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23–411 PDF 2017

MIDTERM REVIEW AND UPDATE ON THE CORPORATE AVERAGE FUEL ECONOMY PROGRAM 

AND GREENHOUSE GAS EMISSIONS STANDARDS 

FOR MOTOR VEHICLES 

JOINT HEARING 

BEFORE THE

SUBCOMMITTEE ON COMMERCE, MANUFACTURING, 

AND TRADE 

AND THE

SUBCOMMITTEE ON ENERGY AND POWER 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

SEPTEMBER 22, 2016 

Serial No. 114–171 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

JOE BARTON, Texas 

Chairman Emeritus 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

GREG WALDEN, Oregon 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

Vice Chairman 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

GUS M. BILIRAKIS, Florida 

BILL JOHNSON, Ohio 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

LARRY BUCSHON, Indiana 

BILL FLORES, Texas 

SUSAN W. BROOKS, Indiana 

MARKWAYNE MULLIN, Oklahoma 

RICHARD HUDSON, North Carolina 

CHRIS COLLINS, New York 

KEVIN CRAMER, North Dakota 

FRANK PALLONE, JR., New Jersey 

Ranking Member 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

G.K. BUTTERFIELD, North Carolina 

DORIS O. MATSUI, California 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

JERRY MCNERNEY, California 

PETER WELCH, Vermont 

BEN RAY LUJA ́ N, New Mexico 

PAUL TONKO, New York 

JOHN A. YARMUTH, Kentucky 

YVETTE D. CLARKE, New York 

DAVID LOEBSACK, Iowa 

KURT SCHRADER, Oregon 

JOSEPH P. KENNEDY, III, Massachusetts 

TONY CA ́ RDENAS, California 

(II) 

(III) 

SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND TRADE

MICHAEL C. BURGESS, Texas 

Chairman 

LEONARD LANCE, New Jersey 

Vice Chairman 

MARSHA BLACKBURN, Tennessee 

GREGG HARPER, Mississippi 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

GUS M. BILIRAKIS, Florida 

SUSAN W. BROOKS, Indiana 

MARKWAYNE MULLIN, Oklahoma 

FRED UPTON, Michigan (ex officio) 

JANICE D. SCHAKOWSKY, Illinois 

Ranking Member 

YVETTE D. CLARKE, New York 

JOSEPH P. KENNEDY, III, Massachusetts 

TONY CA ́ RDENAS, California 

BOBBY L. RUSH, Illinois 

G.K. BUTTERFIELD, North Carolina 

PETER WELCH, Vermont 

FRANK PALLONE, JR., New Jersey (ex 

officio) 

SUBCOMMITTEE ON ENERGY AND POWER

VACANCY 

Chairman 

PETE OLSON, Texas 

Vice Chairman 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

ROBERT E. LATTA, Ohio 

GREGG HARPER, Mississippi 

DAVID B. MCKINLEY, West Virginia 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

BILL JOHNSON, Ohio 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

BILL FLORES, Texas 

MARKWAYNE MULLIN, Oklahoma 

RICHARD HUDSON, North Carolina 

JOE BARTON, Texas 

FRED UPTON, Michigan (ex officio) 

BOBBY L. RUSH, Illinois 

Ranking Member 

JERRY MCNERNEY, California 

PAUL TONKO, New York 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

PETER WELCH, Vermont 

JOHN A. YARMUTH, Kentucky 

DAVID LOEBSACK, Iowa 

FRANK PALLONE, JR., New Jersey (ex 

officio) 

(V) 

C O N T E N T S 

Page 

Hon. Michael C. Burgess, a Representative in Congress from the State of 

Texas, opening statement .................................................................................... 2 

Prepared statement .......................................................................................... 3 

Hon. Janice D. Schakowsky, a Representative in Congress from the State 

of Illinois, opening statement .............................................................................. 4 

Hon. Pete Olson, a Representative in Congress from the State of Texas, 

opening statement ................................................................................................ 5 

Prepared statement .......................................................................................... 6 

Hon. Jerry McNerney, a Representative in Congress from the State of California, opening statement .................................................................................... 7 

Hon. Fred Upton, a Representative in Congress from the State of Michigan, 

opening statement ................................................................................................ 9 

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

Hon. Frank Pallone, Jr., a Representative in Congress from the State of 

New Jersey, opening statement .......................................................................... 10 

Prepared statement .......................................................................................... 12 

WITNESSES

Janet McCabe, Acting Assistant Administrator, Office of Air and Radiation, 

Environmental Protection Agency ...................................................................... 13 

Prepared statement .......................................................................................... 16 

Answers to submitted questions 1 ................................................................... 193 

Paul Hemmersbaugh, Chief Counsel, National Highway Traffic Safety Administration ................................................................................................................. 23 

Prepared statement .......................................................................................... 25 

Answers to submitted questions 1 ................................................................... 194 

Mitch Bainwol, President and CEO, Alliance of Automobile Manufacturers ..... 56 

Prepared statement .......................................................................................... 59 

Answers to submitted questions ...................................................................... 217 

Peter K. Welch, President, National Automobile Dealers Association ................ 82 

Prepared statement .......................................................................................... 84 

Answers to submitted questions ...................................................................... 233 

John D. Graham, Ph.D, Dean, School of Public and Environmental Affairs, 

Indiana University ............................................................................................... 89 

Prepared statement .......................................................................................... 91 

Answers to submitted questions ...................................................................... 238 

John German, Senior Fellow and Program Director, International Council 

on Clean Transportation ...................................................................................... 114 

Prepared statement .......................................................................................... 116 

Answers to submitted questions ...................................................................... 241 

Mark Cooper, Ph.D., Director of Research, Consumer Federation of America ... 140 

Prepared statement .......................................................................................... 142 

Answers to submitted questions 2 ................................................................... 245 

John Bozzella, President and CEO, Association of Global Automakers, Inc. ..... 156 

Prepared statement .......................................................................................... 158 

Answers to submitted questions ...................................................................... 246 

1Ms. McCabe and Mr. Hemmersbaugh entered a joint response to submitted questions for 

the record. It begins on page 195. 2Dr. Cooper did not answer submitted questions for the record by the time of printing. 

Page

VI 

SUBMITTED MATERIAL

Statement of the American Chemistry Council, September 22, 2016, submitted by Mr. Olson ............................................................................................. 188 

(1) 

MIDTERM REVIEW AND UPDATE ON THE 

CORPORATE AVERAGE FUEL ECONOMY 

PROGRAM AND GREENHOUSE GAS EMISSIONS STANDARDS FOR MOTOR VEHICLES 

THURSDAY, SEPTEMBER 22, 2016 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND

TRADE, 

JOINT WITH THE

SUBCOMMITTEE ON ENERGY AND POWER, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittees met, pursuant to call, at 10:06 a.m. in Room 

210 of the Capitol Visitor Center, Hon. Michael Burgess (chairman 

of the Subcommittee on Commerce, Manufacturing, and Trade) presiding. 

Members present: Representatives Burgess, Barton, Shimkus, 

Blackburn, Latta, Harper, Lance, Guthrie, Olson, McKinley, Griffith, Bilirakis, Johnson, Long, Flores, Brooks, Mullin, Hudson, 

Upton (ex officio), Engel, Green, Schakowsky, Castor, Sarbanes, 

McNerney, Welch, Tonko, Yarmuth, Loebsack, Kennedy, and Pallone (ex officio). 

Staff present: Gary Andres, Staff Director; Grace Appelbe, Staff 

Assistant; Will Batson, Legislative Clerk, Energy and Power; Elena 

Brennan, Staff Assistant; James Decker, Policy Coordinator, Commerce, Manufacturing, and Trade; Graham Dufault, Counsel, Commerce, Manufacturing, and Trade; Blair Ellis, Digital Coordinator/ 

Press Secretary; Melissa Froelich, Counsel, Commerce, Manufacturing, and Trade; Giulia Giannangeli, Legislative Clerk, Commerce, Manufacturing, and Trade, and Environment and the Economy; Tom Hassenboehler, Chief Counsel, Energy and Power; A.T. 

Johnston, Senior Policy Advisor; Ben Lieberman, Counsel, Energy 

and Power; Brandon Mooney, Professional Staff Member, Energy 

and Power; Paul Nagle, Chief Counsel, Commerce, Manufacturing, 

and Trade; Annelise Rickert, Legislative Associate; Chris Sarley, 

Policy Coordinator, Environment and the Economy; Dan Schneider, 

Press Secretary; Olivia Trusty, Professional Staff Member, Commerce, Manufacturing, and Trade; Michelle Ash, Democratic Chief 

Counsel, Commerce, Manufacturing, and Trade; Jeff Carroll, Democratic Staff Director; Timia Crisp, Democratic AAAS Fellow; Jean 

Fruci, Democratic Energy and Environment Policy Advisor. 

2 

Mr. BURGESS. The Subcommittee on Commerce, Manufacturing, 

and Trade will now come to order. I will recognize myself 5 minutes for the purpose of an opening statement. 

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Congress established the Corporate Average Fuel Economy Program in 1975 to improve vehicle fuel economy, to reduce oil consumption, and to secure the Nation’s energy independence. The National Highway Traffic Safety Administration was tasked with 

overseeing the program and empowered to set fuel economy standards for cars and trucks sold in the United States. 

Since the establishment of the Corporate Average Fuel Economy 

Program, it has undergone significant modifications and revision. 

Some changes were driven by fluctuating economic conditions and 

projected marketplace activity. Advancements in automotive technology have also played a part, and still other changes have been 

driven by political winds. 

Layer on top of that the National Highway Traffic Safety Administration and the Environmental Protection Agency and all the 

States setting up their own programs, and you have one very complicated regulatory scheme. As we gather today to discuss CAFE 

greenhouse gas emissions and the midterm review, I want to admit 

that I have serious concerns about the real-world impact that the 

National Highway Traffic Safety Administration’s standards for 

model year 2022 to 2025, that are the standards that they will 

have on vehicles on our economy. I worry about the health of the 

auto industry and of course consumer welfare. 

I believe in fuel efficiency, I believe in energy independence, but 

I also believe in policy that is based upon the real world, and I 

really believe in consumer choice and consumer wisdom. In Texas 

we have big spaces and we like to get around those big spaces in 

big cars with big air conditioners, and technology and gas prices 

have allowed us to do that with a great degree of facility. 

I also believe strongly in the power of efficiency. Every summer 

I hold an Energy Efficiency Summit in the district when historically fuel and electricity prices are at their highest in a State like 

Texas, where temperatures exceed 100 degrees consistently 

through the summer. 

However, as strongly as I feel about energy efficiency, I feel 

equally as strongly that the Government should not be in the business of telling consumers what they can use and what they cannot 

purchase. The issue of a product’s efficiency, whether it be a 

lightbulb or motor vehicle, should be between the manufacturer, 

the company that manufactures, and the consumer. 

For this reason I have introduced H.R. 4504, the Energy Efficiency Free Market Act, to repeal the Department of Energy’s authority to mandate efficiency standards for all consumer products. 

That is not to say that I don’t believe in purchasing the most efficient products available. I drive a hybrid, a strong hybrid, in the 

vernacular of today’s witnesses. When I built my house I made certain the products we used were the most energy efficient we could 

obtain in off-the-shelf items. 

3 

But those were my choices. The Government wasn’t and 

shouldn’t be part of those decisions. What I don’t want to see is the 

Government regulations and overly prescriptive mandates taking 

away consumer choice and putting the big hurt on the family budget. 

The auto industry is one of the few bright spots in our economy. 

It creates millions of jobs. It drives productivity. It drives innovation. It drives economic growth. It also allows for investments into 

lifesaving technologies that make our roadways safer and more secure for the driving public. 

I am deeply concerned that the planned fuel economy standards 

for future model years will significantly stall that progress and dramatically reduce consumer choice. I am concerned that in some 

cases it could even push consumers into less safe cars because they 

either have to buy a used car or because they can’t afford the newest CAFE technology, and subsequently they do not avail themselves of the newest safety technologies. 

At a time of persistent economic uncertainty facing hardworking 

American families, we have a responsibility to ensure that this 

does not happen. In that vein, I look forward to discussing the assumptions of both the Highway National Traffic Safety Administration and the Environmental Protection Agency and how they are 

looking at these assumptions as they require ever-increasing fuel 

efficiency standards and how they further the National Highway 

Traffic Safety Administration’s core mission in providing safe and 

secure vehicular travel for the American people. 

[The opening statement of Mr. Burgess follows:] 

PREPARED STATEMENT OF HON. MICHAEL C. BURGESS

Congress established the Corporate Average Fuel Economy program in 1975 to 

improve vehicle fuel economy, reduce oil consumption, and secure the Nation’s energy independence. The National Highway Traffic Safety Administration was tasked 

with overseeing the program and empowered to set fuel economy standards for cars 

and trucks sold in the United States. 

Since the establishment of CAFE, the program has undergone significant modifications and revisions. Some changes were driven by fluctuating economic conditions and projected marketplace activity. Advancements in automotive technology 

have also played a part. And still other changes have been driven by political winds. 

Layer on top of that NHTSA, EPA and the States all setting up their own programs 

and you have one very complicated regulatory scheme. 

As we gather today to discuss CAFE, greenhouse gas emissions, and the Midterm 

Review, I have serious concerns about the real-world impact that NHTSA’s augural 

standards for model year 2022 to 2025 vehicles will have on the economy, the health 

of the auto industry, and consumer welfare. 

I believe in fuel efficiency, and energy independence. But I also believe in policy 

that is based on real world data, and consumer choice. In Texas, we have big spaces 

and we like to get around those big spaces in our big cars. And technology and gas 

prices let us do that pretty easily. 

I believe so strongly in the power of efficiency, in fact, that I hold an annual Energy Efficiency Summit in my district every July, when historically fuel and electricity prices skyrocket in a State like Texas, where temperatures exceed 100 degrees consistently through the summer. 

However, as strongly as I feel about energy efficiency, I feel equally as strongly 

that Government should not be in the business of telling consumers what they can 

and cannot purchase. The issue of a product’s efficiency, whether it be a lightbulb 

or a motor vehicle, should be solely between the company and the customer. For this 

reason, I introduced H.R. 4504, the Energy Efficiency Free Market Act, to repeal 

the Department of Energy’s authority to mandate efficiency standards of consumer 

products. 

4 

This is not to say I don’t believe in purchasing the most efficient products possible. I drive a hybrid. When I built my house, I made sure the products we used 

were the most efficient we could obtain. But those were my choices. The Government wasn’t and shouldn’t have been part of those decisions. 

What I don’t want to see is Government regulations and overly prescriptive mandates taking away consumer choice and putting a real hurt on the family budget. 

The auto industry is one of the few bright spots of our economy. It creates millions 

of jobs and drives productivity, innovation, and economic growth. It also allows for 

investments into lifesaving technologies that make our roadways safer and more secure for the driving public. 

I am deeply concerned that the planned fuel economy standards for future model 

years will significantly stall that progress and dramatically reduce consumer choice. 

I am concerned that in in some cases it could even push consumers into less safe 

cars, either because they have to buy used or because they can’t afford the newest 

CAFE technology and the newest safety technologies. 

At a time of persistent economic uncertainty facing hardworking American families, we have a responsibility to ensure that does not happen. In that vein, I look 

forward to discussing the assumptions that NHTSA and EPA are looking at as they 

require ever increasing fuel efficiency standards and how they further NHTSA’s core 

mission in providing safe and secure vehicular travel for the American people. 

Mr. BURGESS. That concludes my opening statement. I will yield 

back my time and recognize the ranking member of the Subcommittee on Commerce, Manufacturing, and Trade, Ms. Schakowsky, 5 minutes for an opening statement, please. 

OPENING STATEMENT OF HON. JANICE D. SCHAKOWSKY, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Ms. SCHAKOWSKY. Thank you, Chairman Burgess. I am pleased 

to join you and my colleagues for this joint hearing of the Commerce, Manufacturing, and Trade and Energy and Power subcommittees. 

Over the past four decades, Corporate Average Fuel Economy, or 

CAFE, standards have been an important tool in improving fuel efficiency and reducing greenhouse gas emissions. Think about how 

much cars have changed in that time. They became lighter and 

more aerodynamic. Engines have gotten more efficient. And we 

have seen the emergence of hybrid, which I have, electric and alternative fuel vehicles. 

These technological advancements were driven, in part, by CAFE 

standards. CAFE standards were borne out of the energy crisis in 

the 1970s. We now face a different and larger crisis, the threat of 

global climate change. I am not here to debate science. The argument is settled. We need to think about how CAFE factors into our 

broader efforts to improve fuel economy and decrease carbon emissions that contribute to global climate change. 

The work of the National Highway Transportation Safety Administration and Environmental Protection Agency to set fuel efficiency 

and greenhouse gas emission standards is critical. I have heard the 

arguments that CAFE standards are ambitious, push the line limit 

of technology; that is a good thing. We must take meaningful steps 

to reduce fuel consumption, and strong standards push the auto industry toward greater efficiency and innovation. 

Today we examine CAFE standards as NHTSA and the EPA 

work to finalize their Technical Assessment Report, TAR, a step in 

evaluating standards for model years 2022 through 2025. Discussion of the TAR and the midterm review may seem technical but 

5 

the purpose is simple, to determine what standards are feasible 

going forward. I want us to be ambitious but practical as we consider these standards. Those of us serving on these subcommittees 

have responsibility to reject hollow arguments put forth to justify 

lower targets. 

I want to clarify a few items from the start. NHTSA and EPA 

do not set a single fuel economy standard. Since 2007, the standards for each automaker have been customized to a vehicle’s wheelbase and track width, the vehicle’s footprint. That means that 

standards are already tailored to an automaker’s unique fleet. 

Since 2008, vehicles have gotten bigger, meaning lower standards apply. We need to think carefully before providing further 

needless flexibility that allows for even lower fuel efficiency than 

an automaker would otherwise need to achieve 

On that note, I approach discussion of credits for meeting CAFE 

standards with what I think is a healthy level of skepticism. 

Should an eco-friendly sedan excuse a gas-guzzling SUV? That 

seems hard to justify when other automakers have manufactured 

an efficient SUV but a less efficient car. We should expect progress 

across all classes of vehicles. I find the proposal of credits for safety 

improvements especially disingenuous, and I see that suggestion 

again in some of the written testimony today. 

As ranking member of the Commerce, Manufacturing, and Trade 

Subcommittee, I am a strong advocate for auto safety. This is one 

of the key consumer protection issues we work on. Safety and fuel 

efficiency should not be presented as an either/or scenario. The 

automakers should not get a pass on fuel economy for making safety improvements that they have already committed to making. 

The argument for safety credits rests on a shaky premise that 

safety technologies lead to lower energy consumption by reducing 

congestion. The data shows otherwise. According to the Department of Transportation, more than 75 percent of congestion is 

caused by bottlenecks, construction zone, bad weather, poor traffic 

signal timing, and special events, not crashes. 

Contrary to some of the arguments we will hear today, safety 

technology will not help with this congestion, and will not increase 

congestion and will not improve fuel economy. Improving fuel economy is vital. I look forward to hearing from our witnesses on what 

standards are feasible to achieve this and how we can continue 

using CAFE standards to drive the automotive industry forward. 

And I yield back. 

Mr. BURGESS. The gentlelady yields back. The Chair thanks the 

gentlelady. The Chair now would like to recognize the chairman of 

the Subcommittee on Energy and Power, Mr. Olson, 5 minutes for 

an opening statement, please. 

OPENING STATEMENT OF HON. PETE OLSON, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. OLSON. I thank my friend from Texas for taking the lead in 

making this important joint hearing happen. This midterm review 

of Federal CAFE standards and GHG emissions is exactly what the 

American people expect from their Congress. It is timely, because 

when this process began our world and our economy were very different. 

6 

Gasoline prices were only going up from record highs and interest rates were closer to ten percent instead of one percent today. 

Now America is deemed number one producer of oil and gas in the 

entire world which has lowered gasoline prices significantly. The 

Federal Reserve does not budge in increasing interest rates. As a 

result, certain assumptions have changed. 

This is mostly good news for consumers, but it changes their 

spending habits, their patterns. With this stagnant economy consumers are looking for the best value when buying new cars and 

looking long term, 5 to 10 years of ownership on average. The new 

technology automakers are developing to meet the CAFE and GHG 

standards cost more. Today we will look at how consumer choices 

impact the ability to meet these goals. 

The One National Program so far has been a good example of cooperation between the public and private sectors. In these situations, the public sector must speak with only one clear voice. When 

two agencies have conflicts no one wins. I worked hard to protect 

our Nation’s electric grid by fixing a small glitch in Federal law 

that forced electricity producers to choose which Federal law they 

would violate due to competing and conflicting Federal agencies. 

The One National Program was designed to avoid this situation 

for automakers. This midterm evaluation is the best occasion to ensure that three different sets of rules do not conflict with one another. In reviewing the requirements of each program, there is a 

clear gap that can leave manufacturers in compliance with one set 

of rules and out of compliance with another set of rules. And that 

is just based on NHTSA and EPA’s regs. It does not include the 

zero-emission vehicle program being developed by California. 

I also want to hear from the EPA about the benefits of the 

rulemakings. This is a very complex and expensive set of rules and 

we need to start with a very strong foundation. This midterm evaluation is a starting point where we can work together to avoid conflicts before they become a big problem. 

And it is not just automakers that suffer if we don’t get this 

right. The American people will greatly be impacted by a patchwork system that increases costs while weakening the most important force for growth in a free-market economy, consumer choice. 

I hope that working together we can find a common ground to harmonize these standards and develop the real vision of the One National Program. 

Thank you, Mr. Chairman. I yield back. 

[The opening statement of Mr. Olson follows:] 

PREPARED STATEMENT OF HON. PETE OLSON

This Midterm Review of the Corporate Average Fuel Economy Program and 

Greenhouse Gas Emissions Standards is timely. When this process began, America 

was in a different world than we are today. Back then, gas prices were at a record 

high and assumed to go higher. 

Today America is the number one producer of oil and natural gas, which has lowered gas prices significantly. As a result, certain assumptions have changed considerably. 

While this is good news for consumers, it also changes their priorities. A stagnant 

economy and low gas prices have consumers looking for the best value when buying 

a car. The new technology auto makers are developing to meet the CAFE and GHG 

standards cost more. Today, we will look at how consumer choices impact the ability 

to meet these goals. 

7 

Another important issue this committee has looked at closely is the ability of industries to meet goals set by Federal agencies. When two agencies have conflicting 

priorities, no one wins. I worked hard to protect our Nation’s electric grid reliability 

by helping fix a critical glitch in Federal law that forced electricity producers to 

choose which Federal law they would violate due to competing priorities. 

The One National Program was designed to avoid a similar situation for auto 

makers. This Midterm Evaluation is the best occasion to ensure that three different 

sets of rules do not conflict with one another. In reviewing the requirements of each 

program, there is a clear gap that can leave manufacturers in compliance with one 

set of rules and not another. 

And that is just based on NHTSA and EPA’s regs—it does not include the Zero 

Emission Vehicle program being developed by California. 

I am also interested to hear from EPA about the benefits of their rulemakings. 

This is a complex and expensive set of rules, and we need to start with a strong 

foundation. 

This Midterm Evaluation is a starting point where we can work together to avoid 

a similar situation to the one electricity producers faced—BEFORE it becomes a 

problem. It’s not just auto makers who suffer if we don’t get this right. The American people will be greatly impacted by a patchwork system that increases costs, 

when it could have been avoided. 

I hope that working together, we can find the common ground to harmonize these 

standards and develop the real vision of One National Program. 

Mr. BURGESS. The Chair asks if you would be willing to yield 

Mrs. Blackburn the remainder of your time. 

Mr. OLSON. Absolutely. You have my time, the gentlelady from 

Tennessee, Mrs. Blackburn. 

Mrs. BLACKBURN. Thank you, Mr. Chairman. I want to welcome 

all of our witnesses because it is so appropriate that we do take 

the time to go over the CAFE standards and to remember why 

these came about, and we have talked a little bit about that this 

morning. The ’70s were a very different time, and there was a lot 

of emphasis on our vulnerabilities. You had the gas shortages of 

the ’70s that brought that about. People paid attention to that. 

This past weekend we had gas shortages in Tennessee and people 

recalled those gas lines of the ’70s. 

But CAFE came out of that, and it was set up to reduce our dependence on foreign oil, a worthy goal. But what we have to do is 

realize that we have these differences between EPA and NHTSA 

and we do need to move to harmonization for these standards in 

order for them to be effective. 

I have got a big presence of auto industry in my district. We 

have Nissan. We have GM. We have the Toyota Bodine plant. And 

everyone talks about the dilemma that this presents and the need 

to make certain that you are in compliance with each of these. One 

stop makes it easier, because on top of that then you have things 

like the California CARB program that you are also dealing with. 

Safety, security is important to us in these vehicles as well as looking at the environmental issues. We welcome you, look forward to 

the discussion. Yield back. 

Mr. BURGESS. The gentlelady yields back. The gentleman’s time 

has expired. The Chair now recognizes the gentleman from California, Mr. McNerney, 5 minutes for an opening statement, please. 

OPENING STATEMENT OF HON. JERRY MCNERNEY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. MCNERNEY. Well, I thank the chairman. I thank the witnesses for coming out here this morning. I am looking forward to 

8 

your testimony. It is great to have this joint hearing today to receive an update from the agencies and industry stakeholders regarding the CAFE standards. It is an important subject and one in 

which I have a great deal of interest, both because it relates to our 

overall consumption of fossil fuels and our dependence on imported 

oil and because it has a significant impact on climate change. 

To date, the automotive industry and Government have worked 

together to reduce emissions and create safer and more efficient vehicles. This is a win-win for consumers and the environment, and 

I own a Camry hybrid so I personally know the benefits of these 

vehicles. 

CAFE standards have proven moderately effective, but there are 

factors beyond CAFE that are impacting the marketplace, the brokered agreement on greenhouse gas emissions, the lowering cost of 

gasoline, consumer preferences, and improving fuel efficiency of 

automobiles, and State emissions initiatives such as the Zero Emission Vehicle program in California that requires automakers to sell 

electric cars and trucks in California. 

California’s EV penetration is about three percent compared to 

the national average of one percent. And Californians have 22 different types of EVs to choose from. The market is there and California has shown that it can work. California has been a leader in 

programs that reduce emissions for both stationary and mobile 

sources. 

Mobile sources account for more than half of the emissions that 

contribute to ozone and particulate matter and nearly 40 percent 

of the greenhouse gas emissions in our State. As a result of the improving technology and consumer choice, Californians continue to 

purchase zero-emission vehicles. 

Some regions of our State, including my own, will greatly benefit 

from the reduced emissions of low carbon vehicles, and EVs will 

have a significant impact on the Nation’s electric grid. California’s 

electric grid utilities recognize the importance of EVs to the 21st 

century grid infrastructure and are making the appropriate investments. This will help lead and transform the rest of the Nation. 

Now regions do differ in energy use patterns. However, reducing 

emissions is a national goal and increasing zero or low emission vehicles is good for our Nation. California is the leader in hybrid 

zero-emission vehicles and its EV program technology innovation is 

paramount. It leads to efficiency and it can lower costs for consumers and manufacturers and it is good for investment. We have 

in California by 2010 over $800 million was invested in EV research and development. That was nearly three-quarters of the 

global investment at that time, so our policies are having an impact. 

We cannot discuss zero-emission vehicles without talking about 

their impact on the electric grid. EVs will play a tremendous role 

in the future of our grid from utility through end user. EVs play 

a role in storage and allow users to feed back to the grid or use 

stored power outside. These are things that the elements of a 

transforming grid and our Nation’s future of distribution of energy. 

Thank you, Mr. Chairman. I yield back. 

9 

Mr. BURGESS. The Chair thanks the gentleman. The gentleman 

yields back. The Chair recognizes the chairman of the full committee, Mr. Upton, 5 minutes for an opening statement, please. 

OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN 

Mr. UPTON. Well, thank you, Mr. Chairman. You know, you don’t 

have to come from Michigan to be concerned about the administration’s motor vehicle fuel economy and greenhouse gas emission 

standards, because these provisions if they are done wrong would 

hurt car owners as well as car makers, big time. 

The good news is that the 2012 standards wisely included a doover provision in the form of a midterm evaluation that does allow 

the EPA and NHTSA to adjust the future stringency of the standards in light of changed circumstances. And as I recall that was a 

revision that Carl Levin and John Dingell and myself worked very 

hard to include as part of those provisions so that we would have 

this opportunity, bipartisan. 

And circumstances certainly have changed. In particular, EPA 

and NHTSA assumed that gas prices would be headed towards 4 

and maybe even $5 a gallon by now, but instead they are actually 

somewhat stable at $2 a gallon at the moment. And at these prices, 

the added cost of hybrids or other highly efficient vehicles may 

never be earned back in the form of energy savings, and the sticker 

shock is far from trivial. EPA estimates a cumulative impact on vehicle prices of nearly $3,000 per vehicle by 2025, and some analysts 

believe that the actual cost is considerably higher. 

No question that improved vehicle fuel efficiency is a worthy 

goal, no question about it, but not if it reached in a way that harms 

consumers particularly the most vulnerable. And with the average 

cost of a new car at $34,000 and rising, we don’t need any unnecessarily costly DC mandates, and we have got to be particularly sensitive to low-income households who may be getting priced out of 

the new car market altogether. 

So for Michigan I also worry about the impact that these standards could have on the long-term health of the auto sector. The industry is doing pretty well right now, thanks in large part to pentup demand after the last recession and very low interest rates that 

make financing about as cheap as it has ever been. But these two 

temporary factors are not always going to last, and the industry 

will be stuck with these costly standards that perhaps will increase 

every single year. 

That is why I hope that EPA and NHTSA use this opportunity 

to adjust the targets for model years 2022 to 2025 to more reasonable and achievable levels. There are also more immediate problems that have to be addressed. This administration promised the 

auto industry one set of uniform national standards rather than a 

patchwork of inconsistent requirements. Several years into the program, it is clear that the two Federal agencies involved, EPA and 

NHTSA, are not always on the same page. 

So we need to make some changes including legislation if necessary to ensure that there is one set of rules for automakers to 

follow. Motor vehicles are getting more efficient and they are going 

to continue to do so, and that is a good thing. But we need to make 

10 

certain that it happens in a way that maximize benefits for consumers and preserves the health of the automotive industry. 

But I know that today’s hearing is going to help set us on that 

course, and I yield back. Thank you, Mr. Chairman. 

[The opening statement of Mr. Upton follows:] 

PREPARED STATEMENT OF HON. FRED UPTON

You don’t have to come from Michigan to be concerned about the Obama administration’s motor vehicle fuel economy and greenhouse gas emission standards, because these provisions, if done wrong, would hurt car owners as well as car makers. 

The good news is that these 2012 standards wisely included a ‘‘do-over’’ provision 

in the form of a Mid- Term Evaluation that allows EPA and NHTSA to adjust the 

future stringency of the standards in light of changed circumstances. 

And circumstances certainly have changed. In particular, EPA and NHTSA assumed that gasoline prices would be headed toward $4.00 a gallon by now, but instead they have continued to trend toward $2 a gallon. At these prices, the added 

cost of hybrids or other highly efficient vehicles may never be earned back in the 

form of energy savings. And the sticker shock is far from trivial—EPA estimates a 

cumulative impact on vehicle prices of nearly $3,000 per vehicle by 2025 and some 

analysts believe the actual cost is considerably higher. 

There is no question that improved vehicle fuel efficiency is a worthy goal, but 

not if it is reached in a way that harms consumers. With the average cost of a new 

car at $34,000 and rising, we don’t need any unnecessarily costly Washington mandates. And we must be particularly sensitive to low income households who may be 

getting priced out of the new car market entirely. 

Being from Michigan, I also worry about the impact these standards could have 

on the long-term health of the auto sector. The industry is doing well now, thanks 

in large part to pent-up demand after the last recession and very low interest rates 

that make financing about as cheap as it has ever been. But these two temporary 

factors will not last, and the industry will be stuck with these costly standards that 

increase every year. That is why I hope EPA and NHTSA use this opportunity to 

adjust the targets for model years 2022 to 2025 to more reasonable and achievable 

levels. 

There are also more immediate problems that need to be addressed. The Obama 

administration promised the auto industry one set of uniform national standards 

rather than a patchwork of inconsistent requirements. But several years into the 

program, it is clear that the two Federal agencies involved, EPA and NHTSA, are 

not always on the same page. We need to make changes, including legislation if necessary, to ensure that there is one set of rules for automakers to follow. 

Motor vehicles are getting more efficient and will continue to do so, but we need 

to make certain that it happens in a way that maximizes benefits for consumers 

and preserves the health of the automotive industry. I hope today’s hearing helps 

set us on that course. 

Mr. BURGESS. The Chair thanks the gentleman. The gentleman 

yields back. The Chair recognizes the ranking member of the full 

committee, Mr. Pallone of New Jersey, 5 minutes for an opening 

statement, please. 

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY 

Mr. PALLONE. Thank you, Mr. Chairman. I am not saying this 

about Mr. Upton or the Michigan members, but I think that unlike 

the symbol of the Republican Party, the elephant, which has a long 

memory, many of my GOP colleagues have very short memories. 

Because I remember when the President was out there, you know, 

really trying to play up the need for a bailout for the auto industry 

and there were many Republicans including those in the leadership 

who didn’t want to do it. 

11 

So it is very nice for everybody to say that, you know, they want 

to help the auto industry, but that certainly wasn’t the case. 

Mr. UPTON. If the gentleman will yield momentarily. 

Mr. PALLONE. It is not true for you, Mr. Chairman. I am not suggesting that for you. 

Mr. UPTON. We like to use the word ‘‘rescue plan’’ versus ‘‘bailout’’ because it was paid back. It was paid back. 

Mr. Pallone. Oh, rescue plan, OK. And anyway, I like elephants, 

but many of you don’t live up to the elephant. But in any case, not 

true for you. 

Thank you for holding this hearing on the midterm review of the 

Federal greenhouse gas and fuel economy standards for light-duty 

vehicles. It has been some time since our committee held a hearing 

to examine the Corporate Average Fuel Economy, or CAFE, program. We have an excellent panel of witnesses here today. I particularly want to thank Assistant Administrator McCabe and Chief 

Counsel Hemmersbaugh for appearing before us today. 

There is no scientific doubt that the climate is indeed changing 

and we need to be more aggressive about controlling greenhouse 

gas emissions. Today the transportation sector is second only to the 

electricity sector in the production of greenhouse gas emissions. 

The vehicles regulated under the CAFE program account for 60 

percent of the total emissions from the transportation sector, and 

these harmful emissions effect more than our climate. They also directly impact air quality and public health. 

The coordinated standards for greenhouse gas emissions set by 

the EPA and fuel economy set by NHTSA are a vital part of the 

effort to control harmful emissions. These standards will deliver 

multiple benefits including significant savings in fuel costs to consumers, improved air quality, and greater energy security. Compliance with these Federal standards will also ensure that automakers are in compliance with the greenhouse gas emission standards issued by California. 

Gasoline prices have come down. That is great. Lower fuel prices 

keeps more money in people’s pockets. But we also know from past 

experience that prices can rise quickly, and when they do improved 

fuel economy provides an effective buffer from price spikes. 

In 2007, there were two major events that changed the regulatory landscape for vehicles. First, the Supreme Court ruled in 

Massachusetts v. EPA that the Clean Air Act required EPA to regulate greenhouse gas emissions. Second, Congress amended the Energy Policy and Conservation Act to provide automakers a more 

flexible regulatory program. 

The targets set by EPA and NHTSA are aggressive. The purpose 

of the midterm review is to answer two key questions. Can automakers meet the standards and can they meet them at a reasonable cost? And the extensive analysis presented in the Technical 

Assessment Report done by EPA, NHTSA, and California Air Resources Board indicates the answer to both of these questions is 

yes. 

Innovation is and always has been the driver for these advancements. We recognized that air pollution from auto emissions was 

a serious problem in Southern California as early as 1959, and at 

that time there were no pollution control devices for cars. Auto 

12 

manufacturers said pollutants could not be controlled; that the 

technology didn’t exist; and they claimed that even if it were possible it would be far too expensive to deploy the technology. 

Well, California passed laws requiring pollution control anyway. 

We all know the rest of the story. It was not impossible. It was not 

too expensive. We enacted the Clean Air Act and fuel efficiency 

standards, and of course people still bought cars. Not only did they 

buy cars, but today we have cleaner, more efficient cars than ever, 

and we also have much cleaner air thanks to regulation pushing 

technology forward. 

So the last phase of the coordinated regulations maintain the 

necessary pressure for further improvement, and I have no doubt 

that our auto industry can and will rise to the occasion. I would 

like to yield the remainder of my time to Mr. Tonko. 

[The opening statement of Mr. Pallone follows:] 

PREPARED STATEMENT OF HON. FRANK PALLONE, JR. 

Good morning. Thank you for holding this hearing on the mid-term review of the 

Federal greenhouse gas and fuel economy standards for light duty vehicles. It has 

been some time since our committee held a hearing to examine the Corporate Average Fuel Economy—or CAFE Program. We have excellent panels of witnesses here 

today and I particularly want to thank Assistant Administrator McCabe and Chief 

Counsel Hemmersbaugh for appearing before us today. 

There is no scientific doubt that the climate is indeed changing, and we need to 

be more aggressive about controlling greenhouse gas emissions. Today, the transportation sector is second only to the electricity sector in the production of greenhouse 

gas emissions. 

The vehicles regulated under the CAFE program account for 60 percent of the 

total emissions from the transportation sector. And, these harmful emissions affect 

more than our climate, they also directly impact air quality and public health. 

The coordinated standards for greenhouse gas emissions set by the Environmental 

Protection Agency (EPA) and fuel economy set by the National Highway and Traffic 

Safety Administration (NHTSA) are a vital part of the effort to control harmful 

emissions. These standards will deliver multiple benefits including: significant savings in fuel costs to consumers; improved air quality; and greater energy security. 

Compliance with these Federal standards will also ensure that automakers are in 

compliance with the greenhouse gas emission standards issued by California. 

Gasoline prices have come down. That’s great. Lower fuel prices keeps more 

money in people’s pockets. But we also know from past experience that prices can 

rise quickly, and when they do, improved fuel economy provides an effective buffer 

from price spikes. 

In 2007, there were two major events that changed the regulatory landscape for 

vehicles. First, the Supreme Court ruled in Massachusetts v. EPA that the Clean 

Air Act required EPA to regulate greenhouse gas emissions. Second, Congress 

amended the Energy Policy and Conservation Act (EPCA) to provide automakers a 

more flexible regulatory program. 

The targets set by EPA and NHTSA are aggressive. The purpose of the midterm 

review is to answer two key questions: Can automakers meet the standards? And, 

can they meet them at a reasonable cost? The extensive analysis presented in the 

Technical Assessment Report—or TAR—done by EPA, NHTSA, and California’s Air 

Resources Board indicates the answer to both of these questions is ‘‘yes.’’ 

Innovation is and always has been the driver for these advancements. We recognized that air pollution from automobile emissions was a serious problem in southern California as early as 1959. At that time, there were no pollution control devices 

for cars. Auto manufacturers said pollutants couldn’t be controlled—the technology 

didn’t exist. And, they claimed that even if it were possible, it would be far too expensive to deploy the technology. 

Well, California passed laws requiring pollution control anyway. We all know the 

rest of the story. It was not impossible. It was not too expensive. We enacted the 

Clean Air Act and fuel efficiency standards and, of course, people still bought cars. 

Not only did they buy cars, but today we have cleaner, more efficient cars than ever. 

We also have much cleaner air thanks to regulation pushing technology forward. 

13 

The last phase of the coordinated regulations maintain the necessary pressure for 

further improvement, and I have no doubt that our auto industry can and will rise 

to the occasion. 

Mr. TONKO. I thank the gentleman for yielding. Let’s be clear. 

These standards protect consumers and reduce greenhouse gas 

emissions. This year, transportation surpassed the electricity sector 

as the largest source of greenhouse gas emissions in our country. 

Throughout her history America has engaged a pioneer spirit. 

That pioneer spirit was about meeting challenges. CAFE standards 

meet challenges and are an important aspect to reaching our emissions goals, and by so doing we are also saving consumers a lot of 

money at the pump. Consumers support more fuel efficient cars regardless of their feelings on climate change. I think that is important to note. 

And I would certainly offer caution to those who would seek to 

roll back standards because of today’s gas prices. Even though gas 

prices may have been reduced, they won’t stay that way forever 

and it is important for us to go forward with our stewardship of 

the environment to pass on to the next generation and even improved environment. With that I yield back. 

Mr. BURGESS. The gentleman yields back. The gentleman’s time 

has expired. That concludes Member opening statements. I do want 

to remind Members that, pursuant to committee rules, all Members’ opening statements will be made part of the record. 

We do want to thank our witnesses for being here today, for taking the time to testify before the subcommittee. Today’s hearing 

will consistent of two panels. Each panel of witnesses will have the 

opportunity to give an opening statement followed by a round of 

questions from members. Once we conclude with the questions of 

the first panel, we will take a very brief, underscore brief, recess 

to set up for the second panel. 

Our first panel of witnesses for today’s hearing includes Dr. Paul 

Hemmersbaugh, the chief counsel, National Highway Traffic Safety 

Administration, and Ms. Janet McCabe, acting Assistant Administrator for the Office of Air and Radiation, Environmental Protection 

Agency. We appreciate both of you being here today. We will begin 

the panel, I guess, with you, Ms. McCabe. You are recognized for 

5 minutes for an opening statement, please. 

STATEMENTS OF JANET McCABE, ACTING ASSISTANT ADMINISTRATOR, OFFICE OF AIR AND RADIATION, ENVIRONMENTAL PROTECTION AGENCY; AND PAUL 

HEMMERSBAUGH, CHIEF COUNSEL, NATIONAL HIGHWAY 

TRAFFIC SAFETY ADMINISTRATION 

STATEMENT OF JANET McCABE 

Ms. MCCABE. Thank you very much, Chairman Burgess, Chairman Upton, Vice Chairman Olson, Ranking Members Schakowsky 

and Pallone, and other members of the subcommittees. I very much 

appreciate the opportunity to testify on the Environmental Protection Agency’s greenhouse gas standards for light-duty vehicles and 

what we call the midterm evaluation process. 

A little over 3 years ago, President Obama announced his climate 

action plan. That plan called on the Federal Government to do evVerDate Mar 15 2010 12:08 Jan 11, 2017 Jkt 037690 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 F:\114THCONGRESS\114X171CAFEXGHGJKTREQ011017\114X171CAFEXGHGXWORKIN
14 

erything possible to combat the urgent threat of climate change 

using our current laws and authority, and EPA has responded to 

that call. EPA has adopted several rules under our Clean Air Act 

authority to reduce greenhouse gas emissions including the focus of 

today’s hearing, our rules that will significantly reduce GHG emissions from light-duty cars and trucks. 

The National Program for light-duty cars and trucks is the product of successful collaboration among EPA, NHTSA and California. 

The program was established with broad support and extensive 

input from the auto industry, and it is already driving substantial 

greenhouse gas reductions, oil savings, and savings for consumers. 

In the 2012 rule that established GHG and fuel economy standards for model years 2017 through 2025, the agency committed to 

conduct what we call the midterm evaluation through which EPA 

will determine whether the greenhouse gas standards for model 

years 2022 through 2025 are still appropriate. 

The first step in the midterm evaluation process was the preparation of a draft Technical Assessment Report, or TAR, which EPA, 

NHTSA, and California wrote jointly and released in July. The 

draft TAR is a comprehensive and robust technical analysis that 

delivers on our commitment to examine a wide range of factors relevant to the ’22 through ’25 standards. 

Those factors include things like developments in different CO2- reducing technologies and their penetration into the marketplace, 

whether there is consumer acceptance of new efficient technologies, 

trends in the vehicle fleet and many others. Significant analysis 

from EPA, NHTSA and California went into developing the draft 

TAR from state-of-the-art benchmarking testing of actual vehicles 

at EPA’s lab to full vehicle computer simulations that look at how 

new technologies work together to reduce emissions. 

Throughout this process we have made it a priority to share information with stakeholders in real time, including the publication 

of numerous peer-reviewed technical reports. The draft TAR was 

also heavily informed by what we learned from extensive outreach 

to a wide range of stakeholders including automakers and technology suppliers. 

I would like to note a handful of the key initial findings from the 

TAR. First, the draft report shows that automakers are adopting 

CO2-reducing technologies very rapidly. The innovation we have 

seen means there are over 100 car, SUV, and pickup versions on 

the market today from many manufacturers that already meet 

2020 or later standards. 

For consumers, this means that vehicles are getting cleaner and 

using less gas. Every single vehicle category from subcompacts to 

pickup trucks offers more fuel efficient, lower-emitting choices for 

consumers now than in years past. Furthermore, the initial finding 

in the draft TAR is that car makers can meet the standards at 

similar or lower costs than we had anticipated in our 2012 analysis. 

Second, the agency’s vehicle standards are working. The draft 

TAR briefly summarizes information showing how the industry has 

overcomplied with the GHG standards for each of the first 3 years 

of the program, and in 2014 they outperformed the standards by 

about 1.4 miles per gallon. 

15 

Third, our draft analysis is consistent with a key finding from 

the 2012 rule, namely that the 2022 through 2025 standards can 

be met largely with more efficient gasoline powered cars. Automakers have a wide range of technology pathways from which to 

choose, but it appears that advanced gasoline technologies will continue to be the predominant technologies with modest levels of 

what we call strong hybrids and very low levels of full electrification needed to meet the standards. 

We believe that the analysis presented in the draft TAR underscores that the auto industry is well positioned to meet their customers’ expectations while reaching significant new levels of environmental performance. As the comment period closes next week, 

we look forward to reviewing the public’s input. 

EPA’s next step will be to develop and make available a proposed 

determination which will provide another opportunity for public review and comment. After consideration of any additional information and input and as required by EPA’s regulations, EPA will 

issue a final determination as to whether the model years 2022 

through ’25 standards are still appropriate no later than April 

2018. 

Again, I thank you for the opportunity to serve as a witness at 

this hearing and look forward to your questions and the discussion. 

Thank you, Mr. Chairman. 

[The prepared statement of Ms. McCabe follows:] 

16 

17 

18 

19 

20 

21 

22 

23 

Mr. BURGESS. The Chair thanks the gentlelady. Mr. 

Hemmersbaugh, you are recognized for 5 minutes for an opening 

statement, please. 

STATEMENT OF PAUL HEMMERSBAUGH 

Mr. HEMMERSBAUGH. Thank you, Mr. Chairman. Mr. Chairman 

and members of the committee, my name is Paul Hemmersbaugh. 

I am the chief counsel of the National Highway Traffic Safety Administration which Congress has charged with setting Corporate 

Average Fuel Economy, or CAFE standards. Thank you for the opportunity to testify. 

Today I would like to update you on the status of NHTSA’s work 

on the midterm evaluation and answer any questions you may 

have. At the outset, I would like to emphasize a few points about 

two primary topics of this hearing—the midterm evaluation and 

the draft Technical Assessment Report, or TAR. 

First, the TAR is the initial step in the midterm evaluation process for CAFE and greenhouse gas standards for 2022 to 2025. The 

TAR will be used to inform future decisions about the standards for 

those years. The TAR is not a decision document. It does not 

change the standards that are currently in place. 

Second, the administration’s vehicle standards are working and 

consumers are accepting more efficient vehicles. While the TAR focuses on model years 2022 to ’25, the stringency of the standards 

has been increasing steadily since model year 2012 and manufacturers have been meeting those standards. At the same time, the 

automotive industry has seen 6 consecutive years of sales increases 

with a new all-time sales record in 2015. This means that consumers are buying and benefiting from more efficient vehicles with 

lower greenhouse gas emissions while saving money on fuel costs. 

Third, our analysis indicates that the standards can be met 

largely with more efficient gasoline powered cars and with modest 

levels of what we call strong hybrids, like a Prius, and very low 

levels of full electrification. While it is up to automakers what technologies they choose to use, advanced gasoline technologies can 

continue to predominate if that is what the market demands. 

As background, the Energy Independence and Security Act of 

2007, or EISA, directed NHTSA to set attribute-based fuel economy 

standards for both cars and trucks rather than the previous flat 

standards that prescribed a single miles per gallon value. This approach allows the CAFE program to be more responsive to changes 

in consumer demand. 

If a manufacturer builds larger vehicles because gasoline prices 

are low and U.S. consumers then thereby demand bigger cars and 

trucks, then that manufacturer’s compliance obligation will be 

lower reflecting the footprints of the vehicles it builds. Fuel economy overall should continue to improve year after year because the 

footprint standards continue to increase in stringency every year. 

NHTSA and EPA issued a final rule in 2012, representing the 

second phase of what the agencies refer to as the coordinated National Program. The National Program refers to the way that 

NHTSA, EPA and the California Air Resources Board work together to create and coordinate standards and to accomplish the 

goals of energy conservation and emissions reduction. 

24 

The midterm evaluation is an integral step to informing 

NHTSA’s CAFE rulemaking process, and the TAR is the first step 

in that process, the TAR’s comprehensive and robust report informed by extensive stakeholder outreach and substantial technical 

work by the agencies over the past several years. 

Public comment and input on the TAR will be used to inform and 

develop NHTSA’s proposal for its de novo rulemaking for model 

years 2022 to ’25 standards. NHTSA’s subsequent rulemaking will 

consider all relevant information and conduct a fresh balancing of 

statutory factors in order to determine the maximum feasible 

CAFE standards for model years 2022 to ’25. 

I would like to highlight a few additional key results of the TAR 

analysis. The TAR shows that automakers are adopting fuel economy technologies at unprecedented rates. These technologies are 

helping manufacturers meet, and in many cases exceed, applicable 

standards. In fact, many of today’s vehicle models are already 

meeting future fuel targets. 

The TAR also includes a comprehensive update of the compliance 

costs of the program including a review of the numerous possible 

technologies that automakers may use to meet the standards. EPA 

and NHTSA modeling were done largely independently using different technology inputs and different modeling tools. This is a 

strength of the TAR. The independent and parallel analyses provide complementary and analytically robust results. 

NHTSA’s assessment shows that the costs of meeting the 

augural standards for model years 2022 to ’25 are comparable to 

what we found they would be in 2012 at approximately $1,200 per 

vehicle. At the same time, the average model year 2025 vehicle will 

save over 1,900 in fuel costs over its lifetime. In sum, the TAR delivers on the agencies’ commitment to examine a wide range of factors that affect model years 2022 to ’25 standards. 

The next step is reviewing the comments we receive on the TAR. 

NHTSA will continue to work with Congress and stakeholders as 

it seeks to meet its statutory requirements while implementing the 

National Program. Thank you again for the opportunity to testify 

today. I look forward to your questions. 

[The prepared statement of Mr. Hemmersbaugh follows:] 

25 

26 

27 

28 

29 

30 

31 

Mr. BURGESS. The Chair thanks the gentleman. I thank you both 

for your testimony, and we will move on to the question-and-answer portion of the hearing. I will recognize myself 5 minutes to 

begin that questioning. 

Mr. Hemmersbaugh, one of the things I like so much when Administrator Rosekind comes before our subcommittee, he always 

brings the graph of how automobile fatalities have declined under 

the, really, the past 4 or 5 decades. But it does seem that there has 

been a little bit of a plateau or a break in that steady reduction, 

and it does raise the question what are the factors that are responsible for that. 

Can you just speak briefly to the balance between the investment 

that automobile manufacturers are going to have to make in meeting the new Corporate Average Fuel Economy standards and the 

investment in additional safety features in the automobiles that we 

buy? 

Mr. HEMMERSBAUGH. In the first instance I would like to emphasize that we are open to comments on our program on the augural 

standards that the—this is the first part, and so we are really 

gratified to have an opportunity to go through a transparent process whereby all different issues including safety issues are raised 

with respect to the CAFE standards. 

The CAFE standards currently take into account, in fact one of 

the 13 chapters of the TAR is dedicated to safety considerations. 

And we very much are concerned as a safety agency, safety is our 

middle name. We are very interested in preserving safety and not 

sacrificing safety in order to make fuel economy gains. 

So our models have built into them limitations on weight, what 

they call mass reduction, and we always consider safety, and we 

believe that manufacturers as well as responsible public, private 

agencies will take that into account as well. And so we don’t think 

that there is a conflict between safety and fuel economy. 

Mr. BURGESS. You know, last week we had a hearing on advanced robotics and it was a very interesting hearing. One of 

Chairman Upton’s constituents, Dean Kamen, at the end of the 

hearing we talked a little bit about autonomous vehicles, and of 

course we are asking automobile manufacturers to work with your 

agency and work with the Congress on developing that technology. 

And Mr. Kamen had just a very interesting observation at the 

end of his testimony. He said there will be a time when we look 

back on this time and wonder why we didn’t already have autonomous vehicles. And he referenced the fact that so many of us are 

too sleepy or whatever, impaired behind the wheel or texting or 

distracted, and really we ought to leave the driving to the robots 

and not to the driver. 

So it was an interesting philosophical approach. And that is one 

of the great things about this subcommittee is we do—someone told 

me the other day, sometimes they look at this subcommittee as 

kind of being the think tank for the Energy and Commerce Committee in the future of commerce, manufacturing, and trade. 

But I really am concerned and I just want to stress that we do 

need to balance the investments that need to be made in future 

automotive safety. 

32 

Golly, we lost two mothers and two daughters in a head-on collision back in my district a few months ago. A mom and her daughter were driving in one car; a mom and her daughter driving in the 

other car. Apparently a distracted driving situation where someone 

left their lane and went into the oncoming lane of traffic. And had 

a community that was devastated; two schools that were devastated. If there is technology that is just over the horizon that can 

prevent this type of accident from occurring, I mean, I am all for 

it. I want to see that day coming. 

I remember buying my first cars for my children, which now is 

many years ago, and philosophically I wanted to get the cheapest 

jalopy I could get for them because I was cheap, tight. And someone pointed out, you really don’t want to put a teenager in a car 

without anti-lock brakes. And I think that same philosophy now 

fast-forwarded to whatever 3 decades, 4 decades, and putting a 

teenager in a car without a lane departure warning or autonomous 

automatic braking will seem like something no thinking parent 

would do. 

So I mean, I recognize that the future is very involved as far as 

auto safety. We are going to hear from our manufacturers later. I 

mean, I want them to be developing the technologies that are going 

to keep the driving public safe. Of course, that is your agency’s 

charge. So I just hope we are careful about balancing these two 

things as we go forward. I will listen to your observations on that 

if there are anything further you would like to add. 

Mr. HEMMERSBAUGH. Well, thank you. And we are indeed have 

safety uppermost in our mind in nearly everything we do at the 

agency. As you may have seen, we just earlier this week introduced 

an automated vehicle policy and we are very bullish on the safety 

prospects of that technology and we are doing what we can to encourage the development and to encourage the safe and responsible 

deployment of automated vehicles technology. 

And that is something that we are, as I said, really excited about 

the prospects for safety as well as increased mobility for people 

with disabilities. We just think there is a whole panoply of potential benefits. And if we can get this right and that is a big if, but 

if we can facilitate the safe deployment of these automated vehicles, I think we will have tremendous safety benefits and perhaps 

largely eliminate auto crashes as a source of loss of life in the 

United States. 

Mr. BURGESS. The Chair thanks the gentleman, and the Chair 

recognizes Ms. Schakowsky of Illinois, 5 minutes for your questions, please. 

Ms. SCHAKOWSKY. First, I just wanted to comment that fortunately I think we have made great advances in auto safety as well 

as fuel efficiency, and that the two do not cancel out each other in 

any way, and all the evidence is in to say that. 

I wanted to ask Ms. McCabe a question. In 2009, EPA issued the 

finding that elevated concentrations of greenhouse gases in the atmosphere endangered human health and welfare. And since then, 

the climate has continued to change with new records being set for 

a number of climate indicators such as average temperature, vanishing arctic sea ice, carbon dioxide concentrations, and sea levels. 

33 

So Ms. McCabe, the draft TAR, Technical Assessment Report, examined recent scientific literature related to climate change and 

the impact of increasing greenhouse gas emissions. What are some 

of the climate impacts discussed in the report? 

Ms. MCCABE. Yes, thank you, Congresswoman, for that question. 

We do discuss that at great length in the TAR. There are also a 

number of other documents that the Federal Government has put 

out recently addressing these sorts of issues that maybe are a little 

bit more accessible to people in terms of the things that scientists 

are observing. 

One of the most accessible, I think, is temperature. So 2015 was 

the warmest year on record. The last decade has been the warmest 

decade on record. 2016 is gearing up to set another record as well. 

So in terms of temperatures, in terms of increased droughts, storm 

severity, loss of ice in the arctic, rising sea levels, increased coastal 

flooding, those are a number of the kinds of impacts that scientists 

are seeing in the climate. 

Ms. SCHAKOWSKY. Thank you. Understanding the impact our 

emissions have on the atmosphere is particularly important for today’s hearing since the transportation sector accounts for roughly 

a third of total greenhouse gas emissions in the U.S. with lightduty vehicles making up more than 60 percent of the emissions in 

that sector. 

So how have the light-duty standards helped curb greenhouse 

gas emissions in the United States and what level of emissions reductions can we expect to see when these standards are fully implemented? 

Ms. MCCABE. This is a critical element of any program to mitigate greenhouse gases. As you acknowledge, this is a significant 

portion of the inventory. We predicted in 2012 that over the lifetime of this program that there would be about a six billion ton reduction in emissions from these vehicles. And the TAR that we 

have just completed, while it focuses in on the 2022 through 2025 

period we are in the same area of reductions over the lifetime of 

the program and in that last 3 to 4 years of the program it is about 

540 million tons. 

These are substantial. I think we say a lot that it is going to take 

many, many things in order to address greenhouse gases because 

they come from a lot of sources, but when you can find a category 

that contributes this much and you can find cost effective ways of 

reducing those emissions it is really important to do that. 

Ms. SCHAKOWSKY. I really appreciate that focus. And finally, Ms. 

McCabe, what role do the light-duty standards play in meeting our 

Nation’s climate goals, if you could reiterate that? 

Ms. MCCABE. Yes. Well, we have been charged under the Clean 

Air Act to address air pollution that endangers the public health 

and welfare. It is clear that CO2 is one of those air pollutants. And 

so a major source of activity of ours under the Clean Air Act for 

40 years has been reducing air pollution from the auto sector. And 

so these particular rules are a major element of our target, of our 

plan to reduce greenhouse gases as much as can reasonably and 

cost effectively and safely be done. 

Ms. SCHAKOWSKY. Thank you. I said that was the last but I have 

one more. We have heard the argument that in order to meet the 

34 

next round of standards, automakers will have to add a large number of plug-in electric, plug-in electric hybrid and other zero-emission vehicles to their fleet. 

I support efforts to increase the number of electric and alternative fuel vehicles, but that is not really the issue here. This is 

about the National Program which aligns greenhouse gas standards with CAFE standards. And since these standards are based on 

each vehicle’s footprint and not a universal average, this talk of requiring electric cars appears to miss the point. 

And I am wondering, Ms. McCabe, can you explain how each 

automaker is given a unique fleet average based on the individual 

footprint of the vehicles they sell, and would it therefore be possible 

for a manufacturer to produce exclusively light trucks, SUV, and 

crossover vehicles and still be in compliance with the upcoming 

light-duty standards? 

Ms. MCCABE. Yes, absolutely. The standards, I wasn’t around 

when these standards were initially designed so I can compliment 

them without complimenting myself. I just think they are very ingeniously designed in order to provide as much flexibility for the 

automakers and as much choice for the consumers as possible. So 

as you say, we don’t set one expectation across the entire fleet. 

Every automaker, depending on the vehicles they produce, will 

have its own calculated target for what it should achieve. 

And going to your question about electric vehicles, what we found 

in the draft TAR is that due to the innovation and pioneering spirit 

as was said before, the automakers are just moving along like 

gangbusters in developing technologies that apply to gasoline engines. 

So what we found is that in order to achieve those standards, 

while electric cars and other zero-emitting vehicles are certainly 

welcome in the program they are not largely necessary to get each 

automaker to where they need to be. And as I say, each one will 

have a target tailored specifically for them based on the cars that 

they produce, which is based on what they believe they will be able 

to sell to the American public. 

Ms. SCHAKOWSKY. Right. Thank you so much. I yield back. 

Mr. BURGESS. The Chair thanks the gentlelady. The gentlelady 

yields back. I now recognize the chairman of the Energy and Power 

Subcommittee, Mr. Olson from Texas, 5 minutes for questions, 

please. 

Mr. OLSON. I thank the Chair. Welcome, Dr. Hemmersbaugh and 

Ms. McCabe. Ms. McCabe, it is great to have you here, because I 

know you are here for what I imagine is very difficult personal 

times. You spent some time in Boston as has your boss, Administrator McCarthy. You are probably fond of the New England Patriots. Now as you all know, my Houston Texans are going up there 

tonight, 7:25 kickoff, to crush the Patriots. But enough on—let’s get 

serious. 

Mr. TONKO. May I have a point of order on that one? 

Mr. OLSON. If I had more time. But being serious, the regulatory 

impact assessment of 2012, final rule, EPA ballparked that these 

vehicles standards reduced temperatures by 0.0074 to 0.0176 degrees Celsius by the year 2100, 84 years from now. You also said 

35 

this reduces sea level rise by as little as 0.71 centimeters. We are 

looking at amounts too small to even verify. 

Given that the overall program has a very modest effect on global warming, wouldn’t you agree that adjustments to the program 

like revising targets in the out years or harmonizing the training 

program would also have a modest impact on the environment? 

Would you agree with that? 

Ms. MCCABE. Well, Congressman, first, while I cheer for any 

team that my boss is in favor of, I have to confess that I live in 

Indianapolis. So I am not sure when your team is going to play the 

Colts, but we can—— 

Mr. OLSON. Your quarterback came from Houston, Texas, by the 

way. 

Ms. MCCABE. OK. Well, you have just exceeded my knowledge on 

football. 

To answer your question, sir—and we have had this conversation 

before—I think the fact is that climate change is a global problem 

and there are sources that are contributing from a wide variety of 

types of activities. And no one single activity is going to be what 

we need in order to address the threat of climate change. It is 

going to take the cumulative accomplishments of a number of different strategies from not only the U.S. but from countries around 

the world in order to make the difference that we need to see in 

the climate. And this is an important part of that strategy. 

Mr. OLSON. So you agree that this is a modest environmental impact. So given that fact and the fact that these rules will cost over 

$200 billion, and that 2017 through 2025 standards alone come in 

at $157 billion making it the most expensive automobile regulations in history, are these modest gains worth the cost? 

Ms. MCCABE. Well, Congressman, I wouldn’t actually refer to 

this as a modest impact. I would refer to this as a significant impact given the significance of this sector. And I think that I 

would—we are welcoming all comments on the cost and the benefits of this program as people give us comments on the draft TAR 

and all that information is laid out. But what this TAR has found 

is that the costs are that we predict now for the out years of the 

program are in line with the costs that we predicted back in 2012 

and there has been exhaustive research and updating of our information in order to reach that technical conclusion. But we welcome 

everybody’s views on those points. 

Mr. OLSON. Well, it is clear we disagree on the fact that the facts 

are the reduction of the temperatures, 0.0074 to 0.016 degrees Celsius is not something significant in my humble opinion. 

But moving on, this is for Dr. Hemmersbaugh. In EPA’s testimony they commented that these standards are achievable without, quote, significant use, unquote, of electric cars. That of course 

means consumers in a low gasoline price world want smaller and 

lighter vehicles. The automakers in Panel 2 have some serious concerns about whether these assumptions are accurate. Can you talk 

about consumer acceptance and demand for super-efficient or electric cars and what trends you are seeing in that market in the real 

world? 

Mr. HEMMERSBAUGH. Initially, I would like to lay a little groundwork as to the way these standards work. And these standards as 

36 

you know are footprint-based standards. So each different footprint 

of a vehicle has a different target fuel consumption, and it is the 

average over all the vehicles, all the fleet from the smallest to the 

largest truck that result in the Corporate Average Fuel Economy 

target or standard that each manufacturer has to meet. 

Manufacturers have great flexibility in determining what sorts of 

cars they choose to produce in order to meet those standards. Similarly, consumers have, consumer choice is preserved by these footprint standards that we didn’t have before 2007. But when Congress amended the statute, you wisely provided a process and a 

standard and a framework that accommodates consumer choice. 

While I understand that the automakers have estimated that 

they may have to produce large numbers of hybrids in order to 

meet the standards in the years 2022 to 2025, which again as far 

as NHTSA is concerned there are no standards. We have to do an 

entirely new rulemaking before we make those standards, so we 

just have what we call augural standards. It is sort of a hypothetical projection of what those standards would be based on what 

we knew in 2012. 

All that said, the manufacturers are able to produce whatever 

mix of vehicles they wish in order to comply with the greenhouse 

gas standards and the fuel economy standards as well. So it is really up to what the consumer choice and what the manufacturer 

choice is as to what mix of vehicles they will build and sell. 

Mr. OLSON. I am out of time. Go Texans. I yield back. 

Mr. BURGESS. The Chair thanks the gentleman. The gentleman’s 

time has expired. The Chair recognizes the gentleman from California, Mr. McNerney, 5 minutes. 

Mr. MCNERNEY. Well, I thank the Chair. I don’t really need to 

brag about California teams, so I won’t do that. 

But industry usually squawks when emissions or safety standards are issued that the costs are going to go through the roof; that 

the sky is going to fall. But American innovation has proven established industry wrong time and time again. I don’t think I even 

need to give examples. 

But now as I went over in my opening statement and as you all 

confirmed in your statements, American innovation is exploding 

again here. I was struck by the positive tone of both of your opening statements. 

So Mr. Hemmersbaugh, you mentioned that automakers are 

adapting at a great rate to the new regulations. I know that in 

California we are creating jobs. Tesla is there, battery manufacturing, and other manufacturing related to automobile are creating 

thousands of jobs. So how are these standards affecting employment in the rest of the country? 

Mr. HEMMERSBAUGH. I don’t have a good answer for that or good 

data for that. I would be happy to bring it back to you if you want 

to submit a question for the record, or we can just send it back to 

you. But the employment impacts is not something that we closely 

track. We do consider economic effects overall in setting the standards, setting the maximum feasible standards, but we have not to 

my knowledge closely looked at specific employment, and certainly 

not specific regional employment effects. 

37 

But as I said, we will be happy to respond to that when I am 

back at the office and can get my fingers on—— 

Mr. MCNERNEY. Well, that might be a good thing to include in 

your analysis. And you mentioned that the EPA and NHTSA’s 

modeling were done independently. Could you describe the model 

a little bit, what is involved in it, how it works. Is it a computer 

model? 

Mr. HEMMERSBAUGH. They are computer models. They are extremely complex. The NHTSA’s model starts out with modeling of 

technological effectiveness rates from a model developed and used 

by the Argonne National Laboratory, which is also by the way the 

model that most of the auto industry uses. 

That develops certain further inputs that are then input to the 

NHTSA CAFE model, or we sometimes call it the Volpe model because those are at the Volpe Center, the people who run that model 

for us. And then from that we generate the numbers and the analyses that we then slice and dice and figure out different effects and 

different costs. 

Mr. MCNERNEY. And some of this is peer reviewed in papers, in 

academic papers and so on? 

Mr. HEMMERSBAUGH. Yes. Yes. The models have been peer reviewed. The Argonne Lab standard, I think, is pretty much the 

gold standard for this kind of modeling and it is something that we 

have used over time. Our CAFE standard is structured around our 

statute. The CAFE model is built to fit the statutory requirements 

and so forth, so it is a particularly, we believe, well fitting, tight 

fitted model that has benefited from not only peer review but a lot 

of stakeholder input over time. 

Mr. MCNERNEY. Thank you. 

Ms. McCabe, again very positive. Automakers are adapting rapidly. They are meeting standards at lower costs than expected. 

They are outperforming standards and the auto industry is well positioned. Those are some of the statements you made. Could you 

expand on the statement that they are meeting standards at lower 

costs than expected? 

Ms. MCCABE. Well, sure. And before I do I just want to note in 

response to a question you asked earlier, there is a discussion of 

employment impacts in the draft TAR, and we predict fairly modest employment increases related to the development of new technologies. But I also point out that there are record car sales for the 

last couple of years, and so things are going well in the industry. 

So what we did in developing the TAR was to gather as much 

information as we could about the technologies that automakers 

are using, expect to be using, and based on some of our own work 

of where we actually have vehicles in our lab and take them apart 

and put them back together and try different things out. 

So we were able to discern that some of the technologies that we 

expected not until later in the program are already being implemented in these early years, and that the cost of the vehicles are 

in line with what we expected out in the later years of the program 

at about between 900 and $1,100 per car when you get out to the 

end. So the technologies are clearly moving ahead more quickly 

than anybody anticipated. 

38 

Mr. MCNERNEY. And the savings in terms of gasoline or fuel consumption is greater than the initial cost? 

Ms. MCCABE. Well, to the extent that there are more choices of 

cars that are beating where we expected the standards to be, every 

additional mile per gallon is money saved for that motorist. 

Mr. MCNERNEY. Thank you, Mr. Chairman. 

Mr. BURGESS. The gentleman yields back. The Chair thanks the 

gentleman. The Chair recognizes the gentleman from West Virginia, Mr. McKinley, 5 minutes for questions, please. 

Mr. MCKINLEY. Thank you, Mr. Chairman. There are certainly a 

lot of issues we could go in this direction. I have heard some people 

speaking first about the global climate change and the impact, and 

I think we all realize that through the CAFE standards it is going 

to have virtually no impact on the global climate change. You and 

I both know that. 

And I think having the CAFE standards, the interesting part is 

that the thing apparently we are willing to do is ignore the cost of 

life and injuries that have occurred as a result of our efforts in 

America to reduce our consumption. That they have said in this report that 46,000 people have died in crashes in cars—if they had 

simply been driving a heavier car in that time. But people are trying. 

So in a feel-good mood to try to get our CAFE standard, get our 

less consumption, we are going to smaller, lighter cars. We know 

that 23 percent of the weight of a car has been reduced over the 

numbers of years. That has increased the number of rollovers and 

increased the number of deaths. 

So this feel-good attitude that I hear in Congress and through 

this administration of trying to enhance this, it is not going to affect the environment—we know that—and it is also putting the 

lives of people at risk. And I think we all, even from the National 

Highway, your own report has come out and said that for each 100 

pounds that you reduce you are going to increase the accident or 

the death rate one percent of people driving cars. 

I don’t accept all of that. I know it is fact like that but I am not 

accepting that that is the direction we should be going in. But we 

are going to lose that argument, we understand. The feel-good attitude from this administration and some folks here want to have us 

continue in that direction. 

What I am more, equally as concerned about are people in rural 

America that this cost that you are imposing on us is going to be 

passed on to the consumer. And we are seeing from, I guess it is 

from the National Highway, someone has come up or said that it 

is going to increase the price of cars somewhere in the neighborhood of $2,000 to $3,000 to make this achievement. 

But having said that how do we justify increasing that cost to 

people in low-income States like West Virginia or Arkansas or Mississippi, because we have to buy those cars too. It is one thing if 

you want to promote the car in Connecticut or Maryland, where 

there are $70,000 median family incomes, but in rural America it 

is in poorer States at $38,000, $39,000 or $40,000, that is a big discrepancy. 

But yet we are trying to buy the same car, and because of this 

feel-good attitude that we are having with it that this report that 

39 

I have been given says that we are going to reduce, with this increase of the vehicles we are going to reduce, three to four million 

people aren’t going to be able to buy a new car. And we are going 

to remove 5.8 to 6.8 million people, licensed drivers, to be able to 

buy a new car and we are forcing them to buy an older car. I am 

troubled with this. 

So how all would you respond? Do you think these reports are 

wrong from the insurance groups or the other entities that have 

put out reports about safety and cost? Who can answer that? 

Mr. HEMMERSBAUGH. I will start. With respect to the cost and 

the concern about pricing people out of the ability to buy cars, I 

want to give you a few numbers. The overall cost we estimate in 

the TAR, the overall cost of this rule by 2025 if we kept the same 

standards, which again we are going to revisit those standards, but 

if we kept the standards it would $87 billion. At the same time, the 

overall benefits we estimate are $175 billion, so essentially—— 

Mr. MCKINLEY. Am I supposed to feel good in West Virginia, 

then? I can’t buy a car, but health benefits are going to improve 

around the country? I want to get back to specifics. Don’t talk at 

30,000 feet to me. Get down to what, if that cost, the increase of 

that cost is going to be a car of $3,700, how is someone with a 

$36,000 median family income going to be able to afford a new car? 

Mr. HEMMERSBAUGH. I have a couple thoughts on that. One is 

let’s bring it down to an average per car. We estimate in the TAR, 

we, NHTSA, estimates in the TAR that the average cost increase 

for a car by 2025 will be approximately $1,200. That $1,200 is more 

than completely offset by an estimated $1,900 in savings, in fuel 

savings, and that is just fuel alone. That doesn’t take into account 

the climate benefits and the things about which some disagreement 

has been expressed. 

Mr. MCKINLEY. I am sorry. My time is expired, but if I could reclaim it. It says based on the National Highway Traffic Safety it 

is $2,937, not 800-and-some dollars, sir. 

Ms. MCCABE. Congressman, if I could clarify just a couple of 

things. I want to make clear that everybody understands that, 

given the design of the program, nobody is required to buy any particular car. The automakers in fact are and will be able to offer a 

wide range of cars going from very modestly priced cars as they do 

now to higher-end cars as they do now. And so there will be cars 

available for people in every income level, and they will save 

money immediately because of paying less for gas. 

I also wanted to clarify that the first comments you made before—and Mr. Hemmersbaugh may want to add to it as well—in 

terms of lightweight cars, the whole design of this footprint-based 

approach to the cars is to make sure that we are not sacrificing 

safety for this environmental and fuel economy benefit. This program does not require cars to be made lighter. It allows the automakers to provide a range of cars so that they can fully take into 

account all of those considerations. 

Mr. BURGESS. The gentleman’s time has expired, so I thank the 

gentleman. The Chair recognizes the gentleman from New York, 

Mr. Tonko, 5 minutes for questions. 

40 

Mr. TONKO. Thank you, Mr. Chair. Ms. McCabe and Dr. 

Hemmersbaugh, welcome, and thank you for your work, very important to our environment. 

Is it accurate that for each size or footprint of vehicle there is 

an individual fuel economy target set? 

Mr. HEMMERSBAUGH. Yes. That is correct. 

Mr. TONKO. And is it accurate that, instead of a uniform CAFE 

standard, each manufacturer now has a unique CAFE standard? 

Mr. HEMMERSBAUGH. Yes, each manufacturer has a Corporate 

Average Fuel Economy standard. 

Mr. TONKO. And that is based on what? Is it the vehicles that 

they manufacture and sell or—— 

Mr. HEMMERSBAUGH. So as you rightly stated at the start, there 

are based on the footprint of each vehicle, or that is essentially the 

area defined by a square under the wheels of the car, for each footprint for area occupied by a car there is a different standard. 

So depending on the manufacturer’s mix of vehicles, you average 

the target fuel economy into a single thing for each manufacturer’s 

fleet which comes up to an average, or the Corporate Average Fuel 

Economy. So a manufacturer who chooses to build, for example, 

primarily larger vehicles, cars and trucks that are larger and heavier weight, will have a lower Corporate Average Fuel Economy estimate and similarly a higher—Ms. McCabe can speak to this—but 

similarly a higher carbon dioxide emissions. 

Mr. TONKO. Thank you for expanding upon that because I know 

it was talked about a little earlier. But I think it is fair to say today’s CAFE system is much more flexible than it was in the 1970s 

and it is not the case that all vehicles must meet a set standard. 

The standard will adjust based on market trends and other factors. 

Can you explain how this flexibility helps both automakers and 

consumers? 

Mr. HEMMERSBAUGH. Well, the flexibility means that automakers 

can produce and consumers can demand or purchase vehicles of the 

size and other parameters that they want when, if we go back in 

contrast to how it was before 2007, there was a single flat average. 

And so if you built more larger vehicles there would have to be, the 

manufacturer would have to compensate on the other side by building more smaller vehicles that got better gas mileage. 

Today there are individual standards for each footprint of a vehicle, so that really advances consumer choice and manufacturer 

choice while at the same time ensuring that we have increasing 

stringency in the fuel economy standards year over year over year. 

Mr. TONKO. Thank you. So if I am understanding this correctly, 

this will ensure that all models will get more efficient over time 

and that automakers can comply even if consumers are opting for 

larger cars or trucks. 

Ms. McCabe, your testimony states that automakers are already 

ahead of schedule to meet standards for upcoming model years, and 

they are rapidly adopting technologies for greenhouse gas reductions. Did the TAR find that the targets for later model years can 

be met by mostly efficiency improvements to gas-powered engines? 

Ms. MCCABE. Yes, it did. That there are technologies that are applied to advanced gasoline engines that will be the predominant 

pathways for automakers should they choose to go that way. 

41 

Mr. TONKO. OK. And, you know, one of the more encouraging 

findings of the draft TAR was that technological innovation has 

moved the whole process with our automakers. As automakers continue to innovate does new technology give them more flexibility in 

how they meet the standards? 

Ms. MCCABE. Oh, it certainly does. And this has been the triumph of the auto industry over decades in this country is that they 

continue to innovate and find new things and these standards go 

out 9 years ahead. And as the chairman mentioned before in talking about autonomous vehicles, we really don’t know what everybody is going to invent between now and then, but we know they 

will because they always have. 

Mr. TONKO. Right. So with challenges continuing, with certain 

technology outperforming the agencies’ expectations, is it possible 

that some current model year vehicles may already be compliant 

with projected standards for model year 2020 and beyond? 

Ms. MCCABE. Oh yes, there are a number of model vehicles out 

there already complying with the 2020 year standards. 

Mr. TONKO. Then, so what do you think this says about the automakers’ ability to meet the standards with currently available technology? 

Ms. MCCABE. We think it is quite achievable based on the information that we have in the draft TAR. And as I have said, you 

know, we welcome everybody’s views on that. But based on our information which is driven in a large part from our conversations 

with the automakers, because of course we have to be in very close 

communication with them, it is very encouraging. 

Mr. TONKO. Well, I thank you. As I said earlier in my comments, 

America has always stepped up to challenges, and with the intellectual capacity that we bear as a nation I think we are up for 

challenges and we respond well with our pioneer spirit. With that 

I thank you and yield back. 

Mr. BURGESS. The gentleman yields back. The Chair thanks the 

gentleman and the Chair recognizes the gentleman from Illinois, 

Mr. Shimkus, 5 minutes for questions, please. 

Mr. SHIMKUS. Thank you very much, Mr. Chairman. I am over 

here. It is good to have you. You have already been probably told 

there are competing hearings, so we are bouncing back and forth. 

And it was easier when we are in the same building, but when we 

are in different buildings it takes a little bit longer. 

So Ms. McCabe, I want to follow up on actually some of the questions. In your testimony you were talking about the hundred cars, 

SUV, pickup versions that meet 2020. Can you provide us three 

pieces of information to follow up? Data is important. And it is not 

adversarial, it is just to help us analyze. 

What percentage of vehicle sales do those hundred cars, SUVs, 

and trucks represent so to get an idea of, you know, the market 

acceptance and those totals. What is the price differential versus 

the similarly situated cars, SUVs, and trucks because there is 

going to be a debate about how costly are cars and what is affordable. 

How many of the hundred also meet EPA and NHTSA requirements by 2025? So we have got 2020 which you have addressed, 

but does any of these hundred meet 2025? And that would be helpVerDate Mar 15 2010 12:08 Jan 11, 2017 Jkt 037690 PO 00000 Frm 00047 Fmt 6633 Sfmt 6633 F:\114THCONGRESS\114X171CAFEXGHGJKTREQ011017\114X171CAFEXGHGXWORKIN
42 

ful for us if you can provide us with that. And I know Mr. 

Hemmersbaugh is taking notes too, so however you can work on 

those. 

Let me ask, has the EPA assembled any vehicles with the various technologies outlined in the draft Technical Assessment Report 

to see how they actually function in real-world driving conditions? 

Ms. MCCABE. Well, we do have the ability to test out these technologies both by getting cars from manufacturers that have the 

technologies on them and then also working to build them in our 

lab as well. And part of the research that the automakers certainly 

do is to make sure that those technologies will be reliable, will last 

for many, many thousands of miles; that that is part of the routine 

QA and product development that the automakers do. 

Mr. SHIMKUS. So you are getting that information from the automobile dealers. You are not doing any of that research on your 

own? So a lot of us, I remember driving in Colorado and stopping 

at a convenience stop and there was this pickup truck. It was dark. 

It was black. It was kind of covered up in fabric and they were 

driving it all over doing real-world testing. 

Ms. MCCABE. Yes. Yes. 

Mr. SHIMKUS. Which was then of course logos, no logos, all this 

top secret stuff—— 

Ms. MCCABE. Right, right. 

Mr. SHIMKUS [continuing]. To get real-world conditions. So what 

we are trying to just ascertain is, is that information just coming 

from the industry, or are you all doing based on what you perceive 

to accomplish in the technical review are you testing real-world 

standards? 

Ms. MCCABE. We do do testing, confirmatory testing ourselves to 

check the performance of these vehicles. 

Mr. SHIMKUS. Because we found out our country is big and large 

and diverse and there is very, very cold and there is very, very hot 

and—— 

Ms. MCCABE. Absolutely. That is why our lab is in Michigan. 

Mr. SHIMKUS. That is right. Ms. McCabe, while the CAFE and 

the greenhouse gas standards are affecting cars and light trucks, 

the renewable fuel standard is transforming motor fuels. Are there 

potential conflicts between these two programs, and if there are 

how can they be addressed? 

Ms. MCCABE. I am sorry. Conflicts between—— 

Mr. SHIMKUS. The RFS which is kind of transforming the fuel 

mix—— 

Ms. MCCABE. Oh, the RFS. Sure. 

Mr. SHIMKUS [continuing]. And you have greenhouse gas and you 

have CAFE, so we have got these different programs. Are there 

conflicts? 

Ms. MCCABE. No, not at all. Not at all. The RFS was established 

by Congress to encourage the use of non-fossil fuels which are good 

for the climate, and this program encourages the more efficient and 

better fuel economy which will reduce greenhouse gas emissions. 

And in fact if automakers are building flexible fuel cars that can 

use renewable fuels, there is a provision in the greenhouse gas program to give credit for that. So they are complementary. 

43 

Mr. SHIMKUS. Right. So then, Mr. Hemmersbaugh, obviously one 

of the points of discussion will be how does a national program, 

how are you going to harmonize the agency standards when 

NHTSA and EPA have different credit-trading, credit transfer caps, 

and penalties for noncompliance? Are you all talking about this and 

trying to figure out how we are going to do this? 

Mr. HEMMERSBAUGH. Absolutely. We have worked very closely 

with NHTSA and EPA as well as with the CARB to try to harmonize the standards to the best of our ability within our separate 

statutory commands. And NHTSA has some statutory requirements that we don’t have flexibility to change, but we have worked 

hard to have a single set of standards that a manufacturer can 

meet by designing a single fleet that will comply with all the standards. And I misspoke. I didn’t mean a single set of standards, I 

mean a harmonized set of standards. 

Mr. SHIMKUS. Right. And I think—if I can just jump in, my time 

is running out—is that so there is a point being that to try to harmonize these there may be a need for some legislative change to 

help ensure that we actually have one set of standards that can 

harmonize, because it is our impression that you are handcuffed a 

little bit based upon current law. You have to do these certain 

things and you would need a legislative change to maybe be a little 

more flexible? 

Mr. HEMMERSBAUGH. We absolutely would be happy to look at 

any proposed legislation, provide technical assistance, whatever we 

can do. 

Mr. SLAVITT. Great, thank you. I yield back, Mr. Chairman. 

Mr. OLSON [presiding]. The gentleman’s time is expired. The 

Chair calls upon another Houston Texans fan, Mr. Green, for 5 

minutes. 

Mr. GREEN. Thank you, Mr. Chairman. And since we are talking 

about vehicles, both my truck and my cars have our Texas license 

plates on them. But I appreciate—and hopefully they will do very 

well tonight. And I am sorry my colleague from Massachusetts, Mr. 

Kennedy, is not here so we could have some fun. 

I want to thank you for holding this hearing, because this is one 

of the first that we have had for a number of years and because 

we are in toward the end of the public comment period for the technical assistance. And I want to thank our witnesses before us today 

in providing the many perspectives we need to understand how this 

policy affects consumers, manufacturers, and the environment. 

The program affords manufacturers significant flexibility in how 

to meet the standards. It also is important to make sure consumers 

have choices to get a vehicle that meets our needs. For example, 

on my every day in Houston, Texas, I use a Malibu that gets decent mileage, but sometimes we do have a little flooding in there 

so I use a Tahoe that probably gets ten miles less per gallon. So 

consumers need that choice too. Typically in Texas we have, I used 

to hear the Suburban was the national truck of Texas. 

But one of the questions I have is that several witnesses on the 

second panel point out that EPA and NHTSA use different models 

to assess the technological feasibility and costs associated with 

these rules. My first question, does this hamper your ability to 

44 

align the standards for these programs if the two agencies use different vehicles, different models? 

Ms. MCCABE. Well, I will start and if Mr. Hemmersbaugh wants 

to add he certainly can. We actually think that the two agency 

using somewhat different models is a strength of the program, and 

as the TAR reflects our results are right in line with one another 

for the most part. And it makes sense that the two agencies would 

have different tools that they would use, different methodologies 

that they would use. 

All of this is information and material that we discuss widely 

with the industry and look forward to people’s additional comments 

on it. But we think it actually strengthens the record for the findings that the agency will ultimately make. 

Mr. GREEN. That is interesting because, you know, it seems like 

we would want to, both agencies would want to use, you know, the 

same model so they could, because they have different requirements for each agency to look at. But anyway, do the conclusions 

of your analysis differ widely? 

Ms. MCCABE. No, they don’t. Well, one way in which they do differ is the choices that each model makes about the least-cost ways 

for the automakers to be able to comply. And again I think that 

is a strength because it emphasizes that there are multiple pathways that automakers can choose. But when it comes to the ultimate conclusions about whether the technologies are available and 

the expected costs, the two analyses are quite well in line with one 

another. 

Mr. GREEN. Before I get to my last question before my colleague 

from Illinois, Mr. Shimkus, leaves, I am not so sure the RFS is 

good for the climate, but that is the subject for a different hearing 

we will have to have sometime. 

Mr. SHIMKUS. Well, ask the Administrator. 

Mr. GREEN. My last question is, does the use of independent 

analysis strengthen your confidence in the information and assumptions of the underlying rules? 

Ms. MCCABE. I certainly think it does. 

Mr. HEMMERSBAUGH. I do too. And just getting back to your earlier question just to frame it slightly differently than Ms. McCabe, 

we believe that these two analyses are both robust and they are 

complementary and they allow for more comment on the different 

range of options. And that is what we are about right here in this 

midterm evaluation is putting out a lot of technical information 

and some different compliance options for the regulated community 

and other members of the public to comment on. So we think that 

is really a strength of the program. 

Mr. GREEN. Well, and like I said, whether I am driving a Malibu 

or a Tahoe, over the years I have done that, and both vehicles have 

improved their gas mileage. 

So Mr. Chairman, I will yield back. Thank you. 

Mr. OLSON. The gentleman yields back. The Chair calls upon the 

gentleman from Texas, Mr. Barton, for 5 minutes, former chairman. 

Mr. BARTON. Thank you, Mr. Chairman. I thank our two witnesses for being here this morning. I want to make a brief stateVerDate Mar 15 2010 12:08 Jan 11, 2017 Jkt 037690 PO 00000 Frm 00050 Fmt 6633 Sfmt 6633 F:\114THCONGRESS\114X171CAFEXGHGJKTREQ011017\114X171CAFEXGHGXWORKIN
45 

ment since I didn’t make an opening statement, then I will ask a 

question or two. 

I personally think we could repeal the CAFE standards in their 

entirety. If there was a reason to have them back in the ’70s and 

the ’80s and the ’90s, with gasoline prices where they are today I 

think the market could do it. So that is a subject for an entirely 

different hearing and we obviously need a new President. But you 

can make a good intellectual case to just repeal CAFE and let the 

market operate. 

But since we have it we obviously have this mish-mash going on. 

We have got California’s standards and EPA’s standards and National Highway Transportation Administration standards, but theoretically they are all supposed to be working together and we are 

supposed to have what is called One National Program. I will ask 

each of you briefly, what is the status of this One National Program? 

Ms. MCCABE. I will start. We have one national program. The 

goal of the One National Program was that automakers would be 

able to build one fleet of vehicles that could be sold anywhere in 

the country, and they can. And the agencies work very, very closely 

together and we have and we will continue to do so, so that our 

programs are harmonized to the greatest extent feasible. And in 

fact they are harmonized to a very great degree, things like compliance testing and much of the obligations or flexibilities with respect to credits and that sort of thing are harmonized. 

Mr. BARTON. The manufacturers don’t agree that they are harmonized. 

Ms. MCCABE. Well, they have identified a handful of issues that 

they brought to us in a petition which we are considering, both 

agencies are considering them. And if there are other opportunities 

for us to improve the way the programs work together we certainly 

want to—— 

Mr. BARTON. What is NHTSA’s take? Do you agree with EPA or 

do you have a little different opinion? 

Mr. HEMMERSBAUGH. No, we generally agree with EPA that we 

are working hard to harmonize and to the greatest extent they can 

be harmonized we have done that. I can’t comment on the pending 

petition right now, but I would except to note that automakers 

have presented a variety of different options for changing credits. 

Mr. BARTON. Well, let me give you an example. These credits, 

both EPA and NHTSA use a credit program, right? 

Mr. HEMMERSBAUGH. Correct. 

Mr. BARTON. OK. The EPA credits last how long? 

Mr. HEMMERSBAUGH. The EPA—well—— 

Ms. MCCABE. Five years. Five years except for credits earned in 

the first phase of the program we extended their life. 

Mr. BARTON. Well, I am told that NHTSA’s credits last 5 years 

and the EPA credits last 11 years. 

Ms. MCCABE. Well, right. Our—— 

Mr. BARTON. So that doesn’t look like harmonization to me. 

Ms. MCCABE. We had a one-time, as we transitioned from phase 

1 of this program to phase 2 of this program we extended the 

length of credits earned during the first phase so that they last 11 

46 

years. But credits earned during the phase 2 of the program under 

EPA’s rules last for 5 years. Does that clarify it? 

Mr. HEMMERSBAUGH. So beginning in 2016—— 

Mr. BARTON. If I was listening exactly, I am sure it would clarify 

it. I kind of got lost in a daydream there. But do we agree that we 

at least ought to harmonize how long the credits last? Is that, or 

maybe you all agree that they are harmonized. 

Mr. HEMMERSBAUGH. Yes, Mr.—— 

Mr. BARTON. Yes. Yes. 

Mr. HEMMERSBAUGH [continuing]. Barton. They are harmonized 

beginning in 2016. 

Mr. BARTON. OK. Well, the last question on that particular thing: 

Shouldn’t the credits, whether they are harmonized or not, be used 

by both programs? 

Ms. MCCABE. Well, we think it is important that both programs 

have a crediting system, which they do. 

Mr. BARTON. OK. But the credit system is a little different. I am 

just saying, if we are going to have a program and you are going 

to try to harmonize it, let’s call it apples and apples and have it 

comparable. That is all. 

Mr. HEMMERSBAUGH. And we increasingly are harmonizing. We 

are getting to the point where most of the differences between the 

two programs are statutory and are things that we are not able to 

change without a change to the statute. 

Mr. BARTON. So you are saying that there may be some things 

the Congress has to change the statute? 

Mr. HEMMERSBAUGH. You could evaluate and determine whether 

that made sense, yes. 

Mr. BARTON. Well, see, I want to repeal the whole program, so 

that makes the most sense to me. But we probably don’t have the— 

you know, Ms. Schakowsky is rolling her eyes over there. If Mr. 

Trump is President, Ms. Schakowsky, we will be back. With that 

I yield back, Mr. Chairman. 

Mr. OLSON. The gentleman yields back. The Chair calls upon the 

gentlelady from Florida, Ms. Castor, for 5 minutes. 

Ms. CASTOR. Well, thank you, Mr. Chairman. First of all, I want 

to thank the National Highway Traffic Safety Administration. This 

summer you all came to Tampa. In fact, Dr. Mark Rosekind, the 

administrator, came himself and helped with outreach on child 

safety seats for many of my neighbors. He set up a whole section, 

a whole facility to make sure that folks know how to buckle in 

their kids and secure their seats, and highlighted the airbag recalls 

where it is especially important in a steamy, humid area like mine 

in the Tampa Bay area. So I really appreciate you doing that and 

highlighting the safercar.com Web site where people if they have 

questions about airbag recall they can go to get more information. 

And I appreciate you calling this hearing. I think it is overdue. 

But CAFE standards are a great example of American ingenuity 

and innovation. They are really paying off for American families 

and businesses of folks we represent back home. And fuel economy 

and greenhouse gas emissions controls now are vital at a time 

when we must tackle the increasing costs of the changing climate, 

so we can’t lose sight of that. 

47 

And I also appreciate all of the automakers, States, all of the environmental advocates coming together to make progress. And here 

at the end of the Obama administration, I want to say thank you 

to President Obama and everyone in the administration who has 

done a fabulous job for consumers when it comes to fuel economy. 

Ms. McCabe, how much have American consumers saved since, 

over the lifetime of the CAFE standards program which was originally adopted in 1975? 

Ms. MCCABE. Oh boy, I don’t actually have that number for you, 

Congresswoman, but we can certainly see if we can come up with 

that. I mean it is clear that cars across the range of big, little, in 

between, are much more fuel efficient than they were 10 years ago, 

20 years ago, 30 years ago. Just absolutely no question. 

Ms. CASTOR. OK. Yes, please get that. And I bet a lot of the automakers and the advocates out there will have their estimates 

maybe on the next panel as well. 

You have recently released a Technical Assessment Report and 

asked for comments. In what we know so far is automakers have 

exceeded expectations on the miles per gallon and fuel economy. 

Over the history of the program goals have been very important, 

they have helped everyone focus on higher mileage standards. So 

what do you think at this point? If they have exceeded expectations 

will you press for higher standards? 

Ms. MCCABE. Well, of course we have not put out any sort of proposal with respect to the regulatory decision that we have to make. 

The stage we are at right now is putting out the technical information. So we won’t opine on that until we issue a proposed determination after we have seen everybody’s comments. 

But I will say that the results to date are encouraging, and I 

would agree with you that goals are important to set. And I think 

when these standards were issued in 2012 with support from the 

industry, everybody recognized that they were challenging and that 

these were big challenges that we have to rise up to in this country 

and that people were up to doing it. But that is why we have this 

midterm review so that people can weigh in again. 

Ms. CASTOR. And one of the remarkable developments lately is 

the fact that gas prices are so low. I never thought that we would 

see prices, in the Tampa Bay area prices have been hovering just 

above $2 per gallon for many, many months. How does the fact 

that we have had these sustained low gas prices, how does that impact the technical review and the National Program for fuel economy? 

Ms. MCCABE. Yes, it is clearly an issue of great interest in it, and 

as you say the prices, nobody expected them to be this low and we 

don’t know what they will be 2 years from now, 4 years from now. 

Nobody knows, given the way they have gone up and down. So we 

want a system that is robust and anticipates all of those 

eventualities. 

But it is the case that when gasoline prices go down people may 

choose larger cars because they are not feeling the cost of gasoline 

so much. However, no matter what car you buy and no matter 

what gas costs it is still better to pay less for it. And so a fuel efficient car even in a time of low gas prices is something that we 

know consumers care about. 

48 

Ms. CASTOR. Thank you very much, and I yield back. 

Mr. OLSON. The biggest fan of the Houston Cougars in Florida 

yields back. The Chair calls upon the gentleman from Ohio, Mr. 

Latta, for 5 minutes. 

Mr. LATTA. Thank you, Mr. Chairman, and thanks for our panel 

for being here. I appreciate it. And I think the gentleman from Illinois said a little bit ago we have two different hearings going on, 

so we are kind of shuffling back and forth, so I am sorry I missed 

your opening statements. 

But if I could, Administrator, if I could start with my questions 

with you. When the EPA finalized the rule it granted multiplier incentives for electric vehicles, fuel cell vehicles, and natural gas vehicles. These incentives are useful to automakers in meeting the 

standards and encourages the production of these alternative 

fueled vehicles. 

However, it did not extend these multiplier incentives to propane 

powered vehicles. This exclusion puts propane vehicles at a regulatory disadvantage compared to those from the other alternative 

fuels. Could you explain why the propane vehicles weren’t given 

the equitable treatment by the EPA when the rule was finalized? 

Ms. MCCABE. You know, Congressman, I wasn’t intimately involved in the development of the 2012 rule, so I would like, if I 

could, to get back to you with a specific answer to that question. 

Mr. LATTA. Yes, if you could, because that is important. And kind 

of following up with that, with the midterm evaluation underway 

will the EPA continue to examine the application of the multiplier 

incentives or other compliance incentives at this time? 

Ms. MCCABE. Well, the charge in our rule is to look at the standards themselves in 2022 through 2025 and determine whether they 

are still appropriate or whether they should be made less stringent 

or more stringent. We will see what comment we get from people 

on the draft TAR, and of course carefully consider any input that 

we get as we make that particular regulatory recommendation. 

Mr. LATTA. OK, because that is kind of following up on the second point. I just want to make sure then, because you would be 

willing then to reconsider the exclusion of the propane from the 

current incentives in order to bring parity to the alternative fuel 

marketplace? 

Ms. MCCABE. Well, I can’t speak to it specifically today, Congressman, but certainly will take your concern back to my team. 

Mr. LATTA. OK. But if I could hear back from you I would appreciate that. 

Ms. MCCABE. Sure. 

Mr. LATTA. Mr. Hemmersbaugh, the NHTSA just released the 

proposed guidelines for autonomous vehicles earlier this week. In 

making the announcement, the secretary said that your agency 

would be conducting a number of public meetings around the country, which I support. I think that that kind of transparency and 

public engagement is important. 

And one thing that would be tremendously helpful here would be 

if the NHTSA and the EPA would be willing to hold similar public 

workshops to review the Technical Assessment Report methodologies with technical experts. Especially given the significance of 

49 

TAR, would the agencies be willing to commit to holding a public 

workshop or a series of workshops? 

Mr. HEMMERSBAUGH. As you may know, prior to publishing the 

TAR, we had a technical workshop, which we went through with 

all the experts and sort of walked through the technical concerns 

and features of the TAR. But we are—going forward, we are committed to getting as much public input as we can. We have, as you 

know, a comment period, but we are going to continue to take data 

and information in any way we can get it that we can reasonably 

accommodate it until we get to the proposed rulemaking for the 

NHTSA standard. 

So I can’t say today that we necessarily will do X and Y field 

hearings or anything like that, but it is certainly something that 

we are open to and will consider. 

Mr. LATTA. Well, maybe we can communicate on that again because I think it is very, very important that that occurs. 

Let me follow up. Throughout the TAR, the EPA and NHTSA use 

different inputs and assumptions. For example, the percentage of 

higher compression ratio naturally aspirated gasoline engine automakers are expected to deploy to meet the model year 2025 standards differs by about 43 percent. Similarly, the percent of the 

turbo-charge in downsized gasoline engines differs by about 21 percent and the percent of the stop-start technology differs by 18 percent. Can you explain how we have such a discrepancy in all the 

different percentages there that have come out? 

Mr. HEMMERSBAUGH. I think no single reason explains, but there 

are several different reasons. One is that we use different models 

and those different models are each structured to the demands, the 

different demands of our statute. Another is that we use different 

inputs. As I was saying earlier, we use, we NHTSA, use the Argonne Labs’ technology effectiveness model that then the outputs 

of that are the inputs to our CAFE model. EPA uses different models. 

So there are inherent differences both in the inputs and in the 

way that the models treat those inputs for purposes of meeting our 

slightly different statutory obligations. Another reason I think that 

maybe have some, account for some of the difference is that 

NHTSA used a different baseline year than EPA did. We used a 

2015 baseline year and EPA used a 2014 baseline year. So that accounts for some of the differences as well. 

But the main thing I would like to emphasize is that this provides a range of different options that people can look at, that commenters and look at and tell us where we are getting it right, 

where we are getting it wrong and what adjustments can be made. 

So this sort of, you know, array of different options is really a benefit to the commenting community. 

Mr. LATTA. Well, thank you very much, Mr. Chair. My time is 

expired and I yield back. 

Mr. OLSON. The gentleman’s time is expired. The Chair calls 

upon the gentleman from New York, Mr. Engel, for 5 minutes. 

Mr. ENGEL. Thank you, Mr. Chairman. I want to thank the witnesses. You can see there is a lot of interest here. We have had a 

lot of members here. I have a few questions I am going to try to 

move on fast. 

50 

Implementation of CAFE standards has been happening alongside the recovery of the auto industry. In 5 years into this implementation new vehicles are significantly more fuel efficient, consumers are buying automobiles at a record pace, and U.S. automakers have made a dramatic return to profitability. So aren’t the 

standards working as proposed, even though my friend Mr. Barton 

wants to repeal the whole program? Aren’t these working as proposed? 

Ms. MCCABE. Well, we think they are, given the number of additional models that are available for customers to buy that get increasing fuel economy. 

Mr. HEMMERSBAUGH. Yes, we at the Department of Transportation and NHTSA believe they are working well and as intended. 

Mr. ENGEL. Thank you. In the past few years we have seen substantial new technologies come to market including advanced engines, improved transmission systems, light weighting of vehicles 

and more efficient tires. Do you think that the relaxation of CAFE 

standards would stifle additional advancements? 

Ms. MCCABE. Well, I think that the standards do provide a goal 

and a challenge to the manufacturers, and I think that that kind 

of goal and expectation has been helpful to drive innovation over 

years in the auto industry as well as other industries. So I think 

it is important to have reasonable and achievable but ambitious 

standards given the stakes here, which is fuel economy, consumer 

choice, cost and the impact that greenhouse gases are having on 

our environment. 

Mr. ENGEL. Mr. Hemmersbaugh, do you agree? 

Mr. HEMMERSBAUGH. I agree. 

Mr. ENGEL. I agree. OK. I have been an advocate for many years 

of increased production of flex-fuel and alternative fuel vehicles. 

When car makers sell flex-fuel vehicles that are built to run on either gasoline or E85, they earn credits that help them to comply 

with the CAFE requirements. 

Can you explain how that works and share your thoughts on 

whether we should continue these credits, because only about two 

percent, I am told, of gas stations in the U.S. sell E85 so most flexfuel cars run on gasoline and don’t generate the intended benefits 

because they can’t get it. Can we remedy that? Should we, and if 

so, how? 

Ms. MCCABE. Yes. So there is a provision in the rule as you identify for flex-fuel vehicles to get credit in the calculation of fuel economy, and EPA keeps a watch on the very issue that you identify 

which is how often are those vehicles actually driving on E85. And 

we have the ability to adjust the credit that is currently in the rule 

to reflect real-world conditions. 

As we discussed earlier, we have this complementary program, 

the Renewable Fuel Standard, the major purpose of which is to try 

to increase the availability of renewable fuels including E85. And 

so there are significant efforts that not only EPA but USDA and 

others are putting into that effort. The more that that is successful, 

the more we will see these flex-fuel vehicles actually operating on 

E85 and the CAFE standards and the GHG standards can accommodate that. 

51 

Mr. ENGEL. Thanks so much. Let me see, in 2012 it was widely 

reported that about 60 percent of vehicle sales would be cars and 

40 percent would be trucks and these numbers seem to have 

flipped, so it is now 60/40 the other way. Does that consumer 

choice impact industry’s ability to meet their CAFE standards? 

Mr. HEMMERSBAUGH. No. Because the standards are designed 

based on the footprint of the vehicle, every size of vehicle has its 

own fuel economy target. So the manufacturers’ mix of vehicles— 

and say that they are as you suggest. Our numbers suggest more 

like 50/50, light vehicles and, or trucks and light cars, but whatever the percentage is, the beauty of the standards is that each size 

of vehicle has its own fuel economy standard, so there is no need 

to have some corresponding offset in high fuel economy for small 

vehicle if they are building more larger vehicles. 

So that is really an important, and as Ms. McCabe said, ingenious innovation of the 2007 EISA statute to provide that we use 

these footprint standards. 

Mr. ENGEL. Thank you. My last question is that CAFE standards 

are often linked to the 54.5 mile per gallon projection, but that is 

not even close to the miles per gallon estimates that will be pasted 

on the windows of new cars in showrooms, let alone the fuel economy that drivers would experience on the road. Instead, the calculations take into account adjustments and credits for things like 

electric cars, flex-fuel vehicles, energy-efficient air conditioning, 

and rooftop solar panels. So the result is the 54.5 mile projection 

is the equivalent of about 37 to 40 MPGs on the sticker. 

So I am hearing arguments that additional CAFE credits should 

be awarded to the auto industry for safety improvements such as 

autonomous braking which in theory will prevent accidents, reduce 

congestion, and thus save energy and emissions. What are your 

thoughts on that? 

Ms. MCCABE. This is an issue that we are certainly hearing 

about. I don’t think we feel like the data are sufficiently robust to 

make decisions on this right now, but encourage and invite everybody to continue to look at that. 

Mr. HEMMERSBAUGH. I would just add that with respect to any 

proposals to change a program we would keep in mind our overarching goal of fuel conservation, and we would view with some 

skepticism any credit system or other changes to the program that 

could undermine the gains that we have had in fuel economy. 

Mr. ENGEL. Thank you. Thank you, Mr. Chairman. 

Mr. OLSON. The gentleman’s time has expired. The Chair calls 

upon the gentleman from the Commonwealth of Virginia, Mr. Griffith, for 5 minutes. 

Mr. GRIFFITH. Thank you very much, Mr. Chairman. I appreciate 

you all being here today. Acting Administrator McCabe, my constituents tell me that the joint EPA–NHTSA rulemaking published 

in August imposes the compliance burden on the manufacturers of 

truck trailers to achieve reductions in greenhouse gases. Is that 

correct? 

Ms. MCCABE. So you are speaking of the heavy-duty rule that we 

published this summer. 

Mr. GRIFFITH. Yes, ma’am. 

52 

Ms. MCCABE. And it does address a variety of aspects of trucks 

that can contribute to lower greenhouse gases, including trailers. 

Mr. GRIFFITH. OK. And so that brings my first question. The 

legal authority defines, that gives you all the right to do this on 

motor vehicles, defines motor vehicles to mean, and I am going to 

read from 42 USC 7550 paragraph 2. The term motor vehicle 

means any self-propelled vehicle designed for transporting persons 

or property on a street or highway. 

So recognizing that trailers are not self-propelled, they are not a 

part of the heavy truck; they are added to the heavy truck after 

the manufacture of the heavy truck, from whence comes your legal 

authority to regulate trailers? 

Ms. MCCABE. Well, Congressman, we lay out our response to 

those comments and our legal analysis at great length in the rule, 

but I will tell you that without a trailer a truck is not transporting 

goods. And so we see the trailer as an integral part of the vehicle 

that is covered in the Clean Air Act. 

Mr. GRIFFITH. And you and I are going to have these disagreements for years because we just see things differently and I recognize that. But in all due respect, one of the principles of law, and 

I understand that you are not an attorney and I am not—— 

Ms. MCCABE. I am, actually. 

Mr. GRIFFITH. Oh, you are an attorney. OK. Well, there you go. 

One of the principles is—I was giving you credit. One of the principles is, is you go with the plain meaning of the words when Congress writes a statute. ‘‘Motor vehicle’’ means any self-propelled vehicle designed for transporting persons or property on a street or 

a highway. 

It would be my opinion, and I think based in well-settled law, 

that if you wanted to include trailers, you should have asked for 

an amendment to the code section as opposed to deciding on your 

own at the EPA, well, we see the truck can’t be used without a 

trailer to haul goods, therefore we are going to make a determination. That is our job. And respectfully, you are not elected by folks. 

That is our job to make that decision. 

And maybe it is the right decision, but it is something that we 

should have decided as opposed to the EPA just deciding to rewrite 

the words in the code section. And so I find it very difficult to rectify. And while you may have a very lengthy clarification on how 

you get to that point, the plain meaning of the words are motor vehicle means any self-propelled vehicle designed for transporting 

persons or property on a street or highway. A trailer doesn’t do 

anything. 

Furthermore, the manufacturers of those trailers are not in most 

cases, I don’t know of any but maybe there are some, they are not 

the truck manufacturers. So they are completely different entities 

across the board. And I am not talking about wholly owned subsidiaries or anything like that. They are completely different companies. And so a person can go out and buy their truck from one of 

the manufacturers and then they can go buy their trailer from any 

number of manufacturers. And so I am having a hard time figuring 

out how you all came to that conclusion. 

Furthermore, and for many of my colleagues who may not be 

aware of it, there is a SmartWay program where you all encourage 

53 

folks to do things on trailers and the SmartWay is currently voluntary, but appears from this new ruling that has come out that 

you all are making the SmartWay program mandatory. The problem that I have with that, Acting Secretary, is that helps on trucks 

that are going to be hauling across the highways, but it does not 

help in those situations where, which I am told about half of the 

trucks that are out there hauling things are in local traffic, sometimes congested areas, these additional costs and extra weight 

added to the truck by the SmartWay program which appears to 

now going to be basically mandatory, they don’t give you any fuel 

efficiency for those trucks that are hauling things in a local setting. 

Now if you are on the interstate highway they clearly give you 

benefits and the SmartWay program is beneficial to the truckers. 

What do you say to that? Why does it have to apply to every trailer 

that is sold out there when you have got a lot of folks who don’t 

want it to go that direction because it is not going to save them 

any fuel efficiency or give them any benefit? 

Ms. MCCABE. Well, Congressman, of course I am not sure where 

you have concluded that the rule made the SmartWay program 

mandatory because it certainly doesn’t. The rule sets expectations 

and standards for a large range of different kinds of trucks and it 

is very detailed and diverse based on the kinds of trucks. And we 

looked exactly at that question. Different standards are appropriate 

for vehicles that are on the highway operating at high speed, most 

of the time driving many, many miles, and other standards and 

other technologies are appropriate for vehicles that are used in 

urban settings and on smaller roads and stop and start and that 

sort of thing. 

So I think you will find, and I think the manufacturers find that 

we have been very responsive to exactly those sorts of things and 

have not made the SmartWay program mandatory. 

Mr. GRIFFITH. OK. That is not what I am hearing. My time is 

up. I would say though that if you are talking about the averaging 

features that that doesn’t kick in for years and a lot of the smaller 

manufacturers feel like they are going to have some real difficulties. 

With that Mr. Chairman, because time is up and notwithstanding lots of other questions, I yield back. 

Mr. BURGESS [presiding]. The gentleman yields back. The Chair 

thanks the gentleman for his questions and recognizes the gentleman from Texas, Mr. Flores, 5 minutes for questions, please. 

Mr. FLORES. Thank you, Mr. Chairman, and I appreciate the witnesses joining us today. We talk about One National Program, and 

we have had questions regarding the harmonization efforts that we 

have talked about. And as I have listened to the testimony and reviewed the briefing documents, it seems to me like there are four 

principal differences that keep us from absolute harmonization. 

So the first principal is with respect to the credit carryovers—5 

years for NHTSA, 11 years for the EPA. The second one is the carryover transfer cap which allows a manufacturer to transfer part 

of their credits from one fleet to another, for instance, cars to light 

trucks and vice versa. For NHTSA there is a cap of 2 miles per gallon per year. EPA has no such cap. 

54 

Then the third one has to do with off-cycle technologies, for instance start-stop technology, engine start-stop technology, louvers 

and things like that which are all pretty innovative. The EPA allows credits beginning in model year 2014, however, NHTSA is not 

going to start recognizing those until 2017. And then the fourth difference is that the California Air Resources Board is requiring that 

15 percent market penetration of zero-emissions vehicles by 2025, 

and there is no such standard for Federal. 

Do you all agree with those four principal impediments to harmonization, complete harmonization? I know you were writing real 

quickly. 

Ms. MCCABE. Yes. Let me address the last one that you mentioned. 

Mr. FLORES. And I need really quick answers. 

Ms. MCCABE. Yes. So there is no disharmonization there. California has independent authority and has had a ZEV program for 

many, many years because of their air quality problems in California. But vehicles sold in California can absolutely satisfy requirements under the EPA and the NHTSA program. 

Mr. FLORES. OK. So do both of you agree then the other three 

standards prevent Federal harmonization? Does that make sense? 

Mr. HEMMERSBAUGH. I would like to qualify that a little bit. 

Mr. FLORES. OK. 

Mr. HEMMERSBAUGH. The credit lives as of 2016 for both EPA 

and NHTSA are 5 years. 

Mr. FLORES. OK. 

Mr. HEMMERSBAUGH. It was only sort of a catch-up in the start 

that EPA had 10- and 11-year credits. Those will all expire by 

2020. 

Mr. FLORES. OK. But there is no statute that requires EPA to 

limit theirs to 5 years, right? 

Ms. MCCABE. No. That is a regulatory matter, but they are the 

same age now. 

Mr. FLORES. OK. OK, NHTSA’s are 5 years by statute. EPA has 

no statute, correct? OK, so to the extent that Congress wants to 

harmonize, Congress needs to come up with a statute on that issue. 

The second one has to do with the carryover transfer cap. 

NHTSA’s, by statute yours is two miles per gallon per year, right? 

Mr. HEMMERSBAUGH. Correct. 

Mr. FLORES. OK. And EPA no cap, correct? 

Ms. MCCABE. Across vehicles? 

Mr. FLORES. Correct. 

Ms. MCCABE. Correct. 

Mr. FLORES. Across fleets. 

Ms. MCCABE. Yes. 

Mr. FLORES. Or from one fleet to another. 

Ms. MCCABE. Right. That is right. 

Mr. FLORES. OK. So if we want to harmonize that that is going 

to require legislative action and an update to the statute. And then 

lastly, on the off-cycle technologies, I don’t gather that there is any 

statute that regulates that, that addresses this issue, right? 

Mr. HEMMERSBAUGH. My understanding of off-cycles is that they 

are things that the tests don’t measure, the treadmill tests that we 

test for don’t measure. 

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Mr. FLORES. Right. 

Mr. HEMMERSBAUGH. But do contribute to fuel economy and 

greenhouse gas reductions. So my understanding is there are, the 

statute, the NHTSA statute anyway is silent on that. 

Mr. FLORES. Right. 

Mr. HEMMERSBAUGH. And we had previously—— 

Mr. FLORES. Which means there is no statute. 

Mr. HEMMERSBAUGH. Yes. Well, but we had previously interpreted that as meaning we weren’t authorized to do it. We subsequently changed our interpretation such that now starting in 2017 

we will consider off-cycle credits. 

Mr. FLORES. All right. Ms. McCabe. 

Ms. MCCABE. Yes. So our statute requires a two-cycle test, but 

it does not preclude the use of off-cycle credits. 

Mr. FLORES. OK. So to entirely harmonize these we would need 

legislative action. All right. So I think we know what our job is now 

in terms of Congress coming up with a legislative fix for these 

three principal areas of harmonization. 

I have a quick question. You talked about E85 vehicles a minute 

ago. E85 fuel has fewer BTUs of energy per gallon and therefore 

the vehicles that are burning E85 get about a third lower miles per 

gallon. So what is the emissions impact? I know that some people 

claim ethanol has a lower emissions profile than vis-a-vis gasoline, 

but how much of that is offset by the fact that you are getting one 

third less miles per gallon? 

Ms. MCCABE. When it comes to greenhouse gases, the research 

that the agency has done to date on this program shows that there 

is a benefit. There is a carbon benefit in using E85. 

Mr. FLORES. So if you are burning 20 gallons of ethanol you have 

a lower greenhouse gas output than 12 1A1⁄2 gallons of gasoline. Is 

that what you are telling me? 

Ms. MCCABE. I believe that is right, Congressman. We will double—— 

Mr. FLORES. Can you supplementally answer that? 

Ms. MCCABE. Absolutely. 

Mr. FLORES. And some of the statistics, too. I want to see the 

test. 

Ms. MCCABE. Sure. Yes. 

Mr. FLORES. And I have used up too much of my time, so I am 

going to stop. Thank you. 

Mr. BURGESS. The gentleman yields back. The Chair thanks the 

gentleman. Seeing no further members wishing to ask questions of 

the first panel, I do want to thank our witnesses for being here 

today. This will conclude our first panel, and we will take a very, 

very brief recess to set up for the second panel. Thank you for 

being here today. 

[Recess.] 

Mr. BURGESS. We will call the committee back to order. We may 

still be waiting on one witness to join us, but in the interest of everyone’s time, why don’t we go ahead and restart. I do want to 

thank everyone for their patience in being here today. 

Moving into the second panel for today’s hearing, we will follow 

the same format for the first panel. Each witness will be given 5 

minutes for an opening statement followed by a round of questions 

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from members. For our second panel we have the following witnesses. You reversed order on me. 

We have Mr. Mitch Bainwol, the President and CEO of the Alliance of Automobile Manufacturers; Mr. Peter Welch, President of 

the National Automobile Dealers Association; Dr. John Graham, 

Dean of the School of Public and Environmental Affairs for Indiana 

University; Mr. John German, Senior Fellow, U.S. Co-Lead, the 

International Council on Clean Transportation; Dr. Mark Cooper, 

Director of Research from the Consumer Federation of America; 

and Mr. John Bozzella, President and CEO of the Global Automakers. 

We will go in reverse order. We will start with you, Mr. Bainwol, 

5 minutes for questions. 

STATEMENTS OF MITCH BAINWOL, PRESIDENT AND CEO, ALLIANCE OF AUTOMOBILE MANUFACTURERS; PETER K. 

WELCH, PRESIDENT, NATIONAL AUTOMOBILE DEALERS ASSOCIATION; JOHN D. GRAHAM, PH.D., DEAN, SCHOOL OF 

PUBLIC AND ENVIRONMENTAL AFFAIRS, INDIANA UNIVERSITY; JOHN GERMAN, SENIOR FELLOW AND PROGRAM DIRECTOR, INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION; MARK COOPER, PH.D., DIRECTOR OF RESEARCH, 

CONSUMER FEDERATION OF AMERICA; AND JOHN 

BOZZELLA, PRESIDENT AND CEO, ASSOCIATION OF GLOBAL 

AUTOMAKERS, INC. 

STATEMENT OF MITCH BAINWOL 

Mr. BAINWOL. Chairman Burgess, Ranking Member Schakowsky, 

and members of the committee, thank you for this opportunity to 

testify today on behalf of 12 iconic OEMs from the U.S., from Europe, from Japan, who together represent about 75 percent of the 

domestic market. Automakers are investing a staggering $100 billion a year—that is $100 billion with a B—to make today’s cars the 

cleanest, safest, the most fuel efficient ever. 

Let me start by stipulating that we support the goals of increased CAFE and GHG standards and believe they will be 

achieved and ultimately surpassed. The question isn’t yes or no, 

but rather how, when and at what cost to your constituents. OEMs 

strongly embrace two cornerstones of the 2012 joint rule. First, we 

supported the common sense idea of a midterm review to ensure 

that the underlying assumptions remain valid, and that is critical 

given the time horizon involved. 

Second, we embrace the administration’s commitment to One National Program to minimize compliance costs and thereby help your 

constituents buy new cars. Now this is the TAR, this double binder 

is double-sided. It is obviously very long and very dense. This is the 

portion of the TAR that addresses consumer acceptance. It is short 

and, as you can see, not very dense, and that is a concern for us. 

The most critical fact about CAFE that it is effectively a mandate 

on consumption. It doesn’t matter what we put into the showrooms, 

it matters what your constituents take out of those showrooms. 

Critically, CAFE was launched with an expectation of higher gas 

prices and it is being played out in a world of structural lower gas 

prices. That impacts consumer choice and is a game-changer. 

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This first graph that I think you can see on the screens illustrates the materiality of the gap. You can see the gap is consistent 

over time and very large, so that in 2025 in 2010 dollars the expectation was 3.87 and now the expectation is 2.76. This next graph 

shows what happens to the purchase of alternative powertrains 

when gas prices fall. It kind of looks like synchronized swimming. 

And you see in the third graph that the market share of alternative powertrains is therefore sliding down. The regulators in 

Washington and in California want consumers to optimize. They 

want them to optimize fuel efficiency and carbon reduction, but 

consumers are making decisions that reflect a range of other priorities that are right for their families. 

So this next slide shows where fuel efficiency ranks, and there 

you go. And it is kind of hard to see, but it is item number 26 in 

the strategic vision assessment of 2016. Consumers are not saying 

the fuel efficiency isn’t good or desirable, they like it. They are saying instead that they care about a range of attributes. And your 

constituents are not wrong. They are doing what is right for them, 

but they are not doing what planners want them to do. 

Now let’s turn to One National Program. The short story is that 

it doesn’t exist. There are now two separate consumption mandates, CAFE and ZEV. ZEVs run out of California and nine other 

States follow it. By 2025, the ZEV mandate effectively places a 

$356 tax on every car sold in America. This is important. It means 

California policy is raising the cost of every car your constituents 

buy in all of your districts. 

And the Federal program contrary to assurances is not harmonized. Complying with the more stringent EPA requirements 

does not equal compliance with NHTSA, thus counterproductively 

adding regulatory costs making cars less affordable and that especially hurts lower income Americans. It needs to be fixed sooner 

rather than later. 

To close, getting all this right really matters. If we jam standards 

that are inconsistent with consumer behavior we risk jeopardizing 

the health of this key industry leading to thousands of job losses, 

if not more, diminishing environmental gains and safety outcomes. 

We have to keep cars affordable to protect these social goals. 

Now I want to make one other point here since I have a little 

bit more time. The Center for Automotive Research released a 

study yesterday and it was significant in terms of it demonstrates 

that there is a risk to getting this equation wrong. As I understand 

it, the EPA and NHTSA analysis of the TAR analysis did not do 

a sensitivity analysis. 

What CAR did was they looked at nine different scenarios, three 

different gas prices, and three different costs estimates of the technology, and they ran the nine different scenarios. And they looked 

at what happens in terms of employment, sales, production, and it 

is kind of striking. 

Let me take a second and run through the range. Unit sales 

could rise by 410,000 or fall by as much as 3.7 million. Production 

could rise by 240,000 or fall by as much as 2.1 million units. Auto 

employment could rise by 16,000 or fall by 138,000, and with the 

multiplier in employment, employment could rise by 144,000 or fall 

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by over a million jobs. That is in Michigan, it is Ohio, it is Texas, 

it is California, it is Illinois. 

This is profoundly important because it demonstrates that if we 

get this equation wrong, the implications for the economy are truly 

profound. Thank you and I look forward to answering questions. 

[The prepared statement of Mr. Bainwol follows:] 

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Mr. BURGESS. The Chair thanks the gentleman. Mr. Peter Welch, 

you are recognized for 5 minutes for an opening statement, please. 

STATEMENT OF PETER K. WELCH 

Mr. WELCH. Chairman Burgess, Ranking Member Schakowsky, 

thanks for inviting me. I am Peter Welch—I am the other Peter 

Welch—the President of the National Auto Dealers Association. 

NADA represents more than 16,500 franchised new car and truck 

dealer members who sell new and used cars and trucks, arrange 

auto financing, perform routine repairs, warranty and recall work 

on millions of vehicles annually. Local dealerships collectively employ over 1.1 million Americans in good paying jobs and are located 

in every congressional district. 

In America motor vehicles are not luxury goods. Affordable transportation is critical to personal mobility and freedom, essential to 

economic empowerment and a key driver of national productivity. 

Cars and trucks open up employment and housing opportunities 

that many Americans would not otherwise enjoy. 

When it comes to decisions that affect the environment, local 

dealerships are providing their customers with unparalleled 

choices. In addition to incredibly efficient internal combustion engines, franchise dealers currently have on their lots over 75 different models of hybrid, plug-in electric and battery electric vehicles. Toyota dealers are even now selling fuel cell cars. 

Local dealerships consistently educate buyers on the value of 

these technologies and how to use these vehicles and how they can 

fit into their lifestyles. The number one priority at every new car 

dealership is to serve its customers by providing them with the 

choices they want and at prices they can afford. Every one of our 

customers deserves to be able to purchase a vehicle that is right 

for them. 

This means that during the midterm review careful thought 

needs to be given to keeping the cost of vehicles reasonable and to 

ensuring that people can still afford to buy a cleaner, greener, safer 

car or truck they really need or want. Washington should not make 

personal mobility so expensive that it is no longer available to the 

average American. 

Consumers finance more than 90 percent of all new vehicle purchases. When regulations drive up the price of vehicles, fewer of 

our customers will be able to qualify for a car loan. The average 

price of a new car is at an all-time high, $34,250, with an average 

monthly payment of $510. This is with historically low interest 

rates. Right now they are at like average 4.2 percent, but the terms 

keep getting longer and longer. They are stretched out to 68 

months now, on average. 

Since 2005, the percentage of personal income necessary to purchase a new vehicle has risen from 9.5 percent to 12.4 percent 

today. It is taking a bigger chunk out of the wallet. This already 

puts new vehicle purchases beyond the reach of millions of Americans. That is why affordability is everything. We need to ensure 

that people can buy the cars they want or need, and make it possible for average Americans to afford cleaner new cars and trucks. 

If moves here in Washington force our customers out of new cars 

because the technology needed to attain the 2022 to 2025 reguVerDate Mar 15 2010 12:08 Jan 11, 2017 Jkt 037690 PO 00000 Frm 00088 Fmt 6633 Sfmt 6633 F:\114THCONGRESS\114X171CAFEXGHGJKTREQ011017\114X171CAFEXGHGXWORKIN
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latory targets raise loan payments by $50 or $60 a month, many 

of our customers will be forced to drive less safe, less efficient, 

dirtier used cars, and the CAFE greenhouse gas regulations will 

become counterproductive. 

Let me be clear about one thing. America’s new car dealers are 

not on opposite sides of this debate. Dealers are in favor of national 

policies to reduce greenhouse gas emissions, increase fuel efficiency, and promote energy independence. What we are standing 

for is affordability and to make sure our customers, your constituents, are put first. 

An approach that enables more customers to purchase affordable 

new cars and trucks will produce a winning scenario for everyone— 

dealers, manufacturers and the driving public. If we work together 

we have a perfect opportunity in the midterm assessment to ensure 

that our customers have access to clean, efficient new vehicles at 

affordable prices. Thank you. 

[The prepared statement of Mr. Welch follows:] 

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Mr. BURGESS. The Chair thanks the gentleman. The Chair recognizes Dr. Graham, 5 minutes to summarize your opening statement, please. 

STATEMENT OF JOHN D. GRAHAM 

Dr. GRAHAM. Thank you, Mr. Chairman. The theme of my testimony is that a new issue should be added to the midterm review, 

the need to coordinate the California Zero Emission Vehicle program with the Federal regulations. Specifically, I recommend that 

the Congress commission an independent, cost-benefit study of the 

California regulation and compare it to the Federal regulations and 

look for harmonization options. 

My recommendation is based on three concerns. One, from a 

technology perspective, regulators in Washington, DC, and in Sacramento, California, are pushing the automakers in conflicting directions. The Federal regulators expect automakers to accelerate 

their investments in greener versions of the gasoline internal combustion engine. 

The regulators in California expect automakers in the same time 

frame to replace the gasoline engine with plug-in electric vehicles 

or fuel cell vehicles. Please note that when I refer to California, I 

include the nine other States mostly in the Northeast that have 

joined the California Zero Emission Program. In total, these 10 

States account for about 30 percent of all new vehicle sales in the 

country. 

My second concern is that it has proven much more difficult to 

sell plug-in electric vehicles than many of us thought in 2002 when 

this regulation was developed. California expects automakers to 

achieve an 18 percent penetration rate of plug-in electric vehicles 

by 2025, updated from a previous estimate of 15 percent. But the 

sales of such vehicles actually declined in 2015 compared to 2014. 

The sales raise now about 3 percent in California, and less than 

one percent in much of the country. 

In an excellent 2015 report, the National Research Council documented the numerous barriers to commercialization of plug-in electric vehicles, but I would like to highlight three of them that are 

new today compared to when California adopted the regulation in 

2012. First, gas prices as everybody has noted are much lower. Instead of $4 per gallon and going higher, they are projected to be 

under $3 a gallon all the way through 2025. 

Second of all, the Federal regulations are discouraging a consumer from purchasing a plug-in electric vehicle and that is because if there are plenty of gasoline vehicles on the market getting 

40 to 60 miles per gallon, how can a dealer persuade a consumer 

to pay extra for a plug-in electric vehicle? So the Federal regulations are actually undercutting the California program. 

Third, the incentives offered by the Government are inadequate 

to spur commercialization of plug-in electric vehicles. The generous 

$7,500 Federal income tax credit is forecasted to expire before 2025 

at least for several manufacturers. Some States such as Colorado 

and Connecticut have recently added incentives to purchase plugin electric vehicles, but other States—Georgia, Illinois, and California—have scaled back or eliminated entirely their cash incentives for electric vehicles. 

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In fact, some States have added new taxes on electric vehicles because owners do not pay any gasoline tax to fund road repairs. 

Why should a consumer pay extra for an electric vehicle if the Government is going to turn around and add an extra tax on electric 

vehicles? This is not a single national program that is well coordinated, let me assure you of that. 

My faculty colleagues at Indiana University have recently issued 

a report on the many constructive policies that can be enacted to 

spur commercialization of plug-in electric vehicles, but if governments do not get serious about helping dealers sell electric vehicles, 

the California regulation which covers almost a third of the country 

is going to prove to be a very onerous regulation. 

I conclude with two questions that I pose to my students when 

we discuss this issue in class. One, if California regulators are 

right, why not eliminate the Federal regulations and convert the 

California Zero Emission Vehicle program into a national regulation; or two, if the Federal regulators are right, why not preempt 

the California regulations and let the marketplace determine what 

the most cost effective technologies are to comply with the regulation? 

In conclusion, I recommend during the midterm review that Congress commission an independent, cost-benefit study of the California regulations compared to the Federal regulations, and address this as soon as possible. Thank you very much for your time. 

[The prepared statement of Dr. Graham follows:] 

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Mr. BURGESS. The Chair thanks the gentleman. The Chair recognizes Mr. German, 5 minutes to summarize your opening statement, please. 

STATEMENT OF JOHN GERMAN 

Mr. GERMAN. Mr. Chairman, good morning. My name is John 

German. I am a senior fellow at the International Council on Clean 

Transportation with primary responsibility for technology, innovation and U.S. policy development. Thank you for the opportunity to 

appear before the committee, present our views on vehicles and 

technology and how they relate to the midterm review of the CAFE 

and greenhouse gas standards. 

I have been actively involved with vehicle technology and efficiency for 40 years, half of that time working for auto manufacturers Chrysler and Honda, the remainder with EPA and ICCT. Over 

the course of my career I have seen initial cost estimates for complying with emissions and efficiency requirements consistently 

overstated. Not some of the time or even most of the time, but all 

of the time. 

The reason, technology innovation that is left out of the forecast, 

in part because the direction, pace and cost of innovation is hard 

to predict, and in part because there is so much at stake that everyone involved has an incentive to focus on what is already 

known. In my experience, the single most important factor in the 

accuracy of cost-benefit projections is the use of the latest technology data. Using older data or implicitly assuming no further innovation will occur guarantees that the cost in meeting the standard will be overstated. This is even more true now because the pace 

of technology development is accelerating, driven by rapid advances 

in computer-aided design, computer simulations and onboard computer controls. 

In collaboration with engineers and analysts from major automotive suppliers, ICCT is producing a series of papers assessing 

technology development since the analyses for the 2017 to 2025 

standards were conducted 4 to 5 years ago. These assessments 

cover new and improved designs, cost of production, and consumer 

acceptance. 

The improvement in vehicle efficiency technology over the last 5 

years has been astonishing. Significant technologies that were not 

included in the 2025 rule, but which automakers already have in 

production or have production plans for include naturally aspirated 

engines with higher efficiency Atkinson cycle and high compression 

ratios, dynamic cylinder deactivation that can deactivate each cylinder every other stroke, higher efficiency Miller cycle for turbocharged engines, variable compression ratio, electric compressors to 

assist turbo-charged engines or eBoost, less expensive 48-volt hybrid systems, continuously variable transmission improvements, 

and major advancements in lightweight materials and part optimization. These developments will make it easier and cheaper to meet 

the standards that was projected in the rulemaking. 

The agencies extensively updated their technology analyses for 

the draft Technical Assessment Report released this past July. 

They also expanded their use of rigorous peer-reviewed teardown 

cost studies which is the method specifically endorsed in the 2015 

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National Academies of Science report. Still, despite all the updates 

the agencies did not include all of the technology improvements 

that are already happening in the market. Thus, the cost estimates 

in the TAR while much improved over the rulemaking are still 

somewhat overstated. 

The Novation Analytics study prepared for the vehicle manufacturers associations is an example of a study that implicitly assumes 

there will be no more innovation. While this is an excellent study 

of 2014 technology, evaluated only technologies included in the 

rulemaking 5 years ago, and it also assumed that the average vehicles in 2025 would be similar to the best vehicles in production in 

2014. 

The older technologies that were considered by Novation ignores 

recent innovations and artificially restricts the improvements available from conventional technology, forcing additional hybrids and 

plug-in vehicles to make up the shortfall. Simply put, ICCT’s analysis of advanced conditional technologies shows that automakers 

will not need to rely on hybrids and plug-ins to meet the 2025 

standards. Moreover, the fuel savings from these conventional technologies will produce a net monthly gain for most consumers in the 

low gas price scenarios. 

And they come with other benefits that consumers value. Turbocharged engines deliver more torque and better acceleration at low 

engine speeds, more transmission gears improve launch and are 

quieter on the highway, weight reduction improves acceleration, 

ride, handling, braking, and payload and tow capacity. This isn’t 

merely theoretical. Ford’s F–150 buyers aren’t being forced to take 

the V–6 EcoBoost engine over the V–8. Almost half of F–150 buyers 

willingly pay an extra $600 for it. 

To sum up, the agencies’ technology forecast for the 2025 rule 

have proved to be careful, prudent, and like all technology forecasts 

I have seen over the last 40 years a bit too conservative. The TAR 

though improved will most likely turn out the same. Thank you 

again for inviting me to testify here. I will be happy to answer any 

questions. 

[The prepared statement of Mr. German follows:] 

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Mr. BURGESS. The Chair thanks the gentleman for his testimony. 

Dr. Cooper, you are recognized for 5 minutes. 

STATEMENT OF MARK COOPER 

Dr. COOPER. Thank you, Mr. Chairman and members of the committee. The Consumer Federation of America has participated in 

hundreds of efficiency rulemakings and regulatory negotiations and 

legislative hearings involving large and small energy devices from 

automobiles to heavy trucks to computers to light bulbs. We participate in every round of comments on the light-duty standards 

since the passage of the Energy Independence and Security Act. 

Our technical expertise is not in the design and construction of 

products, but in the design and construction of minimum efficiency 

standards. We believe that learning how to build a good standard 

is as important to success as knowing how to build a good product. 

We do look at the technological assessments, economic analyses, 

and examine market behavior to make sure we understand what 

kind of program will be in the consumer’s interest. 

I will briefly discuss seven points that I outline in my testimony 

and will do so before the agency. Under the base case, consumers 

are the big winners with total benefits in our view over five times 

the cost. Three-fifths of those benefits are direct consumer pocketbook benefits because the total cost of driving goes down. 

Second, low-income consumers benefit more than the average 

consumer because operating costs of vehicles are much more important in their total cost of driving than ownership cost. They buy 

used vehicles. And those used vehicles, it turns out, get a disproportionate share of the benefits of fuel savings because they are 

not fully captured in the resale price. They get the benefit of the 

second half of the life of the vehicle. 

And third, let’s be clear. Low-income people suffer the most from 

environmental and pollution harm that results when we drive dirty 

cars. They suffer the most. They benefit the most from the indirect 

effects. 

Now the National Program is still strong in spite of dramatic reduction in the cost of gasoline for a simple reason, because the minimum efficiency standards were well designed, well written by Congress, a law signed by George Bush, I remind you, and implemented effectively by the Obama administration. 

We call these command but not control regulations. I am going 

to patent that—command but not control. Because what these regulations do is they address many market imperfections, but they 

harness the power of capitalism and the market to deliver the benefits at the lowest possible cost. They give producers the freedom 

to meet the standard in the best way possible to meet their interests. And just look at the array of options. There are hundreds of 

options available and consumers get the vehicles they want. 

Automakers have done a magnificent job in using their freedoms. 

They are overcomplying, the costs are coming down, innovation is 

raging, so the economics of the capitalist automakers are meeting 

these standards. Of course their political arms come to Capitol Hill 

and complain. But that is what they always do. They overestimate 

costs by a factor of three or four. It is not $50 a month, it is closer 

to 15 and that makes a big difference. 

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If you look at the agencies, they have listened, identifying a 

dozen things that people said they should do and they have done 

it. They considered scenarios, dozens of scenarios to look at the impact, and they have concluded that this is a positive program that 

is working tremendously. 

Finally, you hear a lot about differences between them. Let’s be 

clear, they agree this is the right direction. They are having a 

healthy debate about cost, but their debate is at a half or a quarter 

of what the industry says, and history shows the industry always 

overestimates the cost. 

Let me make a final point on the ZEV program which is not 

greatly implicated here. The chairman bubbled about the fact that 

he drives a strong hybrid. Hats off to you, sir. The single largest 

reason that you had that vehicle available was the California Low 

Emission Vehicle program. It was California that told the automakers you must find these vehicles. And they stood their ground 

and we now have hybrids because California came first. It is a perfect example of American federalism at its best. 

So before you mess with the leadership role that the clean car 

States—and it is the Northeast and the West. There were 30 in the 

LEV program, there are eight in the ZEV program. They are the 

fifth-largest auto market in the world. Before you squash that leadership and that creativity, think hard about the benefits of having 

a leader and others to follow. Thank you. 

[The prepared statement of Dr. Cooper follows:] 

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Mr. BURGESS. The Chair thanks the gentleman for his testimony. 

Mr. Bozzella, you are recognized for 5 minutes, please. 

STATEMENT OF JOHN BOZZELLA 

Mr. BOZZELLA. Thank you, Chairman Burgess, Ranking Member 

Schakowsky. Thanks for the opportunity to testify today. I am here 

on behalf of the Association of Global Automakers. I want to thank 

you for holding this hearing today and for the opportunity to be 

here as a representative of international automakers that design, 

build, and sell cars and light trucks in the United States. 

In 2009 and again in 2012, the auto industry, Federal Government, and the State of California committed to a unified program 

for fuel economy and greenhouse gas emissions. These goals are 

very important and we support them. But since this program set 

standards for vehicles more than a decade into the future, regulators are now beginning a midterm evaluation to assess the assumptions made in 2012 and to reexamine the path toward 2025. 

To get to the point, the question on everyone’s minds at this 

hearing is this. Are the standards for 2022 to 2025 that were set 

almost 5 years ago too high, too low, or just right? The reality, the 

really only truthful, albeit unsatisfying, answer to that question is 

it depends. It depends on a number of factors. It depends on what 

customers want, and by want I am not talking about what is expressed in public opinion surveys. I am talking about what customers want as expressed by their actual purchases by the votes 

they cast with their wallets. 

Do they want electric vehicles, minivans, sedans, pickups, and 

how much are they willing or able to pay for what they want? It 

depends on price of fuel, because the price of gasoline has a direct 

impact on customer behavior. Gas has been cheap for the last few 

years and customers have reacted by buying trucks and SUVs 

which now account for more than half of U.S. vehicle sales. They 

have reacted by not buying hybrids or electric vehicles, sales of 

which compared to conventional vehicles have dropped despite the 

fact that customers have more and better hybrid and electric vehicles to choose from than ever before. 

And it depends on a regulatory program that recognizes this reality that we have to find a way to reconcile what the customer 

wants with our public policy goals. That is because when we are 

talking about a number, whether it is 54.5, 50.8, the fuel economy 

numbers that we achieve aren’t solely determined by manufacturers or regulators or legislators. They are ultimately determined by 

the customer. 

In my written testimony I have described in greater detail our 

initial analysis of the Technical Assessment Report, and I don’t 

want to use this time to go over that ground. Instead, I would like 

to emphasize a few points. First, if every American went out today 

and purchased a hybrid or electric vehicle and nothing but hybrids 

and electric vehicles, meeting or beating a target of 54.5 miles per 

gallon would be no big deal. But it is not that simple. 

Second, achieving our fuel economy and greenhouse gas emissions targets is not just about engineering and ingenuity, it is also 

about economics and politics. There are more highly efficient vehicles on the market today than ever, but we have two or three, actuVerDate Mar 15 2010 12:08 Jan 11, 2017 Jkt 037690 PO 00000 Frm 00162 Fmt 6633 Sfmt 6633 F:\114THCONGRESS\114X171CAFEXGHGJKTREQ011017\114X171CAFEXGHGXWORKIN
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ally, different regulatory schemes that manufacturers have to comply with. That creates inefficiencies and inconsistencies that needlessly waste resources and drive us to high cost and high price solutions. 

And third, we ought to be doing everything we can to encourage 

support and reward innovation. As we look to 2025 and beyond, we 

need to expand our options and choices. We are lagging woefully 

in building the infrastructure to support electric vehicles. Efforts to 

deploy connected vehicles that will be able to reduce congestion and 

save thousands of lives annually are being delayed by a fight over 

the spectrum dedicated to safety. 

We need to examine new models of mobility that could help us 

achieve our policy goals. Our concern at Global Automakers is that 

if we get locked into a discussion about what the numbers should 

be, a discussion that is, to be kind, a bit stale, we may miss opportunities that provide more effective and faster paths to our goals. 

For our part, we are ready and eager to have these discussions. 

We need to work together to get this right. Thank you again for 

the opportunity to testify. I welcome your questions. 

[The prepared statement of Mr. Bozzella follows:] 

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Mr. BURGESS. The Chair thanks the gentleman. And that concludes the testimony, so we will move on to the question and answer portion of the hearing. I recognize myself for 5 minutes for 

questions. 

And Mr. Bainwol and Mr. Bozzella, perhaps I could start with 

you. We have heard a lot this morning on this panel and it has 

been a pretty informative, has been a very informative panel. But 

as you hear the testimony today and the testimony from our previous panel, what are some of the biggest errors in the assumptions 

that both the Environmental Protection Agency and National Highway Traffic Safety Administration make in doing their technical assessment, the draft Technical Assessment Review? 

We will start with you, Mr. Bainwol, and then we will go back 

to Mr. Bozzella. 

Mr. BAINWOL. Sure. I will be submitting our TAR response to the 

agency. I think it is due next Monday, and that will be a more full 

response. There are several concerns we have got. One is that there 

was not a sensitivity analysis done. That is one. Two is that in contrast to what Mr. German had to say, we believe that the technology yields are not going to be what EPA and NHTSA suggest 

they will be, and we think they will be at higher cost. This, at the 

end of the day is an intellectual debate and only time will prove 

the answer, but I will give you a few examples. 

The TAR assumes that minivans in 2025 will be as aerodynamic 

as 2014 Ferraris. As a father of three, I wish I had one of those 

vans when I was a few years ago. The TAR assumes that the adoption of Atkinson engines will be, I think, at 43 percent in 2025 and 

we don’t think that is practical. The TAR assumes that the lowhanging fruit which allowed us to overcomply, and much of the 

panel discussion at the beginning was how we are overcomplying 

and in fact we are, was on the basis of the low-hanging fruit, and 

we don’t believe that it is a given that that low-hanging fruit will 

regenerate. 

So there are a lot of challenges here. And as I closed with my 

testimony with, the downside risk of being wrong is enormous. And 

so we have got make sure we do this right. We have got to work 

together, but the implications are definitely profound. 

Mr. BURGESS. Thank you. 

Mr. Bozzella. 

Mr. BOZZELLA. Yes, Mr. Chairman. I agree with much of what 

Mitch said. I want to step back a second. I think the agencies 

worked very hard, and you heard about different models and different baselines, and it is a very complex analysis. And so, look, we 

appreciate the attention they are giving to it. We are working 

through the analysis. We also will file comments Monday, but we 

are going to keep that analysis going. We think that there is more 

work to be done and we appreciate a fact-based and scientific analysis. We have to make sure. This is the point. This is their reality 

check to make sure we get it right. 

I think there are a couple of areas where we really need to understand the regulators’ assumptions. I think the technologies required are an important set of assumptions to probe. There is not 

a single conventional fueled vehicle in the market today that meets 

177 

the 2025 standards in any footprint, not a single one. So we have 

a lot of work to do. 

I am bullish on the industry’s ingenuity. I have bet my family’s 

security on it for 15 years or more, so I believe in it. But we have 

a task. Not a single gasoline, not a single conventional vehicle 

meets those standards today. Strong hybrids do, electric vehicles 

do, so there is a question. Is it true that we can meet this mostly 

with conventional powertrains? Obviously we are innovating in 

both places. Lots of innovation with regard to conventional 

powertrains and lots of innovations with regard to advanced technologies. 

But that is a really important question for the customer, right, 

because these technologies may require differences in driver behavior. And so this is, the customer needs to be at the center of this 

discussion. 

Mr. BURGESS. Thank you. And just a personal observation, I 

mean, I do drive a strong hybrid. I got on the waiting list to buy 

that vehicle in 2003, long before the 2007 energy bill passed. It 

took awhile to get it, so I didn’t actually take delivery until 2004. 

But my principal reason for buying was because I thought the 

technology was cool. I had heard about it in a Science Committee 

hearing in 2003, and I thought what a great idea. So when I put 

my brake on, it charges the battery that then I can then use to 

start the car, and when I stop in the drive-in window in Jack in 

the Box, my engine is not running while the clerk fills the order. 

So I respect very much what you said about the consumer. And 

my comments at the beginning, we ignore the consumer at our own 

peril both as a legislative body, sort of the regulators that were on 

the panel before, and you of course as the manufacturers and people who are supplying consumers what they want to buy. It is a 

powerful force, and we must not ignore it. 

I am going to yield to the gentlelady from Illinois, 5 minutes for 

questions, please. 

Ms. SCHAKOWSKY. Thank you, Mr. Chairman. 

Dr. Graham, a quick question. Isn’t it true in your supplemental 

testimony that you indicated that your program is funded by the 

automotive industry? 

Dr. GRAHAM. Yes. We have a grant from the Alliance of Automakers. 

Ms. SCHAKOWSKY. Thank you. 

I wanted to ask Mr. German a question: Can you address how 

allowing for too many credits could undermine the goals of the 

CAFE standards? Put on your microphone, please. 

Mr. GERMAN. Yes. Let me specifically talk about off-cycle credits 

just to illustrate, and these are technologies that improve efficiency 

in the real world that do not appear on the official test cycles. And 

in theory it is a great idea and it is a concept that ICCT supports. 

But the devil is in how you do the calculations and how you 

award the credits. It is very easy to double count the credits so that 

some of the credits that occur on the cycle you also award them offcycle. It is also very difficult to assess the amount of off-cycle credits that actually occur in the real world. 

And the reason for this is that we don’t have any real-world data 

on how consumers drive. We have it for isolated areas. EPA has 

178 

some data from Kansas City. But if you want to give credits, you 

want to do this over the Nation, year-round basis, data doesn’t 

exist. We are recommending that the agency cooperate with DOT 

and the manufacturers to do a program specifically to gather this 

data. This would also allow the off-cycle credits to be standardized. 

The manufacturers have petitioned for the off-cycle credits to be 

streamlined. This would be a great way to do it is get a national 

data set everybody can use and have the same credits for all. 

Ms. SCHAKOWSKY. Thank you. 

I wanted to move now to Mr. Cooper. Several witnesses in this 

second panel have discussed the impact of differing payback methods, payback periods rather, for fuel economy on consumers’ choice 

of vehicle models and options. Regardless of the length of this period, consumers are indeed getting a payback; isn’t that correct? 

Dr. COOPER. Sorry. I usually don’t need a mike, I speak so loudly. Consumers actually say they accept the 5-year payback given 

this debate about how long the payback period should be. But the 

fundamental point is that EPA and NHTSA have both concluded 

that the payback is less than half the life of the asset, and we like 

to use that as the absolute bottom line. If there is that much savings, it means that people are likely to make money. 

Second of all, you have heard that most consumers would love to 

walk into the auto dealership and get paid back in 3 years. That 

is not the world they live in. Ninety percent of them you heard finance them and so it is a cash flow world for the average consumer. And if you look at the cash flow impact even at the EPA 

and NHTSA standards, you will discover that under most assumptions, 75 percent of those assumptions, they are cash flow positive 

in the first year. That is because they lower the total cost of driving, and that is what these folks keep ignoring. They ignore it and 

they make it go away by assuming costs that are through the roof, 

two to five times as much as EPA and NHTSA. 

So now the difference comes down to do you believe their costs 

or do you believe the agencies’ and history which has always shown 

that the capitalists do a good job? They are not dumb. They don’t 

stand still. They put the least-cost things in the vehicles. So these 

are cash flow positive in the first year. They have a payback period 

of less than half the life of the vehicle, and that means they are 

good for consumers. It turns out they are especially good for lowincome consumers who are driven by operating costs. 

Ms. SCHAKOWSKY. I think that is a really important point. Vehicle costs are rising due to many changes in new vehicles, not just 

fuel economy—enhanced performance, greater safety features, 

greater comfort, and other amenities. While all of these things have 

costs which can be estimated, only one has the benefit that is easily converted to a dollar value and directly results in monetary benefits to the person who bought the vehicle, and that is fuel economy. 

A consumer may be willing to pay for any or all of the other features, but none of them result in a direct payback to the consumer. 

Have the agencies received comments to indicate public support for 

strengthening the CAFE and greenhouse gas standards in accordance with these rules? 

179 

Dr. COOPER. We have been surveying on these, the question of 

standards for 12 years. Prices are as high as 4.50 and as low as 

$2. Eighty percent of the respondents to our survey support standards. They understand that it is good for them. They hate the volatility. They hate high prices. But they also hate not knowing 

whether it is going to be $4 or $2. So we find consistent, strong 

support for the standards program. 

Ms. SCHAKOWSKY. Thank you. I yield back. 

Mr. OLSON [presiding]. The gentlelady yields back. The Chair 

calls himself for 5 minutes for questioning. First of all, a warm welcome to all six witnesses and a special warm welcome to a fellow 

Rice University alumni, Mr. Bainwol. Owls always support Owls. 

It is good to have all of you here this afternoon. 

My first question is for you, Mr. Welch. Your opening statement 

expresses concerns that these rules will force dealers into a position where they won’t be able to provide the cars and trucks that 

people want to buy at the prices they can afford. For example, a 

dealer back home, he has electric cars on his lot. They take up 

spaces, parking spaces on his lot. They sell for days, maybe weeks. 

Meanwhile, he is exploding with sales of pickup trucks and SUVs, 

but these sales are curtailed because he doesn’t have the space on 

his lot because of these electric vehicles. 

So my question is, Do you think that is the exception or the rule 

going forward, Mr. Welch? 

Mr. WELCH. I actually think it is the exception. There is a big 

misconception. Dealers actually buy the cars from the manufacturers. They pay for them on the railhead, and they put them in their 

inventory. Dealers are merchants. They stock, sell, and service 

what their consuming public want to buy, own, and drive. So it is 

a big misconception that we are going to buy a vehicle and put it 

in our inventory that isn’t going to sell, because we are paying 

flooring on it on a monthly basis. 

So the dealers control, by and large, and they are required under 

their franchise agreements to stock representative vehicles for 

demonstration purposes and whatnot. But I think what a lot of 

people miss is that the buying process has changed so dramatically 

in the past several years. 

You know, there is a purchase funnel and, you know, we seem 

to get sort of a bad rap that we are not pushing electric cars and 

so on, when the fact of the matter is, is everybody is shopping on 

the Internet these days. The average car shopper spends 13 1A1⁄4

hours researching cars. That is for new cars. It is over 15 hours 

for used cars. A recent Autotrader study indicated that 72 percent 

of customers that come into the dealership have already decided 

which vehicle they are going to buy regardless of how good of salespeople we, quite frankly, retain on our lot. 

So to get back to your question, yes, we will have as many electric vehicles on stock as we anticipate. A dealer typically keeps a 

60-day supply, is the general rule of the thumb, and whatever their 

60-day supply of pickup trucks is going to be different than their 

60-day supply of electric vehicles. Other than California, as it was 

pointed out here, the actual number of pure electric battery vehicles that we sell this year is only 0.4 percent on a national basis. 

180 

Mr. OLSON. The next question is for Mr. Bozzella and Mr. 

Bainwol. The industry was promised explicitly a uniform and harmonized set of national standards affecting fuel economy and 

greenhouse gas emissions, not a patchwork of conflicting requirements. Which one did you get? 

Mr. BOZZELLA. Well, certainly it was an aspirational goal, and we 

have not achieved that aspiration yet. 

Mr. OLSON. So the patchwork. Mr. Bainwol. 

Mr. BAINWOL. I will confirm that, and if I can take one second 

to—— 

Mr. OLSON. You bet. 

Mr. BAINWOL [continuing]. Augment something Mr. Cooper said. 

We too found that 80 percent of the public supports the standards. 

The next question, though, is the one that I think is the essential 

crux of the challenge. We then asked how much would you pay in 

order to reach those standards? Fifty-three percent of the public 

said under a thousand dollars; 12 percent of the public said over 

$2,500. The delta is that or more. That is the fundamental math 

problem. 

There may be more value for the consumer, but that is not their 

perception. And at the end of the day, it is the customer who is 

making the choice, and this shows that the economics are really 

challenging for them. 

Mr. OLSON. Yes. So a follow-up to what are some of the differences between EPA credit trading programs and NHTSA’s program, and why this difference is a problem. Mr. Bozzella. Mr. 

Bainwol. 

Mr. BAINWOL. There are differences in when they kick in, there 

is differences when they expire, and there are differences in how 

they get traded. And it is a problem, because at the end of the day 

when you comply with two different programs, and in this case you 

are complying with a more stringent EPA program, you still have 

additional costs to comply with a program that is not met. And that 

produces costs that get built into the vehicle and makes it harder 

for consumers to buy the product. 

Mr. BOZZELLA. Yes. And the only thing I would add to that, Congressman Olson, is that the point of these credits is to reward innovation and to encourage overcompliance. And so to the extent that 

we take our eyes off the ball and instead of having one streamlined 

set of rules for good competition and good racing and great results 

for the customer, we have to spend more time trying to understand 

how to move things around to comply. And so I think it has an impact on innovation. 

Mr. OLSON. One final question. I am over time, but who can best 

fix this problem, either the midterm evaluation or Congress? And 

who is the best to fix this problem, because it is there it sounds 

like. 

Mr. BAINWOL. I think it takes all parties. Congress will have to 

fix the harmonization piece, then everybody working together will 

have to make sure that the stringency is consistent with consumer 

behavior. 

Mr. BOZZELLA. I would agree with that. 

Dr. COOPER. Is that an open question for everybody? 

Mr. OLSON. Yes, Dr. Cooper. 

181 

Dr. COOPER. Well, look, you know, Congress could do it. Although 

I worked on EISA and so forth, the question is who is going to get 

it done faster and better? And it is not entirely clear that Congress 

is the best entity. If you look back at the acid rain program, we 

would have been better off if the agency had been allowed to raise 

the standard because the industries did such a good job of hitting 

the target by Congress. So it is debatable who will get it done faster and who will get it done better. And it is perfectly all right for 

everybody to talk about it, but EPA and NHTSA under the current 

law are going to have to do something in the time frame of the 

midterm review. Congress might. 

Mr. OLSON. So industry first, Congress second is the preferred 

route. 

Dr. COOPER. I said let’s have a good debate, but remember, EPA 

and NHTSA have to do something. And if you can produce a better 

solution here in that time frame then you will, and EPA can’t stop 

you from doing that. 

Mr. OLSON. You bet. 

Dr. COOPER. And so then that is fine. It is a good debate. But 

they have to do something because they have to write a new rule 

for the next round under the law. 

Mr. OLSON. Thank you, Dr. Cooper, and I am out of time. I yield 

to the gentleman from New York, Mr. Tonko, for 5 minutes. 

Mr. TONKO. Thank you, Mr. Chair, and gentlemen, welcome. So 

Mr. Bozzella and Mr. Bainwol, what is the lead time for on designing your vehicles, and for instance when will plans be finalized for 

model year 2025? 

Mr. BOZZELLA. The lead time for vehicles is years, right. So, you 

know, this is why this discussion is really important, why we have 

to make sure that the assumptions built into the Technical Assessment Report about advanced technologies are accurate, because we 

are looking at technologies now, certainly in the case of electrification that do exist, but in the cases of internal combustion engines 

that don’t necessarily exist in the marketplace yet. So we have a 

lot of work ahead of us. 

Mr. TONKO. Mr. Bainwol. 

Mr. BAINWOL. Somewhere between 3 and 7 depending on car and 

truck and what is going on in life, but it is a long product cycle. 

Mr. TONKO. Is there a shorter period for the time for a car? 

Mr. BAINWOL. I believe it is shorter for cars. 

Mr. TONKO. OK. And Mr. German, you mentioned a number of 

innovations being developed and deployed. In your opinion, what 

are the biggest technology advancements that have allowed manufacturers to exceed targets thus far? 

Mr. GERMAN. The study we focused and the technologies I mentioned were actually technologies that are just starting to hit the 

market now. And so they are going to provide additional benefits 

beyond those that were forecasted in the rulemaking 5 years ago. 

As far as what is in the market now, certainly the biggest technology has been Mazda’s SKYACTIV engine which is 10 to 15 percent more efficient than naturally aspirated engines were previously. And so Mr. Bainwol referred to the 43 percent penetration 

for Atkinson cycle engines in the TAR, it was zero in the rulemaking because they didn’t think naturally aspirated engines could 

182 

compete. It has completely changed the whole way that EPA and 

NHTSA are viewing technology. 

And I will also point out that it shows that there is a lot of different ways to comply, so manufacturers will go naturally aspirated, some will go turbo-charged, some will choose other routes. 

Dr. COOPER. Can I make a point here about this 43 percent? Because I believe, I was very impressed to notice that NHTSA only 

has it at 18 and they still comply. And that is exactly the point. 

Now I need to check that. But, so EPA at 43, NHTSA 18, and 

under both you comply. That is the flexibility of the act. Subject to 

check I want to put that in the record. 

Mr. TONKO. OK. Thank you for placing that in the record. Now 

back to Mr. German. That efficiency effort, the technology gains 

have been moving at a rather robust pace. Can we expect, do you 

expect that that pace will continue? 

Mr. GERMAN. Yes. I don’t think there is any question about it, 

and it is because computers are actually the revolutionary technology. Computer simulations, computer-aided design is allowing 

things to occur in the development of all technologies that was 

never possible before. And it is particularly important for lightweight materials, because the simulations are getting to the point 

where the manufacturer can simultaneously optimize the shape, 

the size and the material of every part simultaneously. It has never 

been possible before. 

Mr. TONKO. And do you believe that these CAFE goals can be 

met with improvements primarily to the conventional internal combustion engine, or will electric vehicles and hybrids for instance 

need to become a much bigger part of our fleet mix? 

Mr. GERMAN. Well, one of the new trends that is happening is 

lower cost 48-volt hybrid systems. This stays below the 60-volt lethal threshold which has some additional cost savings, and everything I am seeing from a lot of suppliers says that you can get over 

half the benefits of a full hybrid at only about a third the cost. 

So I do include 48-volt hybrids into conventional technology, but 

as long as we are willing to stipulate that some of these 48 volts 

are happening, then yes, with all the other technologies that are 

coming that are hitting production now that were not anticipated 

that is all that is going to be needed for the large majority of manufacturers to comply. 

Mr. TONKO. And these technologies that you mentioned, will they 

be available for the manufacturers for their final design time 

frame? 

Mr. GERMAN. Yes. I mean all of them I mentioned are in production now. Miller cycle just hit production, e-Boost just hit production. Mazda’s engine has been in production for 2 years now. And 

the other technologies I have talked about will, at least one manufacturer has announced production intent already. So yes, they will 

be readily available to all manufacturers by 2025. 

Mr. TONKO. I thank you. With that Mr. Chair, I yield back. 

Mr. OLSON. The gentleman’s time is expired. The Chair calls on 

the gentlelady from Tennessee, Mrs. Blackburn, for 5 minutes. 

Mrs. BLACKBURN. Thank you, Mr. Chairman, and thank you all 

for your patience with our hearing today. I know you are fully 

aware we have got another hearing going on and it is over in the 

183 

Rayburn Building, so we are having to jump back and forth while 

our hearing room, our main hearing room is remodeled and updated. But Chairman Upton says, don’t worry, the room will still 

be Michigan green. That that part of the decor is going to change. 

I had appreciated the first panel and the opportunity to talk with 

them just a little bit about harmonization and looking at this program. And Mr. Bainwol, I think I want to come to you on this. 

When you look at the harmonization gaps between the National 

Program and, say, California’s program, tell me how you think we 

go about addressing that. How do you fill in those gaps? What is 

the best way to kind of plug that in? 

And then I am going to come to you all in a consumer choice 

question too, so let me hear from you on that. 

Mr. BAINWOL. Sure. The harmonization piece with California is 

really complex. California is able to do what it does under a waiver 

from EPA, and it is not clear to me whether Congress would choose 

to adjust that or not and we are not in a position where we are 

advocating that. 

What I would say is that the existence of two different consumption mandates produces some serious challenges. You have CAFE 

which requires fuel efficiency and carbon reduction, and you have 

ZEV in California and the other States that requires essentially 

electrification. And so there is an investment going in both in R&D 

for electrification and an investment going in to subsidize the moving of the metal for electrified products because they are not selling 

that well. And that is investment that could go into complying with 

CAFE. 

So the existence of two programs absolutely produces challenges 

and regulatory friction. And I would note that we talk a lot about 

not needing electrification and hybrids in order to comply with 

CAFE, but we have to produce electrics to comply with ZEV. So 

that is an academic point. We have to produce those to comply with 

ZEV, which means those costs are there. Those costs are not in the 

TAR. 

Chairman Olson, you asked about what was missing in the TAR. 

That is one of the challenges with the TAR, they didn’t embrace or 

accept or talk about the cost of ZEV. That is a serious challenge. 

Mrs. BLACKBURN. OK. So all of this regulation, how much cost 

does it add to the price of an average vehicle? 

Mr. BAINWOL. We don’t have a locked in number yet. The TAR 

has been out obviously since July. We did not get an extension on 

the period to respond, but we are doing analysis. There is a range 

of estimates that go anywhere from, you know, $1,500 to over 

$6,000, but the critical point is that car prices are being moved not 

just by CAFE and not just by ZEV. 

ZEV as I said is $356 per car. It is also being moved by other 

very well intended and meaningful social objectives in the safety 

zone and elsewhere, in fuel quality. So the car price question is 

really critical because we want to make sure as Peter stressed that 

affordability remains paramount. 

Mrs. BLACKBURN. Yes. In my district in Tennessee with the presence of the auto industry and with the presence of many who have 

moved from California to Nashville that are connected to the auto 

industry, one of the things that comes up in our meetings reguVerDate Mar 15 2010 12:08 Jan 11, 2017 Jkt 037690 PO 00000 Frm 00189 Fmt 6633 Sfmt 6633 F:\114THCONGRESS\114X171CAFEXGHGJKTREQ011017\114X171CAFEXGHGXWORKIN
184 

larly, town hall meetings or just discussions at civic clubs and 

things, is looking at the CAFE standards and looking at what that 

does to safety of the car, the changing of materials, going for lighter weight materials, and consumer choice comes into play in that. 

And I just think about the auto dealers who have to buy a certain amount of product, and yet it may be a product that the consumer does not like or does not want. And I wonder when we are 

going to hit that threshold on the efficiency issue and what the consumer likes or wants. 

And you mentioned consumer choice in your testimony, and I 

have got just a couple of seconds. I would like to hear just one little 

statement from you on it. Yes, go ahead. Mr. Welch. 

Mr. WELCH. We have literally hundreds of models. And as I mentioned before, under our franchise agreements we stock every line, 

make and model so that we can have them for demonstration purposes. But the real issue is what do we reorder, OK. And virtually, 

as I mentioned again before, we are merchants. We are not much 

different than the hardware store. We have got bins of widgets and 

if they sell we restock them and what not. 

So it is complex. The issue really goes back to the affordability 

issue. We are so fortunate in our country that we have such a wide 

array of different options that we provide consumers based on the 

consumer, and every single sale is different. Every different person 

has a different budget constraint. They have a different utilitarian 

need for the vehicle. They have got different commute patterns. 

And we have got product, it is amazing the product of the manufacturers and we just take it for granted, quite frankly. 

But the fact of the matter is as manufacturers are effectively 

forced under these regulations, even though there is flexibility to 

add certain types of technologies, and once they make that decision 

3 to 7 years in advance they have got to go through the manufacturing process. And, you know, if the demand and the consumer 

preferences are different 3 or 4 years from now and it may be 

based on a safety attribute, it may be based on a fuel economy attribute, but, you know, we are not clairvoyants when it comes to 

that. 

But it is the cost, it is the cost, it is the cost, the affordability 

and the utility that is offered to the consumer. 

Mrs. BLACKBURN. Thank you. I yield back. 

Mr. OLSON. The gentlelady’s time is expired. The Chair calls 

upon the gentleman from Texas, Mr. Green, for 5 minutes. 

Mr. GREEN. Thank you, Mr. Chairman, and again thank our 

panel for their patience. Dr. Cooper, according to the 2015 American Community Survey, nearly 60 percent of our district qualifies 

as a low income. How does this program impact low-income households? 

Dr. COOPER. Well, as we have explained in testimony and we explained in 2012, and EPA has followed up on that low income are 

much less likely to be in the new car market. They are in the used 

car market. And if you look at their expenditure pattern, their total 

cost of driving, the biggest component, the much bigger component 

is operating costs. Higher fuel economy lowers the operating cost 

so they get the benefit of that. 

185 

It turns out when you buy a used car people will hold their cars 

the life of their loan, 5 years. They sell the car, it is going to last 

another 5 years. It is going to save gasoline for another 5 years. 

Does that savings get reflected in the resale price? Actually, only 

part of it does. So low-income consumers get a disproportionate 

share of the second 5 years. Low-income consumers also are the 

beneficiaries, as I say, of these indirect effects, environmental and 

public health, so they will be significant beneficiaries of that. 

The interesting thing is if you go to year 2022, which is what we 

are talking about now, almost every used car sold in 2022 will have 

been subject to the rebooted CAFE standard. 10-year life, the average car, they have all been covered by standards, and that means 

low-income consumers are benefiting from the reboot of the CAFE 

program. This is one of the great myths. Low-income people benefit 

because they benefit from lower operating costs, and this program 

is helping them as a class. 

Mr. GREEN. Well, I have to admit, and I have some older cars, 

but the older your car the more maintenance you have to do. And 

also if they keep it, then the CAFE standards are of a different 

generation than what may happen on the newer cars. 

Dr. COOPER. That is absolutely the case. But on the other hand, 

those cars were required to be more fuel efficient by the new standard and that is the remarkable thing by 2022. 

Mr. GREEN. In your testimony you point out that the industry 

has found lower-cost ways of complying with the standards than 

originally thought. What are some of the ways that this was accomplished? 

Dr. COOPER. Well, the most obvious one is the Atkinson engine. 

It wasn’t even considered. The second of all, what happens is that 

when people are given a 10-year time frame they ain’t dumb, they 

took a look at it and say what am I best at; what else will I be 

changing? And so what the regulators thought the cost would be 

is always too high. What the industry political arms said the cost 

would be is way too high. We have got dozens of studies of that. 

And so the natural process of capitalist markets, they bring the 

costs down, they learn the learning curve is very, very steep in the 

beginning, and so you can find specific technologies that came 

along like this aspirated engine. You can find the general process. 

But this has happened dozens and dozens of times over the last 3 

decades as we have dealt with the issue of improving fuel economy. 

Mr. GREEN. Mr. German, the initial costs for estimates complying like what Mr. Cooper said is actually much lower than the 

manufacturers or even the agencies. In regards to this program, 

have compliance costs been overstated, and what is the primary 

factor in overstating this compliance? 

Mr. GERMAN. Yes. No, it is just innovation. I have only talked in 

my testimony about the major improvements you can put a name 

to, but in the series of reports that we are doing in cooperation 

with suppliers we have all kinds of small things that have happened that were not anticipated. Variable geometry turbo-charger 

from a diesel engine which is highly efficient, it doesn’t work on a 

conventional gasoline turbo-charge, but it does if you add Miller 

cycle. 

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So there are all kinds of little secondary benefits that the suppliers, and I am sure the manufacturers as well, are figuring out 

that taking little steps to improve efficiency and reduce cost and 

the cumulative effect of these things is quite large. 

Mr. GREEN. OK. And how should we project for the new technologies given the rate of new development and adoption? I mean 

do we have a crystal ball? 

Mr. GERMAN. Yes. I mean that is the single biggest problem with 

innovation. You can’t project it. And that is why what I really try 

to push is the concept that the least you can do is to use the latest 

data possible and get as close you can, because if you are using 

older data you are guaranteed to be wrong. You are guaranteed to 

be missing innovation. 

Mr. GREEN. OK. Thank you, Mr. Chairman. I yield back. 

Mr. OLSON. The gentleman yields back. The Chair now calls 

upon the gentleman from the Commonwealth of Virginia, Mr. Griffith, for 5 minutes. 

Mr. GRIFFITH. Thank you very much, Mr. Chairman. I guess I 

am going to look first to Mr. Welch and Mr. Bainwol. Your responses, do you think the industry can get me a cheap car for my 

five-member family? And as you can tell by looking at me I am not 

small and my children probably aren’t going to be small either. Can 

you get me a car that is $22-23,000 that I can fit them all into that 

is going to have all these technological advantages and get it to me 

at $23-24,000? 

Mr. WELCH. For a new car, stripped models which most people 

want more accoutrements on, but—— 

Mr. GRIFFITH. Well, I am a stripped-model guy, but OK. 

Mr. WELCH. Well, that is fine. But, you know, our least expensive 

car I believe that we have on the lots right now is the Nissan Versa 

that is just under $13,000, and of course they go all the way up. 

Mr. GRIFFITH. I understand that. But can I get all five of those 

people in there comfortably? I don’t think I can. 

Mr. WELCH. No. 

Mr. GRIFFITH. I have spent more hours, and somebody gave the 

statistic people spending 13 hours on the Internet. I have already 

spent more than that anticipating when I trade in my Volkswagen 

diesel and the deal gets approved. 

But I do think both of you made the point that price makes a 

difference, and it does make a difference. Because I looked any 

number of times when I was driving my older vehicle, the one that 

I traded in for the Volkswagen diesel, and I drove that for 376,000 

miles before the axle broke and my wife said you have got to get 

rid it. I am tired of no hubcaps and the windows being held up 

with duct tape. So I am that cheapskate, but the price does matter. 

And I noticed, Mr. Welch, in your testimony you said even on a 

monthly basis, because I think it was Dr. Cooper who testified it 

is about the cost of maintaining the vehicle and so forth which includes the loan value or the loan cost that even $20 to $30 that 

your dealers would say that makes a difference on what car they 

are going to buy, or in the case of somebody like me whether or 

not I buy. 

And then Mr. Bainwol, you indicated—and you can correct me 

and jump in anywhere on this—but you indicated that TAR was 

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going to add anywhere, in an average in talking with the 

gentlelady from Tennessee, 1,500 to 6,000. So I quickly pulled out 

the Internet loan calculator and figured 1,500 at 3 percent, which 

I think would be fairly reasonable in the middle if there is not 

some special deal, and that hits your number, 26. It comes back at 

2,695 and that is right smack dab in the middle of the number 

where people start deciding they are going to get a different car or 

not buy at all. 

Am I accurate in those assessments that I have made that some 

people are going to walk away completely from the new car and 

some people are going to downsize? 

Mr. BAINWOL. I would say that the fundamental point you are 

making is that you have to do a whole-car cost analysis. And we 

have a tendency in this town to look at policy from a silo, so today 

we are talking about CAFE and we have kind of brought in ZEV 

because that introduces more cost and it is related. 

But we also talk about things like V to V, and an issue that Congressman Schakowsky talked about, the rear visibility. There is 

lots of things that go into the price of a car that are great technologies that serve important social purposes, but at the end of the 

day they cost money. And when you load them all up and you do 

the whole-car cost analysis you are creating a world in which it becomes harder and harder to purchase a new car. 

And with all due respect to my friends on the panel, that disproportionately hurts and locks out of new cars low-income Americans who then do not get the benefits of the safety technologies 

that have been introduced in the last 5 to 10 years. 

Mr. GRIFFITH. Well, and let’s face it, and I am going to ask you 

a question at the end of this, I could afford the more expensive car. 

But if it is so much more expensive that I walk away from the market, I am never selling the used car that Dr. Cooper wants me to 

sell to some low-income person at the end of 5 years or 6 years or 

8 years or even if I were able and could in my conscience spend 

that much money on a car and buy it, I am likely to drive it longer 

than the 5-year lifespan because I am getting good service or good 

mileage out of it and it is never going to be available, at least not 

mine. I understand I may not be typical, but it is never going to 

be available for the low-income person until the axle breaks and it 

is all falling apart and it is time to take it to the graveyard. I yield 

back. 

Mr. OLSON. The gentleman yields back. And that is all for the 

members and their questions. On behalf of the Commerce, Manufacturing, and Trade and Energy and Power Subcommittees and 

this committee, thank you, thank you, thank you to our witnesses. 

I would like to ask unanimous consent to enter into the record 

a letter from the American Chemistry Council about this hearing. 

Without objection, so ordered. 

[The information appears at the conclusion of the hearing.] 

I remind all Members you have 5—you have 10 legislative days 

for questions for the record. Without objection, this hearing is adjourned. 

[Whereupon, at 1:24 p.m., the subcommittees were adjourned.] 

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