[House Hearing, 112 Congress] [From the U.S. Government Publishing Office] RUNNING ON EMPTY: HOW THE OBAMA ADMINISTRATION'S GREEN ENERGY GAMBLE WILL IMPACT SMALL BUSINESS AND CONSUMERS ======================================================================= HEARING before the SUBCOMMITTEE ON REGULATORY AFFAIRS, STIMULUS OVERSIGHT AND GOVERNMENT SPENDING of the COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM HOUSE OF REPRESENTATIVES ONE HUNDRED TWELFTH CONGRESS FIRST SESSION __________ OCTOBER 12, 2011 __________ Serial No. 112-87 __________ Printed for the use of the Committee on Oversight and Government Reform Available via the World Wide Web: http://www.fdsys.gov http://www.house.gov/reform U.S. GOVERNMENT PRINTING OFFICE 71-980 WASHINGTON : 2012 ----------------------------------------------------------------------- For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, Washington, DC 20402-0001 COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM DARRELL E. ISSA, California, Chairman DAN BURTON, Indiana ELIJAH E. CUMMINGS, Maryland, JOHN L. MICA, Florida Ranking Minority Member TODD RUSSELL PLATTS, Pennsylvania EDOLPHUS TOWNS, New York MICHAEL R. TURNER, Ohio CAROLYN B. MALONEY, New York PATRICK T. McHENRY, North Carolina ELEANOR HOLMES NORTON, District of JIM JORDAN, Ohio Columbia JASON CHAFFETZ, Utah DENNIS J. KUCINICH, Ohio CONNIE MACK, Florida JOHN F. TIERNEY, Massachusetts TIM WALBERG, Michigan WM. LACY CLAY, Missouri JAMES LANKFORD, Oklahoma STEPHEN F. LYNCH, Massachusetts JUSTIN AMASH, Michigan JIM COOPER, Tennessee ANN MARIE BUERKLE, New York GERALD E. CONNOLLY, Virginia PAUL A. GOSAR, Arizona MIKE QUIGLEY, Illinois RAUL R. LABRADOR, Idaho DANNY K. DAVIS, Illinois PATRICK MEEHAN, Pennsylvania BRUCE L. BRALEY, Iowa SCOTT DesJARLAIS, Tennessee PETER WELCH, Vermont JOE WALSH, Illinois JOHN A. YARMUTH, Kentucky TREY GOWDY, South Carolina CHRISTOPHER S. MURPHY, Connecticut DENNIS A. ROSS, Florida JACKIE SPEIER, California FRANK C. GUINTA, New Hampshire BLAKE FARENTHOLD, Texas MIKE KELLY, Pennsylvania Lawrence J. Brady, Staff Director John D. Cuaderes, Deputy Staff Director Robert Borden, General Counsel Linda A. Good, Chief Clerk David Rapallo, Minority Staff Director Subcommittee on Regulatory Affairs, Stimulus Oversight and Government Spending JIM JORDAN, Ohio, Chairman ANN MARIE BUERKLE, New York, Vice DENNIS J. KUCINICH, Ohio, Ranking Chairwoman Minority Member CONNIE MACK, Florida JIM COOPER, Tennessee RAUL R. LABRADOR, Idaho JACKIE SPEIER, California SCOTT DesJARLAIS, Tennessee BRUCE L. BRALEY, Iowa FRANK C. GUINTA, New Hampshire MIKE KELLY, Pennsylvania C O N T E N T S ---------- Page Hearing held on October 12, 2011................................. 1 Statement of: Anwyl, Jeremy, CEO, Edmunds.com; Marlo Lewis, Ph.D., senior fellow, Competitive Enterprise Institute; Roland Hwang, Transportation Program Director, Natural Resources Defense Council; and Scott Grenerth, independent trucker, owner- operator, Independent Driver's Association................. 7 Anwyl, Jeremy............................................ 7 Grenerth, Scott.......................................... 61 Hwang, Roland............................................ 37 Lewis, Marlo, Ph.D....................................... 16 Strickland, David, Administrator, National Highway Traffic Safety Administration; Gina McCarthy, Assistant Administrator for the Office of Air and Radiation, Environmental Protection Agency, accompanied by Margo Oge, Director of the Office of Transportation and Air Quality, Environmental Protection Agency............................ 101 McCarthy, Gina........................................... 108 Strickland, David........................................ 101 Letters, statements, etc., submitted for the record by: Anwyl, Jeremy, CEO, Edmunds.com: Information concerning academic research................. 98 Prepared statement of.................................... 10 Buerkle, Hon. Ann Marie, a Representative in Congress from the State of New York, letter dated May 16, 2011........... 122 Cummings, Hon. Elijah E., a Representative in Congress from the State of Maryland, prepared statement of............... 5 Grenerth, Scott, independent trucker, owner-operator, Independent Driver's Association, prepared statement of.... 63 Hwang, Roland, Transportation Program Director, Natural Resources Defense Council, prepared statement of........... 39 Kucinich, Hon. Dennis J., a Representative in Congress from the State of Ohio, prepared statement of................... 90 Lewis, Marlo, Ph.D., senior fellow, Competitive Enterprise Institute, prepared statement of........................... 18 McCarthy, Gina, Assistant Administrator for the Office of Air and Radiation, Environmental Protection Agency, prepared statement of............................................... 110 Strickland, David, Administrator, National Highway Traffic Safety Administration, prepared statement of............... 104 RUNNING ON EMPTY: HOW THE OBAMA ADMINISTRATION'S GREEN ENERGY GAMBLE WILL IMPACT SMALL BUSINESS AND CONSUMERS ---------- WEDNESDAY, OCTOBER 12, 2011 House of Representatives, Subcommittee on Regulatory Affairs, Stimulus Oversight and Government Spending, Committee on Oversight and Government Reform, Washington, DC. The subcommittee met, pursuant to notice, at 10 a.m., in room 2247, Rayburn House Office Building, Hon. Jim Jordan (chairman of the subcommittee) presiding. Present: Representatives Jordan, Buerkle, Labrador, Guinta, Kelly, Issa (ex officio), Kucinich, Speier, and Cummings (ex officio). Staff present: Michael R. Bebeau, assistant clerk; Molly Boyl, parliamentarian; David Brewer, counsel; Tyler Grimm, professional staff member; Christopher Hixon, deputy chief counsel; Kristina Moore, senior counsel; Sharon Meredith Utz, research analyst; Krista Boyd, Claire Coleman, minority counsels; Ashley Etienne, minority director of communications; Devon Hill, minority assistant; Jennifer Hoffman, minority press secretary; and Suzanne Sachsman Grooms, minority chief counsel. Mr. Jordan. All right, the subcommittee will come to order, do opening statements. I want to welcome our witnesses or panelists and guests. The subcommittee convenes this morning to continue with the investigation into the process by which the Obama administration set fuel economy standards for cars and trucks, and the impact these standards will have on small businesses and consumers. On July 29, 2011, President Obama announced his administration had come to an agreement with the State of California, labor unions, and several major auto manufacturers on increased corporate average fuel economy standards for 2017 through 2025. Previously, the administration enacted fuel economy standards for light-duty cars and trucks from the 2012 to 2016 time line and for heavy-duty trucks from 2014 to 2018. In announcing the latest version of these standards, the President boasted that the agreement had been reached ``without Congress.'' Based on this statement and other evidence, it appears that the President has forgotten that there are in fact three separate, but equal, branches of Government, and it is Congress that writes the law. In addition to forgetting about Congress, the President also forgot about his pledge to be the most transparent president in history. It appears that each of these standards were set based on closed-door negotiations with select stakeholders who sometimes were awarded with billions in Federal grants or loans or, in the case of a few, a generous taxpayer bailout. Despite the President's expressed desire to craft regulations in a way that is sensitive to their impact on job creation, the President's staff never bothered to consult with consumers or the small businesses that will be impacted by these very regulations. While the administration has argued that a future notice and comment rulemaking will cure this defect, there is reason to believe that such a process will be merely a pro forma exercise and that the voice of the consumers and small businesses will never be heard because the critical elements of the regulation are already set in stone. What is more, these new regulations do not come cheap. The 2012 to 2016 standards are expected to cost manufacturers $50 billion in compliance costs. The 2017 to 2025 standards may well cost three times that amount, $150 billion. Truckers can also expect to pay a minimum of $6,000 more per truck starting in just 2 years, and many argue that the estimate is at the low end. Because of these concerns, Chairman Issa has sent detailed letters to the White House and the agencies asking the administration to reveal the process used to determine the standards and to be transparent with the public on the impact these higher fuel economy standards will have on future cars and trucks. We look forward to reviewing the administration's response. In addition to these procedural concerns, today's hearing will focus on the impact these fuel economy standards are expected to have on consumer choice and the safety of the vehicles. The committee wants to know how much these regulations will cost and how many consumers will be priced out of the new car market. If consumers can't afford to purchase new vehicles, what will be the impact on the many automobile dealerships that depend on new car sales for their very survival. It appears that the administration is simply substituting its bureaucratic judgment for the independent judgment of the marketplace. When Government substitutes its judgment for the private market, the result is never good. Most likely, these standards will force the auto industry to limit consumer choice and manufacture products that Americans may not want or simply cannot afford. In the case of the trucking industry, we want to know if the heavy-duty fuel economy standards are necessary and, if so, how they will impact the livelihood of independent truckers. It appears as though the administration's heavy-duty truck standards will have dire consequences for independent truckers, who are the backbone of American commerce. Independent truckers did not have a seat at the table during the administration's negotiations, but these negotiations now threaten to force them off the road. We also want to know if NHTSA has a handle on how many people may lose their life or suffer severe injury as a result of these standards. In the case of light-duty vehicles, these standards will force Americans to drive lighter weight vehicles. This has significant implications for driver safety. Moreover, if the heavy-duty trucking regulation forces independent owner-operators to retire, it is possible that less experienced drivers will take their place. This turnover could have severe implications for highway safety as well. Regrettably, we may never know the full truth about how the 2009 standards were set, because they were the result of closed door negotiations where, according to the California Air Resources Board Chairman Mary Nichols, participants took a ``vow of silence'' and took great pains to ``put nothing in writing ever.'' The committee wanted to ask Ms. Nichols what exactly she meant by that statement but, regrettably, she has refused to appear before this panel. The committee also wanted to ask Ms. Nichols why her State is in the business of setting fuel economy standards at all, in light of the explicit congressional preemption of State action on matters relating to fuel economy standards. In my opinion, her absence today crystalizes why the State of California should not be part of this rulemaking process. Quite simply, CARB is unaccountable and unresponsive to the needs of the Nation and should not be in the business of establishing Federal law. With these considerations in mind, we look forward to hearing from today's witnesses. With that, I will yield to the ranking member of the full committee, the gentleman from Maryland, is now recognized for 5 minutes. Mr. Cummings. Thank you, Mr. Chairman. I would like to welcome Administrator Strickland, Assistant Administrator McCarthy, and Director Oge for joining us today to discuss the recently announced corporate average fuel economy and greenhouse gas emission standards for automobiles for models year 2017 to 2025. I am pleased that the Obama administration is moving forward on fuel economy standards that will decrease our dependence on foreign oil, improve vehicle value for consumers, our constituents, and improve air quality across our Nation. Despite what some may claim, the standards proposed by the Obama administration are not grabs from thin air. In 2007, President Bush signed into law the Energy Independence and Security Act, which set a national standard of 35 miles per gallon by 2020. President Bush praised this legislation, calling it, ``a major step toward reducing our dependence on oil; confronting global climate change, expanding the production of renewable fuels; and giving future generations of our country a Nation that is stronger, cleaner, and more secure.'' Now, just 4 years later the majority has arrived at the puzzling conclusion that improving energy efficiency is not in our national interest. Today's hearing is entitled Running on Empty, which is a misguided criticism of fuel efficiency standards supported by the industry, consumers, and the administration. Frankly, I have a hard time understanding what the majority's problem is with the fuel efficiency standards, or whose interests they are representing in opposing them. I also understand that the majority is concerned that the administration has been inappropriately colluding with stakeholders. This is also a strange claim considering the frequent complaints from the other side about the administration seeking too little input from industry when developing regulations. While the administration has worked out a proposal that automakers support, as you will hear today, it fully intends to go through the formal rulemaking process and comply with the requirements of the Administrative Procedures Act. The new standards are critical to ensuring that consumers are getting the most for their money. According to the Union of Concerned Scientists, the new standards are expected to save average drivers, our constituents, $3,500 over the lifetime of their vehicles, after factoring in the cost of new fuel technology. In recent months, several of the top automakers have reported that their customers are increasingly choosing fuel-efficient vehicles over the less efficient products. We can certainly understand that in these recessionary times. The new standards also will help create new jobs. Serus estimates that the standards could create as many as 8,400 new jobs in Maryland, my State, and 500,000 jobs nationwide by 2030. While there undoubtedly will be some challenges to meeting these standards, the substantial buy-in from industry indicates that they are achievable and ultimately will benefit consumers and the U.S. auto industry as a whole. With that, Mr. Chairman, I yield back. [The prepared statement of Hon. Elijah E. Cummings follows:] [GRAPHIC] [TIFF OMITTED] 71980.001 [GRAPHIC] [TIFF OMITTED] 71980.002 Mr. Jordan. I thank the gentleman for his statement. We will now introduce our first panel. We first have Mr. Jeremy Anwyl, who is CEO of Edmunds.com. We also have Dr. Marlo Lewis, senior fellow at the Competitive Enterprise Institute; Mr. Roland Hwang is the transportation program director at the Natural Resources Defense Council; and finally, Mr. Scott Grenerth is an independent trucker from the Fourth District of Ohio. So we appreciate all of you being here today. Pursuant to the rules, all witnesses are to be sworn in before they testify, so if you will please stand up and raise your right hands. [Witnesses sworn.] Mr. Jordan. Let the record reflect that all witnesses answered in the affirmative. Thank you. We will go now to our first witness, Mr. Anwyl. STATEMENTS OF JEREMY ANWYL, CEO, EDMUNDS.COM; MARLO LEWIS, PH.D., SENIOR FELLOW, COMPETITIVE ENTERPRISE INSTITUTE; ROLAND HWANG, TRANSPORTATION PROGRAM DIRECTOR, NATURAL RESOURCES DEFENSE COUNCIL; AND SCOTT GRENERTH, INDEPENDENT TRUCKER, OWNER-OPERATOR INDEPENDENT DRIVER'S ASSOCIATION STATEMENT OF JEREMY ANWYL Mr. Anwyl. Thank you, Chairman Jordan and Ranking Member Cummings and members of the committee. Thank you for the opportunity to speak today on this most important issue. I have been tracking the progress of the soon to be proposed CAFE standards with a growing level of concern. This concern relates to several areas, but my comments this morning will focus on one in particular. This is one we at Edmunds think about every day, and that is the automotive consumer. I have three points to make this morning. The first is that up until now consumers have been either ignored or misrepresented; the second is that consumers matter; and the third is that consumers are most definitely not on board. The evidence that consumers have been ignored is everywhere, but one of the clearest is this interim technical assessment prepared by EPA that listed the CAFE stakeholders. These included environmental groups, auto firms, labor unions, and others, even EV charging firms were seen as needing a seat at the table, but apparently not consumers. Consumers matter because responding to their needs is what drives innovation, and innovation is what should drive our economy. They matter because, at the end of the day, they are the ones who will be asked to buy and to drive the vehicles our Government is potentially demanding car companies build. Most importantly, let me emphasize the consumer is not on board with the proposed standards. Now, I know there has been a blizzard of polls showing consumers want higher mileage standards. My contention is these polls are worse than meaningless; they are in fact grossly misleading. Instead of polls, we should, first and foremost, be guided by what consumers are actually doing, by actual purchases. In the U.S. market, consumers have demonstrated the marked preference for larger vehicles, illustrated by sales as recently as just last month. And a particular caution exists around the new high-tech higher mileage vehicles that have been introduced. These are the very vehicles that the administration seems determined to mandate through the proposed CAFE standards. In these instances, it is not the car company that is not getting it; they are delivering the goods. It is the consumer that is not interested. And in several cases these cars are selling slowly, even after large tax credits have been offered. Any study of actual sales makes clear that for the vast majority of consumers fuel economy is simply not their primary motivating factor when purchasing a vehicle. This doesn't mean they don't care about fuel economy, just that other things are more important. Consumers decide which vehicle to buy based on a weighing of vehicle features and a judgment on which set of features best meet their needs. In other words, they make tradeoffs. Price and fuel economy for most consumers represent costs. Passenger capacity, cargo space, towing ability, and other things represent features. Consumers are always happy to pay less or save fuel, but not if it means giving up features they deem important. This is key. Edmunds can actually add a special clarity around this issue of consumer preferences and demand because among our many datasets we have a market simulation model that was developed working with leading academics. This simulator can be used to show how consumers weight various vehicle attributes in terms of importance. And I have actually run an analysis for this committee and the following are the results. Note that vehicle mileage accounts for only about 6 percent of why consumers purchased a particular vehicle. As you would expect, the weighting does vary amongst vehicle categories, but it is important to note that even in the heavily cost-sensitive segment of subcompacts, mileage only accounts for about 15 percent of the purchase decision. There is an obvious factor that can influence these weightings, and that is the price of fuel. We have seen that when fuel prices jump there is an increase in the number of consumers who consider smaller vehicles and, in some cases, buy them. But these effects are not as dramatic as I have seen claimed. Further, they have been short-lived as consumers have shifted back to larger vehicles quickly, either because they grew accustomed to the higher price, fuel prices dropped, or maybe a little bit of both. Looking at the data, there is an argument that could be made that if fuel prices increase sufficiently, market demand could align with future CAFE standards, and this is an interesting point. But the increase, about a doubling of today's price, would need to be far higher than even the most extreme forecast deemed likely. And we should also consider the chance that fuel prices in the mid-term could actually be lower than prices seen today. I do have some good news. If we look back, the auto industry seems to have delivered the impossible: they have added features, increased safety, elevated performance, and delivered increased fuel economy, much of this even during a period when CAFE standards were stable. I credit mostly the advance of technology and expect this progress to continue. But if mandates trigger an escalation of prices, a reduction in consumer utility, or the adoption of technologies before they have been proven, consumers will react. This reaction could destabilize an industry that is a vital engine of our collective prosperity. Thank you again for the opportunity to speak and I look forward to your questions. [The prepared statement of Mr. Anwyl follows:] [GRAPHIC] [TIFF OMITTED] 71980.003 [GRAPHIC] [TIFF OMITTED] 71980.004 [GRAPHIC] [TIFF OMITTED] 71980.005 [GRAPHIC] [TIFF OMITTED] 71980.006 [GRAPHIC] [TIFF OMITTED] 71980.007 [GRAPHIC] [TIFF OMITTED] 71980.008 Mr. Jordan. Thank you, Mr. Anwyl. Dr. Lewis. STATEMENT OF MARLO LEWIS, PH.D. Mr. Lewis. Mr. Chairman and Ranking Member Cummings, thank you for inviting me to testify today. I know of no oversight proceeding more important than committee Chairman Issa's investigation of the administration's actions to regulate greenhouse gases and fuel economy. Only last year Congress declined to give EPA explicit authority to regulate greenhouse gases when Senate leaders abandoned cap- and-trade legislation. Recall that a key selling point for the Waxman-Markey cap-and-trade bill was its broad preemption of EPA regulation of greenhouse gases through the Clean Air Act. A bill introduced in 2009 authorizing EPA to do exactly what it is doing now, regulate greenhouse gases through the Clean Air Act, as it sees fit, would have been dead on arrival. Therefore, the notion that Congress gave EPA such expansive authority in 1970, almost two decades before global warming became a public concern and 5 years before Congress enacted its first fuel economy statute, defies common sense. In his September 30th letter to Administrator Jackson, Chairman Issa says that he finds EPA's actions troubling and inconsistent with the system of government articulated in the U.S. Constitution. I think he means the following. The Constitution seeks to ensure a system of democratic accountability through the separation of powers. The Constitution is vitiated when agencies legislate, when they exercise powers not delegated by Congress, when they flout procedural safeguards Congress has put in place. To obtain industry buy-in for its new career as fuel economy regulator, EPA pursued what might be called a regulatory extortion strategy. By reconsidering California's request for a waiver to establish its own greenhouse gas, motor vehicle emissions program, EPA threatened to allow State governments to balkanize the U.S. auto market. This flouted the Energy Policy Conservation Act's express prohibition against State laws or regulations related to fuel economy. Then, in negotiations culminating in the May 2009 historic agreement, EPA offered to remove the threat of a regulatory patchwork if automakers promised not to oppose EPA and California's new non-congressionally authorized roles as national fuel economy regulators. The negotiations, as you mentioned, Mr. Chairman, were conducted under a vow of silence and no notes were taken, an apparent violation of the Presidential Records Act. Similarly, the negotiations culminating in this year's historic agreement to raise fuel economy standards appear to violate Federal Advisory Committee Act standards of transparency and accountability. As Chairman Issa also notes, the fuel economy targets in this year's historic agreement are ``outside the scope of law.'' NHTSA and California plan to set fuel economy standards for model years 2017 to 2025, a 9-year period, but EPCA limits setting fuel economy standards to ``not more than five model years.'' The 9-year plan also conflicts with the EPCA requirement that NHTSA consider economic practicability when setting fuel economy standards. As Chairman Issa has explained, at the present time it is impossible for NHTSA to adequately consider economic practicability for fuel economy standards in model years 2022 to 2025 because car manufacturers themselves do not have product plans for those years. The agencies claim that EPA and California's greenhouse gas emission standards are harmonized and consistent with NHTSA's fuel economy standards, but EPA's standards do not allow automakers to pay fines in lieu of compliance or earn credits for producing flexible fuel vehicles during model years 2016 to 2019. This means automakers face more stringent requirements than they would if fuel economy were administered under the statutory scheme Congress created. Fuel economy advocates may see no problem in the transfer of power from NHTSA to EPA and California because it produces policy outcomes they want. They forget an elementary civics lessons: the legislative process is more valuable than any result an administrative agency can obtain by doing an end-run around it. And I think Members of Congress should understand this better than anyone else. Thank you very much. I will be happy to take questions. [The prepared statement of Mr. Lewis follows:] [GRAPHIC] [TIFF OMITTED] 71980.009 [GRAPHIC] [TIFF OMITTED] 71980.010 [GRAPHIC] [TIFF OMITTED] 71980.011 [GRAPHIC] [TIFF OMITTED] 71980.012 [GRAPHIC] [TIFF OMITTED] 71980.013 [GRAPHIC] [TIFF OMITTED] 71980.014 [GRAPHIC] [TIFF OMITTED] 71980.015 [GRAPHIC] [TIFF OMITTED] 71980.016 [GRAPHIC] [TIFF OMITTED] 71980.017 [GRAPHIC] [TIFF OMITTED] 71980.018 [GRAPHIC] [TIFF OMITTED] 71980.019 [GRAPHIC] [TIFF OMITTED] 71980.020 [GRAPHIC] [TIFF OMITTED] 71980.021 [GRAPHIC] [TIFF OMITTED] 71980.022 [GRAPHIC] [TIFF OMITTED] 71980.023 [GRAPHIC] [TIFF OMITTED] 71980.024 [GRAPHIC] [TIFF OMITTED] 71980.025 [GRAPHIC] [TIFF OMITTED] 71980.026 [GRAPHIC] [TIFF OMITTED] 71980.027 Mr. Jordan. Thank you, Dr. Lewis. Mr. Hwang. STATEMENT OF ROLAND HWANG Mr. Hwang. Thank you, Chairman Jordan and Ranking Member Cummings, for the opportunity to testify today. My name is Ronald Hwang. I am the Transportation Program Director for the Natural Resources Defense Council. NRDC is a nonprofit organization of scientists, lawyers, and environmental specialists dedicated to protecting public health and the environment. Founded in 1970, NRDC has more than 1.3 million members and online activists nationwide. President Obama's July 30th announcement of the latest clean car agreement builds on two other previous highly successful and broadly supported agreements for stronger pollution and fuel efficiency standards for passenger vehicles and commercial trucks. These three agreements exemplify how leadership, partnership, and compromise can solve the enormous environmental, economic, and energy challenges facing this country. Far from running on empty, these clean car and fuel efficiency standards will save Americans from emptying their wallets at the pump, slow the emptying of our national wealth for foreign oil, and cut the dangerous carbon pollution that is emptying our children's future. Over the lifetime of model year 2012 and 2025 vehicles covered by the first and second round of clean car standards, drivers will save $1.7 trillion in fuel savings, oil dependence will be reduced by 12 billion barrels of oil, and heat trapping pollution that drives global warming will be cut by approximately 6 billion metric tons. By cutting our oil dependency, the national program will act as a powerful economic stimulus by allowing us to keep $100 billion annually by 2030 in the U.S. economy, money that otherwise would be sent overseas to Saudi Arabia, Iran, Venezuela, and other oil exporting countries. Drivers will have more money in their pockets. By 2030, net fuel savings from these combined standards will be equivalent to a $330 tax rebate for every American household. This higher level investment in the U.S. economy and reduced fuel bills is estimated to create 500,000 more jobs by 2030. With such overwhelming benefits, it is not surprising the most recent clean car agreement has strong support from a broad array of stakeholders; from automakers to environmentalists, Republicans to Democrats, consumer advocates to energy security advocates, business leaders to labor unions. Even an overwhelming 80 percent of small business owners support a 60 mpg standard by 2025. One of the great success stories is the role the national program has played in laying the foundations for the auto industry's remarkable recovery. In a world of volatile but steadily rising oil prices, it is regulation that has played a crucial role in providing businesses the certainty they need to invest in fuel-efficient technologies needed to be competitive in the future. Compared to 2009, when the auto industry hit rock bottom, car sales, profits, and fuel efficiency are all on the rise. And one of the key reasons for why stronger standards and the auto industry recovery are going hand-in-hand is that with $3.50 gallon gasoline prices, consumers are demanding, make no mistake about it, fuel-efficient cars. In fact, thanks to the new products now on the market in anticipation of stronger standards, automakers like General Motors and Ford find themselves stepping up production and hiring new workers to keep up with the demand for fuel-efficient cars like the Chevy Cruze and Ford Focus. The market trend toward fuel efficiency is clear. Americans have fallen out of love with gas-guzzling vehicles and engines. Where once truck-based SUVs and V8s ruled the road, now one out of every two vehicles sold is a small car, small crossover, or a mid-sized car. And thrifty 4-cylinder vehicles are now America's most popular engine choice. Even picky drivers are choosing fuel efficiency. Six out of 10 Ford F-150 buyers are now choosing the more powerful and more fuel-efficient EcoBoost engine options, even though it costs extra. But perhaps the most remarkable result of the newest clean car agreement is what it shows about getting beyond political gridlock in today's America. The President, the auto companies, States, labor, and environmentalists have once again shown what it means to govern effectively and what can be accomplished by constructive compromise. Chairman Jordan, Ranking Member Cummings, and members of the subcommittee, the Clean Car and Clean Truck National Program are examples of Government at its best. The results speak for themselves. Upsetting this important program would only raise drivers' fuel bills, increase dangerous pollution, and make us more dependent on foreign oil. In view of its overwhelming benefits and overwhelming support, if anything, Congress should be urging the agencies to implement this important program sooner rather than later. Thank you for your attention, and I welcome your questions. [The prepared statement of Mr. Hwang follows:] [GRAPHIC] [TIFF OMITTED] 71980.028 [GRAPHIC] [TIFF OMITTED] 71980.029 [GRAPHIC] [TIFF OMITTED] 71980.030 [GRAPHIC] [TIFF OMITTED] 71980.031 [GRAPHIC] [TIFF OMITTED] 71980.032 [GRAPHIC] [TIFF OMITTED] 71980.033 [GRAPHIC] [TIFF OMITTED] 71980.034 [GRAPHIC] [TIFF OMITTED] 71980.035 [GRAPHIC] [TIFF OMITTED] 71980.036 [GRAPHIC] [TIFF OMITTED] 71980.037 [GRAPHIC] [TIFF OMITTED] 71980.038 [GRAPHIC] [TIFF OMITTED] 71980.039 [GRAPHIC] [TIFF OMITTED] 71980.040 [GRAPHIC] [TIFF OMITTED] 71980.041 [GRAPHIC] [TIFF OMITTED] 71980.042 [GRAPHIC] [TIFF OMITTED] 71980.043 [GRAPHIC] [TIFF OMITTED] 71980.044 [GRAPHIC] [TIFF OMITTED] 71980.045 [GRAPHIC] [TIFF OMITTED] 71980.046 [GRAPHIC] [TIFF OMITTED] 71980.047 [GRAPHIC] [TIFF OMITTED] 71980.048 [GRAPHIC] [TIFF OMITTED] 71980.049 Mr. Jordan. Thank you, Mr. Hwang. Mr. Grenerth, you are recognized for 5 minutes. STATEMENT OF SCOTT GRENERTH Mr. Grenerth. Thank you. Good morning, Chairman Jordan, Ranking Member Cummings, and members of the subcommittee. Thank you for inviting me here to testify. My name is Scott Grenerth. I have been a professional truck driver for more than 10 years and proud to hail from Chairman Jordan's home district. I am here on behalf of the Owner- Operator Independent Drivers Association. OOIDA's approximately 150,000 members are small business professional truckers in all 50 States. I am here to talk about how the EPA and NHTSA heavy truck duty greenhouse gas and fuel efficiency rule will impact small trucking operations such as mine, particularly during a time when most small business truckers are fighting to stay afloat. While trucking is my career, environmental stewardship is my life's passion. Before trucking, I worked for many years in environmental education. My wife and I were married on Earth Day in 1995 and we both took the name Grenerth to mark our commitment to the planet. So you might assume that I support the heavy-duty truck rule. However, I am strongly opposed to this one-size-fits-all regulation and the mandates it places on trucking. Compared to large trucking companies, small business truckers and owner-operators have a very different reality when it comes to fuel efficiency. Simply put, with diesel at close to $4 a gallon, if I do not drive in a fuel-efficient manner, I will be driving myself out of business. Considering that small businesses are the vast majority of trucking companies, it is hard to understand why the agencies chose not to tap into the collective knowledge of truckers like me on how to improve fuel efficiency. They did not speak to a single truck driver, apparently taking the attitude that truck drivers will never improve fuel economy without regulation. This view was eagerly supported by large motor carriers, who all too often do turn to the Government to diminish competition from smaller carriers. The resulting rule mandates add-ons and truck specifications that work for large motor carrier operations, even though trucking has hundreds of thousands of different operating models. Despite EPA's claims, this will add new costs to small business truckers, negatively impacting operations, and could lead to reduced efficiency for some. For example, a colleague hauls fresh produce in a refrigerator box trailer for most of the year, but for a few months he pulls a flatbed trailer. His tractor has a roof fairing that improves fuel efficiency while he is hauling produce. When he is not using his box trailer, he removes the fairing because it actually decreases fuel efficiency with his flatbed operation. Under this new rule, removing the fairing and improving fuel efficiency this way will be a violation of Federal law. Truckers inspect their trucks from bumper to bumper, making sure that everything meets the needs of their business. However, truck manufacturers have stated that this rule will reduce operations to truckers. This puts us in a tough position: buy the wrong truck for my operation or buy the right truck and pay a $37,000 EPA penalty. Truckers are also forced to purchase equipment they don't need or want under this rule. Take heavy haul operations that move loads like Army tanks and massive construction equipment. There is no way the aerodynamics of their truck will improve efficiency, but they will be forced to pay for mandated add-ons anyway. Low rolling resistance tires which reduce traction are also a significant part of this rule. Am I expected to only drive on dry and clear roads? EPA estimates all this will add another $6,000 to the price of a truck; this on top of the $20,000 to $30,000 their previous engine emissions rules added. And that is the crazy thing about this new rule. EPA sees truckers as the reason fuel economy is down. But, in reality, they should look at themselves. The technology required under the former rules has significantly reduced fuel economy, forcing truckers to buy around 800 gallons more fuel every year. Think about how much more oil has to be refined directly because of EPA emission standards mandates. These past rules cost truckers in other ways. New trucks break down more often, costing drivers more money. Further, OOIDA has learned that truck manufacturers are charging big dollars for once low-cost warranties and instituting EPA surcharges that add another $20,000 to the price of a truck. Instead of a costly one-size-fits-all rule, EPA and NHTSA could have offered a compliance alternative focused on improved driver training to operate any truck one driver drives as efficiently as possible. Yet, they ignored that significant recommendation from the National Academy of Sciences in lieu of a rule that unquestionably will fail to achieve purported goals. Chairman Jordan and members of the subcommittee, OOIDA supports improved efficiency and lower emissions, but there must be recognition of the costs they entail and the fact that trucking is a diverse industry. Small business truckers are inherently focused on maximizing fuel efficiency because our business success depends upon it. Pure economics tells you that trucking is going to take advantage of every opportunity to improve fuel efficiency based on their operating needs and without Government mandates. Thank you for the opportunity to testify and I welcome your questions. [The prepared statement of Mr. Grenerth follows:] [GRAPHIC] [TIFF OMITTED] 71980.050 [GRAPHIC] [TIFF OMITTED] 71980.051 [GRAPHIC] [TIFF OMITTED] 71980.052 [GRAPHIC] [TIFF OMITTED] 71980.053 [GRAPHIC] [TIFF OMITTED] 71980.054 [GRAPHIC] [TIFF OMITTED] 71980.055 [GRAPHIC] [TIFF OMITTED] 71980.056 [GRAPHIC] [TIFF OMITTED] 71980.057 [GRAPHIC] [TIFF OMITTED] 71980.058 [GRAPHIC] [TIFF OMITTED] 71980.059 [GRAPHIC] [TIFF OMITTED] 71980.060 [GRAPHIC] [TIFF OMITTED] 71980.061 [GRAPHIC] [TIFF OMITTED] 71980.062 [GRAPHIC] [TIFF OMITTED] 71980.063 Mr. Jordan. Thank you, Mr. Grenerth. We appreciate all the witnesses' testimony. We are going to start with the gentleman who understands this issue or has to deal with this issue on a regular basis, and that is the gentleman from Pennsylvania, who is a small business owner in the car business. Mr. Kelly is recognized for 5 minutes. Mr. Kelly. Thank you, Mr. Chairman. Mr. Anwyl, thanks for being here today. As the chairman said, I think one of the other costs that we are not looking at is what it costs a dealer to stock these vehicles. I am a Chevrolet dealer, and have been when my dad started in 1953. We have a Chevy Volt on the lot right now; it has been there now for 4 weeks. We have had one person come in to look at it, just to see what it actually looked like. Now, my question, and I guess what I am trying to understand is, here is a car that costs $45,763. I can stock that car for probably a year and then have to sell it at some ridiculous price. Now, by the way, I just got some information from Chevrolet. In addition to the $7,500 tax credit, Pennsylvania is going to throw another $3,500 to anybody foolish enough to buy one of these cars, somehow giving $11,000 of taxpayer money to buy this Volt. Now, when you look at this, it makes absolutely no sense. I can stock a Chevy Cruze, which is about a $17,500 car and turns every 30 to 40 days out of inventory, or I can have a Volt, which never turns and creates nothing for me on the lot except interest cost. And I am trying to understand how in the world we come up with these ideas that somehow, somehow, if we just go electric we are going to save all this money and all this fuel, and we are going to relieve the world of all this emission that is out there. It is absolutely insane that we continue down this path. A Chevy Cruze can get 36 miles per gallon on the highway. Now, they say on a Volt you can get 94 miles per gallon. That is if you go on an electric charge, right? Which I think the range on that, I think you can go 35 miles if you just go electric, okay? Which doesn't make sense for people who live in northwest Pennsylvania. Sometimes that is the one way just to your work. So a lot of these things that we are seeing and that are going on have a tremendous economic impact on the people who are being asked to stock them and sell them. There is no market for this car. I have some friends who have sold them and they are mostly to people who have an academic interest in it or municipalities that they are asking to buy these cars. So just from your standpoint, because you talk to a lot of dealers, people like me, is there any upside to any of this? We can get cars that I can turn every 35 to 40 days that get almost the same amount of miles per gallon, their emissions are clean. Please tell me what is the marketing strategy on this? And I saw where Mr. Ackerson said we need to build 200,000 of these. I tell you what. If he builds 200,000, he is going to have to find somebody that can buy those cars and put them on their lot. If General Motors wants to ship them to me and I will put them on my floor plan, I will gladly store them in the back lot for them as long as I don't have any economic interest in it. But if you can tell me where do you see this going. I mean, is anybody out there, other than somebody that is good with a laptop but lousy with an econotop, cold tell me where in the heck are we going with this policy and where does this lead down the road? If we continue this policy, it makes no sense. And I can tell you as far as job creation, the guy who ordered that Volt in my store is no longer in that job. So it actually worked against him. And I am trying to understand. And I was told that the reason that that car is on our lot is that General Motors told him had to stock it. I said, wait, let me understand. I told you under no circumstances were you to order a Volt. And he said, yeah. And I said, so why did you order it? He said, well, General Motors told me. I said, is this the same General Motors that tried to take my Cadillac franchise from me? These are the people you listen to? The guy that signs your check doesn't have as much influence as the guy who tried to take the franchise? So if you could, tell me where is this market going? Do you see any market for this car at all? Mr. Anwyl. There is a little bit of good news. You mentioned it did create some traffic for you, albeit one person. That is something that the car companies tout, is that these vehicles do attract some interest, some traffic; not necessarily buyers. I think there are a couple things in what you are mentioning. And let me also mention the Volt is actually a very nice vehicle. We bought one ourselves. It is in a long-term fleet. We have an extended charger. People actually enjoy it. But the problem I think you have outlined is really twofold. One of them is that there are all sorts of inducements for people to be buying these vehicles. In California it varies; I think it is $2,500 plus the $7,500. And yet, when you look at who is buying these vehicles, and there are people buying them, they are at the very high end of the demographic scale. And there is a group in society, a group in the marketplace who are very passionate about alternatively powered vehicles, Leafs, Volts. We have an environmental editor who bought a Leaf with his own money and he is putting solar panels on his roof so that he can actually charge the vehicle from the sun. So this is a little extreme, but there are people that are very passionate about that. And for these people I think the Volt is a perfectly fine choice, and so is the Leaf a perfectly fine choice. The question is, though, how many people are there like that? And right now we are seeing people who would have bought that vehicle anyway, even without the tax credits, getting the tax credit obviously at the expense of other taxpayers, and you have to wonder about the wisdom of that. Mr. Kelly. Well, people who actually have to work within a budget that they are very limited to, and part of it is not only their housing cost and their food cost, but also their transportation cost and the cost for fuel, it makes absolutely no sense to those people. I am talking about hard-working, taxpaying American public that actually needs transportation to get back and forth to work. These are the people that cannot afford to buy these cars, and it makes no sense to it. It is not a vehicle that I would want on my car lot in northwest Pennsylvania. Thanks for weighing in on it. Mr. Anwyl. Sure. Mr. Kelly. Thank you, Mr. Chairman. Mr. Jordan. Thank you. Next, the gentlelady from California is recognized for 5 minutes. Ms. Speier. Thank you, Mr. Chairman. First of all, to Mr. Kelly, send that Volt to California. It doesn't have to stay on your lot, because there is a waiting list in my district at my Chevrolet dealership of 6 months to get a Chevy Volt. Mr. Kelly. Would the gentlelady yield? Give me the name of the dealer. I will get it out there as quick as I can. Ms. Speier. Putnam Chevrolet. Send it to him today and I can guarantee you---- Mr. Kelly. If you will pick up the transportation costs, I would love to do that. Ms. Speier. All right. Mr. Jordan. Bipartisan operation. Mr. Kelly. Thank you. Appreciate your help. We do work together. Thank you. [Laughter.] I will be right back; I am going to call the store. Ms. Speier. Mr. Chairman, I respect your authority as chairman of this committee. I realize that you can set the agenda, but this subcommittee has the responsibility to look at a number of things, probably the most important is Government spending. And if we spent our entire legislative agenda in this subcommittee on getting rid of wasteful Government spending and look exclusively at the $30 billion to $60 billion of contracting that goes on that is fraudulent, we would be doing a service to the public. But this hearing, with all due respect, is a bad fairy tale because it doesn't reflect reality. And to you, Mr. Anwyl, you said, under oath, that the consumer is not on board with higher mileage vehicles. I don't now what consumer in this country wouldn't be interested in getting a vehicle that gets better mileage, because they save money at the gas pump if they get a vehicle that gets better mileage. Now, I want to address to you the press release put out by Ford Motor Co. in June 2011, just a couple of months ago, entitled Miles Per Gallon Matters. ``Forty-two percent say fuel economy is key in new vehicle purchase decisions. Influence likely to grow.'' The release cited the new vehicle customer study done by Moritz Research that has been going on since the 1970's, and according to this study 42 percent of those surveyed say fuel economy is ``extremely,'' not a little, extremely important in their decision to purchase a new 2011 model, and it has been a 13 percent increase versus 10 years ago. So for you to say that the consumer is not on board is a false statement, and I want you to address the Ford Motor Co. press release that says 42 percent say it is extremely important in their new car decision. Mr. Anwyl. Thank you. So let me explain. And I did say that under oath and I do stand by that statement. The issue that we are dealing with is that what you are citing are surveys, and there are a lot of surveys out there that show that consumers, and the numbers are going to vary, but basically they are making the case that to consumers fuel economy is very important. The issue that you run into, though, either through the survey design or pretty much on any surveys, that surveys are going to create some strange results. The big one is that consumers tend to respond to surveys in ways that they think are societally acceptable. And a great example of this would be when you ask someone why did you pick the job that you have? They are going to talk about job satisfaction or making a difference. And yet, when you actually do a mathematical scientific study, you are going to find that they took the job because of the money, and yet nobody says that on a survey. And we are seeing the same thing in terms of the cars that people are buying. So when I say that they are not on board, it is not that they don't say nice things in surveys. What matters are the vehicles that they are buying, and their preference is overwhelmingly not for the types of vehicles that are being mandated by this proposed set of regulations. Ms. Speier. So you are basically saying that people don't say what they mean. Mr. Anwyl. Absolutely. Ms. Speier. So then why do we listen to any polls? Mr. Anwyl. That is a very good question. [Laughter.] I would echo that. Ms. Speier. But, Mr. Anwyl, you cited your own poll. So it sounds like you are being selective. Mr. Anwyl. No, no, I did not cite a poll. No, the study that we have done is actually a market-based study, where we look at the vehicles that people are buying and we blend into that consumer analysis, but it is fundamentally driven by the vehicles that they are choosing in the marketplace, not what they are saying when somebody calls them at dinnertime. Ms. Speier. All right, Mr. Hwang, how would you respond to that? Mr. Hwang. First of all, I think this discussion about the Chevy Volt is a good discussion to have, and I think we would like more Chevy Volts in California; however, the fact of the matter is the 54.5 mpg standard will not require vehicles like the Chevy Volt. General Motors is free to build such vehicles, but reaching 54 mpg can be done with rather conventional technologies. Furthermore, Mr. Anwyl does point out a very important issue, which is that we should listen to the market. So let's look at the marketplace. In September what we have seen is an increase in so-called crossover utility vehicles. Okay, these are not SUVs. I believe in his testimony he labeled these as SUVs. A true truck-based SUV market no longer exists, practically no longer exists; it has been cut in half since 2005. These are the Chevy Tahoes and what you traditionally might think of as a Ford Explorer. In fact, in September a very popular vehicle, very popular Chevy vehicle that drove General Motors' sale growth is a crossover utility vehicle, a car-based, very tall station wagon type vehicle called the Chevy Equinox. The Chevy Equinox, the most fuel-efficient version you can buy, which many customers are choosing, achieves 25.9 miles per gallon for a crossover utility vehicle that replaces the Chevy Trailblazer. And the Chevy Trailblazer used to achieve--General Motors no longer builds it--17.2 miles per gallon combined cycle. So, therefore, customers are speaking. They are buying fuel-efficient vehicles, whether they are crossover utility vehicles, whether they are compact cars, or whether they are other types of vehicles. A recent article by Edmunds, October 6th, on Edmunds site talked about pickup trucks. Pickup truck sales did increase in September, but the title of the article was ``Incentives Bulge to Keep Big Pickups Moving.'' So it is not like the American public are flocking back to big gas guzzling vehicles. One, they are crossover utility vehicles, not SUVs; and, two, incentives, according to Edmunds, averaged for pickup trucks, the current incentive level is $4,281, up in April of $3,261. A quote from Edmunds, ``Appears market share perhaps profitable, perhaps not, was bought largely with increased incentives.'' Again, this is the pickup market. Mr. Jordan. Thank you. Before recognizing the gentlelady from New York, let me just be clear. Mr. Anwyl, so you are saying your poll is based on actual purchases versus what people may say, is that correct? Mr. Anwyl. Yes, Mr. Chairman. It is actually not a poll, this is a scientific study. Mr. Jordan. The facts are the facts. Let me ask one quick question. Let's assume Ms. Speier is right, that in fact Americans want higher miles per gallon. Then I go to the fundamental question: Why do we need Government to impose it? If that is what they want, won't the market get us there? Mr. Anwyl. Well, I think the three pillars under which I have heard supporters talk about the new CAFE standards, one of them is that the technology is readily available; the second is that it is cheap; and the third is that the consumers want it. And I think, to your point, in a pre-market economy you wouldn't need regulations to drive sales; under those circumstances the market would be pulling sales through for you. Mr. Jordan. Correct. Thank you. Now let's recognize the gentlelady from New York, Ms. Buerkle. Ms. Buerkle. Thank you, Mr. Chairman, and thank you to our panelists for being here today. Unfortunately, the gentlelady from California left. I just have a couple of issues with what she said. First of all, she mentioned we should be dealing with wasteful Government spending, and I think when we see $7,500 tax credits to a car that is questionable in the market, and trying to put the Government in the middle of how the market works, I think that is a waste of taxpayer money. I also want to mention about Ford and the press. I was going to ask her to repeat the press release that she read regarding Ford. Ford has a vested interest in this, and speaking of wasteful Government spending, the amount of money they received from this administration, both in grant and in loans, is several billions of dollars. So I think when they issue a press release such as that, they have a vested interest in this whole initiative going forward, and that is precisely what we are doing here this morning. We are trying to understand why a regulatory agency is circumventing the legislative process. So we all are concerned with wasteful Government spending, but I think we need to be clear about that. I wanted to talk to Mr. Anwyl. I have a couple questions for you. NRDC cites a survey, and Mr. Hwang mentioned it, the Small Business Majority, that says the majority of small businesses support fuel economy standards. The whole project, frankly, seems fundamentally, ideological, and clearly liberal. That is what was stated within the Democratic party. The Small Business Majority has all the hallmarks of a shadowy interest group, starting with a name. Are you familiar with this survey, the Small Business Majority? Mr. Anwyl. Yes, I have seen an overview of the study, yes. Ms. Buerkle. And how does that reconcile with what your studies have shown? Mr. Anwyl. Well, I think this echoes what I was talking about earlier. This is actually a poll, so it is not a scientific study. I think, as I was saying, the poll respondents tend to say what they think is societally acceptable. You will find that with every poll. The third thing, on this particular study, is it seems, when you look at how the questions were phrased, that the results were somewhat inevitable. I mean, I can read you the one question. This is on the pro-regulation side. Ms. Buerkle. Yes, if you would clarify that, that would be great. Mr. Anwyl. Sure. So listen to the question. It says, Should automakers be required to meet higher fuel efficiency standards because of our growing dependence on Middle East oil is a serious threat to our security and American car companies lost market share in this country because they built fuel inefficient vehicles? From a polling perspective, that is what I would call a highly leading question. There is almost no way to respond to that other than in the affirmative. So, as you would expect, that is what the poll did, it showed that small businesses favored higher standards. Ms. Buerkle. Now, in your testimony you mentioned that the consumers were left out, they weren't consulted. Can you just expand on that? Mr. Anwyl. Well, I think we have heard this morning that the new standards were arrived at through a process where secrecy was a requirement, and from the consumer perspective we were looking at this all along and were very troubled by that process. My personal belief is that government should be transparent, that things should be simple and should be easy to understand. When we contacted the EPA about the consumer point of view, their response was that consumers would have the ability to contribute during the hearing process. After the rules have been published, there is a process where consumers can comment. I wonder how much consumer comments will be actually taken into consideration when a deal has already been announced. Ms. Buerkle. So your position or your thought is that this period of time for comment isn't going to cure the defect in this whole process. Mr. Anwyl. I would find that unlikely. Ms. Buerkle. Dr. Lewis, would you like to expand on that? Mr. Lewis. Well, yes. There is a basic difference between the opinions that people express just in response to a question and the revealed preferences that they have when they are actually putting their money where their mouth is. So I think that is what my colleague's here study actually tries to measure, is revealed preference. Another point to be consider would be--and I completely acknowledge that a lot of people really do want to buy more fuel-efficient cars, and I trust the data that Mr. Hwang was mentioning about how many people are now buying V6s rather than V8s and so on, but if that is what people really want, why do we need a law forcing automakers to produce those cars? If the automakers don't provide customer satisfaction, and if the dealers, Mr. Kelly, don't have cars on the lot that people want to buy, they will be penalized in the marketplace more ruthlessly than any government regulator could possibly administer. So it seems to me that the only purpose that a fuel economy standard would serve would be to actually limit what customers are able to buy and what automakers are able to sell and produce. I mean, that is the only point of them, really, because if we just had a totally free market, then automakers would be able to cater to consumer preferences rather than government agency directives. Mr. Buerkle. Thank you, Dr. Lewis. My time is up, but I just want one further comment, if I may, Mr. Chairman. In all of this, everyone wants to drive a fuel-efficient car, but I had six children, my son has seven children, so some of these options--it isn't that I don't want to drive a fuel-efficient car, it is that the reality is that I have to fit these kids in a car and I want my kids to be safe. I yield back. Thank you, Mr. Chairman. Mr. Jordan. I thank the gentlelady. Real quickly. Mr. Grenerth, as a small business owner who has the standards already imposed on your trucking company, did you feel your concerns were addressed during the comment time that you had? We are talking about the comment period that exists for people to weigh in, consumers and business owners. How was it for you? Mr. Grenerth. I know the staff from OOIDA is more than happy to get hold of me any time. They know I will show up in D.C. any time there is a worthwhile opportunity for input. They tried to get the EPA to provide an opportunity for actual truck drivers to have input. Nothing. They did not get back to them. That is one of the things that drives me nuts. Mr. Jordan. So you would agree with the statement that Mr. Lewis and Mr. Anwyl made, that it seems to be the deal is already done. Mr. Grenerth. Yes, that generally seems to sum it up there, definitely. It is very disheartening, to put it mildly. Mr. Jordan. I thank the gentleman. I now recognize the ranking member of the full committee, the gentleman from Maryland. Mr. Cummings. Thank you very much. As I listen to all of this, I am wondering what, Mr. Hwang, let's assume for a moment that all that Mr. Anwyl is saying is true, and Dr. Lewis. I am trying to figure out what is the down side of trying to save fuel. Maybe I am missing something. You talked about how we are sending dollars overseas and how it would be good to, for our consumers, our constituents, to spend less money on gasoline. But you have listened to Mr. Anwyl and he has talked about what consumers are doing, but what is the down side of trying to do this? Maybe I am missing something. Mr. Hwang. Frankly, Mr. Cummings, I strongly concur with you. I struggle to see down sides in this new proposal. The benefits to the consumer, the benefits to our balance of trade and reducing imported oil, the benefits to the environment are overwhelming. Why is there a law or requirement for automakers to raise fuel economy and lower CO2? Well, the fact of the matter is that there is a national interest here at stake: our energy dependency and the future of our health and our environment. So there is a national interest here at stake, so I think it is quite appropriate that there are long-term standards. Furthermore, of course, what we have seen over the past history of the U.S. auto industry and what we see in the combativeness associated with the last two decades of trying to lower carbon pollution and raise fuel economy for motor vehicles has not actually done a great service, actually has done a disservice to the U.S. auto industry, who was caught multiple times, when oils prices were raised and lost market share, jobs were lost, companies lost market share, especially the domestic automakers. So no one really wants to return to the bad old days of fighting about new standards because everybody recognizes that it is in our long-term interest, both from a business perspective from the U.S. auto industry and from a national interest perspective to reduce our dependency on oil and enhance U.S. economic competitiveness by having the U.S. auto industry build the cars of the future. And Ms. Buerkle, I am the father of two children. Safety is of absolutely critical importance to myself personally, and I would say that to your question about needing to haul around your family, needing a larger vehicle, when it comes to safety, design matters. Vehicles which are lighter can be safe, are safer than heavier vehicles. This is data that I am happy to submit; some of it is in my testimony. Furthermore, I also mentioned that there is a vehicle called the Chevy Equinox. The Chevy Equinox is a crossover utility vehicle that holds probably at least, I will have to check on that, but it is a mid-sided crossover utility vehicle. That vehicle achieves 25.9 miles per gallon, 50 percent higher than the 17.2 miles per gallon vehicle that Chevy replaced called the Chevy Trailblazer. Mr. Cummings. Let me just interrupt, because I want to ask you one more question. You talk about your kids. I teach my kids to never mistake a comma for a period, and I think we could go the route we have been going and be the same place we are 20 years from now. At some point I think we have to aim in the direction that we are aiming in. And let's assume what Mr. Anwyl says is true, that maybe people are not buying these vehicles as fast. I am just assuming for the moment. Maybe there are some people that need to catch up with that. I mean, at some point I can tell you people in my area, they need that extra savings because a lot of them have lost their jobs, lost their houses. So if there is any way that they can save fuel, they want to do that. When we talk about innovation, sometimes we need to be aiming at a higher standard. We are better than this. When I go to other countries, it seems like I see these cars everywhere. How do we compare to other countries with regard to this kind of issue? Mr. Hwang. Well, the fact of the matter, when it comes to international competitiveness, we have slipped behind, and we are behind Europe and even China when it comes to current fuel economy levels. Both Europe and China are moving forward very aggressively with advanced vehicles also, including electric vehicles. So the world is moving at a more fuel-efficient, the world is moving toward hybrid electric vehicles, battery electric vehicles, plug-in electric vehicles, and that is really the future and that is really where we need to invest our money, in our U.S. manufacturing innovation and competitiveness, if we still want to be able to compete in the 21st century. Mr. Cummings. Thank you, Mr. Chairman. Mr. Jordan. I would argue part of that in Europe is the price of gasoline is about $8 a gallon, so there is a little different climate there. Let me just, real quickly, ask Mr. Lewis. You know, Mr. Hwang, if it was up to him, why don't we make it 70 miles per gallon, 100 miles, if it is going to be all this wonderful world and just raise it as high as we possibly can? Can we meet the standard now, the 49 miles per gallon, that NHTSA has, the 54 that EPA? Can that standard be met today? I know that is the target in the future, but can it be met? Mr. Lewis. There are very few cars that could meet that standard today. Mr. Jordan. And certainly not in a practical sense, for folks who live like in northwest Pennsylvania, like Mr. Kelly talked about, right? Mr. Lewis. Yes. Yes. And if we are going to offer $7,500 in tax rebates to put a million of these vehicles on the road, that is $7.5 billion in loss of revenue at a time of a fiscal crisis. So you wonder how affordable it is from a national perspective as well. I wish I had the reference here, I will provide it to the committee, but I saw an article only a few weeks ago that said that in China SUV sales are booming, that in 2010 there were 850,000 SUVs sold and only one hybrid sold. One Prius in all of China, and it may have been purchased from an engineer who was trying to take it apart to see how it worked. So here is the down side that I see. Mr. Jordan. Quickly, because I want to recognize the gentleman from Idaho. Mr. Lewis. Okay. The premise of setting fuel economy standards really is that consumers don't understand their best interest, that they let the short-term pain of a higher priced vehicle overwhelm their good judgment in achieving longer-term fuel savings. But this kind of reduces the consumer to a two- dimensional character. The only thing that the consumer considers from this mentality is up-front costs versus fuel expenditures. Whereas, in fact, we know that consumers are much more complicated than that. Sometimes you don't want to spend a couple extra thousand dollars this year on a car because you want to send your kid to college or because you need it for the kid's music lessons. So if you read the EPA NHTSA literature, they say the consumers undervalue fuel economy. Well, that is like saying consumers undervalue music lessons. Mr. Jordan. Thank you. Mr. Lewis. And where it gets really crazy. Mr. Jordan. Hang on a second. I am going to stop you right there. Mr. Lewis. Okay. Mr. Jordan. I want to get to Mr. Labrador, and maybe you can jump right back in there. The gentleman from Idaho is recognized. Thank you. Mr. Labrador. Thank you, Mr. Chairman. Mr. Grenerth, I just have a question. I don't know if you heard what Mr. Hwang just said, but he said that there is really no down side to this new CAFE standards, and I think I heard your testimony say something different. Do you agree with his statement? Mr. Grenerth. Oh, I definitely would say there is a down side to it, because the fact that if you just look at, for example, the last time the EPA did this with the 2004 and 2007 standards, fuel economy dropped with the exhaust gas recirculation being introduced in trucks, it dropped by one mile per gallon. One mile per gallon on a vehicle that gets, on a good average, 6 miles per gallon. That is a huge down side. That is very detrimental. That puts more greenhouse gas out in the air. The other thing that came along with that is reduced reliability, and I mean in a big way. Those valves fail frequently. As a matter of fact, I called a shop back in Congressman Jordan's district, where I get my truck worked on, and this is a pretty small truck repair shop, too. In that week they replaced four EGR valves on trucks. That is $400 apiece plus basically missing an entire day's work and maybe, even worse than that, losing a customer because you are viewed as not a reliable individual anymore in your business. So that unproven technology is a very, very serious concern. It has been proven, unfortunately, from these previous mandates, that this does happen, talking about trying to push technology that is really not there. And that is why I personally can tell you that when I went to buy my truck, almost exactly 3 years ago, when I became an owner-operator, I intentionally purchased a truck that did not have that exhaust gas recirculation on it because I believe that I can make the choice the way I drive the vehicle between here and my right foot, that I know how to drive it appropriately and get the best fuel economy. I haul very heavy loads all the time. I get 7.2 miles per gallon. Mr. Labrador. So what you are saying is that central government planning doesn't necessarily work. Mr. Grenerth. Absolutely. It doesn't necessarily mean you are going to end up with proven technology. There are a lot of risks in this. I don't gamble. I am willing to take a risk being a small business owner, but I do not gamble, definitely not. Mr. Labrador. Mr. Anwyl, what is the number one selling vehicle in America right now? Mr. Anwyl. Generally, it is the F-150 pickup truck from Ford. Mr. Labrador. And that is just like a Prius, right, it gets the same gas mileage? Mr. Anwyl. It is a little bit bigger than a Prius. Mr. Labrador. Okay. And can you explain to us why, if America wants fuel efficiency, why the F-150 is the number one selling vehicle in America? Mr. Anwyl. Well, I think it actually is supported by my earlier testimony, and that is that consumers are looking for fundamental utility when they buy a vehicle. They buy a vehicle to do something, to take their family around, to haul something, to tow something. And I think it is important to note that the car companies have been delivering utility and better performance, better safety, and improved fuel economy over the past few years, and I do expect that to continue. So when we talk about the future, what we need to be recognizing is that the future in terms of fuel economy is going to improve even without additional regulation. The trend line there is pretty clear. The F-150 is interesting because they have introduced a V6 EcoBoost engine, and I think that is probably the best evidence of what I have described, because what Ford has done with the EcoBoost is actually improved the utility of the truck; it has more torque, more towing capacity, happens to get only 1 mpg better, so it is not like it is solving all the problems, but it is a step in the right direction. Mr. Labrador. Excellent. Dr. Lewis, I am having a hard time here understanding why, if America wants these cars, we have to give them $7,500 to buy them. I really like Big Macs, and the Government doesn't have to make me, force me to buy those Big Macs. So how does this work? Mr. Lewis. Well, you have just provided the reductio ad absurdum, and you are absolutely correct. And what is even, I think, stranger, and this is what I was going to get to earlier, is that the EPA and NHTSA seem to think that even truck drivers, people who haul freight for a living, people whose single biggest operating expense is fuel, people who live on razor thin profit margins don't understand their true interest are shortsighted buyers and need to be forced to buy trucks that meet Government-imposed fuel economy regulations, and, you know, it is like saying we need a Big Mac mandate. Mr. Labrador. So we are too stupid to know that we want these cars. Is that what is being said here? Mr. Lewis. I think there is a nanny status aspect to this in which ordinary people are viewed as just big children. Mr. Labrador. Mr. Chairman, I respect your job very much and I think that if we are going to look at Government spending, the fact that we are spending $7,500 for each one of these cars, and in some States we are adding another $2,000 to $2,500, I think that is wasteful Government spending, especially if it is something that the people want. Mr. Jordan. Well said. I thank the gentleman. Now yield to the ranking member of the committee, my good friend from Cleveland, Mr. Kucinich. Mr. Kucinich. Thank you very much, Mr. Chairman, members of the committee. I just want to say I think Mr. Anwyl is one of the most remarkable witnesses that this committee has ever had because he came to a town that is totally reliant on polls. [Laughter.] The White House, the Presidential race, Republican Party, the Democratic Party, just about every Member of Congress is reliant on polls, and we have a witness come before this committee who tells us definitively, authoritatively, no doubt, that polls are not scientific. I want everyone to mark this moment and check with your campaign treasurers. [Laughter.] And I think that we ought to take Mr. Anwyl's other comment about consumers don't care much about fuel economy with the same humor. Now, I just want to say the trucking industry is a critical part of Ohio's economy; provides Ohio with over 290,000 jobs. But in order to survive and remain competitive, truck drivers need trucks that get better gas mileage and cost less to operate. That is exactly why the new fuel efficiency standards for medium- and heavy-duty trucks that are finalized this summer are so important to Ohio and the trucking industry; and it is also why there is a long list of trucking industry groups that support the new rule, including the American Trucking Association and its Ohio affiliate, the Ohio Trucking Association. Now, Mr. Hwang, I am puzzled by Mr. Grenerth's testimony that members of the Owner-Operator Independent Drivers Association will be harmed by the new standards. Can you discuss the impact of the proposed fuel economy standards on the trucking industry, including trucking companies that are small, locally owned businesses? What do they stand to gain or lose? Thank you. Mr. Hwang. Thank you, Mr. Kucinich. According to EPA analysis, standards of this new fuel economy and CO2 program for medium- and heavy-duty trucks will save truck owners quite a bit of money. Semi-truck owners will save an average of $73,000 over the life of the truck. Purchasers of new trucks, fuel savings in the first year will outweigh incremental costs of $6,200, so fuel savings are estimated to be about, for most truck drivers, $10,000. For drivers that finance their purchase, savings will accrue immediately in the form of lower monthly payments both for the vehicles and fuel costs. So in the first month most truck owners will actually see savings; in the first year they will see the incremental costs paid. Mr. Kucinich. Thank you, sir. I just want to say whatever views one holds about environmental protections against greenhouse gas emissions, it would be difficult to dispute the fact that unemployment and a weak labor market are continuing to devastate the future of this country. The bottom line is that job creation benefits from the manufacturing of fuel- efficient vehicles and components will help reduce the massive unemployment rate in this country. Ohio is at the heart of the auto industry, ranking second only to Michigan in terms of employment in the motor vehicle industry. In Ohio, it is estimated that the higher fuel standards will create at least 23,000 new jobs. I know that in Ohio we have many more skilled workers who would jump at good jobs in a clean auto manufacturing industry. Now, we have a chart here. Now, this chart shows every Member's district in this room stands to gain jobs resulting from new technologies. Mr. Hwang, again, can you talk in detail about the array of job opportunities, both inside and outside the auto industry, that will be created as a result of higher fuel efficiency and auto pollution standards? Mr. Hwang. Yes, I would be glad to. In terms of job opportunities for fuel efficiency, we have seen what has happened to the U.S. auto industry from lack of attention to fuel efficiency; jobs have been lost, market share has been lost. Conversely, we see the benefit already of the U.S. auto industry, U.S. auto supply industry already in a joint study by United Auto Workers, NRDC, and the National Wildlife Federation have identified already 300 facilities in 43 States plus the District of Columbia that are currently responsible for employment of 150,000 workers today that are building components for fuel-efficient and clean advanced and conventional I would add vehicle technologies. According to a recent forecast, in 2030 the job creation potential will be close to 500,000 for a 54.5 mpg by 2030. That is accruing both from new manufacturing jobs and the fact that there will be more money back in the pockets of consumers equivalent to a $330 tax rebate that they can spend back into the economy. Mr. Kucinich. I want to thank the gentleman. My time has expired. Thank you, Mr. Chairman. And I want to thank each of the witnesses for testifying. Thank you. [The prepared statement of Hon. Dennis J. Kucinich follows:] [GRAPHIC] [TIFF OMITTED] 71980.083 [GRAPHIC] [TIFF OMITTED] 71980.084 Mr. Jordan. I thank the gentleman. We now yield to the chairman of the full committee, gentleman from California, Mr. Issa. Mr. Issa. Thank you, Mr. Chairman. Following up on Mr. Kucinich, there is a lot of humor here and I know that Dennis, my friend, you intend to find humor whenever you can. But what I find humor is that only a couple weeks ago this committee had a hearing in which we had Secretary Hilda Solis and we asked her about green jobs, and she was able to show that this administration, for $250 million, had managed to create 1,000 new green jobs, those being jobs that last a year or more. They created 8,000 if you don't mind the fact they only lasted as long as we paid for the training. So what I find interesting in Mr. Hwang's testimony is he is talking about green jobs. Well, the problem is the definition of green jobs includes a bus driver, we found out last week. Not the hybrid bus driver, not electric bus, just any form of public transportation. So as I see this administration have a war on the private automobile and the private light truck, I kind of get it that, yes, you will get green jobs, and those green jobs will be forcing people off the road and out of the vehicles they want. Dr. Lewis, when I compare the mission of the NRDC, which is to save the earth and to hell with the American people--no, I am serious. Sometimes you just get a witness and you look and say I know the organization; I am sure he is knowledgeable and so on. But I have been through this. Clearly, they could care less about whether we still have automobiles. As a matter of fact, we are mandating electric vehicles. Fine. GE bought a bunch of them as long as they got the tax break. But we are doing it when we still don't have a nuclear or other alternative to the 51 percent of our fuel that is created by coal when it comes to electric fuel. So I want to ask a couple of quick questions. When you look at the total package of subsidies and unfunded mandates that are in the current CAFE increase--and when I say unfunded, the cost to industry that they are going to have in addition to the subsidies and so on--if you were to take that amount of money and set it in a pot and say we will invest in better mileage technology at a given weight, a given performance level, what fraction of that $100 billion a year do you think it would take if the Government started looking and saying we want to be part of the solution, not simply shift cost to people so they can feel good? I happen to own a Prius. It is a wonderful vehicle. At the end of 50,000 miles, it hasn't paid for itself, and everyone knows it. Where will we be if we took that other tact, instead of constantly shifting huge amounts of unfunded mandates to auto companies, some of them effectively owned or controlled by the American administration currently in the White House? Mr. Lewis. Well, I do think that we would be more prosperous in that the auto industry would be--one of the figures that was cited earlier is that just to comply with the current model year 2012 to 2016 standards requires an investment of $50 billion. Now, what if that money had been invested by the auto industry to meet revealed consumer preferences? I would imagine that some of that would have gone into fuel economy improvements. But some of it might have gone into other amenities, features, capacities, maybe things we can't even imagine. So it seems to me, though, that a very good suspicion is that it would have, in the long-term, produced more jobs, more happy customers than the Government trying to determine what it is people should want to buy. Mr. Issa. Mr. Grenerth, I am going to follow up with you. As an environmentalist, as somebody who does care about how we get more for less strain on our environment, you mentioned you carry heavy loads. By definition, to get to 55 miles per gallon, isn't a big part of that going to be simply limiting the capacity of vehicles, dumbing down categories so that your category may not be where the real savings is; the category of the vehicle you need to carry heavy loads simply may be the one that they try to find a way not to sell? Isn't that really what you have seen in the past in CAFE standards? Mr. Grenerth. Well, there is definitely with Kenworth, for example, streamlined option choices when we are talking about large trucks. They are talking about, to meet these standards, having to eliminate some of the choices that are available, and those are things like, when you get into heavy-haul, people that do--when I say heavy, I am talking 80,000 pounds, typically. Mr. Issa. Okay. And I assuming that you already go to alloy wheels, alloy tanks, aerodynamic improvements. Mr. Grenerth. I have a few things---- Mr. Issa. All the things that reduce drag and to reduce weight. But ultimately, if you are carrying a 65,000 pound cargo, that part, there is no way to make it lighter, is there? Mr. Grenerth. Absolutely. Or if it is a very large object with a lot of wind resistance. You can't do that. Mr. Issa. So when we look at the standard--and we have been talking about cars and light trucks today. When we look at the standards, don't we really have to look at the fuel economy achievements, carrying a specific load, whether that is the vehicle or, in this case, the cargo; look at the low-road industry and the improvements that they continue to make because it is all about carrying more for less, and the heavy truck industry, and haven't we found that basically that is mostly an engine design improvement to optimize efficiency, something that is not in the CAFE standards? The CAFE standards rewards you for simply taking weight out, making light, tiny vehicles, not necessarily producing true efficiency increases. Isn't that what you found in the trucking industry? Mr. Grenerth. I found you definitely have to spec your vehicle out for specifically what you are doing. Owner- operators take great care to make sure that the wheels, the transmission, the final gear ratio---- Mr. Issa. Tire pressure. Mr. Grenerth [continuing]. Everything, tires, exactly, and maintain it impeccably as well, too. So, absolutely, you have to do that or you are not going to succeed. It is that simple. Mr. Issa. Thank you. Mr. Chairman, I might comment for the record, because it always seems like the press says you have a vested interest in this. I had two RVs. My old RV, which used the Mercedes diesel, was a Sprinter, Dodge Sprinter, before they required that actual fuel economy reduction design. So I have experienced my old one versus my new one; and I like the new one and I like a lot of the features. But going to a newer RV with a ``next generation engine'' and getting less mileage was pretty repugnant to me, and I think to all of us who---- Mr. Kucinich. Would the gentleman yield? Mr. Issa. Of course. Mr. Kucinich. I would just like to say while the chairman and I may have some fundamental disagreements about where we go with these policies, I think there are probably very few Members of Congress who have the kind of expertise that you do have in this area. We have to appreciate that. Mr. Issa. Thank you. And I thank you for pointing out the wrong way in diesel technology because it is something that I think this committee didn't watch closely enough, and hopefully we will continue to monitor it. Thank you, Mr. Chairman. Mr. Jordan. Thank you. Mr. Hwang, earlier you referenced material on safety and the idea that lighter cars are in fact, you cited, I think, some study that shows their safety. We would like for you to provide that to the committee at the end of the hearing, if you would be able to do that. I want to next recognize Mr. Guinta for his 5 minutes. Mr. Guinta. Thank you very much, Mr. Chairman. Mr. Hwang, I read your testimony on page 3. You said by 2030, the 2012 to 2025 national program standards will reduce oil consumption by 3.1 million barrels per day. Can you tell me what expectation you have for vehicle sales annually during that period of time? Mr. Hwang. Yes, absolutely. The issue of vehicle sales, as currently, the estimate for this year, the sale for calendar year 2011 is 13.6 million units. I believe in 2008, when the auto industry hit rock bottom, the units were about 10 million, 10 point something million units. So this points to the fact that vehicle sales can increase, profits can increase, as well as fuel efficiency. If you take the agency estimates, as well as our estimates of what the cost of the new technology will be and what the payback time will be in 2025 for the 54.5 mpg, my full expectation is that vehicle sales will continue to increase from the 13.6 million units that we are expecting this year, and my full expectation is that these vehicles will actually be highly desirable for consumers, and because of the payback time attractiveness, that there will be no impact, and if there is any impact, in my opinion, it will be a positive impact, an increase in sales. Today, the vehicles on the used car market, the most valuable cars on the used car market, according to data from KBB, from Edmunds, and other places, and also NADA, the National Automobile Dealers Association, the most valuable vehicles on the used car market today are fuel-efficient vehicles; the least valuable vehicles on the used car market today are fuel-inefficient vehicles. The F-150 is a great example. In the new car market, 6 out of 10 buyers are buying the F-150 EcoBoost more fuel-efficient V6 option. So consumers are willing to pay more for fuel efficiency because of the benefits that it accrues. So my expectation is that sales in 2025 will continue to increase from today's and it will, if anything, vehicle sales will be higher than otherwise. Mr. Guinta. Okay, in New Hampshire, where I represent, we roughly have 600 businesses that are related to the motor vehicle industry and we have about 13,000 employees. There was a chart that was put up earlier that showed, with these standards, we would increase jobs in New Hampshire by approximately 2,600. I would love to see an increase in this industry for New Hampshire by 2,600. What you are saying is, in part, the increase in sales will continue to grow as the economy comes back, but you also said something else. You said this is based also on payback. I want to take just Manchester, the city that I am from. The average family income is somewhere between $55,000 and $60,000. If you are looking at payback and looking at Chevrolet as the example, the Cruze is a $20,000 vehicle, the Volt is $45,760. That is a difference of $25,763. Here is the math that I don't quite understand. The Cruze, $1,682 is what you would spend annually for fuel, and the Volt is $1,000 according to the sticker. So that is a difference, a fuel savings of $682 per year. My math says that you would have to have that car for 37 years in order to achieve payback. So if I purchase that today, I just had a birthday last month, I am 41, I would be 78 years old by the time I had payback on that vehicle. I am struggling to see how the marketplace, the consumer, when they walk into a showroom and decide that they want a vehicle with greater fuel efficiency, and I agree with the statement made earlier that fuel does matter, but purchase price matters even more. So if you can find a purchase price that dictates these savings, I think the theory would be that more people would buy these vehicles. But you are talking right now about almost a $26,000 differential and a 37-year payback. So I struggle to appreciate or understand how that math would work and how the country, over this period of time, would see that 37-year payback as something effective for their family and efficient for their family in cost dollar savings. Mr. Hwang. Well, very quickly, in 2025--today's technology is not 2025 technology, for one. Second, the calculations that we have done based upon the agency and our own cost estimates, is that in the first month drivers who financed the purchase of their vehicles will see monthly savings in their vehicle payments and fuel costs. Their costs will go down. Mr. Guinta. But how is that possible if the vehicle is $45,000 today for the Volt, $45,760. So if I, as an average shopper--what does an average individual spend on a car, $25,000? Unidentified Speaker. Thirty-three. Mr. Guinta. Thirty-three. Okay, so just take the 33 number. You are adding, you are going up to $45,000, almost $46,000. I fail to see how the financing would actually monthly payment would come down. I mean, unless you are financing it over a longer period of time, of course it would come down in that perspective. Mr. Hwang. I believe, sir, the difference in our calculations are that, and my calculations and my estimates based upon the agency's and other publically available research data, we believe that Chevy Volts and other kind of electric vehicles will actually not be required to--no one will have to be required to build those kinds of vehicles to meet the 2025 standards. In fact, the 2025 standards can be met through relatively conventional gasoline vehicle technology, much less expensive. The example I gave earlier is 50 percent improvement between a Chevy Equinox and a Chevy Trailblazer, and both of those are considered to many people as a sport utility vehicle, when in fact the Equinox is a lighter, more fuel-efficient so-called crossover utility vehicle, 50 percent better improvement in the combined EPA estimated fuel economy. Mr. Guinta. Thank you, Mr. Chairman. Mr. Jordan. I thank the gentleman from New Hampshire. Mr. Kelly, you are recognized. Mr. Kelly. Thanks, Mr. Chairman. I would like to ask we put in the record I have the actual window stickers that would probably help testimony that shows actually the list prices and the fuel savings based on the calculations that is on the label of every vehicle produced. So I would like to submit that because that really adds some authenticity to what we are talking about. Mr. Jordan. I thank the gentleman. Mr. Anwyl, just one question for you. Why, if it is not in the consumers' best interest, if it doesn't seem to be in the best interest of the market, why are the auto manufacturers going along with the whole process, the whole scheme? Mr. Anwyl. Well, I think that is a good question and it is one I put to them directly. I meet with the car companies on a regular basis. The expression that I hear repeatedly is they felt they had a gun to their head, and by that I think they are referring to the threat of a California opt-out, the California waiver. We have talked about the balkanization of the marketplace, but the cost associated with meeting individual standards across the 50 States would be overwhelming. So the threat of the California waiver is very real and very scary. Mr. Jordan. And you have individuals represent the auto manufacturers tell you this personally? Mr. Anwyl. Yes, absolutely. Mr. Jordan. Okay. I thank the gentleman. I want to thank our panel for a great hearing. Mr. Anwyl. Mr. Anwyl. I don't know if this is out of order or not, but I do---- Mr. Jordan. It is, but go ahead. Mr. Anwyl. Okay. Well, I wanted to characterize, again, my testimony as not saying that consumers don't care about fuel economy, because that is not what I am saying. What I am saying is they care about other things more. Mr. Jordan. Exactly. Mr. Anwyl. And the second thing I would like to offer for the written record would be copies of peer vetted academic research that actually do show that what consumers say in polls and what they do in the real world are not the same thing. And I feel that that might be a public benefit as an outsider from Washington. Mr. Jordan. Without objection. [The information referred to follows:] [GRAPHIC] [TIFF OMITTED] 71980.064 [GRAPHIC] [TIFF OMITTED] 71980.065 Mr. Jordan. Since we are going down the list, go ahead, Mr. Lewis. Mr. Lewis. Okay. Well, thank you very much. There is a cartoon that I would like to send the committee which shows a man who looks very depressed, and his friend says what is wrong? And he says, everybody I talk to lies to me. Why? Are you a defense attorney? No, I am a pollster. Mr. Jordan. Here we go. Mr. Lewis. But a point that I would like to make in regard to Chairman Issa's question about an unfunded mandate, you see, if I remember the figure from Mr. Hwang's testimony, EPA and NHTSA are saying that the truck driver will save something like $68,000 over the lifetime of the truck, netting out all the costs with the savings. Mr. Jordan. Mr. Grenerth disagrees. Mr. Lewis. Right. Okay. Now, the problem, though, is what if EPA and NHTSA are wrong? What if the reliability problems that Mr. Grenerth talked about are just horrendous and he actually ends up with the short end of the stick, paying more for a truck that costs him more to operate? And then what about the manufacturer who then finds that there is no market for these vehicles? If EPA and NHTSA were actually providing a guarantee, we guarantee that you will save $68,000 over the life of the truck and, if not, we will refund your purchase to that amount, it would be a whole different story. But my point is that the agencies don't assume any of the risk. And we know that when people make decisions, including regulatory decisions, and other people bear all the risks, well, then factors like ideology get to play a bigger part than prudence. Mr. Jordan. Well said. In the spirit of bipartisanship, I will give you 30 seconds, Mr. Hwang and Mr. Grenerth. One last quick statement because we do want to get to our next panel quickly because I have to leave shortly. Mr. Hwang. Yes, much appreciated, Chairman Jordan. I will just say, in terms of your request for the safety data, that is all in my testimony, and I am glad to provide the committee with even more data, and I am also glad to provide the press release from a safety expert named Clarence Ditlow that reinforces the position. Mr. Jordan. Great. Mr. Grenerth. Mr. Grenerth. Yes, absolutely. Appreciate it. I would just say earlier Mr. Kucinich was asking about the cost in Ohio and all that. We are talking about basically $50,000 being added to the cost of a vehicle. That is a huge problem for a small business owner. And regarding EPA's attitude about this and not including truck drivers, to me it is as if you are a doctor and we give you a drug without consulting you. They are trying to force us to take this medicine, if you will, that we have no idea what is going to happen. It is unproven technology we are going to rely on and that could be fatal to my business. Mr. Jordan. Thank you very much for taking the time to come today, Mr. Grenerth, and all of you as well. We appreciate your great witness panel. We will quickly get ready for the next panel because we have to move very fast. The committee will come back in order. I want to thank our witnesses for being here and for your patience. We thought the first panel was great and we had, as you can see, a full committee. But we now want to welcome you. Our first witness is the Honorable David Strickland. He is the Administrator of the National Highway Traffic Safety Administration. We also have with us the Honorable Gina McCarthy, who is the Assistant Administrator for the Office of Air and Radiation at the Environmental Protection Agency; and also Mrs. Margo Oge, who is the Director of the Office of Transportation and Air Quality at the EPA. So let's quickly swear you in. If you would please stand and raise your right hands. [Witnesses sworn.] Mr. Jordan. All right, let the record show that all witnesses answered in the affirmative. Mr. Strickland, you know the routine here. You have 5 minutes. Fire away with that high-tech gadget there in front of you. STATEMENTS OF DAVID STRICKLAND, ADMINISTRATOR, NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION; GINA MCCARTHY, ASSISTANT ADMINISTRATOR FOR THE OFFICE OF AIR AND RADIATION, ENVIRONMENTAL PROTECTION AGENCY, ACCOMPANIED BY MARGO OGE, DIRECTOR OF THE OFFICE OF TRANSPORTATION AND AIR QUALITY, ENVIRONMENTAL PROTECTION AGENCY STATEMENT OF DAVID STRICKLAND Mr. Strickland. Thank you. On the part of Secretary LaHood and the entire Department of Transportation and my staff at the National Highway Traffic Safety Administration, we appreciate this opportunity to testify before you today on our efforts to improve the corporate average fuel economy [CAFE], standards. Now, this joint rulemaking with the Environmental Protection Agency highlights the very best in the rulemaking process. This process created greater transparency with early technological engagement with stakeholders assisted these agencies to develop the most informed proposal possible to maximize economic and environmental benefits without impacting safety or vehicle choice. Now, Ms. McCarthy and Ms. Oge will speak to a lot of the aspects about our work and process-wise. I want to take my time in oral statement to talk about the safety perspective, which is my agency's core mission. We at the National Highway Traffic Safety Administration do not require any manufacturer to do anything that would have a negative impact on safety. Past safety tradeoffs occurred because manufacturers chose at the time to build smaller and lighter vehicles to help them meet the CAFE standards in years past. Staying true to our safety-first mission, the National Highway Traffic Safety Administration moved from a flat fuel economy standard that subjects each manufacturer to a single standard, regardless of differences in their product mix, to an attribute-based standard. This attribute system, which is used as the vehicle's footprint as the foundation for the standard, was then mandated by the Energy Independence and Security Act in 2007. Under this revised system, cars and light trucks have fuel economy targets based on a specific vehicle's footprint, which is roughly the area between the points at which the tires touch the ground. As a result, manufacturers no longer have an incentive to try to average out sales of larger vehicles by producing more small vehicles. Every additional small vehicle actually increases a manufacturer's overall compliance obligation under the new attribution system. In our analysis, then, we try to make sure that the proposed standards are safety-neutral in two ways: first, we set footprint-based standards that do not encourage manufacturers to build smaller vehicles to even out the larger ones; and, second, although manufacturers can choose whatever technologies they want to meet our standards, we demonstrate that in our analysis there is a feasible technology path that the industry could pursue to meet the standards that do not require unsafe levels of mass reduction. The National Highway Traffic Safety Administration will be continuing this safety- neutral approach in the upcoming CAFE proposal as we undertook this work in model year standards for 2012 through 2016. Now, in addition to building on the safety efforts that we founded in 2012 to 2016, working in collaboration with the Environmental Protection Agency, we also were tasked to make sure that this process had the ability to pull forward the hard work that we achieved in model years 2012 to 2016 very successfully. That work was almost 14 constant months and, frankly, the work for model years 2017 to 2025 has actually been a very intensive and very transparent 2-month effort. After several milestones, including the Notice of Intent that was issued in September of last year, also the Joint Interim Technical Assessment Report, we, along with the Environmental Protection Agency, looked at the potentials of cost, effectiveness, and lead time requirements for over 30 technologies that could be applied toward the new standards in 2025. These particular assessments describe the Agency's initial assessment of what could be done, recognizing that we received comments from more than 30 organizations and more than 100,000 individuals. Following this opportunity for public notice and comment through these processes, we published a supplemental Notice of Intent in December 2010 which highlighted many of the key comments received in response to the initial Notice of Intent and to the initial Technical Assessment Report. It is that work, us and the Environmental Protection Agency, working in consultation with the California Air and Resources Board, where we undertook an opportunity to have a forward-reaching opportunity to speak to key stakeholders to better inform the upcoming proposal for model years 2017 to 2025. This is something exactly that the President of the United States asked for us to do in his executive order and, frankly, shows the best aspects of how rulemaking should be made clear, transparent, and forward thinking. Thank you very much, Mr. Chairman. [The prepared statement of Mr. Strickland follows:] [GRAPHIC] [TIFF OMITTED] 71980.066 [GRAPHIC] [TIFF OMITTED] 71980.067 [GRAPHIC] [TIFF OMITTED] 71980.068 [GRAPHIC] [TIFF OMITTED] 71980.069 Mr. Jordan. I thank the gentleman. Ms. McCarthy, you are welcome to go. STATEMENT OF GINA MCCARTHY Ms. McCarthy. Chairman Jordan, members of the committee, first, thank you for inviting Margo Oge to testify today about motor vehicle regulations that are being developed jointly by EPA and NHTSA that will reduce greenhouse gas emissions and improve fuel economy for cars and light-duty trucks, as well as medium- and heavy-duty trucks and engines. These motor vehicle regulations are a great success story for this country. They will save consumers and small businesses money; they will lower the cost of transporting goods; they will reduce our dependence on foreign oil; and they will help protect the environment. Combined, the model year 2011 to 2025 light-duty vehicles are estimated to save Americans $1.7 trillion in fuel costs and reduce our need for oil by a total of 12 billion barrels. Ultimately, our savings will reach nearly 4 million barrels a day. That is almost as much as we import from all OPEC countries combined. The regulations are supported by a wide variety of stakeholders, including the industries they regulate, the labor unions representing workers in those industries, environmentalists, and States. The first of these regulations was last year's joint EPA- NHTSA rulemaking for model year 2012 to 2016 vehicles. This national program allows manufacturers to build a single national fleet that satisfies EPA, NHTSA, and California standards. It is common sense, good government approach that harmonizes three different regulatory programs. EPA standards for model year 2016 light-duty vehicles are projected to achieve an average tailpipe CO2 compliance level of 250 grams of carbon dioxide per mile, equivalent to a fuel economy level of 35.5 mile per gallon if they are met only through fuel economy improvements. Over the lifetime of the vehicles, these standards are projected to save 1.8 billion barrels of oil and reduce greenhouse gas emissions by about 960 million metric tons. Consumers and small businesses buying model year 2016 vehicles are projected to average net savings of $3,000 over the life of the vehicle. Those fuel savings far outweigh the initial additional cost of the vehicle. We are now working on the President's request to extend this national program to 2017 to 2025 vehicles. This past July we published a preliminary framework for this program, including standards that could lead to a projected EPA fleetwide model year 2025 compliance level of 163 grams per mile CO2, which is equivalent to 54.5 mile per gallon, if reductions were achieved through fuel economy improvements. We project these standards set at these levels would reduce greenhouse gas emissions by approximately 2 million metric tons and save 4 billion barrels of oil over the lifetime of the vehicles, while still allowing consumers to have access to the full range of vehicle choices that they have today. The preliminary elements of the 2017 to 2025 program were informed by extensive public process over the course of the past year that included publication of a technical assessment of a range of standards, several notices published in the Federal Register, and extensive dialog with a wide range of stakeholders. The program is supported by letters from no less than 13 CEOs of auto companies, as well as the California Air Resources Board, which again intends to accept compliance with the Federal program as meeting California's standards. EPA and NHTSA will soon publish a Joint Notice of Proposed Rulemaking, seek an additional public comment before making any final decision on the 2017 to 2025 greenhouse gas and CAFE standards. The third set of regulations is a joint EPA and NHTSA rulemaking that established greenhouse gas and fuel efficiency standard for model year 2014 to 2018 medium- and heavy-duty trucks and engines. Supporters of this program include engine and truck manufacturers, the American Trucking Association, environmental groups, and California. We estimate that these standards will save about 530 million barrels of oil, they will reduce CO2 emissions by about 270 million metric tons, and help vehicle owners achieve $50 billion in total fuel savings over the lifetime of these vehicles. A semi-truck operator could pay for the technology upgrades in under a year and realize net savings of $73,000 to reduce fuel costs over the truck's useful life. Efforts like this national program represent monumental achievement for America and American families. History has shown that we can clean up pollution, preserve jobs, help grow our economy all at the same time. Again, I appreciate the opportunity to provide the Agency's views on this matter and I look forward to answering questions. Thank you very much. [The prepared statement of Ms. McCarthy follows:] [GRAPHIC] [TIFF OMITTED] 71980.070 [GRAPHIC] [TIFF OMITTED] 71980.071 [GRAPHIC] [TIFF OMITTED] 71980.072 [GRAPHIC] [TIFF OMITTED] 71980.073 [GRAPHIC] [TIFF OMITTED] 71980.074 [GRAPHIC] [TIFF OMITTED] 71980.075 [GRAPHIC] [TIFF OMITTED] 71980.076 [GRAPHIC] [TIFF OMITTED] 71980.077 [GRAPHIC] [TIFF OMITTED] 71980.078 [GRAPHIC] [TIFF OMITTED] 71980.079 Mr. Jordan. Thank you, Administrator. We will go first to the gentlelady from New York, Ms. Ann Marie Buerkle. Ms. Buerkle. Thank you, Mr. Chairman, and thank you to our panelists for being here this morning. For those of you who don't know me, I have spent much of my professional career in health, so safety is of utmost importance to me. As I mentioned in the previous panel, I have six children and soon to be 12 grandchildren, so safety is always on my mind when you are putting kids in a car. Mr. Strickland, you talked about one of the ways to increase efficiency and decrease the use of fuel is decreasing the weight of a car, and I am concerned. Can you talk to me about the safety impacts resulting from making fleets smaller and lighter? Mr. Strickland. Absolutely. Well, the goal is actually to not encourage mass reduction, but actually to use fuel economy through driving technology, which is the reason why the National Highway Traffic Safety Administration went to an attribute-based standard, I believe, for our last set of truck rules prior to 2012 to 2016, which I think are for light-duty trucks, which was, I believe, in 2005. That system was actually not only validated, but actually mandated by the Congress in 2007. When you have a flat standard, which is basically one rule covering the entire manufacturer's individual fleet, that encouraged car companies at the time to offset larger vehicles by making more smaller vehicles. This attribute-based system actually discourages that, and what you do is you don't take out weight. Actually, what you do is you encourage manufacturers to reduce weight in their largest vehicles. So not only do you have---- Ms. Buerkle. Okay, I don't mean to interrupt---- Mr. Strickland. Oh, certainly. Go ahead. Ms. Buerkle. Five minutes go by so quickly. Ms. Oge, I would like to just follow up with you. With regards to EPA and the concern for this fuel efficiency, what if the number of increase in fatalities and injuries goes up? At what point does the EPA say maybe this isn't such a smart idea, maybe this fuel efficiency approach is to the detriment of safety, so we are going to back off of this? Ms. Oge. Thank you for the question. Actually, this is a question that should go to Mr. Strickland. The beauty of the two agencies working together is that we were able to bring the expertise of our two technical teams. EPA has extensive expertise for the past 40 years to regulate the car companies for emissions and NHTSA has significant expertise in the area of safety. So, working together, we are going to put a proposal together that will demonstrate---- Ms. Buerkle. So let me just---- Ms. Oge [continuing]. Safety neutral proposal. Ms. Buerkle. So EPA is setting these standards without having the expertise with regards to safety issues? Ms. Oge. Under the Clean Air Act, we are required to look at safety, and we do that, so we have our own expertise. But also NHTSA has that expertise, so we rely on NHTSA when it comes to the fuel economy greenhouse gas program. Ms. Buerkle. So based on that would you just tell me what EPA's position is with regards to safety? We always do benefits and burdens analysis, so we want fuel efficiency, but we also want safety. So at what point do you say let's back off from this fuel efficiency issue because it is jeopardizing safety? Ms. Oge. As will become evident from the proposal, the proposal will be safety-neutral. That means we have taken that into consideration as one of the many factors that both agencies have to evaluate. Ms. Buerkle. Okay. We have evidence to the contrary. Mr. Strickland, I will just go back to you because you mentioned that these safety studies were continuing on. Mr. Strickland. That is correct. Ms. Buerkle. And I think it is important for you, if you are willing to do this, to commit to this committee that if in fact this final rule isn't going to be issued until and unless we know what the impact on safety is going to be. Are you willing to commit that to this committee today? Mr. Strickland. That is part of our statutory responsibility, Congresswoman. Ms. Buerkle. No, that wasn't my question. Would you be willing to not issue a final rule until and unless all of the safety studies have been completed and we understand what the impact of these fuel-efficiency standards are going to be on safety? Mr. Strickland. The issue is for us to be able to have the most complete information possible before we, as an agency, make a recommendation to Secretary LaHood about a final rule, of course, or proposal, for that matter. So the question of all the studies being completed, if the agency feels that we have enough technical information on hand to make a very educated decision in terms of proposal, we will go forward with that. Ms. Buerkle. So you are not willing to commit that we are not going to get all the safety studies first, before we issue the final rule. Mr. Strickland. We will have all the appropriate safety studies done to make a decision, Congresswoman. Ms. Buerkle. Mr. Chairman, I would like to introduce into the record a letter from Mark Pryor, Senator Pryor, a letter to him from Ray LaHood. Mr. Jordan. Without objection. Ms. Buerkle. Thank you. [The information referred to follows:] [GRAPHIC] [TIFF OMITTED] 71980.080 [GRAPHIC] [TIFF OMITTED] 71980.081 [GRAPHIC] [TIFF OMITTED] 71980.082 Ms. Buerkle. I see my time has expired. Thank you, Mr. Chairman. Mr. Jordan. Thank you. Mr. Strickland, is the fuel efficiency standard for NHTSA in year 2025 49.6 miles per gallon? Is that going to be the standard? Mr. Strickland. Actually, it is virtually a conditional target. We are not allowed to set standards for more than 5- year periods. Mr. Jordan. What does that number come from, then? Mr. Strickland. It is actually the work collectively done with us and the Environmental Protection Agency in terms of the technological reviews we are doing initially. Now, at this particular point---- Mr. Jordan. But is that the number? Mr. Strickland. We have open notice and comment not only to have to go through for the initial part of the rule for 2017 to 2021; we, under statutory obligation, under the Energy Independence and Security Act, we have to go through another open notice and comment period. We have to literally do another set of rulemaking. So we do not have a set endpoint standard; we can't, by law. Mr. Jordan. Anything on NHTSA letterhead or anything that points to that number, 49.6 miles per gallon? Mr. Strickland. We believe that the long-term program has the ability at this point to achieve that, but, once again, it has to be evaluated under the---- Mr. Jordan. So that is a standard that is at least out there and proposed and being talked about and subject to maybe being the number. Mr. Strickland. It is a similar issue as an advanced notice of proposed rulemaking under the APA, which is you can definitely have a prospective number for thinking about planning purposes and also for long-term purposes planning for the manufacturers. Mr. Jordan. Ms. McCarthy, is the number that the EPA has 54.5? Ms. McCarthy. That is the number that we have put out in a framework that is initially guiding our thought based on public information that has been out in the record. Mr. Jordan. So I guess that begs the question, then, is there one national standard? Is there going to be one standard as we are looking ahead or is there going to be two, 49.6 that one Federal agency is saying and 54.5 another Federal agency is saying? Because one of the things I hear and, look, I have been hearing for 2 years when I talk to business owners in our district and, frankly, across the State of Ohio, is the word that comes up more and more often, you hear it from elected officials, is the uncertainty in the marketplace with business owners today. So wouldn't it seem like maybe if there is supposed to be one national standard, we wouldn't want two numbers out there? Ms. McCarthy. Well, the success of the 2012 to 2016 program was that for the first time we did have one national program, which means we had three regulatory agencies that worked together so that one national fleet could be produced that would achieve all of the regulatory requirements. Mr. Jordan. My question is do you think that adds to uncertainty, the fact that there is not one standard at least in the proposed numbers and the target that manufacturers are going to have to hit? Ms. McCarthy. I think the manufacturers are well aware that for the first time they can build one fleet that achieves all of the regulatory requirements. That is the first time that we have been able to deliver it. That is why they asked us to look beyond 2016 and actually get together to extend that national-- -- Mr. Jordan. Okay. Let me go to this, then. So the process-- and you were all here for the first panel. Mr. Grenerth talked about during the comment period for the truck industry where he felt like he was not heard at all and talked about the additional cost he now faces as a small business owner. And Mr. Anwyl, in his comments, talked about how he thinks the deal is already done now as we are moving forward with the new set of standards coming. How do you respond to that, that here are folks, consumer advocates, small business owners, who feel like they are not actually having their concerns addressed in the process and the deal is already done? Mr. Strickland. The deal is not done. We still have to propose, bottom line. What we did was asked stakeholders to provide us technical information to better inform the proposal. So everyone that was here that provided you testimony, we are looking forward to seeing their comments in our open notice and comment period when we issue the proposal. Again, also, I believe that OOIDA, which is, I think, the group that Mr. Grenerth, actually did have meetings not only with my technical team, but also with the EPA, and I can have Ms. McCarthy answer more specifically to that. But in terms of hearing particular voices or the consumers' voice or things of that nature, that is what open notice and comment is for, and our doors were always open throughout this process. While there were numbers of technical meetings that were going on with lead stakeholders, there were other meetings going on all the time for the process. Mr. Anwyl was always welcome, if he had his study, to be able to provide that to the agency, to provide that to EPA; we would happily have taken that into consideration in the preliminary look in shaping the proposal and especially, more importantly, during open notice and comment, which is where we have to evaluate all this information. Mr. Jordan. Well, I appreciate that, Director, but we had two people under oath just testify that they thought it did work the way you just described. We have this statement from the Center for Progressive Reform which says the Center notes that the agreed-upon CAFE standards are ``the result of raw political wrangling, not the rational rulemaking process.'' So this is not a small business owners, this is probably a center- left organization making that kind of statement. We had Mr. Anwyl, under testimony before, saying he called it the California balkanization, talking about manufacturing, and I think the statement he used was he feels like the manufacturers had a gun to their head and they felt they had to go along with the proposed standards. So how do you respond to that? Mr. Strickland. Well, I can't speak to the state of mind to a manufacturer, you need to ask them how they felt. Mr. Jordan. How about Administrator McCarthy? Ms. McCarthy. Well, first of all, I would say that the national program has garnered such widespread support because it is a model of how government can and should work effectively with a wide range of stakeholders to develop thoughtful data- driven regulations that benefit consumers, that improve the environment, that improve security---- Mr. Jordan. A lot of the questioning in the first--if I could just real quickly. A lot of the questioning in the first panel was on the cost issue. Did you guys, when you go through this, you did, I would assume, a pretty extensive cost-benefit analysis? Ms. McCarthy. We did, and we will provide a similar analysis when we put out the proposed rule---- Mr. Jordan. And is there a chance the committee could get that cost-benefit analysis used thus far to arrive at the decisions you have arrived at? Ms. McCarthy. Actually, all of that information is in the public record already. We actually put out a Notice of Intent, we put out a Technical Assessment Report, we put out a Supplemental Notice of Intent---- Mr. Jordan. And you will get that all to the committee? Can you get that to the committee? Ms. McCarthy. Absolutely. It is in the public record. Mr. Jordan. Okay. Okay. Ms. Jordan. The only thing I would also say is I know that one of the representatives you heard from this morning is OOIDA, and I wanted to make it very clear to you that we actually met with OOIDA extensively. They, early on, identified seven issues that were of concern to them in our proposal, and I can provide you direct information that indicated that their comments led to significant changes in the final because we took their comments into consideration. In fact, I can provide you an email from OOIDA subsequent to our meeting with them during the comment period in which they went on effusively about how good EPA was to pay such close attention to the interests of small business. So I don't know who this representative was or how extensive an involvement he had in the process, but clearly not working for OOIDA, because the staff of OOIDA met with us, appreciated it, and had an influence in the decision. Mr. Jordan. All right. Gentlelady from New York for a second round. We will go real quickly second round. Ms. Buerkle. Thank you, Mr. Chairman. Just as a followup question to the chairman's question, Ms. McCarthy, with regards to you sat there and you were quick to tick off the benefits, savings 12 billion barrels of oil with these new standards. Can you give us some idea of the costs? Ms. McCarthy. Certainly. The costs are in the rulemaking themselves, and let me talk to you a little bit about the costs. Ms. Buerkle. Just the amount. Just the amount. Ms. McCarthy. Relative to 2012 to 2016, the cost for those model years is $52 billion, the monetized benefits are $240 billion. For the estimated, we haven't proposed it yet. We don't have any costs yet for the 2017 to 2025. But if you look in the record, you will see that the Notice of Intent that we put out actually references a wide variety of costs related to different ranges of stringency in those rules. For the 2014 to 2016, heavy-duty vehicles, the cost is $8 billion, the monetized benefits are $50 billion. Ms. Buerkle. Okay, yes, if you could provide those for the committee, that would be great. Ms. McCarthy. Happy to. Ms. Buerkle. Thank you. Mr. Strickland, I want to go back a little bit because it sounds to me like we are going to have three different standards here. Mr. Strickland. There are three different programs, Congresswoman; it is one harmonized national program. There are different authorities under the National Highway Traffic Safety Administration, Clean Air Act authority under EPA, and then the California Air Resources Board also has the ability, because of the waiver and the endangerment finding, to issue their own rules regarding greenhouse gas emissions. The key to it was to harmonize those three different authorities. So while, yes, there are three different regulatory actions happening, they are jointly done and coordinated so you do have one harmonized national program. Ms. Buerkle. Can you comment, though? This California waiver, doesn't that create--why was California given a waiver? Doesn't that create confusion? This harmony, there are three different sets of standards. It wasn't that way before 2009, and I would like you to comment on that. Mr. Strickland. Well, I will defer to Ms. McCarthy and EPA, since they are the ones who have to process the waiver. Ms. Buerkle. But my question is directed to you, Mr. Strickland. Mr. Strickland. Oh, certainly. Ms. Buerkle. Then I will follow up with the other two. Mr. Strickland. In terms of why I think there is--well, clearly because California was given the waiver, they have the authority, because of their endangerment finding, the endangerment finding made by the Environmental Protection Agency, to be able to issue greenhouse gas standards and, therefore, under Mass. v. EPA, which gave the Clean Air Act authority the right to actually oversee transportation sources, we have a new regulatory environment that we have to deal with. The White House and the President's leadership said for us all that there were various statements of Presidential orders to be able to work together to create one national harmonized program, and that is what we did. Ms. Buerkle. But I would like you to comment on the fact that the EPA really, in issuing this waiver to California, violated the State preemption, that California should not have been given a waiver. Mr. Strickland. I am not an expert on California waiver issues. I would be happy to answer that for the record specifically, but you have two experts to my left. Ms. Buerkle. Well, but you are working with these groups and it is of concern to me whether EPA had the authority to grant this waiver to California, and now we end up in a situation where we have three sets of standards where, in 2009, we had one set, and that was NHTSA's standard, which appears to be a more reasonable and less onerous and less burdensome on the economy and on the folks, as you heard from this morning. Mr. Strickland. We were given congressional authority under EPCA in the mid-1970's and then modified by the Energy Independence Security Act in 2007 we will carry out those duties. Because of Mass. v. EPA and the Clean Air Act authority, there is independent authority as well to also regulate greenhouse gas emissions, and it is not our place to evaluate the Environmental Protection Agency's legal authority. Our responsibility under the Department of Transportation is to actually deal with our statutory authorities, and our agency's mission is to not only regulate fuel economy, which is one part of our mission, but to find the best ways to save lives and reduce injuries, which is what we do every single day. Ms. Buerkle. I would disagree with you on the fact that you should have knowledge and you should be concerned with the fact that EPA violated the State preemption by granting California that waiver, and that should be the place where you start. It was in EPCA and there was a State preemption clause in there. And that is why we are having this hearing. We are not saying we don't want a clean environment, but we want to make sure that this process that was followed is legal and is the right way to go. I yield back, Mr. Chairman. Ms. McCarthy. Madam Vice Chairman, would you like me to answer this question? Mr. Jordan. Yes. I think the question is the statute seems to indicate that you can't have preemption, yet the EPA said you can have preemption. So what gives? Ms. McCarthy. Actually, I believe that what you are referring to are fuel economy regulations. What California is regulating and what EPA is regulating are greenhouse gas emission standards. And the only thing that I wanted to make sure to point out is that Congress, in the Clean Air Act, in Section 209, actually not only gave us the authority to grant California waivers, but it gave us specific criteria that we needed to follow. We applied those criteria to the letter; we went through a public rulemaking process---- Mr. Jordan. I guess maybe here is a question. I am not a legal scholar, but it seems, when you read the statute, it talks about a regulation related to fuel economy standards, and greenhouse gases are certainly related to fuel economy standards, is that right? Ms. McCarthy. They are closely aligned, but they are different, Mr. Chairman. Mr. Jordan. Then I think that proves the gentlelady's point. Ms. McCarthy. We actually take into consideration all greenhouse gas emissions related to that vehicle, most notably, the major differences, the air conditioning. And that makes a very big difference in terms of the outcome of these rules. EPA's regulation actually improves the amount of greenhouse gases you can get and achieve through this joint rulemaking, and it also helps improve fuel economy in the end. But we are not driving fuel economy; we are actually regulating greenhouse gases. Mr. Jordan. I want to go back to where I was earlier, because I wasn't quite clear. Is there one standard or are there going to be two? Are there going to be 49 miles per gallon and 54, are there going to be two numbers out there or is there going to be just one number? Mr. Strickland. Well, the easiest way to explain it is the 54.5 mile per gallon standard derived from the EPA's greenhouse gas rules versus NHTSA's 49.6. They are actually harmonized; they are the same number. We have different authorities. They have more flexibilities---- Mr. Jordan. Mr. Strickland, only in Washington could you say two numbers are the same number. I mean, I have seen all kinds of things in budgeting---- Mr. Strickland. It is a harmonized---- Mr. Jordan. We are going to cut spending, but we are not cutting spending; we are reducing the rate of growth. I have seen it all and I have only been here 5 years. But I have never had someone, a Federal agency say 49.6 is the same as 54.5. I have just never seen it. Mr. Strickland. There are different statutory authorities and different flexibilities that the agencies have. When you-- -- Mr. Jordan. Well, will you at least admit this, that that probably doesn't help the uncertainty that currently exists in our economy where we have 9 percent unemployment? Would you at least admit that? Mr. Strickland. No, the exact reason why we needed---- Mr. Jordan. You wouldn't think so? Wow. Mr. Strickland. The exact reason why we needed a harmonized national program is to address exactly that, so the auto manufacturers can actually address building one national fleet. It is what the manufacturers wanted. It is the best environmental policy and best economic policy. The reason why we have undertaken this joint rulemaking in the first place is to address that very question. Bottom line is---- Mr. Jordan. Would you ever have had to undertake the joint rulemaking if California didn't have a different standard? Mr. Strickland. Well, clearly the issue is---- Mr. Jordan. I mean, just be frank. You are under oath, so just be frank. But for that, you wouldn't have had to do this, would you? Mr. Strickland. Well, before---- Mr. Jordan. We wouldn't have this whole convoluted rulemaking process, special committee---- Mr. Strickland [continuing]. The only auto fuel regulator was NHTSA. So you are asking a question which sort of bespokes, and that isn't the current reality. The current reality is is that the Supreme Court made the decision that the Clean Air Act did cover mobile transportation sources and, frankly, not only because of that legal decision, it frankly was the best policy decision, because there are some things that the Environmental Protection Agency, such as air conditioning, can reach which actually strengthens our fuel economy policy, makes it more consistent, and actually makes a more rigorous standard. Mr. Jordan. I want to thank the witnesses. I do have to run. I appreciate your coming in and I apologize I can't stay, but I have to get to another meeting here. I will turn it over to the gentlelady from New York. Ms. Buerkle. And I just have a quick question for the three of you. It is a yes or no question, if you wouldn't mind. Are the greenhouse gas rules, either the EPA's or the California rules, are they related to fuel economy? Mr. Strickland? Mr. Strickland. They regulate---- Ms. Buerkle. Yes or no? Mr. Strickland. No. They regulate greenhouse gas emissions. Ms. McCarthy. They regulate greenhouse gas emissions. Ms. Oge. They regulate greenhouse gas emissions. Ms. Buerkle. So they are not related to fuel economy, under oath? Mr. Strickland. No. They are greenhouse gas emission regulations. Ms. McCarthy. We do not regulate fuel economy standards. Ms. Buerkle. Okay. And all three of you agree with that? Mr. Strickland. Yes. Ms. Oge. Yes. Ms. McCarthy. Yes. Ms. Buerkle. Very good. This hearing is adjourned. Thank you all for being here. [Whereupon, at 12:15 p.m., the subcommittee was adjourned.] [Additional information submitted for the hearing record follows:] [GRAPHIC] [TIFF OMITTED] 71980.085 [GRAPHIC] [TIFF OMITTED] 71980.086 [GRAPHIC] [TIFF OMITTED] 71980.087 [GRAPHIC] [TIFF OMITTED] 71980.088 [GRAPHIC] [TIFF OMITTED] 71980.089 [GRAPHIC] [TIFF OMITTED] 71980.090 [GRAPHIC] [TIFF OMITTED] 71980.091 [GRAPHIC] [TIFF OMITTED] 71980.092 [GRAPHIC] [TIFF OMITTED] 71980.093 [GRAPHIC] [TIFF OMITTED] 71980.094 [GRAPHIC] [TIFF OMITTED] 71980.095