committee rules provide that members have 10 days to
submit additional questions to the record to the witnesses, and
we hope you will respond promptly to that.
With that, this hearing is adjourned.
[Whereupon, at 2:32 p.m., the subcommittee was adjourned.]
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