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RUNNING ON EMPTY: HOW THE OBAMA ADMINISTRATION’S GREEN ENERGY GAMBLE WILL

IMPACT SMALL BUSINESS AND CONSUMERS

HEARING

BEFORE THE

SUBCOMMITTEE ON REGULATORY AFFAIRS,

STIMULUS OVERSIGHT AND GOVERNMENT

SPENDING

OF THE

COMMITTEE ON OVERSIGHT

AND GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

OCTOBER 12, 2011

Serial No. 112–87

Printed for the use of the Committee on Oversight and Government Reform

(

Available via the World Wide Web: http://www.fdsys.gov

http://www.house.gov/reform
(II)

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

DARRELL E. ISSA, California, Chairman

DAN BURTON, Indiana

JOHN L. MICA, Florida

TODD RUSSELL PLATTS, Pennsylvania

MICHAEL R. TURNER, Ohio

PATRICK T. MCHENRY, North Carolina

JIM JORDAN, Ohio

JASON CHAFFETZ, Utah

CONNIE MACK, Florida

TIM WALBERG, Michigan

JAMES LANKFORD, Oklahoma

JUSTIN AMASH, Michigan

ANN MARIE BUERKLE, New York

PAUL A. GOSAR, Arizona

RAU ́ L R. LABRADOR, Idaho

PATRICK MEEHAN, Pennsylvania

SCOTT DESJARLAIS, Tennessee

JOE WALSH, Illinois

TREY GOWDY, South Carolina

DENNIS A. ROSS, Florida

FRANK C. GUINTA, New Hampshire

BLAKE FARENTHOLD, Texas

MIKE KELLY, Pennsylvania

ELIJAH E. CUMMINGS, Maryland, Ranking

Minority Member

EDOLPHUS TOWNS, New York

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, District of

Columbia

DENNIS J. KUCINICH, Ohio

JOHN F. TIERNEY, Massachusetts

WM. LACY CLAY, Missouri

STEPHEN F. LYNCH, Massachusetts

JIM COOPER, Tennessee

GERALD E. CONNOLLY, Virginia

MIKE QUIGLEY, Illinois

DANNY K. DAVIS, Illinois

BRUCE L. BRALEY, Iowa

PETER WELCH, Vermont

JOHN A. YARMUTH, Kentucky

CHRISTOPHER S. MURPHY, Connecticut

JACKIE SPEIER, California

LAWRENCE J. BRADY, Staff Director

JOHN D. CUADERES, Deputy Staff Director

ROBERT BORDEN, General Counsel

LINDA A. GOOD, Chief Clerk

DAVID RAPALLO, Minority Staff Director

SUBCOMMITTEE ON REGULATORY AFFAIRS, STIMULUS OVERSIGHT AND GOVERNMENT

SPENDING

JIM JORDAN, Ohio, Chairman

ANN MARIE BUERKLE, New York, Vice

Chairwoman

CONNIE MACK, Florida

RAU ́ L R. LABRADOR, Idaho

SCOTT DESJARLAIS, Tennessee

FRANK C. GUINTA, New Hampshire

MIKE KELLY, Pennsylvania

DENNIS J. KUCINICH, Ohio, Ranking

Minority Member

JIM COOPER, Tennessee

JACKIE SPEIER, California

BRUCE L. BRALEY, Iowa
(III)

C O N T E N T S

Page

Hearing held on October 12, 2011 .......................................................................... 1

Statement of:

Anwyl, Jeremy, CEO, Edmunds.com; Marlo Lewis, Ph.D., senior fellow,

Competitive Enterprise Institute; Roland Hwang, Transportation Program Director, Natural Resources Defense Council; and Scott Grenerth,

independent trucker, owner-operator, Independent Driver’s Association 7

Anwyl, Jeremy ........................................................................................... 7

Grenerth, Scott .......................................................................................... 61

Hwang, Roland .......................................................................................... 37

Lewis, Marlo, Ph.D. ................................................................................... 16

Strickland, David, Administrator, National Highway Traffic Safety Administration; Gina McCarthy, Assistant Administrator for the Office

of Air and Radiation, Environmental Protection Agency, accompanied

by Margo Oge, Director of the Office of Transportation and Air Quality,

Environmental Protection Agency ............................................................... 101

McCarthy, Gina ......................................................................................... 108

Strickland, David ...................................................................................... 101

Letters, statements, etc., submitted for the record by:

Anwyl, Jeremy, CEO, Edmunds.com:

Information concerning academic research ............................................. 98

Prepared statement of ............................................................................... 10

Buerkle, Hon. Ann Marie, a Representative in Congress from the State

of New York, letter dated May 16, 2011 ..................................................... 122

Cummings, Hon. Elijah E., a Representative in Congress from the State

of Maryland, prepared statement of ............................................................ 5

Grenerth, Scott, independent trucker, owner-operator, Independent Driver’s Association, prepared statement of ...................................................... 63

Hwang, Roland, Transportation Program Director, Natural Resources Defense Council, prepared statement of .......................................................... 39

Kucinich, Hon. Dennis J., a Representative in Congress from the State

of Ohio, prepared statement of .................................................................... 90

Lewis, Marlo, Ph.D., senior fellow, Competitive Enterprise Institute, prepared statement of ........................................................................................ 18

McCarthy, Gina, Assistant Administrator for the Office of Air and Radiation, Environmental Protection Agency, prepared statement of ............. 110

Strickland, David, Administrator, National Highway Traffic Safety Administration, prepared statement of ........................................................... 104

(1)

RUNNING ON EMPTY: HOW THE OBAMA ADMINISTRATION’S GREEN ENERGY GAMBLE

WILL IMPACT SMALL BUSINESS AND CONSUMERS

WEDNESDAY, OCTOBER 12, 2011

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON REGULATORY AFFAIRS, STIMULUS

OVERSIGHT AND GOVERNMENT SPENDING,

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM,

Washington, DC.

The subcommittee met, pursuant to notice, at 10 a.m., in room

2247, Rayburn House Office Building, Hon. Jim Jordan (chairman

of the subcommittee) presiding.

Present: Representatives Jordan, Buerkle, Labrador, Guinta,

Kelly, Issa (ex officio), Kucinich, Speier, and Cummings (ex officio).

Staff present: Michael R. Bebeau, assistant clerk; Molly Boyl,

parliamentarian; David Brewer, counsel; Tyler Grimm, professional

staff member; Christopher Hixon, deputy chief counsel; Kristina

Moore, senior counsel; Sharon Meredith Utz, research analyst;

Krista Boyd, Claire Coleman, minority counsels; Ashley Etienne,

minority director of communications; Devon Hill, minority assistant; Jennifer Hoffman, minority press secretary; and Suzanne

Sachsman Grooms, minority chief counsel.

Mr. JORDAN. All right, the subcommittee will come to order, do

opening statements. I want to welcome our witnesses or panelists

and guests.

The subcommittee convenes this morning to continue with the investigation into the process by which the Obama administration set

fuel economy standards for cars and trucks, and the impact these

standards will have on small businesses and consumers.

On July 29, 2011, President Obama announced his administration had come to an agreement with the State of California, labor

unions, and several major auto manufacturers on increased corporate average fuel economy standards for 2017 through 2025. Previously, the administration enacted fuel economy standards for

light-duty cars and trucks from the 2012 to 2016 time line and for

heavy-duty trucks from 2014 to 2018.

In announcing the latest version of these standards, the President boasted that the agreement had been reached ‘‘without Congress.’’ Based on this statement and other evidence, it appears that

the President has forgotten that there are in fact three separate,

but equal, branches of Government, and it is Congress that writes

the law. In addition to forgetting about Congress, the President
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also forgot about his pledge to be the most transparent president

in history. It appears that each of these standards were set based

on closed-door negotiations with select stakeholders who sometimes

were awarded with billions in Federal grants or loans or, in the

case of a few, a generous taxpayer bailout.

Despite the President’s expressed desire to craft regulations in a

way that is sensitive to their impact on job creation, the President’s

staff never bothered to consult with consumers or the small businesses that will be impacted by these very regulations. While the

administration has argued that a future notice and comment rulemaking will cure this defect, there is reason to believe that such

a process will be merely a pro forma exercise and that the voice

of the consumers and small businesses will never be heard because

the critical elements of the regulation are already set in stone.

What is more, these new regulations do not come cheap. The 2012 to 2016 standards are expected to cost manufacturers $50 billion in compliance costs. The 2017 to 2025 standards may well cost

three times that amount, $150 billion. Truckers can also expect to

pay a minimum of $6,000 more per truck starting in just 2 years,

and many argue that the estimate is at the low end.

Because of these concerns, Chairman Issa has sent detailed letters to the White House and the agencies asking the administration to reveal the process used to determine the standards and to

be transparent with the public on the impact these higher fuel

economy standards will have on future cars and trucks. We look

forward to reviewing the administration’s response.

In addition to these procedural concerns, today’s hearing will

focus on the impact these fuel economy standards are expected to

have on consumer choice and the safety of the vehicles. The committee wants to know how much these regulations will cost and

how many consumers will be priced out of the new car market. If

consumers can’t afford to purchase new vehicles, what will be the

impact on the many automobile dealerships that depend on new

car sales for their very survival.

It appears that the administration is simply substituting its bureaucratic judgment for the independent judgment of the marketplace. When Government substitutes its judgment for the private

market, the result is never good. Most likely, these standards will

force the auto industry to limit consumer choice and manufacture

products that Americans may not want or simply cannot afford.

In the case of the trucking industry, we want to know if the

heavy-duty fuel economy standards are necessary and, if so, how

they will impact the livelihood of independent truckers. It appears

as though the administration’s heavy-duty truck standards will

have dire consequences for independent truckers, who are the backbone of American commerce. Independent truckers did not have a

seat at the table during the administration’s negotiations, but

these negotiations now threaten to force them off the road.

We also want to know if NHTSA has a handle on how many people may lose their life or suffer severe injury as a result of these

standards. In the case of light-duty vehicles, these standards will

force Americans to drive lighter weight vehicles. This has significant implications for driver safety. Moreover, if the heavy-duty

trucking regulation forces independent owner-operators to retire, it
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is possible that less experienced drivers will take their place. This

turnover could have severe implications for highway safety as well.

Regrettably, we may never know the full truth about how the

2009 standards were set, because they were the result of closed

door negotiations where, according to the California Air Resources

Board Chairman Mary Nichols, participants took a ‘‘vow of silence’’

and took great pains to ‘‘put nothing in writing ever.’’

The committee wanted to ask Ms. Nichols what exactly she

meant by that statement but, regrettably, she has refused to appear before this panel. The committee also wanted to ask Ms. Nichols why her State is in the business of setting fuel economy standards at all, in light of the explicit congressional preemption of State

action on matters relating to fuel economy standards. In my opinion, her absence today crystalizes why the State of California

should not be part of this rulemaking process. Quite simply, CARB

is unaccountable and unresponsive to the needs of the Nation and

should not be in the business of establishing Federal law.

With these considerations in mind, we look forward to hearing

from today’s witnesses.

With that, I will yield to the ranking member of the full committee, the gentleman from Maryland, is now recognized for 5 minutes.

Mr. CUMMINGS. Thank you, Mr. Chairman.

I would like to welcome Administrator Strickland, Assistant Administrator McCarthy, and Director Oge for joining us today to discuss the recently announced corporate average fuel economy and

greenhouse gas emission standards for automobiles for models year

2017 to 2025.

I am pleased that the Obama administration is moving forward

on fuel economy standards that will decrease our dependence on

foreign oil, improve vehicle value for consumers, our constituents,

and improve air quality across our Nation.

Despite what some may claim, the standards proposed by the

Obama administration are not grabs from thin air. In 2007, President Bush signed into law the Energy Independence and Security

Act, which set a national standard of 35 miles per gallon by 2020.

President Bush praised this legislation, calling it, ‘‘a major step toward reducing our dependence on oil; confronting global climate

change, expanding the production of renewable fuels; and giving future generations of our country a Nation that is stronger, cleaner,

and more secure.’’

Now, just 4 years later the majority has arrived at the puzzling

conclusion that improving energy efficiency is not in our national

interest. Today’s hearing is entitled Running on Empty, which is

a misguided criticism of fuel efficiency standards supported by the

industry, consumers, and the administration. Frankly, I have a

hard time understanding what the majority’s problem is with the

fuel efficiency standards, or whose interests they are representing

in opposing them.

I also understand that the majority is concerned that the administration has been inappropriately colluding with stakeholders.

This is also a strange claim considering the frequent complaints

from the other side about the administration seeking too little

input from industry when developing regulations.
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While the administration has worked out a proposal that automakers support, as you will hear today, it fully intends to go

through the formal rulemaking process and comply with the requirements of the Administrative Procedures Act.

The new standards are critical to ensuring that consumers are

getting the most for their money. According to the Union of Concerned Scientists, the new standards are expected to save average

drivers, our constituents, $3,500 over the lifetime of their vehicles,

after factoring in the cost of new fuel technology. In recent months,

several of the top automakers have reported that their customers

are increasingly choosing fuel-efficient vehicles over the less efficient products. We can certainly understand that in these recessionary times.

The new standards also will help create new jobs. Serus estimates that the standards could create as many as 8,400 new jobs

in Maryland, my State, and 500,000 jobs nationwide by 2030.

While there undoubtedly will be some challenges to meeting

these standards, the substantial buy-in from industry indicates

that they are achievable and ultimately will benefit consumers and

the U.S. auto industry as a whole.

With that, Mr. Chairman, I yield back.

[The prepared statement of Hon. Elijah E. Cummings follows:]
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Mr. JORDAN. I thank the gentleman for his statement.

We will now introduce our first panel. We first have Mr. Jeremy

Anwyl, who is CEO of Edmunds.com. We also have Dr. Marlo

Lewis, senior fellow at the Competitive Enterprise Institute; Mr.

Roland Hwang is the transportation program director at the Natural Resources Defense Council; and finally, Mr. Scott Grenerth is

an independent trucker from the Fourth District of Ohio. So we appreciate all of you being here today.

Pursuant to the rules, all witnesses are to be sworn in before

they testify, so if you will please stand up and raise your right

hands.

[Witnesses sworn.]

Mr. JORDAN. Let the record reflect that all witnesses answered

in the affirmative. Thank you.

We will go now to our first witness, Mr. Anwyl.

STATEMENTS OF JEREMY ANWYL, CEO, EDMUNDS.COM;

MARLO LEWIS, PH.D., SENIOR FELLOW, COMPETITIVE ENTERPRISE INSTITUTE; ROLAND HWANG, TRANSPORTATION

PROGRAM DIRECTOR, NATURAL RESOURCES DEFENSE

COUNCIL; AND SCOTT GRENERTH, INDEPENDENT TRUCKER,

OWNER-OPERATOR INDEPENDENT DRIVER’S ASSOCIATION

STATEMENT OF JEREMY ANWYL

Mr. ANWYL. Thank you, Chairman Jordan and Ranking Member

Cummings and members of the committee. Thank you for the opportunity to speak today on this most important issue.

I have been tracking the progress of the soon to be proposed

CAFE standards with a growing level of concern. This concern relates to several areas, but my comments this morning will focus on

one in particular. This is one we at Edmunds think about every

day, and that is the automotive consumer.

I have three points to make this morning. The first is that up

until now consumers have been either ignored or misrepresented;

the second is that consumers matter; and the third is that consumers are most definitely not on board.

The evidence that consumers have been ignored is everywhere,

but one of the clearest is this interim technical assessment prepared by EPA that listed the CAFE stakeholders. These included

environmental groups, auto firms, labor unions, and others, even

EV charging firms were seen as needing a seat at the table, but

apparently not consumers.

Consumers matter because responding to their needs is what

drives innovation, and innovation is what should drive our economy. They matter because, at the end of the day, they are the ones

who will be asked to buy and to drive the vehicles our Government

is potentially demanding car companies build.

Most importantly, let me emphasize the consumer is not on

board with the proposed standards. Now, I know there has been a

blizzard of polls showing consumers want higher mileage standards. My contention is these polls are worse than meaningless; they

are in fact grossly misleading.

Instead of polls, we should, first and foremost, be guided by what

consumers are actually doing, by actual purchases. In the U.S.
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market, consumers have demonstrated the marked preference for

larger vehicles, illustrated by sales as recently as just last month.

And a particular caution exists around the new high-tech higher

mileage vehicles that have been introduced. These are the very vehicles that the administration seems determined to mandate

through the proposed CAFE standards. In these instances, it is not

the car company that is not getting it; they are delivering the

goods. It is the consumer that is not interested. And in several

cases these cars are selling slowly, even after large tax credits have

been offered.

Any study of actual sales makes clear that for the vast majority

of consumers fuel economy is simply not their primary motivating

factor when purchasing a vehicle. This doesn’t mean they don’t care

about fuel economy, just that other things are more important.

Consumers decide which vehicle to buy based on a weighing of

vehicle features and a judgment on which set of features best meet

their needs. In other words, they make tradeoffs. Price and fuel

economy for most consumers represent costs. Passenger capacity,

cargo space, towing ability, and other things represent features.

Consumers are always happy to pay less or save fuel, but not if it

means giving up features they deem important. This is key.

Edmunds can actually add a special clarity around this issue of

consumer preferences and demand because among our many

datasets we have a market simulation model that was developed

working with leading academics. This simulator can be used to

show how consumers weight various vehicle attributes in terms of

importance. And I have actually run an analysis for this committee

and the following are the results.

Note that vehicle mileage accounts for only about 6 percent of

why consumers purchased a particular vehicle. As you would expect, the weighting does vary amongst vehicle categories, but it is

important to note that even in the heavily cost-sensitive segment

of subcompacts, mileage only accounts for about 15 percent of the

purchase decision.

There is an obvious factor that can influence these weightings,

and that is the price of fuel. We have seen that when fuel prices

jump there is an increase in the number of consumers who consider

smaller vehicles and, in some cases, buy them. But these effects

are not as dramatic as I have seen claimed. Further, they have

been short-lived as consumers have shifted back to larger vehicles

quickly, either because they grew accustomed to the higher price,

fuel prices dropped, or maybe a little bit of both.

Looking at the data, there is an argument that could be made

that if fuel prices increase sufficiently, market demand could align

with future CAFE standards, and this is an interesting point. But

the increase, about a doubling of today’s price, would need to be far

higher than even the most extreme forecast deemed likely. And we

should also consider the chance that fuel prices in the mid-term

could actually be lower than prices seen today.

I do have some good news. If we look back, the auto industry

seems to have delivered the impossible: they have added features,

increased safety, elevated performance, and delivered increased

fuel economy, much of this even during a period when CAFE standards were stable. I credit mostly the advance of technology and ex-
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pect this progress to continue. But if mandates trigger an escalation of prices, a reduction in consumer utility, or the adoption of

technologies before they have been proven, consumers will react.

This reaction could destabilize an industry that is a vital engine of

our collective prosperity.

Thank you again for the opportunity to speak and I look forward

to your questions.

[The prepared statement of Mr. Anwyl follows:]
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Mr. JORDAN. Thank you, Mr. Anwyl.

Dr. Lewis.

STATEMENT OF MARLO LEWIS, PH.D.

Mr. LEWIS. Mr. Chairman and Ranking Member Cummings,

thank you for inviting me to testify today.

I know of no oversight proceeding more important than committee Chairman Issa’s investigation of the administration’s actions

to regulate greenhouse gases and fuel economy. Only last year Congress declined to give EPA explicit authority to regulate greenhouse gases when Senate leaders abandoned cap-and-trade legislation. Recall that a key selling point for the Waxman-Markey capand-trade bill was its broad preemption of EPA regulation of greenhouse gases through the Clean Air Act.

A bill introduced in 2009 authorizing EPA to do exactly what it

is doing now, regulate greenhouse gases through the Clean Air Act,

as it sees fit, would have been dead on arrival. Therefore, the notion that Congress gave EPA such expansive authority in 1970, almost two decades before global warming became a public concern

and 5 years before Congress enacted its first fuel economy statute,

defies common sense.

In his September 30th letter to Administrator Jackson, Chairman Issa says that he finds EPA’s actions troubling and inconsistent with the system of government articulated in the U.S. Constitution. I think he means the following. The Constitution seeks

to ensure a system of democratic accountability through the separation of powers. The Constitution is vitiated when agencies legislate, when they exercise powers not delegated by Congress, when

they flout procedural safeguards Congress has put in place.

To obtain industry buy-in for its new career as fuel economy regulator, EPA pursued what might be called a regulatory extortion

strategy. By reconsidering California’s request for a waiver to establish its own greenhouse gas, motor vehicle emissions program,

EPA threatened to allow State governments to balkanize the U.S.

auto market. This flouted the Energy Policy Conservation Act’s express prohibition against State laws or regulations related to fuel

economy.

Then, in negotiations culminating in the May 2009 historic

agreement, EPA offered to remove the threat of a regulatory patchwork if automakers promised not to oppose EPA and California’s

new non-congressionally authorized roles as national fuel economy

regulators.

The negotiations, as you mentioned, Mr. Chairman, were conducted under a vow of silence and no notes were taken, an apparent violation of the Presidential Records Act. Similarly, the negotiations culminating in this year’s historic agreement to raise fuel

economy standards appear to violate Federal Advisory Committee

Act standards of transparency and accountability.

As Chairman Issa also notes, the fuel economy targets in this

year’s historic agreement are ‘‘outside the scope of law.’’ NHTSA

and California plan to set fuel economy standards for model years

2017 to 2025, a 9-year period, but EPCA limits setting fuel economy standards to ‘‘not more than five model years.’’ The 9-year

plan also conflicts with the EPCA requirement that NHTSA con-
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sider economic practicability when setting fuel economy standards.

As Chairman Issa has explained, at the present time it is impossible for NHTSA to adequately consider economic practicability for

fuel economy standards in model years 2022 to 2025 because car

manufacturers themselves do not have product plans for those

years.

The agencies claim that EPA and California’s greenhouse gas

emission standards are harmonized and consistent with NHTSA’s

fuel economy standards, but EPA’s standards do not allow automakers to pay fines in lieu of compliance or earn credits for producing flexible fuel vehicles during model years 2016 to 2019. This

means automakers face more stringent requirements than they

would if fuel economy were administered under the statutory

scheme Congress created.

Fuel economy advocates may see no problem in the transfer of

power from NHTSA to EPA and California because it produces policy outcomes they want. They forget an elementary civics lessons:

the legislative process is more valuable than any result an administrative agency can obtain by doing an end-run around it. And I

think Members of Congress should understand this better than

anyone else.

Thank you very much. I will be happy to take questions.

[The prepared statement of Mr. Lewis follows:]
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Mr. JORDAN. Thank you, Dr. Lewis.

Mr. Hwang.

STATEMENT OF ROLAND HWANG

Mr. HWANG. Thank you, Chairman Jordan and Ranking Member

Cummings, for the opportunity to testify today.

My name is Ronald Hwang. I am the Transportation Program

Director for the Natural Resources Defense Council. NRDC is a

nonprofit organization of scientists, lawyers, and environmental

specialists dedicated to protecting public health and the environment. Founded in 1970, NRDC has more than 1.3 million members

and online activists nationwide.

President Obama’s July 30th announcement of the latest clean

car agreement builds on two other previous highly successful and

broadly supported agreements for stronger pollution and fuel efficiency standards for passenger vehicles and commercial trucks.

These three agreements exemplify how leadership, partnership,

and compromise can solve the enormous environmental, economic,

and energy challenges facing this country.

Far from running on empty, these clean car and fuel efficiency

standards will save Americans from emptying their wallets at the

pump, slow the emptying of our national wealth for foreign oil, and

cut the dangerous carbon pollution that is emptying our children’s

future.

Over the lifetime of model year 2012 and 2025 vehicles covered

by the first and second round of clean car standards, drivers will

save $1.7 trillion in fuel savings, oil dependence will be reduced by

12 billion barrels of oil, and heat trapping pollution that drives

global warming will be cut by approximately 6 billion metric tons.

By cutting our oil dependency, the national program will act as a powerful economic stimulus by allowing us to keep $100 billion

annually by 2030 in the U.S. economy, money that otherwise would

be sent overseas to Saudi Arabia, Iran, Venezuela, and other oil exporting countries. Drivers will have more money in their pockets.

By 2030, net fuel savings from these combined standards will be

equivalent to a $330 tax rebate for every American household. This

higher level investment in the U.S. economy and reduced fuel bills

is estimated to create 500,000 more jobs by 2030.

With such overwhelming benefits, it is not surprising the most

recent clean car agreement has strong support from a broad array

of stakeholders; from automakers to environmentalists, Republicans to Democrats, consumer advocates to energy security advocates, business leaders to labor unions. Even an overwhelming 80

percent of small business owners support a 60 mpg standard by

2025.

One of the great success stories is the role the national program

has played in laying the foundations for the auto industry’s remarkable recovery. In a world of volatile but steadily rising oil

prices, it is regulation that has played a crucial role in providing

businesses the certainty they need to invest in fuel-efficient technologies needed to be competitive in the future.

Compared to 2009, when the auto industry hit rock bottom, car

sales, profits, and fuel efficiency are all on the rise. And one of the

key reasons for why stronger standards and the auto industry re-
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covery are going hand-in-hand is that with $3.50 gallon gasoline

prices, consumers are demanding, make no mistake about it, fuelefficient cars. In fact, thanks to the new products now on the market in anticipation of stronger standards, automakers like General

Motors and Ford find themselves stepping up production and hiring new workers to keep up with the demand for fuel-efficient cars

like the Chevy Cruze and Ford Focus.

The market trend toward fuel efficiency is clear. Americans have

fallen out of love with gas-guzzling vehicles and engines. Where

once truck-based SUVs and V8s ruled the road, now one out of

every two vehicles sold is a small car, small crossover, or a midsized car. And thrifty 4-cylinder vehicles are now America’s most

popular engine choice. Even picky drivers are choosing fuel efficiency. Six out of 10 Ford F–150 buyers are now choosing the more

powerful and more fuel-efficient EcoBoost engine options, even

though it costs extra.

But perhaps the most remarkable result of the newest clean car

agreement is what it shows about getting beyond political gridlock

in today’s America. The President, the auto companies, States,

labor, and environmentalists have once again shown what it means

to govern effectively and what can be accomplished by constructive

compromise.

Chairman Jordan, Ranking Member Cummings, and members of

the subcommittee, the Clean Car and Clean Truck National Program are examples of Government at its best. The results speak for

themselves. Upsetting this important program would only raise

drivers’ fuel bills, increase dangerous pollution, and make us more

dependent on foreign oil.

In view of its overwhelming benefits and overwhelming support,

if anything, Congress should be urging the agencies to implement

this important program sooner rather than later.

Thank you for your attention, and I welcome your questions.

[The prepared statement of Mr. Hwang follows:]
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Mr. JORDAN. Thank you, Mr. Hwang.

Mr. Grenerth, you are recognized for 5 minutes.

STATEMENT OF SCOTT GRENERTH

Mr. GRENERTH. Thank you. Good morning, Chairman Jordan,

Ranking Member Cummings, and members of the subcommittee.

Thank you for inviting me here to testify.

My name is Scott Grenerth. I have been a professional truck

driver for more than 10 years and proud to hail from Chairman

Jordan’s home district. I am here on behalf of the Owner-Operator

Independent Drivers Association.

OOIDA’s approximately 150,000 members are small business

professional truckers in all 50 States. I am here to talk about how

the EPA and NHTSA heavy truck duty greenhouse gas and fuel efficiency rule will impact small trucking operations such as mine,

particularly during a time when most small business truckers are

fighting to stay afloat.

While trucking is my career, environmental stewardship is my

life’s passion. Before trucking, I worked for many years in environmental education. My wife and I were married on Earth Day in

1995 and we both took the name Grenerth to mark our commitment to the planet. So you might assume that I support the heavyduty truck rule. However, I am strongly opposed to this one-sizefits-all regulation and the mandates it places on trucking.

Compared to large trucking companies, small business truckers

and owner-operators have a very different reality when it comes to

fuel efficiency. Simply put, with diesel at close to $4 a gallon, if I

do not drive in a fuel-efficient manner, I will be driving myself out

of business.

Considering that small businesses are the vast majority of trucking companies, it is hard to understand why the agencies chose not

to tap into the collective knowledge of truckers like me on how to

improve fuel efficiency. They did not speak to a single truck driver,

apparently taking the attitude that truck drivers will never improve fuel economy without regulation. This view was eagerly supported by large motor carriers, who all too often do turn to the Government to diminish competition from smaller carriers.

The resulting rule mandates add-ons and truck specifications

that work for large motor carrier operations, even though trucking

has hundreds of thousands of different operating models. Despite

EPA’s claims, this will add new costs to small business truckers,

negatively impacting operations, and could lead to reduced efficiency for some.

For example, a colleague hauls fresh produce in a refrigerator

box trailer for most of the year, but for a few months he pulls a

flatbed trailer. His tractor has a roof fairing that improves fuel efficiency while he is hauling produce. When he is not using his box

trailer, he removes the fairing because it actually decreases fuel efficiency with his flatbed operation. Under this new rule, removing

the fairing and improving fuel efficiency this way will be a violation of Federal law.

Truckers inspect their trucks from bumper to bumper, making

sure that everything meets the needs of their business. However,

truck manufacturers have stated that this rule will reduce oper-
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ations to truckers. This puts us in a tough position: buy the wrong

truck for my operation or buy the right truck and pay a $37,000

EPA penalty.

Truckers are also forced to purchase equipment they don’t need

or want under this rule. Take heavy haul operations that move

loads like Army tanks and massive construction equipment. There

is no way the aerodynamics of their truck will improve efficiency,

but they will be forced to pay for mandated add-ons anyway. Low

rolling resistance tires which reduce traction are also a significant

part of this rule. Am I expected to only drive on dry and clear

roads? EPA estimates all this will add another $6,000 to the price

of a truck; this on top of the $20,000 to $30,000 their previous engine emissions rules added.

And that is the crazy thing about this new rule. EPA sees truckers as the reason fuel economy is down. But, in reality, they should

look at themselves. The technology required under the former rules

has significantly reduced fuel economy, forcing truckers to buy

around 800 gallons more fuel every year. Think about how much

more oil has to be refined directly because of EPA emission standards mandates.

These past rules cost truckers in other ways. New trucks break

down more often, costing drivers more money. Further, OOIDA has

learned that truck manufacturers are charging big dollars for once

low-cost warranties and instituting EPA surcharges that add another $20,000 to the price of a truck. Instead of a costly one-sizefits-all rule, EPA and NHTSA could have offered a compliance alternative focused on improved driver training to operate any truck

one driver drives as efficiently as possible. Yet, they ignored that

significant recommendation from the National Academy of Sciences

in lieu of a rule that unquestionably will fail to achieve purported

goals.

Chairman Jordan and members of the subcommittee, OOIDA

supports improved efficiency and lower emissions, but there must

be recognition of the costs they entail and the fact that trucking

is a diverse industry. Small business truckers are inherently focused on maximizing fuel efficiency because our business success

depends upon it. Pure economics tells you that trucking is going to

take advantage of every opportunity to improve fuel efficiency

based on their operating needs and without Government mandates.

Thank you for the opportunity to testify and I welcome your

questions.

[The prepared statement of Mr. Grenerth follows:]
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Mr. JORDAN. Thank you, Mr. Grenerth. We appreciate all the

witnesses’ testimony.

We are going to start with the gentleman who understands this

issue or has to deal with this issue on a regular basis, and that is

the gentleman from Pennsylvania, who is a small business owner

in the car business. Mr. Kelly is recognized for 5 minutes.

Mr. KELLY. Thank you, Mr. Chairman.

Mr. Anwyl, thanks for being here today. As the chairman said,

I think one of the other costs that we are not looking at is what

it costs a dealer to stock these vehicles. I am a Chevrolet dealer,

and have been when my dad started in 1953. We have a Chevy

Volt on the lot right now; it has been there now for 4 weeks. We

have had one person come in to look at it, just to see what it actually looked like.

Now, my question, and I guess what I am trying to understand

is, here is a car that costs $45,763. I can stock that car for probably

a year and then have to sell it at some ridiculous price. Now, by

the way, I just got some information from Chevrolet. In addition

to the $7,500 tax credit, Pennsylvania is going to throw another

$3,500 to anybody foolish enough to buy one of these cars, somehow

giving $11,000 of taxpayer money to buy this Volt.

Now, when you look at this, it makes absolutely no sense. I can

stock a Chevy Cruze, which is about a $17,500 car and turns every

30 to 40 days out of inventory, or I can have a Volt, which never

turns and creates nothing for me on the lot except interest cost.

And I am trying to understand how in the world we come up with

these ideas that somehow, somehow, if we just go electric we are

going to save all this money and all this fuel, and we are going to

relieve the world of all this emission that is out there. It is absolutely insane that we continue down this path.

A Chevy Cruze can get 36 miles per gallon on the highway. Now,

they say on a Volt you can get 94 miles per gallon. That is if you

go on an electric charge, right? Which I think the range on that,

I think you can go 35 miles if you just go electric, okay? Which

doesn’t make sense for people who live in northwest Pennsylvania.

Sometimes that is the one way just to your work.

So a lot of these things that we are seeing and that are going

on have a tremendous economic impact on the people who are

being asked to stock them and sell them. There is no market for

this car. I have some friends who have sold them and they are

mostly to people who have an academic interest in it or municipalities that they are asking to buy these cars.

So just from your standpoint, because you talk to a lot of dealers,

people like me, is there any upside to any of this? We can get cars

that I can turn every 35 to 40 days that get almost the same

amount of miles per gallon, their emissions are clean. Please tell

me what is the marketing strategy on this?

And I saw where Mr. Ackerson said we need to build 200,000 of

these. I tell you what. If he builds 200,000, he is going to have to

find somebody that can buy those cars and put them on their lot.

If General Motors wants to ship them to me and I will put them

on my floor plan, I will gladly store them in the back lot for them

as long as I don’t have any economic interest in it.
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But if you can tell me where do you see this going. I mean, is

anybody out there, other than somebody that is good with a laptop

but lousy with an econotop, cold tell me where in the heck are we

going with this policy and where does this lead down the road? If

we continue this policy, it makes no sense. And I can tell you as

far as job creation, the guy who ordered that Volt in my store is

no longer in that job. So it actually worked against him.

And I am trying to understand. And I was told that the reason

that that car is on our lot is that General Motors told him had to

stock it. I said, wait, let me understand. I told you under no circumstances were you to order a Volt. And he said, yeah. And I

said, so why did you order it? He said, well, General Motors told

me. I said, is this the same General Motors that tried to take my

Cadillac franchise from me? These are the people you listen to? The

guy that signs your check doesn’t have as much influence as the

guy who tried to take the franchise?

So if you could, tell me where is this market going? Do you see

any market for this car at all?

Mr. ANWYL. There is a little bit of good news. You mentioned it

did create some traffic for you, albeit one person. That is something

that the car companies tout, is that these vehicles do attract some

interest, some traffic; not necessarily buyers.

I think there are a couple things in what you are mentioning.

And let me also mention the Volt is actually a very nice vehicle.

We bought one ourselves. It is in a long-term fleet. We have an extended charger. People actually enjoy it. But the problem I think

you have outlined is really twofold. One of them is that there are

all sorts of inducements for people to be buying these vehicles. In

California it varies; I think it is $2,500 plus the $7,500.

And yet, when you look at who is buying these vehicles, and

there are people buying them, they are at the very high end of the

demographic scale. And there is a group in society, a group in the

marketplace who are very passionate about alternatively powered

vehicles, Leafs, Volts. We have an environmental editor who

bought a Leaf with his own money and he is putting solar panels

on his roof so that he can actually charge the vehicle from the sun.

So this is a little extreme, but there are people that are very passionate about that. And for these people I think the Volt is a perfectly fine choice, and so is the Leaf a perfectly fine choice.

The question is, though, how many people are there like that?

And right now we are seeing people who would have bought that

vehicle anyway, even without the tax credits, getting the tax credit

obviously at the expense of other taxpayers, and you have to wonder about the wisdom of that.

Mr. KELLY. Well, people who actually have to work within a

budget that they are very limited to, and part of it is not only their

housing cost and their food cost, but also their transportation cost

and the cost for fuel, it makes absolutely no sense to those people.

I am talking about hard-working, taxpaying American public that

actually needs transportation to get back and forth to work. These

are the people that cannot afford to buy these cars, and it makes

no sense to it. It is not a vehicle that I would want on my car lot

in northwest Pennsylvania.

Thanks for weighing in on it.
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Mr. ANWYL. Sure.

Mr. KELLY. Thank you, Mr. Chairman.

Mr. JORDAN. Thank you.

Next, the gentlelady from California is recognized for 5 minutes.

Ms. SPEIER. Thank you, Mr. Chairman.

First of all, to Mr. Kelly, send that Volt to California. It doesn’t

have to stay on your lot, because there is a waiting list in my district at my Chevrolet dealership of 6 months to get a Chevy Volt.

Mr. KELLY. Would the gentlelady yield? Give me the name of the

dealer. I will get it out there as quick as I can.

Ms. SPEIER. Putnam Chevrolet. Send it to him today and I can

guarantee you——

Mr. KELLY. If you will pick up the transportation costs, I would

love to do that.

Ms. SPEIER. All right.

Mr. JORDAN. Bipartisan operation.

Mr. KELLY. Thank you. Appreciate your help. We do work together. Thank you. [Laughter.]

I will be right back; I am going to call the store.

Ms. SPEIER. Mr. Chairman, I respect your authority as chairman

of this committee. I realize that you can set the agenda, but this

subcommittee has the responsibility to look at a number of things,

probably the most important is Government spending. And if we

spent our entire legislative agenda in this subcommittee on getting

rid of wasteful Government spending and look exclusively at the

$30 billion to $60 billion of contracting that goes on that is fraudulent, we would be doing a service to the public. But this hearing,

with all due respect, is a bad fairy tale because it doesn’t reflect

reality.

And to you, Mr. Anwyl, you said, under oath, that the consumer

is not on board with higher mileage vehicles. I don’t now what consumer in this country wouldn’t be interested in getting a vehicle

that gets better mileage, because they save money at the gas pump

if they get a vehicle that gets better mileage.

Now, I want to address to you the press release put out by Ford

Motor Co. in June 2011, just a couple of months ago, entitled Miles

Per Gallon Matters. ‘‘Forty-two percent say fuel economy is key in

new vehicle purchase decisions. Influence likely to grow.’’

The release cited the new vehicle customer study done by Moritz

Research that has been going on since the 1970’s, and according to

this study 42 percent of those surveyed say fuel economy is ‘‘extremely,’’ not a little, extremely important in their decision to purchase a new 2011 model, and it has been a 13 percent increase

versus 10 years ago.

So for you to say that the consumer is not on board is a false

statement, and I want you to address the Ford Motor Co. press release that says 42 percent say it is extremely important in their

new car decision.

Mr. ANWYL. Thank you. So let me explain. And I did say that

under oath and I do stand by that statement. The issue that we

are dealing with is that what you are citing are surveys, and there

are a lot of surveys out there that show that consumers, and the

numbers are going to vary, but basically they are making the case

that to consumers fuel economy is very important.
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The issue that you run into, though, either through the survey

design or pretty much on any surveys, that surveys are going to

create some strange results. The big one is that consumers tend to

respond to surveys in ways that they think are societally acceptable. And a great example of this would be when you ask someone

why did you pick the job that you have? They are going to talk

about job satisfaction or making a difference. And yet, when you

actually do a mathematical scientific study, you are going to find

that they took the job because of the money, and yet nobody says

that on a survey. And we are seeing the same thing in terms of

the cars that people are buying.

So when I say that they are not on board, it is not that they don’t

say nice things in surveys. What matters are the vehicles that they

are buying, and their preference is overwhelmingly not for the

types of vehicles that are being mandated by this proposed set of

regulations.

Ms. SPEIER. So you are basically saying that people don’t say

what they mean.

Mr. ANWYL. Absolutely.

Ms. SPEIER. So then why do we listen to any polls?

Mr. ANWYL. That is a very good question. [Laughter.]

I would echo that.

Ms. SPEIER. But, Mr. Anwyl, you cited your own poll. So it

sounds like you are being selective.

Mr. ANWYL. No, no, I did not cite a poll. No, the study that we

have done is actually a market-based study, where we look at the

vehicles that people are buying and we blend into that consumer

analysis, but it is fundamentally driven by the vehicles that they

are choosing in the marketplace, not what they are saying when

somebody calls them at dinnertime.

Ms. SPEIER. All right, Mr. Hwang, how would you respond to

that?

Mr. HWANG. First of all, I think this discussion about the Chevy

Volt is a good discussion to have, and I think we would like more

Chevy Volts in California; however, the fact of the matter is the

54.5 mpg standard will not require vehicles like the Chevy Volt.

General Motors is free to build such vehicles, but reaching 54 mpg

can be done with rather conventional technologies.

Furthermore, Mr. Anwyl does point out a very important issue,

which is that we should listen to the market. So let’s look at the

marketplace. In September what we have seen is an increase in socalled crossover utility vehicles. Okay, these are not SUVs. I believe in his testimony he labeled these as SUVs. A true truck-based

SUV market no longer exists, practically no longer exists; it has

been cut in half since 2005. These are the Chevy Tahoes and what

you traditionally might think of as a Ford Explorer.

In fact, in September a very popular vehicle, very popular Chevy

vehicle that drove General Motors’ sale growth is a crossover utility

vehicle, a car-based, very tall station wagon type vehicle called the

Chevy Equinox. The Chevy Equinox, the most fuel-efficient version

you can buy, which many customers are choosing, achieves 25.9

miles per gallon for a crossover utility vehicle that replaces the

Chevy Trailblazer. And the Chevy Trailblazer used to achieve—
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General Motors no longer builds it—17.2 miles per gallon combined

cycle.

So, therefore, customers are speaking. They are buying fuel-efficient vehicles, whether they are crossover utility vehicles, whether

they are compact cars, or whether they are other types of vehicles.

A recent article by Edmunds, October 6th, on Edmunds site

talked about pickup trucks. Pickup truck sales did increase in September, but the title of the article was ‘‘Incentives Bulge to Keep

Big Pickups Moving.’’ So it is not like the American public are

flocking back to big gas guzzling vehicles. One, they are crossover

utility vehicles, not SUVs; and, two, incentives, according to

Edmunds, averaged for pickup trucks, the current incentive level

is $4,281, up in April of $3,261. A quote from Edmunds, ‘‘Appears

market share perhaps profitable, perhaps not, was bought largely

with increased incentives.’’ Again, this is the pickup market.

Mr. JORDAN. Thank you.

Before recognizing the gentlelady from New York, let me just be

clear. Mr. Anwyl, so you are saying your poll is based on actual

purchases versus what people may say, is that correct?

Mr. ANWYL. Yes, Mr. Chairman. It is actually not a poll, this is

a scientific study.

Mr. JORDAN. The facts are the facts. Let me ask one quick question. Let’s assume Ms. Speier is right, that in fact Americans want

higher miles per gallon. Then I go to the fundamental question:

Why do we need Government to impose it? If that is what they

want, won’t the market get us there?

Mr. ANWYL. Well, I think the three pillars under which I have

heard supporters talk about the new CAFE standards, one of them

is that the technology is readily available; the second is that it is

cheap; and the third is that the consumers want it. And I think,

to your point, in a pre-market economy you wouldn’t need regulations to drive sales; under those circumstances the market would

be pulling sales through for you.

Mr. JORDAN. Correct. Thank you.

Now let’s recognize the gentlelady from New York, Ms. Buerkle.

Ms. BUERKLE. Thank you, Mr. Chairman, and thank you to our

panelists for being here today.

Unfortunately, the gentlelady from California left. I just have a

couple of issues with what she said. First of all, she mentioned we

should be dealing with wasteful Government spending, and I think

when we see $7,500 tax credits to a car that is questionable in the

market, and trying to put the Government in the middle of how the

market works, I think that is a waste of taxpayer money.

I also want to mention about Ford and the press. I was going to

ask her to repeat the press release that she read regarding Ford.

Ford has a vested interest in this, and speaking of wasteful Government spending, the amount of money they received from this

administration, both in grant and in loans, is several billions of dollars. So I think when they issue a press release such as that, they

have a vested interest in this whole initiative going forward, and

that is precisely what we are doing here this morning. We are trying to understand why a regulatory agency is circumventing the

legislative process. So we all are concerned with wasteful Government spending, but I think we need to be clear about that.
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I wanted to talk to Mr. Anwyl. I have a couple questions for you.

NRDC cites a survey, and Mr. Hwang mentioned it, the Small

Business Majority, that says the majority of small businesses support fuel economy standards. The whole project, frankly, seems fundamentally, ideological, and clearly liberal. That is what was stated

within the Democratic party. The Small Business Majority has all

the hallmarks of a shadowy interest group, starting with a name.

Are you familiar with this survey, the Small Business Majority?

Mr. ANWYL. Yes, I have seen an overview of the study, yes.

Ms. BUERKLE. And how does that reconcile with what your studies have shown?

Mr. ANWYL. Well, I think this echoes what I was talking about

earlier. This is actually a poll, so it is not a scientific study. I think,

as I was saying, the poll respondents tend to say what they think

is societally acceptable. You will find that with every poll. The

third thing, on this particular study, is it seems, when you look at

how the questions were phrased, that the results were somewhat

inevitable. I mean, I can read you the one question. This is on the

pro-regulation side.

Ms. BUERKLE. Yes, if you would clarify that, that would be great.

Mr. ANWYL. Sure. So listen to the question. It says, Should automakers be required to meet higher fuel efficiency standards because of our growing dependence on Middle East oil is a serious

threat to our security and American car companies lost market

share in this country because they built fuel inefficient vehicles?

From a polling perspective, that is what I would call a highly

leading question. There is almost no way to respond to that other

than in the affirmative. So, as you would expect, that is what the

poll did, it showed that small businesses favored higher standards.

Ms. BUERKLE. Now, in your testimony you mentioned that the

consumers were left out, they weren’t consulted. Can you just expand on that?

Mr. ANWYL. Well, I think we have heard this morning that the

new standards were arrived at through a process where secrecy

was a requirement, and from the consumer perspective we were

looking at this all along and were very troubled by that process.

My personal belief is that government should be transparent, that

things should be simple and should be easy to understand. When

we contacted the EPA about the consumer point of view, their response was that consumers would have the ability to contribute

during the hearing process. After the rules have been published,

there is a process where consumers can comment. I wonder how

much consumer comments will be actually taken into consideration

when a deal has already been announced.

Ms. BUERKLE. So your position or your thought is that this period of time for comment isn’t going to cure the defect in this whole

process.

Mr. ANWYL. I would find that unlikely.

Ms. BUERKLE. Dr. Lewis, would you like to expand on that?

Mr. LEWIS. Well, yes. There is a basic difference between the

opinions that people express just in response to a question and the

revealed preferences that they have when they are actually putting

their money where their mouth is. So I think that is what my col-
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league’s here study actually tries to measure, is revealed preference.

Another point to be consider would be—and I completely acknowledge that a lot of people really do want to buy more fuel-efficient cars, and I trust the data that Mr. Hwang was mentioning

about how many people are now buying V6s rather than V8s and

so on, but if that is what people really want, why do we need a law

forcing automakers to produce those cars? If the automakers don’t

provide customer satisfaction, and if the dealers, Mr. Kelly, don’t

have cars on the lot that people want to buy, they will be penalized

in the marketplace more ruthlessly than any government regulator

could possibly administer.

So it seems to me that the only purpose that a fuel economy

standard would serve would be to actually limit what customers

are able to buy and what automakers are able to sell and produce.

I mean, that is the only point of them, really, because if we just

had a totally free market, then automakers would be able to cater

to consumer preferences rather than government agency directives.

Mr. BUERKLE. Thank you, Dr. Lewis.

My time is up, but I just want one further comment, if I may,

Mr. Chairman. In all of this, everyone wants to drive a fuel-efficient car, but I had six children, my son has seven children, so

some of these options—it isn’t that I don’t want to drive a fuel-efficient car, it is that the reality is that I have to fit these kids in

a car and I want my kids to be safe. I yield back. Thank you, Mr.

Chairman.

Mr. JORDAN. I thank the gentlelady.

Real quickly. Mr. Grenerth, as a small business owner who has

the standards already imposed on your trucking company, did you

feel your concerns were addressed during the comment time that

you had? We are talking about the comment period that exists for

people to weigh in, consumers and business owners. How was it for

you?

Mr. GRENERTH. I know the staff from OOIDA is more than happy

to get hold of me any time. They know I will show up in D.C. any

time there is a worthwhile opportunity for input. They tried to get

the EPA to provide an opportunity for actual truck drivers to have

input. Nothing. They did not get back to them. That is one of the

things that drives me nuts.

Mr. JORDAN. So you would agree with the statement that Mr.

Lewis and Mr. Anwyl made, that it seems to be the deal is already

done.

Mr. GRENERTH. Yes, that generally seems to sum it up there,

definitely. It is very disheartening, to put it mildly.

Mr. JORDAN. I thank the gentleman.

I now recognize the ranking member of the full committee, the

gentleman from Maryland.

Mr. CUMMINGS. Thank you very much. As I listen to all of this,

I am wondering what, Mr. Hwang, let’s assume for a moment that

all that Mr. Anwyl is saying is true, and Dr. Lewis. I am trying

to figure out what is the down side of trying to save fuel. Maybe

I am missing something. You talked about how we are sending dollars overseas and how it would be good to, for our consumers, our

constituents, to spend less money on gasoline. But you have lis-
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tened to Mr. Anwyl and he has talked about what consumers are

doing, but what is the down side of trying to do this? Maybe I am

missing something.

Mr. HWANG. Frankly, Mr. Cummings, I strongly concur with you.

I struggle to see down sides in this new proposal. The benefits to

the consumer, the benefits to our balance of trade and reducing imported oil, the benefits to the environment are overwhelming. Why

is there a law or requirement for automakers to raise fuel economy

and lower CO2? Well, the fact of the matter is that there is a national interest here at stake: our energy dependency and the future

of our health and our environment. So there is a national interest

here at stake, so I think it is quite appropriate that there are longterm standards.

Furthermore, of course, what we have seen over the past history

of the U.S. auto industry and what we see in the combativeness associated with the last two decades of trying to lower carbon pollution and raise fuel economy for motor vehicles has not actually

done a great service, actually has done a disservice to the U.S. auto

industry, who was caught multiple times, when oils prices were

raised and lost market share, jobs were lost, companies lost market

share, especially the domestic automakers.

So no one really wants to return to the bad old days of fighting

about new standards because everybody recognizes that it is in our

long-term interest, both from a business perspective from the U.S.

auto industry and from a national interest perspective to reduce

our dependency on oil and enhance U.S. economic competitiveness

by having the U.S. auto industry build the cars of the future.

And Ms. Buerkle, I am the father of two children. Safety is of

absolutely critical importance to myself personally, and I would say

that to your question about needing to haul around your family,

needing a larger vehicle, when it comes to safety, design matters.

Vehicles which are lighter can be safe, are safer than heavier vehicles. This is data that I am happy to submit; some of it is in my

testimony.

Furthermore, I also mentioned that there is a vehicle called the

Chevy Equinox. The Chevy Equinox is a crossover utility vehicle

that holds probably at least, I will have to check on that, but it is

a mid-sided crossover utility vehicle. That vehicle achieves 25.9

miles per gallon, 50 percent higher than the 17.2 miles per gallon

vehicle that Chevy replaced called the Chevy Trailblazer.

Mr. CUMMINGS. Let me just interrupt, because I want to ask you

one more question. You talk about your kids. I teach my kids to

never mistake a comma for a period, and I think we could go the

route we have been going and be the same place we are 20 years

from now. At some point I think we have to aim in the direction

that we are aiming in.

And let’s assume what Mr. Anwyl says is true, that maybe people are not buying these vehicles as fast. I am just assuming for

the moment. Maybe there are some people that need to catch up

with that. I mean, at some point I can tell you people in my area,

they need that extra savings because a lot of them have lost their

jobs, lost their houses. So if there is any way that they can save

fuel, they want to do that.
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When we talk about innovation, sometimes we need to be aiming

at a higher standard. We are better than this. When I go to other

countries, it seems like I see these cars everywhere. How do we

compare to other countries with regard to this kind of issue?

Mr. HWANG. Well, the fact of the matter, when it comes to international competitiveness, we have slipped behind, and we are behind Europe and even China when it comes to current fuel economy levels. Both Europe and China are moving forward very aggressively with advanced vehicles also, including electric vehicles.

So the world is moving at a more fuel-efficient, the world is moving

toward hybrid electric vehicles, battery electric vehicles, plug-in

electric vehicles, and that is really the future and that is really

where we need to invest our money, in our U.S. manufacturing innovation and competitiveness, if we still want to be able to compete

in the 21st century.

Mr. CUMMINGS. Thank you, Mr. Chairman.

Mr. JORDAN. I would argue part of that in Europe is the price

of gasoline is about $8 a gallon, so there is a little different climate

there.

Let me just, real quickly, ask Mr. Lewis. You know, Mr. Hwang,

if it was up to him, why don’t we make it 70 miles per gallon, 100

miles, if it is going to be all this wonderful world and just raise it

as high as we possibly can? Can we meet the standard now, the

49 miles per gallon, that NHTSA has, the 54 that EPA? Can that

standard be met today? I know that is the target in the future, but

can it be met?

Mr. LEWIS. There are very few cars that could meet that standard today.

Mr. JORDAN. And certainly not in a practical sense, for folks who

live like in northwest Pennsylvania, like Mr. Kelly talked about,

right?

Mr. LEWIS. Yes. Yes. And if we are going to offer $7,500 in tax

rebates to put a million of these vehicles on the road, that is $7.5

billion in loss of revenue at a time of a fiscal crisis. So you wonder

how affordable it is from a national perspective as well.

I wish I had the reference here, I will provide it to the committee, but I saw an article only a few weeks ago that said that

in China SUV sales are booming, that in 2010 there were 850,000

SUVs sold and only one hybrid sold. One Prius in all of China, and

it may have been purchased from an engineer who was trying to

take it apart to see how it worked.

So here is the down side that I see.

Mr. JORDAN. Quickly, because I want to recognize the gentleman

from Idaho.

Mr. LEWIS. Okay. The premise of setting fuel economy standards

really is that consumers don’t understand their best interest, that

they let the short-term pain of a higher priced vehicle overwhelm

their good judgment in achieving longer-term fuel savings. But this

kind of reduces the consumer to a two-dimensional character.

The only thing that the consumer considers from this mentality

is up-front costs versus fuel expenditures. Whereas, in fact, we

know that consumers are much more complicated than that. Sometimes you don’t want to spend a couple extra thousand dollars this
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year on a car because you want to send your kid to college or because you need it for the kid’s music lessons.

So if you read the EPA NHTSA literature, they say the consumers undervalue fuel economy. Well, that is like saying consumers undervalue music lessons.

Mr. JORDAN. Thank you.

Mr. LEWIS. And where it gets really crazy.

Mr. JORDAN. Hang on a second. I am going to stop you right

there.

Mr. LEWIS. Okay.

Mr. JORDAN. I want to get to Mr. Labrador, and maybe you can

jump right back in there.

The gentleman from Idaho is recognized. Thank you.

Mr. LABRADOR. Thank you, Mr. Chairman.

Mr. Grenerth, I just have a question. I don’t know if you heard

what Mr. Hwang just said, but he said that there is really no down

side to this new CAFE standards, and I think I heard your testimony say something different. Do you agree with his statement?

Mr. GRENERTH. Oh, I definitely would say there is a down side

to it, because the fact that if you just look at, for example, the last

time the EPA did this with the 2004 and 2007 standards, fuel economy dropped with the exhaust gas recirculation being introduced

in trucks, it dropped by one mile per gallon. One mile per gallon

on a vehicle that gets, on a good average, 6 miles per gallon. That

is a huge down side. That is very detrimental. That puts more

greenhouse gas out in the air.

The other thing that came along with that is reduced reliability,

and I mean in a big way. Those valves fail frequently. As a matter

of fact, I called a shop back in Congressman Jordan’s district,

where I get my truck worked on, and this is a pretty small truck

repair shop, too. In that week they replaced four EGR valves on

trucks. That is $400 apiece plus basically missing an entire day’s

work and maybe, even worse than that, losing a customer because

you are viewed as not a reliable individual anymore in your business.

So that unproven technology is a very, very serious concern. It

has been proven, unfortunately, from these previous mandates,

that this does happen, talking about trying to push technology that

is really not there. And that is why I personally can tell you that

when I went to buy my truck, almost exactly 3 years ago, when I

became an owner-operator, I intentionally purchased a truck that

did not have that exhaust gas recirculation on it because I believe

that I can make the choice the way I drive the vehicle between

here and my right foot, that I know how to drive it appropriately

and get the best fuel economy. I haul very heavy loads all the time.

I get 7.2 miles per gallon.

Mr. LABRADOR. So what you are saying is that central government planning doesn’t necessarily work.

Mr. GRENERTH. Absolutely. It doesn’t necessarily mean you are

going to end up with proven technology. There are a lot of risks in

this. I don’t gamble. I am willing to take a risk being a small business owner, but I do not gamble, definitely not.

Mr. LABRADOR. Mr. Anwyl, what is the number one selling vehicle in America right now?
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Mr. ANWYL. Generally, it is the F–150 pickup truck from Ford.

Mr. LABRADOR. And that is just like a Prius, right, it gets the

same gas mileage?

Mr. ANWYL. It is a little bit bigger than a Prius.

Mr. LABRADOR. Okay. And can you explain to us why, if America

wants fuel efficiency, why the F–150 is the number one selling vehicle in America?

Mr. ANWYL. Well, I think it actually is supported by my earlier

testimony, and that is that consumers are looking for fundamental

utility when they buy a vehicle. They buy a vehicle to do something, to take their family around, to haul something, to tow something. And I think it is important to note that the car companies

have been delivering utility and better performance, better safety,

and improved fuel economy over the past few years, and I do expect

that to continue. So when we talk about the future, what we need

to be recognizing is that the future in terms of fuel economy is

going to improve even without additional regulation. The trend line

there is pretty clear.

The F–150 is interesting because they have introduced a V6

EcoBoost engine, and I think that is probably the best evidence of

what I have described, because what Ford has done with the

EcoBoost is actually improved the utility of the truck; it has more

torque, more towing capacity, happens to get only 1 mpg better, so

it is not like it is solving all the problems, but it is a step in the

right direction.

Mr. LABRADOR. Excellent.

Dr. Lewis, I am having a hard time here understanding why, if

America wants these cars, we have to give them $7,500 to buy

them. I really like Big Macs, and the Government doesn’t have to

make me, force me to buy those Big Macs. So how does this work?

Mr. LEWIS. Well, you have just provided the reductio ad absurdum, and you are absolutely correct. And what is even, I think,

stranger, and this is what I was going to get to earlier, is that the

EPA and NHTSA seem to think that even truck drivers, people

who haul freight for a living, people whose single biggest operating

expense is fuel, people who live on razor thin profit margins don’t

understand their true interest are shortsighted buyers and need to

be forced to buy trucks that meet Government-imposed fuel economy regulations, and, you know, it is like saying we need a Big

Mac mandate.

Mr. LABRADOR. So we are too stupid to know that we want these

cars. Is that what is being said here?

Mr. LEWIS. I think there is a nanny status aspect to this in

which ordinary people are viewed as just big children.

Mr. LABRADOR. Mr. Chairman, I respect your job very much and

I think that if we are going to look at Government spending, the

fact that we are spending $7,500 for each one of these cars, and

in some States we are adding another $2,000 to $2,500, I think

that is wasteful Government spending, especially if it is something

that the people want.

Mr. JORDAN. Well said. I thank the gentleman.

Now yield to the ranking member of the committee, my good

friend from Cleveland, Mr. Kucinich.
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Mr. KUCINICH. Thank you very much, Mr. Chairman, members

of the committee. I just want to say I think Mr. Anwyl is one of

the most remarkable witnesses that this committee has ever had

because he came to a town that is totally reliant on polls. [Laughter.]

The White House, the Presidential race, Republican Party, the

Democratic Party, just about every Member of Congress is reliant

on polls, and we have a witness come before this committee who

tells us definitively, authoritatively, no doubt, that polls are not scientific. I want everyone to mark this moment and check with your

campaign treasurers. [Laughter.]

And I think that we ought to take Mr. Anwyl’s other comment

about consumers don’t care much about fuel economy with the

same humor.

Now, I just want to say the trucking industry is a critical part

of Ohio’s economy; provides Ohio with over 290,000 jobs. But in

order to survive and remain competitive, truck drivers need trucks

that get better gas mileage and cost less to operate. That is exactly

why the new fuel efficiency standards for medium- and heavy-duty

trucks that are finalized this summer are so important to Ohio and

the trucking industry; and it is also why there is a long list of

trucking industry groups that support the new rule, including the

American Trucking Association and its Ohio affiliate, the Ohio

Trucking Association.

Now, Mr. Hwang, I am puzzled by Mr. Grenerth’s testimony that

members of the Owner-Operator Independent Drivers Association

will be harmed by the new standards. Can you discuss the impact

of the proposed fuel economy standards on the trucking industry,

including trucking companies that are small, locally owned businesses? What do they stand to gain or lose? Thank you.

Mr. HWANG. Thank you, Mr. Kucinich. According to EPA analysis, standards of this new fuel economy and CO2 program for

medium- and heavy-duty trucks will save truck owners quite a bit

of money. Semi-truck owners will save an average of $73,000 over

the life of the truck. Purchasers of new trucks, fuel savings in the

first year will outweigh incremental costs of $6,200, so fuel savings

are estimated to be about, for most truck drivers, $10,000.

For drivers that finance their purchase, savings will accrue immediately in the form of lower monthly payments both for the vehicles and fuel costs. So in the first month most truck owners will

actually see savings; in the first year they will see the incremental

costs paid.

Mr. KUCINICH. Thank you, sir. I just want to say whatever views

one holds about environmental protections against greenhouse gas

emissions, it would be difficult to dispute the fact that unemployment and a weak labor market are continuing to devastate the future of this country. The bottom line is that job creation benefits

from the manufacturing of fuel-efficient vehicles and components

will help reduce the massive unemployment rate in this country.

Ohio is at the heart of the auto industry, ranking second only to

Michigan in terms of employment in the motor vehicle industry. In

Ohio, it is estimated that the higher fuel standards will create at

least 23,000 new jobs. I know that in Ohio we have many more
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skilled workers who would jump at good jobs in a clean auto manufacturing industry.

Now, we have a chart here. Now, this chart shows every Member’s district in this room stands to gain jobs resulting from new

technologies. Mr. Hwang, again, can you talk in detail about the

array of job opportunities, both inside and outside the auto industry, that will be created as a result of higher fuel efficiency and

auto pollution standards?

Mr. HWANG. Yes, I would be glad to. In terms of job opportunities

for fuel efficiency, we have seen what has happened to the U.S.

auto industry from lack of attention to fuel efficiency; jobs have

been lost, market share has been lost. Conversely, we see the benefit already of the U.S. auto industry, U.S. auto supply industry already in a joint study by United Auto Workers, NRDC, and the National Wildlife Federation have identified already 300 facilities in

43 States plus the District of Columbia that are currently responsible for employment of 150,000 workers today that are building

components for fuel-efficient and clean advanced and conventional

I would add vehicle technologies.

According to a recent forecast, in 2030 the job creation potential

will be close to 500,000 for a 54.5 mpg by 2030. That is accruing

both from new manufacturing jobs and the fact that there will be

more money back in the pockets of consumers equivalent to a $330

tax rebate that they can spend back into the economy.

Mr. KUCINICH. I want to thank the gentleman.

My time has expired. Thank you, Mr. Chairman. And I want to

thank each of the witnesses for testifying. Thank you.

[The prepared statement of Hon. Dennis J. Kucinich follows:]
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Mr. JORDAN. I thank the gentleman.

We now yield to the chairman of the full committee, gentleman

from California, Mr. Issa.

Mr. ISSA. Thank you, Mr. Chairman. Following up on Mr.

Kucinich, there is a lot of humor here and I know that Dennis, my

friend, you intend to find humor whenever you can. But what I find

humor is that only a couple weeks ago this committee had a hearing in which we had Secretary Hilda Solis and we asked her about

green jobs, and she was able to show that this administration, for

$250 million, had managed to create 1,000 new green jobs, those

being jobs that last a year or more. They created 8,000 if you don’t

mind the fact they only lasted as long as we paid for the training.

So what I find interesting in Mr. Hwang’s testimony is he is talking about green jobs. Well, the problem is the definition of green

jobs includes a bus driver, we found out last week. Not the hybrid

bus driver, not electric bus, just any form of public transportation.

So as I see this administration have a war on the private automobile and the private light truck, I kind of get it that, yes, you

will get green jobs, and those green jobs will be forcing people off

the road and out of the vehicles they want.

Dr. Lewis, when I compare the mission of the NRDC, which is

to save the earth and to hell with the American people—no, I am

serious. Sometimes you just get a witness and you look and say I

know the organization; I am sure he is knowledgeable and so on.

But I have been through this. Clearly, they could care less about

whether we still have automobiles. As a matter of fact, we are

mandating electric vehicles. Fine. GE bought a bunch of them as

long as they got the tax break. But we are doing it when we still

don’t have a nuclear or other alternative to the 51 percent of our

fuel that is created by coal when it comes to electric fuel.

So I want to ask a couple of quick questions. When you look at

the total package of subsidies and unfunded mandates that are in

the current CAFE increase—and when I say unfunded, the cost to

industry that they are going to have in addition to the subsidies

and so on—if you were to take that amount of money and set it

in a pot and say we will invest in better mileage technology at a

given weight, a given performance level, what fraction of that $100

billion a year do you think it would take if the Government started

looking and saying we want to be part of the solution, not simply

shift cost to people so they can feel good?

I happen to own a Prius. It is a wonderful vehicle. At the end

of 50,000 miles, it hasn’t paid for itself, and everyone knows it.

Where will we be if we took that other tact, instead of constantly

shifting huge amounts of unfunded mandates to auto companies,

some of them effectively owned or controlled by the American administration currently in the White House?

Mr. LEWIS. Well, I do think that we would be more prosperous

in that the auto industry would be—one of the figures that was

cited earlier is that just to comply with the current model year

2012 to 2016 standards requires an investment of $50 billion. Now,

what if that money had been invested by the auto industry to meet

revealed consumer preferences? I would imagine that some of that

would have gone into fuel economy improvements. But some of it
93

might have gone into other amenities, features, capacities, maybe

things we can’t even imagine.

So it seems to me, though, that a very good suspicion is that it

would have, in the long-term, produced more jobs, more happy customers than the Government trying to determine what it is people

should want to buy.

Mr. ISSA. Mr. Grenerth, I am going to follow up with you. As an

environmentalist, as somebody who does care about how we get

more for less strain on our environment, you mentioned you carry

heavy loads. By definition, to get to 55 miles per gallon, isn’t a big

part of that going to be simply limiting the capacity of vehicles,

dumbing down categories so that your category may not be where

the real savings is; the category of the vehicle you need to carry

heavy loads simply may be the one that they try to find a way not

to sell? Isn’t that really what you have seen in the past in CAFE

standards?

Mr. GRENERTH. Well, there is definitely with Kenworth, for example, streamlined option choices when we are talking about large

trucks. They are talking about, to meet these standards, having to

eliminate some of the choices that are available, and those are

things like, when you get into heavy-haul, people that do—when I

say heavy, I am talking 80,000 pounds, typically.

Mr. ISSA. Okay. And I assuming that you already go to alloy

wheels, alloy tanks, aerodynamic improvements.

Mr. GRENERTH. I have a few things——

Mr. ISSA. All the things that reduce drag and to reduce weight.

But ultimately, if you are carrying a 65,000 pound cargo, that part,

there is no way to make it lighter, is there?

Mr. GRENERTH. Absolutely. Or if it is a very large object with a

lot of wind resistance. You can’t do that.

Mr. ISSA. So when we look at the standard—and we have been

talking about cars and light trucks today. When we look at the

standards, don’t we really have to look at the fuel economy achievements, carrying a specific load, whether that is the vehicle or, in

this case, the cargo; look at the low-road industry and the improvements that they continue to make because it is all about carrying

more for less, and the heavy truck industry, and haven’t we found

that basically that is mostly an engine design improvement to optimize efficiency, something that is not in the CAFE standards? The

CAFE standards rewards you for simply taking weight out, making

light, tiny vehicles, not necessarily producing true efficiency increases. Isn’t that what you found in the trucking industry?

Mr. GRENERTH. I found you definitely have to spec your vehicle

out for specifically what you are doing. Owner-operators take great

care to make sure that the wheels, the transmission, the final gear

ratio——

Mr. ISSA. Tire pressure.

Mr. GRENERTH [continuing]. Everything, tires, exactly, and maintain it impeccably as well, too. So, absolutely, you have to do that

or you are not going to succeed. It is that simple.

Mr. ISSA. Thank you.

Mr. Chairman, I might comment for the record, because it always seems like the press says you have a vested interest in this.

I had two RVs. My old RV, which used the Mercedes diesel, was
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a Sprinter, Dodge Sprinter, before they required that actual fuel

economy reduction design. So I have experienced my old one versus

my new one; and I like the new one and I like a lot of the features.

But going to a newer RV with a ‘‘next generation engine’’ and getting less mileage was pretty repugnant to me, and I think to all

of us who——

Mr. KUCINICH. Would the gentleman yield?

Mr. ISSA. Of course.

Mr. KUCINICH. I would just like to say while the chairman and

I may have some fundamental disagreements about where we go

with these policies, I think there are probably very few Members

of Congress who have the kind of expertise that you do have in this

area. We have to appreciate that.

Mr. ISSA. Thank you. And I thank you for pointing out the wrong

way in diesel technology because it is something that I think this

committee didn’t watch closely enough, and hopefully we will continue to monitor it.

Thank you, Mr. Chairman.

Mr. JORDAN. Thank you.

Mr. Hwang, earlier you referenced material on safety and the

idea that lighter cars are in fact, you cited, I think, some study

that shows their safety. We would like for you to provide that to

the committee at the end of the hearing, if you would be able to

do that.

I want to next recognize Mr. Guinta for his 5 minutes.

Mr. GUINTA. Thank you very much, Mr. Chairman.

Mr. Hwang, I read your testimony on page 3. You said by 2030,

the 2012 to 2025 national program standards will reduce oil consumption by 3.1 million barrels per day. Can you tell me what expectation you have for vehicle sales annually during that period of

time?

Mr. HWANG. Yes, absolutely. The issue of vehicle sales, as currently, the estimate for this year, the sale for calendar year 2011

is 13.6 million units. I believe in 2008, when the auto industry hit

rock bottom, the units were about 10 million, 10 point something

million units. So this points to the fact that vehicle sales can increase, profits can increase, as well as fuel efficiency.

If you take the agency estimates, as well as our estimates of

what the cost of the new technology will be and what the payback

time will be in 2025 for the 54.5 mpg, my full expectation is that

vehicle sales will continue to increase from the 13.6 million units

that we are expecting this year, and my full expectation is that

these vehicles will actually be highly desirable for consumers, and

because of the payback time attractiveness, that there will be no

impact, and if there is any impact, in my opinion, it will be a positive impact, an increase in sales.

Today, the vehicles on the used car market, the most valuable

cars on the used car market, according to data from KBB, from

Edmunds, and other places, and also NADA, the National Automobile Dealers Association, the most valuable vehicles on the used

car market today are fuel-efficient vehicles; the least valuable vehicles on the used car market today are fuel-inefficient vehicles.

The F–150 is a great example. In the new car market, 6 out of

10 buyers are buying the F–150 EcoBoost more fuel-efficient V6 op-
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tion. So consumers are willing to pay more for fuel efficiency because of the benefits that it accrues. So my expectation is that

sales in 2025 will continue to increase from today’s and it will, if

anything, vehicle sales will be higher than otherwise.

Mr. GUINTA. Okay, in New Hampshire, where I represent, we

roughly have 600 businesses that are related to the motor vehicle

industry and we have about 13,000 employees. There was a chart

that was put up earlier that showed, with these standards, we

would increase jobs in New Hampshire by approximately 2,600. I

would love to see an increase in this industry for New Hampshire

by 2,600.

What you are saying is, in part, the increase in sales will continue to grow as the economy comes back, but you also said something else. You said this is based also on payback. I want to take

just Manchester, the city that I am from. The average family income is somewhere between $55,000 and $60,000. If you are looking at payback and looking at Chevrolet as the example, the Cruze

is a $20,000 vehicle, the Volt is $45,760. That is a difference of

$25,763. Here is the math that I don’t quite understand. The

Cruze, $1,682 is what you would spend annually for fuel, and the

Volt is $1,000 according to the sticker. So that is a difference, a

fuel savings of $682 per year.

My math says that you would have to have that car for 37 years

in order to achieve payback. So if I purchase that today, I just had

a birthday last month, I am 41, I would be 78 years old by the time

I had payback on that vehicle.

I am struggling to see how the marketplace, the consumer, when

they walk into a showroom and decide that they want a vehicle

with greater fuel efficiency, and I agree with the statement made

earlier that fuel does matter, but purchase price matters even

more. So if you can find a purchase price that dictates these savings, I think the theory would be that more people would buy these

vehicles.

But you are talking right now about almost a $26,000 differential

and a 37-year payback. So I struggle to appreciate or understand

how that math would work and how the country, over this period

of time, would see that 37-year payback as something effective for

their family and efficient for their family in cost dollar savings.

Mr. HWANG. Well, very quickly, in 2025—today’s technology is

not 2025 technology, for one. Second, the calculations that we have

done based upon the agency and our own cost estimates, is that in

the first month drivers who financed the purchase of their vehicles

will see monthly savings in their vehicle payments and fuel costs.

Their costs will go down.

Mr. GUINTA. But how is that possible if the vehicle is $45,000

today for the Volt, $45,760. So if I, as an average shopper—what

does an average individual spend on a car, $25,000?

Unidentified SPEAKER. Thirty-three.

Mr. GUINTA. Thirty-three. Okay, so just take the 33 number. You

are adding, you are going up to $45,000, almost $46,000. I fail to

see how the financing would actually monthly payment would come

down. I mean, unless you are financing it over a longer period of

time, of course it would come down in that perspective.
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Mr. HWANG. I believe, sir, the difference in our calculations are

that, and my calculations and my estimates based upon the agency’s and other publically available research data, we believe that

Chevy Volts and other kind of electric vehicles will actually not be

required to—no one will have to be required to build those kinds

of vehicles to meet the 2025 standards.

In fact, the 2025 standards can be met through relatively conventional gasoline vehicle technology, much less expensive. The example I gave earlier is 50 percent improvement between a Chevy

Equinox and a Chevy Trailblazer, and both of those are considered

to many people as a sport utility vehicle, when in fact the Equinox

is a lighter, more fuel-efficient so-called crossover utility vehicle, 50

percent better improvement in the combined EPA estimated fuel

economy.

Mr. GUINTA. Thank you, Mr. Chairman.

Mr. JORDAN. I thank the gentleman from New Hampshire.

Mr. Kelly, you are recognized.

Mr. KELLY. Thanks, Mr. Chairman. I would like to ask we put

in the record I have the actual window stickers that would probably help testimony that shows actually the list prices and the fuel

savings based on the calculations that is on the label of every vehicle produced. So I would like to submit that because that really

adds some authenticity to what we are talking about.

Mr. JORDAN. I thank the gentleman.

Mr. Anwyl, just one question for you. Why, if it is not in the consumers’ best interest, if it doesn’t seem to be in the best interest

of the market, why are the auto manufacturers going along with

the whole process, the whole scheme?

Mr. ANWYL. Well, I think that is a good question and it is one

I put to them directly. I meet with the car companies on a regular

basis. The expression that I hear repeatedly is they felt they had

a gun to their head, and by that I think they are referring to the

threat of a California opt-out, the California waiver. We have

talked about the balkanization of the marketplace, but the cost associated with meeting individual standards across the 50 States

would be overwhelming. So the threat of the California waiver is

very real and very scary.

Mr. JORDAN. And you have individuals represent the auto manufacturers tell you this personally?

Mr. ANWYL. Yes, absolutely.

Mr. JORDAN. Okay. I thank the gentleman.

I want to thank our panel for a great hearing. Mr. Anwyl.

Mr. ANWYL. I don’t know if this is out of order or not, but I

do——

Mr. JORDAN. It is, but go ahead.

Mr. ANWYL. Okay. Well, I wanted to characterize, again, my testimony as not saying that consumers don’t care about fuel economy,

because that is not what I am saying. What I am saying is they

care about other things more.

Mr. JORDAN. Exactly.

Mr. ANWYL. And the second thing I would like to offer for the

written record would be copies of peer vetted academic research

that actually do show that what consumers say in polls and what
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they do in the real world are not the same thing. And I feel that

that might be a public benefit as an outsider from Washington.

Mr. JORDAN. Without objection.

[The information referred to follows:]
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Mr. JORDAN. Since we are going down the list, go ahead, Mr.

Lewis.

Mr. LEWIS. Okay. Well, thank you very much. There is a cartoon

that I would like to send the committee which shows a man who

looks very depressed, and his friend says what is wrong? And he

says, everybody I talk to lies to me. Why? Are you a defense attorney? No, I am a pollster.

Mr. JORDAN. Here we go.

Mr. LEWIS. But a point that I would like to make in regard to

Chairman Issa’s question about an unfunded mandate, you see, if

I remember the figure from Mr. Hwang’s testimony, EPA and

NHTSA are saying that the truck driver will save something like

$68,000 over the lifetime of the truck, netting out all the costs with

the savings.

Mr. JORDAN. Mr. Grenerth disagrees.

Mr. LEWIS. Right. Okay. Now, the problem, though, is what if

EPA and NHTSA are wrong? What if the reliability problems that

Mr. Grenerth talked about are just horrendous and he actually

ends up with the short end of the stick, paying more for a truck

that costs him more to operate? And then what about the manufacturer who then finds that there is no market for these vehicles?

If EPA and NHTSA were actually providing a guarantee, we

guarantee that you will save $68,000 over the life of the truck and,

if not, we will refund your purchase to that amount, it would be

a whole different story. But my point is that the agencies don’t assume any of the risk. And we know that when people make decisions, including regulatory decisions, and other people bear all the

risks, well, then factors like ideology get to play a bigger part than

prudence.

Mr. JORDAN. Well said.

In the spirit of bipartisanship, I will give you 30 seconds, Mr.

Hwang and Mr. Grenerth. One last quick statement because we do

want to get to our next panel quickly because I have to leave shortly.

Mr. HWANG. Yes, much appreciated, Chairman Jordan. I will just

say, in terms of your request for the safety data, that is all in my

testimony, and I am glad to provide the committee with even more

data, and I am also glad to provide the press release from a safety

expert named Clarence Ditlow that reinforces the position.

Mr. JORDAN. Great.

Mr. Grenerth.

Mr. GRENERTH. Yes, absolutely. Appreciate it. I would just say

earlier Mr. Kucinich was asking about the cost in Ohio and all

that. We are talking about basically $50,000 being added to the

cost of a vehicle. That is a huge problem for a small business

owner.

And regarding EPA’s attitude about this and not including truck

drivers, to me it is as if you are a doctor and we give you a drug

without consulting you. They are trying to force us to take this

medicine, if you will, that we have no idea what is going to happen.

It is unproven technology we are going to rely on and that could

be fatal to my business.
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Mr. JORDAN. Thank you very much for taking the time to come

today, Mr. Grenerth, and all of you as well. We appreciate your

great witness panel.

We will quickly get ready for the next panel because we have to

move very fast.

The committee will come back in order. I want to thank our witnesses for being here and for your patience. We thought the first

panel was great and we had, as you can see, a full committee. But

we now want to welcome you.

Our first witness is the Honorable David Strickland. He is the

Administrator of the National Highway Traffic Safety Administration. We also have with us the Honorable Gina McCarthy, who is

the Assistant Administrator for the Office of Air and Radiation at

the Environmental Protection Agency; and also Mrs. Margo Oge,

who is the Director of the Office of Transportation and Air Quality

at the EPA.

So let’s quickly swear you in. If you would please stand and raise

your right hands.

[Witnesses sworn.]

Mr. JORDAN. All right, let the record show that all witnesses answered in the affirmative.

Mr. Strickland, you know the routine here. You have 5 minutes.

Fire away with that high-tech gadget there in front of you.

STATEMENTS OF DAVID STRICKLAND, ADMINISTRATOR, NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION; GINA

MCCARTHY, ASSISTANT ADMINISTRATOR FOR THE OFFICE

OF AIR AND RADIATION, ENVIRONMENTAL PROTECTION

AGENCY, ACCOMPANIED BY MARGO OGE, DIRECTOR OF THE

OFFICE OF TRANSPORTATION AND AIR QUALITY, ENVIRONMENTAL PROTECTION AGENCY

STATEMENT OF DAVID STRICKLAND

Mr. STRICKLAND. Thank you. On the part of Secretary LaHood

and the entire Department of Transportation and my staff at the

National Highway Traffic Safety Administration, we appreciate

this opportunity to testify before you today on our efforts to improve the corporate average fuel economy [CAFE], standards.

Now, this joint rulemaking with the Environmental Protection

Agency highlights the very best in the rulemaking process. This

process created greater transparency with early technological engagement with stakeholders assisted these agencies to develop the

most informed proposal possible to maximize economic and environmental benefits without impacting safety or vehicle choice.

Now, Ms. McCarthy and Ms. Oge will speak to a lot of the aspects about our work and process-wise. I want to take my time in

oral statement to talk about the safety perspective, which is my

agency’s core mission.

We at the National Highway Traffic Safety Administration do

not require any manufacturer to do anything that would have a

negative impact on safety. Past safety tradeoffs occurred because

manufacturers chose at the time to build smaller and lighter vehicles to help them meet the CAFE standards in years past.
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Staying true to our safety-first mission, the National Highway

Traffic Safety Administration moved from a flat fuel economy

standard that subjects each manufacturer to a single standard, regardless of differences in their product mix, to an attribute-based

standard. This attribute system, which is used as the vehicle’s footprint as the foundation for the standard, was then mandated by

the Energy Independence and Security Act in 2007.

Under this revised system, cars and light trucks have fuel economy targets based on a specific vehicle’s footprint, which is roughly

the area between the points at which the tires touch the ground.

As a result, manufacturers no longer have an incentive to try to average out sales of larger vehicles by producing more small vehicles.

Every additional small vehicle actually increases a manufacturer’s

overall compliance obligation under the new attribution system.

In our analysis, then, we try to make sure that the proposed

standards are safety-neutral in two ways: first, we set footprintbased standards that do not encourage manufacturers to build

smaller vehicles to even out the larger ones; and, second, although

manufacturers can choose whatever technologies they want to meet

our standards, we demonstrate that in our analysis there is a feasible technology path that the industry could pursue to meet the

standards that do not require unsafe levels of mass reduction. The

National Highway Traffic Safety Administration will be continuing

this safety-neutral approach in the upcoming CAFE proposal as we

undertook this work in model year standards for 2012 through

2016.

Now, in addition to building on the safety efforts that we founded

in 2012 to 2016, working in collaboration with the Environmental

Protection Agency, we also were tasked to make sure that this

process had the ability to pull forward the hard work that we

achieved in model years 2012 to 2016 very successfully. That work

was almost 14 constant months and, frankly, the work for model

years 2017 to 2025 has actually been a very intensive and very

transparent 2-month effort.

After several milestones, including the Notice of Intent that was

issued in September of last year, also the Joint Interim Technical

Assessment Report, we, along with the Environmental Protection

Agency, looked at the potentials of cost, effectiveness, and lead

time requirements for over 30 technologies that could be applied toward the new standards in 2025. These particular assessments describe the Agency’s initial assessment of what could be done, recognizing that we received comments from more than 30 organizations

and more than 100,000 individuals.

Following this opportunity for public notice and comment

through these processes, we published a supplemental Notice of Intent in December 2010 which highlighted many of the key comments received in response to the initial Notice of Intent and to the

initial Technical Assessment Report. It is that work, us and the

Environmental Protection Agency, working in consultation with the

California Air and Resources Board, where we undertook an opportunity to have a forward-reaching opportunity to speak to key

stakeholders to better inform the upcoming proposal for model

years 2017 to 2025. This is something exactly that the President

of the United States asked for us to do in his executive order and,
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frankly, shows the best aspects of how rulemaking should be made

clear, transparent, and forward thinking.

Thank you very much, Mr. Chairman.

[The prepared statement of Mr. Strickland follows:]
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Mr. JORDAN. I thank the gentleman.

Ms. McCarthy, you are welcome to go.

STATEMENT OF GINA MCCARTHY

Ms. MCCARTHY. Chairman Jordan, members of the committee,

first, thank you for inviting Margo Oge to testify today about motor

vehicle regulations that are being developed jointly by EPA and

NHTSA that will reduce greenhouse gas emissions and improve

fuel economy for cars and light-duty trucks, as well as mediumand heavy-duty trucks and engines. These motor vehicle regulations are a great success story for this country. They will save consumers and small businesses money; they will lower the cost of

transporting goods; they will reduce our dependence on foreign oil;

and they will help protect the environment.

Combined, the model year 2011 to 2025 light-duty vehicles are estimated to save Americans $1.7 trillion in fuel costs and reduce

our need for oil by a total of 12 billion barrels. Ultimately, our savings will reach nearly 4 million barrels a day. That is almost as

much as we import from all OPEC countries combined. The regulations are supported by a wide variety of stakeholders, including the

industries they regulate, the labor unions representing workers in

those industries, environmentalists, and States.

The first of these regulations was last year’s joint EPA-NHTSA

rulemaking for model year 2012 to 2016 vehicles. This national

program allows manufacturers to build a single national fleet that

satisfies EPA, NHTSA, and California standards. It is common

sense, good government approach that harmonizes three different

regulatory programs. EPA standards for model year 2016 lightduty vehicles are projected to achieve an average tailpipe CO2 compliance level of 250 grams of carbon dioxide per mile, equivalent to

a fuel economy level of 35.5 mile per gallon if they are met only

through fuel economy improvements.

Over the lifetime of the vehicles, these standards are projected

to save 1.8 billion barrels of oil and reduce greenhouse gas emissions by about 960 million metric tons. Consumers and small businesses buying model year 2016 vehicles are projected to average

net savings of $3,000 over the life of the vehicle. Those fuel savings

far outweigh the initial additional cost of the vehicle.

We are now working on the President’s request to extend this national program to 2017 to 2025 vehicles. This past July we published a preliminary framework for this program, including standards that could lead to a projected EPA fleetwide model year 2025

compliance level of 163 grams per mile CO2, which is equivalent

to 54.5 mile per gallon, if reductions were achieved through fuel

economy improvements. We project these standards set at these

levels would reduce greenhouse gas emissions by approximately 2

million metric tons and save 4 billion barrels of oil over the lifetime

of the vehicles, while still allowing consumers to have access to the

full range of vehicle choices that they have today.

The preliminary elements of the 2017 to 2025 program were informed by extensive public process over the course of the past year

that included publication of a technical assessment of a range of

standards, several notices published in the Federal Register, and

extensive dialog with a wide range of stakeholders. The program is
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supported by letters from no less than 13 CEOs of auto companies,

as well as the California Air Resources Board, which again intends

to accept compliance with the Federal program as meeting California’s standards. EPA and NHTSA will soon publish a Joint Notice

of Proposed Rulemaking, seek an additional public comment before

making any final decision on the 2017 to 2025 greenhouse gas and

CAFE standards.

The third set of regulations is a joint EPA and NHTSA rulemaking that established greenhouse gas and fuel efficiency standard for model year 2014 to 2018 medium- and heavy-duty trucks

and engines. Supporters of this program include engine and truck

manufacturers, the American Trucking Association, environmental

groups, and California. We estimate that these standards will save

about 530 million barrels of oil, they will reduce CO2 emissions by

about 270 million metric tons, and help vehicle owners achieve $50

billion in total fuel savings over the lifetime of these vehicles. A

semi-truck operator could pay for the technology upgrades in under

a year and realize net savings of $73,000 to reduce fuel costs over

the truck’s useful life.

Efforts like this national program represent monumental

achievement for America and American families. History has

shown that we can clean up pollution, preserve jobs, help grow our

economy all at the same time.

Again, I appreciate the opportunity to provide the Agency’s views

on this matter and I look forward to answering questions. Thank

you very much.

[The prepared statement of Ms. McCarthy follows:]
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Mr. JORDAN. Thank you, Administrator.

We will go first to the gentlelady from New York, Ms. Ann Marie

Buerkle.

Ms. BUERKLE. Thank you, Mr. Chairman, and thank you to our

panelists for being here this morning.

For those of you who don’t know me, I have spent much of my

professional career in health, so safety is of utmost importance to

me. As I mentioned in the previous panel, I have six children and

soon to be 12 grandchildren, so safety is always on my mind when

you are putting kids in a car.

Mr. Strickland, you talked about one of the ways to increase efficiency and decrease the use of fuel is decreasing the weight of a

car, and I am concerned. Can you talk to me about the safety impacts resulting from making fleets smaller and lighter?

Mr. STRICKLAND. Absolutely. Well, the goal is actually to not encourage mass reduction, but actually to use fuel economy through

driving technology, which is the reason why the National Highway

Traffic Safety Administration went to an attribute-based standard,

I believe, for our last set of truck rules prior to 2012 to 2016, which

I think are for light-duty trucks, which was, I believe, in 2005.

That system was actually not only validated, but actually mandated by the Congress in 2007.

When you have a flat standard, which is basically one rule covering the entire manufacturer’s individual fleet, that encouraged

car companies at the time to offset larger vehicles by making more

smaller vehicles. This attribute-based system actually discourages

that, and what you do is you don’t take out weight. Actually, what

you do is you encourage manufacturers to reduce weight in their

largest vehicles. So not only do you have——

Ms. BUERKLE. Okay, I don’t mean to interrupt——

Mr. STRICKLAND. Oh, certainly. Go ahead.

Ms. BUERKLE. Five minutes go by so quickly.

Ms. Oge, I would like to just follow up with you. With regards

to EPA and the concern for this fuel efficiency, what if the number

of increase in fatalities and injuries goes up? At what point does

the EPA say maybe this isn’t such a smart idea, maybe this fuel

efficiency approach is to the detriment of safety, so we are going

to back off of this?

Ms. OGE. Thank you for the question. Actually, this is a question

that should go to Mr. Strickland. The beauty of the two agencies

working together is that we were able to bring the expertise of our

two technical teams. EPA has extensive expertise for the past 40

years to regulate the car companies for emissions and NHTSA has

significant expertise in the area of safety. So, working together, we

are going to put a proposal together that will demonstrate——

Ms. BUERKLE. So let me just——

Ms. OGE [continuing]. Safety neutral proposal.

Ms. BUERKLE. So EPA is setting these standards without having

the expertise with regards to safety issues?

Ms. OGE. Under the Clean Air Act, we are required to look at

safety, and we do that, so we have our own expertise. But also

NHTSA has that expertise, so we rely on NHTSA when it comes

to the fuel economy greenhouse gas program.
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Ms. BUERKLE. So based on that would you just tell me what

EPA’s position is with regards to safety? We always do benefits and

burdens analysis, so we want fuel efficiency, but we also want safety. So at what point do you say let’s back off from this fuel efficiency issue because it is jeopardizing safety?

Ms. OGE. As will become evident from the proposal, the proposal

will be safety-neutral. That means we have taken that into consideration as one of the many factors that both agencies have to

evaluate.

Ms. BUERKLE. Okay. We have evidence to the contrary.

Mr. Strickland, I will just go back to you because you mentioned

that these safety studies were continuing on.

Mr. STRICKLAND. That is correct.

Ms. BUERKLE. And I think it is important for you, if you are willing to do this, to commit to this committee that if in fact this final

rule isn’t going to be issued until and unless we know what the impact on safety is going to be. Are you willing to commit that to this

committee today?

Mr. STRICKLAND. That is part of our statutory responsibility,

Congresswoman.

Ms. BUERKLE. No, that wasn’t my question. Would you be willing

to not issue a final rule until and unless all of the safety studies

have been completed and we understand what the impact of these

fuel-efficiency standards are going to be on safety?

Mr. STRICKLAND. The issue is for us to be able to have the most

complete information possible before we, as an agency, make a recommendation to Secretary LaHood about a final rule, of course, or

proposal, for that matter. So the question of all the studies being

completed, if the agency feels that we have enough technical information on hand to make a very educated decision in terms of proposal, we will go forward with that.

Ms. BUERKLE. So you are not willing to commit that we are not

going to get all the safety studies first, before we issue the final

rule.

Mr. STRICKLAND. We will have all the appropriate safety studies

done to make a decision, Congresswoman.

Ms. BUERKLE. Mr. Chairman, I would like to introduce into the

record a letter from Mark Pryor, Senator Pryor, a letter to him

from Ray LaHood.

Mr. JORDAN. Without objection.

Ms. BUERKLE. Thank you.

[The information referred to follows:]
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Ms. BUERKLE. I see my time has expired. Thank you, Mr. Chairman.

Mr. JORDAN. Thank you.

Mr. Strickland, is the fuel efficiency standard for NHTSA in year

2025 49.6 miles per gallon? Is that going to be the standard?

Mr. STRICKLAND. Actually, it is virtually a conditional target. We

are not allowed to set standards for more than 5-year periods.

Mr. JORDAN. What does that number come from, then?

Mr. STRICKLAND. It is actually the work collectively done with us

and the Environmental Protection Agency in terms of the technological reviews we are doing initially. Now, at this particular

point——

Mr. JORDAN. But is that the number?

Mr. STRICKLAND. We have open notice and comment not only to

have to go through for the initial part of the rule for 2017 to 2021;

we, under statutory obligation, under the Energy Independence

and Security Act, we have to go through another open notice and

comment period. We have to literally do another set of rulemaking.

So we do not have a set endpoint standard; we can’t, by law.

Mr. JORDAN. Anything on NHTSA letterhead or anything that

points to that number, 49.6 miles per gallon?

Mr. STRICKLAND. We believe that the long-term program has the

ability at this point to achieve that, but, once again, it has to be

evaluated under the——

Mr. JORDAN. So that is a standard that is at least out there and

proposed and being talked about and subject to maybe being the

number.

Mr. STRICKLAND. It is a similar issue as an advanced notice of

proposed rulemaking under the APA, which is you can definitely

have a prospective number for thinking about planning purposes

and also for long-term purposes planning for the manufacturers.

Mr. JORDAN. Ms. McCarthy, is the number that the EPA has

54.5?

Ms. MCCARTHY. That is the number that we have put out in a

framework that is initially guiding our thought based on public information that has been out in the record.

Mr. JORDAN. So I guess that begs the question, then, is there one

national standard? Is there going to be one standard as we are

looking ahead or is there going to be two, 49.6 that one Federal

agency is saying and 54.5 another Federal agency is saying? Because one of the things I hear and, look, I have been hearing for

2 years when I talk to business owners in our district and, frankly,

across the State of Ohio, is the word that comes up more and more

often, you hear it from elected officials, is the uncertainty in the

marketplace with business owners today. So wouldn’t it seem like

maybe if there is supposed to be one national standard, we

wouldn’t want two numbers out there?

Ms. MCCARTHY. Well, the success of the 2012 to 2016 program

was that for the first time we did have one national program,

which means we had three regulatory agencies that worked together so that one national fleet could be produced that would

achieve all of the regulatory requirements.

Mr. JORDAN. My question is do you think that adds to uncertainty, the fact that there is not one standard at least in the pro-
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posed numbers and the target that manufacturers are going to

have to hit?

Ms. MCCARTHY. I think the manufacturers are well aware that

for the first time they can build one fleet that achieves all of the

regulatory requirements. That is the first time that we have been

able to deliver it. That is why they asked us to look beyond 2016

and actually get together to extend that national——

Mr. JORDAN. Okay. Let me go to this, then. So the process—and

you were all here for the first panel. Mr. Grenerth talked about

during the comment period for the truck industry where he felt like

he was not heard at all and talked about the additional cost he now

faces as a small business owner. And Mr. Anwyl, in his comments,

talked about how he thinks the deal is already done now as we are

moving forward with the new set of standards coming.

How do you respond to that, that here are folks, consumer advocates, small business owners, who feel like they are not actually

having their concerns addressed in the process and the deal is already done?

Mr. STRICKLAND. The deal is not done. We still have to propose,

bottom line. What we did was asked stakeholders to provide us

technical information to better inform the proposal. So everyone

that was here that provided you testimony, we are looking forward

to seeing their comments in our open notice and comment period

when we issue the proposal.

Again, also, I believe that OOIDA, which is, I think, the group

that Mr. Grenerth, actually did have meetings not only with my

technical team, but also with the EPA, and I can have Ms. McCarthy answer more specifically to that. But in terms of hearing particular voices or the consumers’ voice or things of that nature, that

is what open notice and comment is for, and our doors were always

open throughout this process.

While there were numbers of technical meetings that were going

on with lead stakeholders, there were other meetings going on all

the time for the process. Mr. Anwyl was always welcome, if he had

his study, to be able to provide that to the agency, to provide that

to EPA; we would happily have taken that into consideration in the

preliminary look in shaping the proposal and especially, more importantly, during open notice and comment, which is where we

have to evaluate all this information.

Mr. JORDAN. Well, I appreciate that, Director, but we had two

people under oath just testify that they thought it did work the

way you just described. We have this statement from the Center

for Progressive Reform which says the Center notes that the

agreed-upon CAFE standards are ‘‘the result of raw political wrangling, not the rational rulemaking process.’’ So this is not a small

business owners, this is probably a center-left organization making

that kind of statement.

We had Mr. Anwyl, under testimony before, saying he called it

the California balkanization, talking about manufacturing, and I

think the statement he used was he feels like the manufacturers

had a gun to their head and they felt they had to go along with

the proposed standards.

So how do you respond to that?
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Mr. STRICKLAND. Well, I can’t speak to the state of mind to a

manufacturer, you need to ask them how they felt.

Mr. JORDAN. How about Administrator McCarthy?

Ms. MCCARTHY. Well, first of all, I would say that the national

program has garnered such widespread support because it is a

model of how government can and should work effectively with a

wide range of stakeholders to develop thoughtful data-driven regulations that benefit consumers, that improve the environment, that

improve security——

Mr. JORDAN. A lot of the questioning in the first—if I could just

real quickly. A lot of the questioning in the first panel was on the

cost issue. Did you guys, when you go through this, you did, I

would assume, a pretty extensive cost-benefit analysis?

Ms. MCCARTHY. We did, and we will provide a similar analysis

when we put out the proposed rule——

Mr. JORDAN. And is there a chance the committee could get that

cost-benefit analysis used thus far to arrive at the decisions you

have arrived at?

Ms. MCCARTHY. Actually, all of that information is in the public

record already. We actually put out a Notice of Intent, we put out

a Technical Assessment Report, we put out a Supplemental Notice

of Intent——

Mr. JORDAN. And you will get that all to the committee? Can you

get that to the committee?

Ms. MCCARTHY. Absolutely. It is in the public record.

Mr. JORDAN. Okay. Okay.

Ms. JORDAN. The only thing I would also say is I know that one

of the representatives you heard from this morning is OOIDA, and

I wanted to make it very clear to you that we actually met with

OOIDA extensively. They, early on, identified seven issues that

were of concern to them in our proposal, and I can provide you direct information that indicated that their comments led to significant changes in the final because we took their comments into consideration.

In fact, I can provide you an email from OOIDA subsequent to

our meeting with them during the comment period in which they

went on effusively about how good EPA was to pay such close attention to the interests of small business. So I don’t know who this

representative was or how extensive an involvement he had in the

process, but clearly not working for OOIDA, because the staff of

OOIDA met with us, appreciated it, and had an influence in the

decision.

Mr. JORDAN. All right.

Gentlelady from New York for a second round. We will go real

quickly second round.

Ms. BUERKLE. Thank you, Mr. Chairman.

Just as a followup question to the chairman’s question, Ms.

McCarthy, with regards to you sat there and you were quick to tick

off the benefits, savings 12 billion barrels of oil with these new

standards. Can you give us some idea of the costs?

Ms. MCCARTHY. Certainly. The costs are in the rulemaking

themselves, and let me talk to you a little bit about the costs.

Ms. BUERKLE. Just the amount. Just the amount.
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Ms. MCCARTHY. Relative to 2012 to 2016, the cost for those

model years is $52 billion, the monetized benefits are $240 billion.

For the estimated, we haven’t proposed it yet. We don’t have any

costs yet for the 2017 to 2025. But if you look in the record, you

will see that the Notice of Intent that we put out actually references a wide variety of costs related to different ranges of stringency in those rules. For the 2014 to 2016, heavy-duty vehicles, the

cost is $8 billion, the monetized benefits are $50 billion.

Ms. BUERKLE. Okay, yes, if you could provide those for the committee, that would be great.

Ms. MCCARTHY. Happy to.

Ms. BUERKLE. Thank you.

Mr. Strickland, I want to go back a little bit because it sounds

to me like we are going to have three different standards here.

Mr. STRICKLAND. There are three different programs, Congresswoman; it is one harmonized national program. There are different

authorities under the National Highway Traffic Safety Administration, Clean Air Act authority under EPA, and then the California

Air Resources Board also has the ability, because of the waiver and

the endangerment finding, to issue their own rules regarding

greenhouse gas emissions. The key to it was to harmonize those

three different authorities. So while, yes, there are three different

regulatory actions happening, they are jointly done and coordinated

so you do have one harmonized national program.

Ms. BUERKLE. Can you comment, though? This California waiver,

doesn’t that create—why was California given a waiver? Doesn’t

that create confusion? This harmony, there are three different sets

of standards. It wasn’t that way before 2009, and I would like you

to comment on that.

Mr. STRICKLAND. Well, I will defer to Ms. McCarthy and EPA,

since they are the ones who have to process the waiver.

Ms. BUERKLE. But my question is directed to you, Mr. Strickland.

Mr. STRICKLAND. Oh, certainly.

Ms. BUERKLE. Then I will follow up with the other two.

Mr. STRICKLAND. In terms of why I think there is—well, clearly

because California was given the waiver, they have the authority,

because of their endangerment finding, the endangerment finding

made by the Environmental Protection Agency, to be able to issue

greenhouse gas standards and, therefore, under Mass. v. EPA,

which gave the Clean Air Act authority the right to actually oversee transportation sources, we have a new regulatory environment

that we have to deal with.

The White House and the President’s leadership said for us all

that there were various statements of Presidential orders to be able

to work together to create one national harmonized program, and

that is what we did.

Ms. BUERKLE. But I would like you to comment on the fact that

the EPA really, in issuing this waiver to California, violated the

State preemption, that California should not have been given a

waiver.

Mr. STRICKLAND. I am not an expert on California waiver issues.

I would be happy to answer that for the record specifically, but you

have two experts to my left.
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Ms. BUERKLE. Well, but you are working with these groups and

it is of concern to me whether EPA had the authority to grant this

waiver to California, and now we end up in a situation where we

have three sets of standards where, in 2009, we had one set, and

that was NHTSA’s standard, which appears to be a more reasonable and less onerous and less burdensome on the economy and on

the folks, as you heard from this morning.

Mr. STRICKLAND. We were given congressional authority under

EPCA in the mid-1970’s and then modified by the Energy Independence Security Act in 2007 we will carry out those duties. Because of Mass. v. EPA and the Clean Air Act authority, there is

independent authority as well to also regulate greenhouse gas

emissions, and it is not our place to evaluate the Environmental

Protection Agency’s legal authority. Our responsibility under the

Department of Transportation is to actually deal with our statutory

authorities, and our agency’s mission is to not only regulate fuel

economy, which is one part of our mission, but to find the best

ways to save lives and reduce injuries, which is what we do every

single day.

Ms. BUERKLE. I would disagree with you on the fact that you

should have knowledge and you should be concerned with the fact

that EPA violated the State preemption by granting California that

waiver, and that should be the place where you start. It was in

EPCA and there was a State preemption clause in there. And that

is why we are having this hearing. We are not saying we don’t

want a clean environment, but we want to make sure that this

process that was followed is legal and is the right way to go.

I yield back, Mr. Chairman.

Ms. MCCARTHY. Madam Vice Chairman, would you like me to

answer this question?

Mr. JORDAN. Yes. I think the question is the statute seems to indicate that you can’t have preemption, yet the EPA said you can

have preemption. So what gives?

Ms. MCCARTHY. Actually, I believe that what you are referring

to are fuel economy regulations. What California is regulating and

what EPA is regulating are greenhouse gas emission standards.

And the only thing that I wanted to make sure to point out is that

Congress, in the Clean Air Act, in Section 209, actually not only

gave us the authority to grant California waivers, but it gave us

specific criteria that we needed to follow. We applied those criteria

to the letter; we went through a public rulemaking process——

Mr. JORDAN. I guess maybe here is a question. I am not a legal

scholar, but it seems, when you read the statute, it talks about a

regulation related to fuel economy standards, and greenhouse gases

are certainly related to fuel economy standards, is that right?

Ms. MCCARTHY. They are closely aligned, but they are different,

Mr. Chairman.

Mr. JORDAN. Then I think that proves the gentlelady’s point.

Ms. MCCARTHY. We actually take into consideration all greenhouse gas emissions related to that vehicle, most notably, the

major differences, the air conditioning. And that makes a very big

difference in terms of the outcome of these rules. EPA’s regulation

actually improves the amount of greenhouse gases you can get and

achieve through this joint rulemaking, and it also helps improve
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fuel economy in the end. But we are not driving fuel economy; we

are actually regulating greenhouse gases.

Mr. JORDAN. I want to go back to where I was earlier, because

I wasn’t quite clear. Is there one standard or are there going to be

two? Are there going to be 49 miles per gallon and 54, are there

going to be two numbers out there or is there going to be just one

number?

Mr. STRICKLAND. Well, the easiest way to explain it is the 54.5

mile per gallon standard derived from the EPA’s greenhouse gas

rules versus NHTSA’s 49.6. They are actually harmonized; they are

the same number. We have different authorities. They have more

flexibilities——

Mr. JORDAN. Mr. Strickland, only in Washington could you say

two numbers are the same number. I mean, I have seen all kinds

of things in budgeting——

Mr. STRICKLAND. It is a harmonized——

Mr. JORDAN. We are going to cut spending, but we are not cutting spending; we are reducing the rate of growth. I have seen it

all and I have only been here 5 years. But I have never had someone, a Federal agency say 49.6 is the same as 54.5. I have just

never seen it.

Mr. STRICKLAND. There are different statutory authorities and

different flexibilities that the agencies have. When you——

Mr. JORDAN. Well, will you at least admit this, that that probably doesn’t help the uncertainty that currently exists in our economy where we have 9 percent unemployment? Would you at least

admit that?

Mr. STRICKLAND. No, the exact reason why we needed——

Mr. JORDAN. You wouldn’t think so? Wow.

Mr. STRICKLAND. The exact reason why we needed a harmonized

national program is to address exactly that, so the auto manufacturers can actually address building one national fleet. It is what

the manufacturers wanted. It is the best environmental policy and

best economic policy. The reason why we have undertaken this

joint rulemaking in the first place is to address that very question.

Bottom line is——

Mr. JORDAN. Would you ever have had to undertake the joint

rulemaking if California didn’t have a different standard?

Mr. STRICKLAND. Well, clearly the issue is——

Mr. JORDAN. I mean, just be frank. You are under oath, so just

be frank. But for that, you wouldn’t have had to do this, would

you?

Mr. STRICKLAND. Well, before——

Mr. JORDAN. We wouldn’t have this whole convoluted rulemaking

process, special committee——

Mr. STRICKLAND [continuing]. The only auto fuel regulator was

NHTSA. So you are asking a question which sort of bespokes, and

that isn’t the current reality. The current reality is is that the Supreme Court made the decision that the Clean Air Act did cover

mobile transportation sources and, frankly, not only because of that

legal decision, it frankly was the best policy decision, because there

are some things that the Environmental Protection Agency, such as

air conditioning, can reach which actually strengthens our fuel
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economy policy, makes it more consistent, and actually makes a

more rigorous standard.

Mr. JORDAN. I want to thank the witnesses. I do have to run. I

appreciate your coming in and I apologize I can’t stay, but I have

to get to another meeting here. I will turn it over to the gentlelady

from New York.

Ms. BUERKLE. And I just have a quick question for the three of

you. It is a yes or no question, if you wouldn’t mind. Are the greenhouse gas rules, either the EPA’s or the California rules, are they

related to fuel economy? Mr. Strickland?

Mr. STRICKLAND. They regulate——

Ms. BUERKLE. Yes or no?

Mr. STRICKLAND. No. They regulate greenhouse gas emissions.

Ms. MCCARTHY. They regulate greenhouse gas emissions.

Ms. OGE. They regulate greenhouse gas emissions.

Ms. BUERKLE. So they are not related to fuel economy, under

oath?

Mr. STRICKLAND. No. They are greenhouse gas emission regulations.

Ms. MCCARTHY. We do not regulate fuel economy standards.

Ms. BUERKLE. Okay. And all three of you agree with that?

Mr. STRICKLAND. Yes.

Ms. OGE. Yes.

Ms. MCCARTHY. Yes.

Ms. BUERKLE. Very good.

This hearing is adjourned. Thank you all for being here.

[Whereupon, at 12:15 p.m., the subcommittee was adjourned.]

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