[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
UPDATE ON THE CORPORATE AVERAGE FUEL ECONOMY PROGRAM (CAFE) AND
GREENHOUSE GAS EMISSIONS STANDARDS FOR MOTOR VEHICLES
=======================================================================
JOINT HEARING
BEFORE THE
SUBCOMMITTEE ON ENVIRONMENT
AND THE
SUBCOMMITTEE ON DIGITAL COMMERCE AND CONSUMER PROTECTION
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
DECEMBER 12, 2017
__________
Serial No. 115-86
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
________
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28-875 PDF WASHINGTON : 2018
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COMMITTEE ON ENERGY AND COMMERCE
GREG WALDEN, Oregon
Chairman
JOE BARTON, Texas FRANK PALLONE, Jr., New Jersey
Vice Chairman Ranking Member
FRED UPTON, Michigan BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois ANNA G. ESHOO, California
MICHAEL C. BURGESS, Texas ELIOT L. ENGEL, New York
MARSHA BLACKBURN, Tennessee GENE GREEN, Texas
STEVE SCALISE, Louisiana DIANA DeGETTE, Colorado
ROBERT E. LATTA, Ohio MICHAEL F. DOYLE, Pennsylvania
CATHY McMORRIS RODGERS, Washington JANICE D. SCHAKOWSKY, Illinois
GREGG HARPER, Mississippi G.K. BUTTERFIELD, North Carolina
LEONARD LANCE, New Jersey DORIS O. MATSUI, California
BRETT GUTHRIE, Kentucky KATHY CASTOR, Florida
PETE OLSON, Texas JOHN P. SARBANES, Maryland
DAVID B. McKINLEY, West Virginia JERRY McNERNEY, California
ADAM KINZINGER, Illinois PETER WELCH, Vermont
H. MORGAN GRIFFITH, Virginia BEN RAY LUJAN, New Mexico
GUS M. BILIRAKIS, Florida PAUL TONKO, New York
BILL JOHNSON, Ohio YVETTE D. CLARKE, New York
BILLY LONG, Missouri DAVID LOEBSACK, Iowa
LARRY BUCSHON, Indiana KURT SCHRADER, Oregon
BILL FLORES, Texas JOSEPH P. KENNEDY, III,
SUSAN W. BROOKS, Indiana Massachusetts
MARKWAYNE MULLIN, Oklahoma TONY CARDENAS, California
RICHARD HUDSON, North Carolina RAUL RUIZ, California
CHRIS COLLINS, New York SCOTT H. PETERS, California
KEVIN CRAMER, North Dakota DEBBIE DINGELL, Michigan
TIM WALBERG, Michigan
MIMI WALTERS, California
RYAN A. COSTELLO, Pennsylvania
EARL L. ``BUDDY'' CARTER, Georgia
JEFF DUNCAN, South Carolina
(ii)
Subcommittee on Environment
JOHN SHIMKUS, Illinois
Chairman
DAVID B. McKINLEY, West Virginia PAUL TONKO, New York
Vice Chairman Ranking Member
JOE BARTON, Texas RAUL RUIZ, California
MARSHA BLACKBURN, Tennessee SCOTT H. PETERS, California
GREGG HARPER, Mississippi GENE GREEN, Texas
PETE OLSON, Texas DIANA DeGETTE, Colorado
BILL JOHNSON, Ohio JERRY McNERNEY, California
BILL FLORES, Texas TONY CARDENAS, California
RICHARD HUDSON, North Carolina DEBBIE DINGELL, Michigan
KEVIN CRAMER, North Dakota DORIS O. MATSUI, California
TIM WALBERG, Michigan FRANK PALLONE, Jr., New Jersey (ex
EARL L. ``BUDDY'' CARTER, Georgia officio)
JEFF DUNCAN, South Carolina
GREG WALDEN, Oregon (ex officio)
------
Subcommittee on Digital Commerce and Consumer Protection
ROBERT E. LATTA, Ohio
Chairman
ADAM KINZINGER, Illinois JANICE D. SCHAKOWSKY, Illinois
Vice Chairman Ranking Member
FRED UPTON, Michigan BEN RAY LUJAN, New Mexico
MICHAEL C. BURGESS, Texas YVETTE D. CLARKE, New York
LEONARD LANCE, New Jersey TONY CARDENAS, California
BRETT GUTHRIE, Kentucky DEBBIE DINGELL, Michigan
DAVID B. McKINLEY, West Virgina DORIS O. MATSUI, California
ADAM KINZINGER, Illinois PETER WELCH, Vermont
GUS M. BILIRAKIS, Florida JOSEPH P. KENNEDY, III,
LARRY BUCSHON, Indiana Massachusetts
MARKWAYNE MULLIN, Oklahoma GENE GREEN, Texas
MIMI WALTERS, California FRANK PALLONE, Jr., New Jersey (ex
RYAN A. COSTELLO, Pennsylvania officio)
JEFF DUNCAN, South Carolina
GREG WALDEN, Oregon (ex officio)
C O N T E N T S
----------
Page
Hon. Robert E. Latta, a Representative in Congress from the State
of Ohio, opening statement..................................... 2
Prepared statement........................................... 3
Hon. Janice D. Schakowsky, a Representative in Congress from the
State of Illinois, opening statement........................... 4
Hon. John Shimkus, a Representative in Congress from the State of
Illinois, opening statement.................................... 6
Prepared statement........................................... 7
Hon. Paul Tonko, a Representative in Congress from the State of
New York, opening statement.................................... 8
Hon. Greg Walden, a Representative in Congress from the State of
Oregon, opening statement...................................... 10
Prepared statement........................................... 11
Hon. Frank Pallone, Jr., a Representative in Congress from the
State of New Jersey, opening statement......................... 12
Prepared statement........................................... 13
Witnesses
Mitch Bainwol, President and Chief Executive Officer, Alliance of
Automobile Manufacturers....................................... 15
Prepared statement........................................... 17
Answers to submitted questions............................... 99
Forrest McConnell III, President, McConnell Honda & Acura, on
Behalf of the National Automobile Dealers Association.......... 38
Prepared statement........................................... 40
Answers to submitted questions............................... 104
Dave Cooke, Ph.D., Senior Vehicles Analyst, Union of Concerned
Scientists..................................................... 45
Prepared statement........................................... 47
Answers to submitted questions............................... 107
John Bozzella, President and Chief Executive Officer, Association
of Global Automakers, Inc...................................... 55
Prepared statement........................................... 57
Submitted Material
Proposed Rule, Department of Transportation, National Highway
Traffic Safety Administration, 49 CFR Parts 531, 533, and 536,
Federal Register, December 28, 2016, submitted by Mr. Olson.... 93
Letter of December 11, 2017, from Ann Wilson, Senior Vice
President, Government Affairs, Motor & Equipment Manufacturers
Association, to Mr. Shimkus and Mr. Latta, submitted by Mr.
Shimkus........................................................ 95
UPDATE ON THE CORPORATE AVERAGE FUEL ECONOMY PROGRAM (CAFE) AND
GREENHOUSE GAS EMISSIONS STANDARDS FOR MOTOR VEHICLES
----------
TUESDAY, DECEMBER 12, 2017
House of Representatives,
Subcommittee on Environment
joint with the
Subcommittee on Digital Commerce and Consumer
Protection,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:04 a.m., in
room 2123, Rayburn House Office Building, Hon. Robert Latta
(chairman of the Subcommittee on Digital Commerce and Consumer
Protection) presiding.
Members present: Latta, Shimkus, McKinley, Kinzinger,
Barton, Upton, Blackburn, Harper, Lance, Olson, Bilirakis,
Johnson, Bucshon, Flores, Mullin, Hudson, Cramer, Walberg,
Walters, Costello, Carter, Duncan, Walden (ex officio),
Schakowsky, Tonko, Green, Matsui, McNerney, Welch, Clarke,
Cardenas, Ruiz, Peters, Dingell, and Pallone (ex officio).
Staff present: Ray Baum, Staff Director; Samantha Bopp,
Staff Assistant; Allie Bury, Legislative Clerk, Energy/
Environment; Kelly Collins, Staff Assistant; Wyatt Ellertson,
Professional Staff Member; Melissa Froelich, Chief Counsel,
Digital Commerce and Consumer Protection; Adam Fromm, Director
of Outreach and Coalitions; Jordan Haverly, Policy Coordinator,
Environment; Paul Jackson, Professional Staff Member, Digital
Commerce and Consumer Protection; A.T. Johnston, Senior Policy
Advisor, Energy; Bijan Koohmaraie, Counsel, Digital Commerce
and Consumer Protection; Ben Lieberman, Senior Counsel, Energy;
Mary Martin, Chief Counsel, Energy/Environment; Katie McKeogh,
Press Assistant; Mark Ratner, Policy Coordinator; Madeline Vey,
Policy Coordinator, Digital Commerce and Consumer Protection;
Everett Winnick, Director of Information Technology; Andy Zach,
Senior Professional Staff Member, Environment; Greg Zerzan,
Counsel, Digital Commerce and Consumer Protection; Michelle
Ash, Minority Chief Counsel, Digital Commerce and Consumer
Protection; Jeff Carroll, Minority Staff Director; Jean Fruci,
Minority Policy Advisor, Energy and Environment; Lisa Goldman,
Minority Counsel; Caitlin Haberman, Minority Professional Staff
Member; Rick Kessler, Minority Senior Advisor and Staff
Director, Energy and Environment; Caroline Paris-Behr, Minority
Policy Analyst; Alexander Ratner, Minority Policy Analyst; and
C.J. Young, Minority Press Secretary.
Mr. Latta. Well, good morning. The joint subcommittee will
now come to order. The Chair now recognizes himself for 5
minutes for an opening statement.
OPENING STATEMENT OF HON. ROBERT E. LATTA, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OHIO
Good morning. I would like to thank our witnesses for being
with us this morning. Today we are here to discuss with
stakeholders the Corporate Average Fuel Economy Program, or
CAFE, at the National Highway Transportation Safety
Administration, NHTSA, and the greenhouse gas emissions
standards at the U.S. EPA agency that govern fuel economy
standards.
NHTSA's CAFE program was established by Congress in 1975.
The goals of the program are to improve vehicle fuel economy,
reduce oil consumption, and secure the Nation's energy
independence.
The CAFE program has undergone major changes and
modifications in the past four decades, both because of
political and economic forces.
Less than 10 years ago, and on top of the CAFE program, the
EPA standards were created to incentivize the production of
more efficient vehicles that will use less fuel and emit less
carbon dioxide.
In addition, various States have enacted their own
standards with respect to automobile emissions. The
combinations of these requirements has created an incredibly
complicated regulatory scheme.
Improving fuel efficiency and achieving energy independence
are important goals. That said, real-world facts and data must
drive regulatory decisions that impact such an important and
far-reaching part of the American economy and consumers' daily
lives.
The previous administration announced an attempt to create
a national standard which included a plan for NHTSA and EPA to
work together to avoid conflicting regulations.
Whatever progress had been made on that front was undone,
however, when earlier this year EPA issued its final
determination that the standards for model year 2022 and 2025
are appropriate.
EPA took this action without coordinating with NHTSA,
clearly undermining their earlier pledge. The result is that
automobile makers potentially found themselves in a position
where they are in compliance with one Federal program but out
of compliance and subject to penalty with another.
This type of fragmented regulation harms our economy, our
workers, and our consumers. The automobile industry is a huge
source of American jobs, including nearly 100,000 Ohioans.
A hallmark of the American automobile industry has been the
ability to innovate and build cars that American drivers want
to buy. But outdated, conflicting, or impossible-to-meet
Government regulations get in the way of this type of
innovation.
It is a rare event, to say the least, for policymakers in
Washington to have better ideas about how to meet consumer
demand than consumers themselves.
All too often, Washington stands in the way, particularly
when it creates unnecessary confusion with conflicting rules.
My constituents know what type of vehicles work best for
their family and their budget. That may change over time, and
each American family should be able to make their own choice
without the Federal Government putting an extra strain on their
finances.
Also, there is a real risk that the costs associated with
duplicative Federal and State fuel economy standards could
force families to choose older cars without the benefits of new
safety technologies.
NHTSA's safety mission and statutory obligations must
remain its guiding principle. When we are just starting to turn
the corner after many challenging years, it is disheartening,
but not surprising, to see the EPA rush out a final
determination in the waning hours of the last administration.
I am interested in hearing from our witnesses about
industry's experience attempting to navigate this tricky
regulatory terrain and what can be done to help support choice
for American consumers and jobs across the country.
Again, I want to thank our witnesses for being here, and I
yield at this time to the gentlelady from Tennessee.
[The prepared statement of Mr. Latta follows:]
Prepared statement of Hon. Robert E. Latta
Good morning, I would like to thank our witnesses for being
here this morning. Today we are here to discuss with
stakeholders the Corporate Average Fuel Economy Program, or
CAFE, at the National Highway Transportation Safety
Administration (NHTSA), and the Greenhouse Gas Emissions
Standards at the U.S. Environmental Protection Agency (EPA)
that govern fuel economy standards.
NHTSA's CAFE program was established by Congress in 1975.
The goals of the program are to improve vehicle fuel economy,
reduce oil consumption, and secure the Nation's energy
independence. The CAFE program has undergone major changes and
modifications in the past four decades--both because of
political and economic forces.
Less than 10 years ago, and on top of the CAFE program, the
EPA standards were created to incentivize the production of
more efficient vehicles that will use less fuel and emit less
carbon dioxide. In addition, various States have enacted their
own standards with respect to automobile emissions.
The combination of these requirements has created an
incredibly complicated regulatory scheme. Improving fuel
efficiency and achieving energy independence are important
goals. That said, real world facts and data must drive
regulatory decisions that impact such an important and far-
reaching part of the American economy and consumers' daily
lives.
The previous administration announced an attempt to create
a national standard which included a plan for NHTSA and EPA to
work together to avoid conflicting regulations. Whatever
progress had been made on that front was undone, however, when
earlier this year the EPA issued its Final Determination that
the standards for model year 2022-2025 are appropriate. EPA
took this action without coordinating with NHTSA, clearly
undermining the earlier pledge.
The result is that automakers potentially find themselves
in a position where they are in compliance with one Federal
program, but out of compliance and subject to penalties with
another's.
This type of fragmented regulation harms our economy, our
workers and consumers. The automotive industry is a huge source
of American jobs including nearly 100,000 Ohioans.1
A hallmark of the American automotive industry has been the
ability to innovate and build cars that American drivers want
to buy.
But outdated, conflicting or impossible-to-meet Government
regulations get in the way of this type of innovation. It is a
rare event, to say the least, for policymakers in Washington to
have better ideas about how to meet consumer demand than
consumer themselves. All too often Washington stands in the
way, particularly when it creates unnecessary confusion with
conflicting rules.
My constituents know what type of vehicle works best for
their family and their budget. That may change over time and
each American family should be able to make their own choice
without the Federal Government putting extra strain on their
finances. Also, there is a real risk that the costs associated
with duplicative Federal and State fuel economy standards could
force families to choose older cars without the benefits of new
safety technologies. NHTSA's safety mission and statutory
obligations must remain its guiding principle.
When we are just starting to turn the corner after many
challenging years, it is disheartening, but not surprising, to
see the EPA rush out a Final Determination in the waning hours
of the last administration.
I am interested in hearing from the witnesses about
industry's experience attempting to navigate this tricky
regulatory terrain, and what can be done to help support choice
for American consumers and jobs across the country.
Thank you for being here today and I look forward to
hearing your testimony.
Mrs. Blackburn. Thank you, Mr. Chairman, and I appreciate
so much that you and Chairman Shimkus have called this hearing.
Studies have shown that the higher purchase price of cars
under a stricter CAFE under these 2025 standards would
eliminate a lot of consumers from buying new cars.
There is between 3.1 and 14.9 million American consumers
that would fall out of the new-car marketplace. Now, this is
where there is a tension and a friction that we need to talk
about: When is something counterproductive?
And, of course, in Tennessee we have a lot of auto
manufacturers. This is what they tell me: Whether they are with
Nissan or Toyota or Volkswagen or GM, it does not matter. They
want realistic standards. They want something that will--they
will be able to meet the expectation of American consumers and
deliver a product that is, first of all, safe and that
consumers are going to be safe in these automobiles.
So I thank the chairman for the hearing. I think this is
time for us to talk about what is realistic, what is
achievable, and what will deliver a safe product for the
American consumer, and I yield back.
Mr. Latta. Thank you very much. The gentlelady yields
back.
The Chair now recognizes the subcommittee ranking member,
the gentlelady from Illinois, for 5 minutes for an opening
statement.
OPENING STATEMENT OF HON. JANICE D. SCHAKOWSKY, A
REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS
Ms. Schakowsky. Thank you, Mr. Chairman.
CAFE and greenhouse gas emission standards have been
critical tools to improve fuel economy and reduce carbon
pollution.
The CAFE program was born out of the energy crisis in the
1970s. Now those standards are helping us address the even
greater threat of a changing climate.
Strong standards have a more immediate consequence for
American consumers: big savings at the pump. In the midterm
evaluation finalized in January, the Environmental Protection
Agency estimated that the model year 2022 to 2025 greenhouse
gas emission standards will save consumers $92 billion over the
lifetime of their vehicle--obviously, not each one, together
$92 billion. Industry has criticized the standards for 2022 to
2025 as too costly. That criticism is not supported by the
facts.
The EPA found that meeting the standards is not only
technologically feasible but also cheaper than expected. In
fact, the cost estimate per vehicle has gone down over $200
since 2012.
Ambitious standards have driven innovation, which has, in
turn, lowered costs. The last time we held this hearing in
September of 2016, John German of the International Council on
Clean Transportation testified, quote, ``During the course of
my 40-year career, initial cost estimates for complying with
emissions and efficiency requirements have consistently been
overstated, not some of the time or even most of the time, but
all of the time.``
Nevertheless, the standards face resistance. I often hear
companies call for greater regulatory certainty and more time
to comply with the rules. But this time, the EPA actually
finished its work ahead of schedule.''
So what did the automakers do? Petition for a redo, and the
Trump administration was all too happy to comply. No matter how
EPA Administrator Scott Pruitt or others want to explain the
decision to reopen the midterm evaluation, the end result is
clear: dirtier, less efficient vehicles.
Calls for harmonization between CAFE and greenhouse gas
standards are just further efforts to weaken the standards.
I am especially confused why the auto industry would be so
opposed to strong standards when the automakers are promising
fleets of energy-efficient autonomous vehicles.
If AVs are actually going to be electric vehicles, I would
think compliance should be easy. As we discuss the future of
these standards, family budgets and public health hangs in the
balance. This is not the time to ignore facts under the
industry pressure.
We need to continue the progress toward greater fuel
efficiency and lower greenhouse gas emissions.
And I now yield to Congresswoman Matsui.
Ms. Matsui. Thank you very much, Ranking Member
Schakowsky.
NHTSA's CAFE standards and the EPA's greenhouse gas
emission standards for light-duty vehicles are win-win. They
are good for consumers who save billions of dollars at the pump
over the lifetime of their vehicles.
They are good for the environment. The standards
significantly reduce emissions for the transportation sector,
the only sector in which energy efficiency has grown worse over
the past 15 years in this country.
And they are good for the American workers. They spark the
development of innovative technologies that create profits and
support jobs.
Many companies understand this and support the NHTSA and
EPA standards. Even those companies critical of the standards
are shifting to efficient engines and electric vehicles in
response to consumer demand for cleaner cars.
In light of the widespread support for improving fuel
economy, I am disappointed with the Trump administration's
decision to revisit the standards for model years 2022 to 2025.
It is clear the administration is simply intent on
weakening the progress we have made so far. That is why I will
be introducing a bill to codify the NHTSA and EPA standards.
These standards are written in 2012 with the support of the
auto industry, environmental groups, and States.
My legislation maintains the Federal Government and auto
manufacturers' promise to American people, a promise for
cleaner and efficient cars that cost less at the pump and that
are better for the environment, health, and the future of our
children and grandchildren.
I look forward to continuing to engage with the committee
on this issue. Thank you, and I yield back.
Mr. Latta. Thank you. The gentlelady yields back, and the
Chair now recognizes the chairman of the Environment
Subcommittee, the gentleman from Illinois, for 5 minutes for an
opening statement.
Mr. Shimkus. Mr. Chairman, before I do my opening
statement, I get 15 seconds for a point of personal privilege?
Thank you. Two pictures I want to identify for folks--you
will all appreciate this. This is a tweet I got from my
colleague from Texas, who is not paying attention, talking
about the next streak, and then the next photo will--if you put
that up--that's actually what--Mr. Olson, are you paying
attention?
Mr. Olson. Yes.
Mr. Shimkus. So I thank you for correcting the record and
starting a new streak.
Mr. Olson. For the second time in 16 years.
Mr. Shimkus. I would just--we saw your tweet earlier, so--
I know my colleagues because of Mr. Olson and how he acts, and
we appreciate that. So thank you very much.
Mr. Latta. The gentleman is recognized.
OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ILLINOIS
Mr. Shimkus. One of the costs of this energy and
environmental regulation from the Obama administration is the
one we will address today that targets fuel efficiency and
greenhouse gas emissions for cars and light trucks.
EPA estimated total cost in excess of $200 billion by 2025,
much of which will show up in the form of higher sticker prices
for new vehicles.
And although the agency claims offsetting consumer savings
from lower fuel costs, we now know that this was based upon
inaccurate projections of rising gas prices as well as other
assumptions that are proving to be off the mark.
It is time to review these rules to see if they are a good
deal for consumers or whether they can be improved upon.
Fortunately, regulations contain just such a review, the so-
called midterm evaluation.
The regulations were finalized in 2012 and included
progressively stricter standards all the way out to 2025, more
than a decade into the future.
For this reason, it was decided to revisit the standards
midway through the process to see if standards for model years
2022 to 2025 need to be adjusted in light of changed
circumstances.
In 2016, EPA commenced its midterm evaluation and was
poised to make a final determination by April 2018. But after
the elections, EPA accelerated its time line and rushed the
final determination out the door last January.
This determination concluded that standards are fine as
they are and don't need to be changed. The good news is that
Administrator Pruitt found this process to be completely
unacceptable and has reopened the midterm evaluation with the
original deadline of April 2018, after which the agency may
proceed to a rulemaking to change the targets for 2022 through
2025.
Part of this hearing is to get input from those who make
cars and trucks as well as those who sell them about their
contributions to the midterm evaluation and what they would
like to see come out of the process.
The stakes are high for automakers and auto dealers. But
they are higher still for consumers. The average price of a new
vehicle has risen to $35,000 in 2017. These regulations are a
contributor to the increase.
EPA estimated cumulative price increases of nearly $3,000
per vehicle by 2025, and the real number may prove to be
higher.
Worst of all, the biggest sticker shock may be on the
vehicles that matter most to middle America. Granted, a Toyota
Prius or a Smart car may be fine for some people, but many of
my constituents need family-size vehicles or pickup trucks for
work, and it is these larger vehicles that may take the biggest
hit.
We need to make sure that the future targets under this
program maintain vehicle choice and affordability.
In addition to the midterm evaluation, we also need to
evaluate whether we have a uniform set of rules for the Nation.
Recall that since the 1970s the National Highway Traffic
Safety Administration, or NHTSA, had exclusive authority to set
vehicle fuel economy standards.
But the Obama administration decided that the EPA and the
California Air Resources Board should do so as well. So now we
have three agencies all regulating the same thing, and, not
surprisingly, there are discrepancies emerging.
Looking ahead, we need to ask whether we still want three
agencies involved in the fuel economy and why we gave
California so much more power than any other State in the
Union.
It all comes down to what is best for the consumer. Vehicle
purchases are second only to home purchases in terms of their
consumer impact, and I hope this hearing helps us strengthen
our understanding of what we need to do to make these
regulations as consumer friendly as possible.
Thank you, Mr. Chairman, and I yield back the balance of my
time.
[The prepared statement of Mr. Shimkus follows:]
Prepared statement of Hon. John Shimkus
One of the costliest energy and environmental regulations
from the Obama administration is the one we will address today
that targets fuel efficiency and greenhouse gas emissions from
cars and light trucks. EPA estimated total costs in excess of
$200 billion by 2025, much of which will show up in the form of
higher sticker prices for new vehicles. And although the agency
claims offsetting consumer savings from lower fuel costs, we
now know that this was based on inaccurate projections of
rising gas prices as well as other assumptions that are proving
to be off the mark. It is time to review these rules to see if
they are a good deal for consumers and whether they can be
improved upon.
Fortunately, the regulations contained just such a review--
the so-called midterm evaluation. The regulations were
finalized in 2012 and included progressively stricter standards
all the way out to 2025--more than a decade into the future.
For this reason, it was decided to revisit the standards midway
through the process to see if the standards for model years
2022-2025 need to be adjusted in light of changed
circumstances. In 2016 EPA commenced its midterm evaluation and
was poised to make a final determination by April of 2018.
But after the elections, EPA accelerated its timeline and
rushed the final determination out the door last January. This
determination concluded that the standards are fine as they are
and don't need to be changed.
The good news is that Administrator Pruitt found this
process to be completely unacceptable and has reopened the
midterm evaluation with the original deadline of April of 2018,
after which the agency may proceed to a rulemaking to change
the targets for 2022-2025.
Part of this hearing is to get input from those who make
cars and trucks as well as those who sell them about their
contributions to the midterm evaluation and what they would
like to see come out of this process.
The stakes are high for auto makers and auto dealers, but
they are higher still for consumers. The average price of a new
vehicle has risen to $35,000 in 2017, and these regulations are
a contributor to the increase. EPA estimated cumulative price
increases of nearly $3,000 per vehicle by 2025, and the real
number may prove to be higher.
Worst of all, the biggest sticker shock may be on the
vehicles that matter most to Middle America. Granted, a Toyota
Prius or a Smart car may be fine for some people, but many of
my constituents need family-sized vehicles or pickup trucks for
work, and its these larger vehicles that may take the biggest
hit. We need to make sure that the future targets under this
program maintain vehicle choice and affordability.
In addition to the midterm evaluation, we also need to
evaluate whether we have a uniform set of rules for the Nation.
Recall that since the 1970s the National Highway Traffic Safety
Administration (NHTSA) had exclusive authority to set vehicle
fuel economy standards, but the Obama administration decided
that EPA and the California Air Resources Board should do so as
well. So now we havethree agencies all regulating the same
thing and not surprisingly there are discrepancies emerging.
Looking ahead, we need to ask whether we still want three
agencies involved in fuel economy and why we gave California so
much more power than any other State.
In conclusion, it all comes down to what is best for the
consumer. Vehicle purchases are second only to home purchases
in terms of their consumer impact, and I hope this hearing
helps us strengthen our understanding of what we need to do to
make these regulations as consumer-friendly as possible. Thank
you.
Mr. Latta. Thank you. The gentleman yields back the
balance of his time.
The Chair now recognizes the Environment Subcommittee
ranking member, the gentleman from New York, for 5 minutes for
an opening statement.
OPENING STATEMENT OF HON. PAUL TONKO, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF NEW YORK
Mr. Tonko. Thank you, and thank you to our witnesses.
Thank you, Chair Latta, Chair Shimkus for holding today's
hearing.
NHTSA's Corporate Average Fuel Economy, or CAFE, standards
and EPA's greenhouse gas emissions standards have played a
critical role in saving consumers money at the pump while
reducing carbon pollution.
CAFE standards were established in 1975 by the Energy
Policy and Conservation Act to reduce our Nation's reliance on
foreign oil, and since 2009, EPA's greenhouse gas emissions
standards have become increasingly important in our Nation's
efforts to address climate change.
Last year, transportation surpassed the electricity sector
as the largest source of greenhouse gas emissions in our
country. According to the EPA's Inventory of U.S. Greenhouse
Gas Emissions and Sinks, light-duty vehicles accounted for
nearly 60 percent of the United States transportation emissions
and approximately 16.5 percent of total domestic emissions in
2015.
No serious effort to reduce emissions can ignore emissions
from light-duty vehicles. The current standards are estimated
to lead to the reduction of carbon emissions by 6 billion
metric tons for vehicles within model years 2012 through 2025.
In addition to the pollution reduction, CAFE standards are
estimated to save consumers some $1.7 trillion at the pump from
vehicles produced between 2011 and 2025.
Improving vehicle efficiency has truly been a win-win
outcome. We have come a long way since the 1930s. Over the past
four decades, the Federal fuel economy program has evolved
considerably to give automakers significantly greater
flexibility.
Today, manufacturers are not forced into a single
compliance path. Each manufacturer has its own fleetwide
standard that reflects the vehicles it produces to meet its
customers' demands.
But in the 15 months since our last hearing on this
subject, we have seen major changes at EPA. As part of the 2012
agreement between President Obama and the auto industry, EPA
agreed to conduct a midterm evaluation to determine whether
assumptions made about technology development and costs in 2012
were still accurate and still reasonable.
Last summer, EPA began its midterm review. The agency
examined a wide range of factors and built an extensive public
record on the appropriateness of greenhouse gas standards for
model years 2022 through 2025 vehicles.
Along with the NHTSA and the California Air Resources
Board, EPA issued the July 2016 draft technical assessment
report and sought public comment.
EPA also sought public comment on the proposed
determination that the greenhouse gas standards for model years
2022 through 2025 vehicles remain appropriate.
The technical assessment and ensuing comments provide a
robust and conclusive record. EPA standards are feasible and
can be met at lower costs than originally estimated.
EPA's current estimate is an average per-vehicle cost of
$875 to meet these standards. This estimate is lower than the
initial estimate of $1,100 per vehicle, which EPA found
reasonable in its 2012 rule and much lower than consumers can
expect to save at the pump over the life of the vehicle.
In January, former EPA Administrator Gina McCarthy issued a
final determination that the targets should remain in place up
to 2025.
I believe that was the correct decision. But despite the
extensive record established by EPA, in March Administrator
Pruitt announced his decision to reopen the midterm review.
Weakening these standards would be bad for consumers, the
environment, and, certainly, American competitiveness.
I have tremendous faith in America's manufacturers. There
is no doubt they will continue to be able to meet these
achievable goals.
In fact, the evidence is clear that technology adoption
rates have occurred more quickly than EPA's initial
expectation.
Last year, former EPA Acting Assistant Administrator Janet
McCabe testified before this committee that there are more than
100 individual model year 2016 vehicle versions already meeting
model year 2020 standards or later.
As automakers continue to innovate, it is clear that
multiple technology pathways, including existing off-the-shelf
technologies, will allow them to achieve existing model years
2022 through 2025 standards, particularly given the flexibility
of the program.
So thank you again to the chairs for today's joint hearing
and thank you to our witnesses for being here. These are
incredibly important programs for the sake of our constituents'
wallets and our Nation's efforts to reduce pollution.
With that, I yield back.
Mr. Latta. Thank you. The gentleman yields back.
The Chair now recognizes the chairman of the full
committee, the gentleman from Oregon, for 5 minutes for an
opening statement.
OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OREGON
Mr. Walden. I thank the chairman.
Good morning, everyone. Today's hearing touches on a
prominent point of frustration for many Americans, and that's
the duplicative Government programs that increase costs and
decrease choices for consumers.
Specifically, we are talking about the differing fuel
economy standards under programs administered by the National
Highway Traffic Safety Administration and the Environmental
Protection Agency.
While NHTSA has been charged with implementing fuel economy
standards for motor vehicles since 1978, I believe, the Obama-
era EPA developed its own standard under the Clean Air Act in
2009.
So, in order to coordinate these different requirements,
the Obama administration created the national program.
Unfortunately, the national program has failed in its attempt
to develop a single national standard, which causes uncertainty
around the multiple policies and creates barriers to innovation
and growth.
Under the current scheme, it is possible that automakers
will find themselves in full compliance with one Federal
regulatory standard but running afoul of another.
This is true even though the previous administration
explicitly told this committee during a hearing last Congress
that they would work together to avoid this very result.
Since then, we have seen activity that completely
undermines the national program and works against the Obama
administration's promise of coordinated regulatory efforts.
Under the midterm evaluation schedule, NHTSA and EPA were
to jointly issue their respective determinations on the model
years 2022 through 2025 standards.
This was supposed to happen in April of 2018. However, the
EPA then abandoned this commitment and rushed through its final
determination without coordination with the National Highway
Traffic Safety Administration just 7 days before President
Trump was sworn into office.
I look forward to receiving an update from our witnesses
today on how they are dealing with different requirements. We
want to know how these different regulatory schemes impact
consumers and learn more about better ways to ensure the
Federal fuel economy standards are met without creating
unnecessary paperwork or administrative burdens that serve only
to drive up costs for American families.
As currently constructed, it's been estimated these
programs will raise the average price of a new vehicle by
almost $3,000. That's no small amount and one that will
undoubtedly price many Americans out of the new car market.
Although the goals of these varying programs are important,
we must never forget that we do in Washington have a real
impact on consumers across the country.
Government works best when it identifies clear problems and
offers clear instructions for how to solve those problems.
Federal programs that overlap or conflict do nothing to help
protect the American people.
It's our job to ensure that our laws and the implementation
of them advance public policy goals, and, if they need
correction or clarification, it's what we are here to do.
So I want to thank our witnesses again for participating in
our discussions today, and the American people deserve a
Government that removes barriers to innovation and growth and
avoids unnecessarily driving up costs for consumers.
I look forward to your testimony, and unless any other
Member wants the balance of my time, I will return the balance
of my time.
I yield back.
[The prepared statement of Mr. Walden follows:]
Prepared statement of Hon. Greg Walden
Good morning. Today's hearing touches on a prominent point
of frustration for many Americans: duplicative Government
programs that increase costs and decrease choices for
consumers. Specifically, we're talking about the differing fuel
economy standards under programs administered by the National
Highway Traffic Safety Administration and the Environmental
Protection Agency.
While NHTSA has been charged with implementing fuel economy
standards for motor vehicles since 1978, the Obama-era EPA
developed its own standards under the Clean Air Act in 2009.
In order to coordinate these different requirements, the
Obama administration created the National Program.
Unfortunately, the program has failed in its attempt to develop
a single national standard, causing uncertainty around the
multiple policies and creating barriers to innovation and
growth.
Under the current scheme it is possible that auto makers
will find themselves in full compliance with one Federal
regulatory standard, but running afoul of another. This is true
even though the previous administration explicitly told this
committee during a hearing last Congress that they would work
together to avoid this very result.
Since then, we've seen activity that completely undermines
the National Program and works against the Obama
administration's promise of coordinated regulatory efforts.
Under the Midterm Evaluation schedule, NHTSA and EPA were to
jointly issue their respective determinations on the model year
2022-2025 standards. This was supposed to happen in April of
2018.
However, EPA abandoned this commitment and rushed through
its final determination--without coordinating with NHTSA--just
7 days before President Trump was sworn into office.
I look forward to receiving an update from our witnesses
today on how they are dealing with the different requirements.
We want to know how these different regulatory schemes impact
consumers, and learn more about better ways to ensure the
Federal fuel economy standards are met, without creating
unnecessary paperwork or administrative burdens that serve only
to drive up costs for American families.
As currently constructed, it has been estimated that these
programs will raise the average price of a new vehicle by
almost $3,000--that is no small amount and one that will
undoubtedly price many Americans out of the new car market.
Although the goals of these varying programs are important, we
must never forget that we do in Washington has a real impact on
consumers across the country.
Government works best when it identifies clear problems and
offers clear instructions for how to solve them. Federal
programs that overlap or conflict do nothing to help protect
the American people. It is our job to ensure that our laws and
the implementation of them advance public policy goals, and if
they need correction or clarification, we do so.
I thank our witnesses for appearing before us today to
address this important topic. The American people deserve a
Government that removes barriers to innovation and growth, and
avoids unnecessarily driving up costs for consumers.
I look forward to our witnesses' testimony and I yield back
the balance of my time.
Mr. Latta. The gentleman yields back the balance of his
time, and the Chair now recognizes the ranking member of the
full committee, the gentleman from New Jersey, for 5 minutes.
OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Pallone. Thank you, Mr. Chairman.
A little over a year ago, the committee held a hearing on
the technical assessments report produced by the National
Highway Transportation and Safety Administration, the EPA, and
the California Air Resources Board, and that report formed the
basis for all three agencies' decision in January to move
forward with the proposed light-duty vehicle standard for
models produced from 2022 to 2025.
Unfortunately, as with many other decisions and regulations
needed to improve public health, the environment, and consumer
benefits, the Trump administration is moving to weaken these
important standards.
The administration complied with a request from the auto
industry to reopen the midterm review and reconsider the
current greenhouse gas emission target for light-duty vehicles
equivalent to 51.4 miles per gallon by model year 2025, and
this review could potentially lead to a weakening of the
standard.
I believe that if the U.S. oil industry is to remain
competitive in the global market, we must reject efforts to
move backwards. These targets are critical to reducing
greenhouse gas emissions that contribute greatly to the ongoing
threat of climate change, and we must meet these goals to
reduce harmful emissions that endanger public health.
Air pollution and carbon emissions from the transportation
sector are significant in many of the world's urban areas.
The fastest-growing markets for auto are in Asia,
especially in India and China. These are the same countries
whose large cities experience chronic poor air quality that
creates significant public health problems.
Understandably, several countries, including Britain,
France, India, and China this year, announced ambitious goals
to restrict or eliminate sales of new gas and diesel cars
within the next few decades.
And the auto industry claims that it can't meet stricter
fuel efficiency and emission reduction goals by 2025. But their
efforts to seek harmonization through credits and so-called
credit banking will only serve to undermine and erode the
laudable goals previously set by the Obama administration.
Meanwhile, the auto industry has already received a
sizeable advantage from the Trump administration: an indefinite
delay of the civil penalty increases for CAFE violations that
were finalized at the end of last year.
Industry must find ways to continue their investment in
vehicles that are more fuel efficient, particularly those that
don't rely on fossil fuel for power.
The joint standards developed by NHTSA and EPA in
conjunction with the State of California are ambitious but,
clearly, achievable.
They will deliver tremendous benefits to consumers and make
our Nation more energy secure. It will also play a critical
role in our effort to slow the pace and severity of climate
change, and lowering emissions will improve air quality and
public health.
We know that technologies to produce more efficient and
less polluting vehicles are available and affordable today.
Those vehicles must be produced, and they must be marketed with
at least the same level of resources used to market the large,
inefficient sport utility vehicles currently being pushed by
industry, and there is simply no justification for easing up on
this important effort that will benefit the public health, the
environment, and American manufacturers who will reap the
benefits of our Nation being out front instead of being dragged
behind.
I don't know if anybody else wants my time. If not, I'll
yield back, Mr. Chairman.
[The prepared statement of Mr. Pallone follows:]
Prepared statement of Hon. Frank Pallone, Jr.
Good morning. A little over a year ago, the committee held
a hearing on the Technical Assessment Report (TAR) produced by
the National Highway Transportation and Safety Administration
(NHTSA), the Environmental Protection Agency (EPA), and the
California Air Resources Board (CARB). The report formed the
basis for all three agencies' decision in January to move
forward with their proposed light duty vehicle standards for
models produced between 2022 and 2025.
Unfortunately, as with many other decisions and regulations
needed to improve public health, the environment, and consumer
benefits, the Trump administration is moving to weaken these
important standards. The administration complied with a request
from the auto industry to re-open the midterm review and
reconsider the current greenhouse gas emission target for light
duty vehicles equivalent to 51.4 miles per gallon by model year
2025. This review could potentially lead to a weakening of the
standard.
I believe that if the U.S. auto industry is to remain
competitive in the global market we must reject efforts to move
backwards. These targets are critical to reducing greenhouse
gas emissions that contribute greatly to the ongoing threat of
climate change. And, we must meet these goals to reduce harmful
emissions that endanger public health.
Air pollution and carbon emissions from the transportation
sector are significant in many of the world's urban areas. The
fastest growing markets for automobiles are in Asia, especially
in India and China. These are the same countries whose large
cities experience chronic poor air quality that create
significant public health problems. Understandably, several
countries, including Britain, France, India, and China, this
year announced ambitious goals to restrict or eliminate sales
of new gas and diesel cars within the next few decades.
The auto industry claims that it cannot meet stricter fuel
efficiency and emission reduction goals by 2025. But their
efforts to seek harmonization through credits and so-called
credit banking will only serve to undermine and erode the
laudable goals previously set by the Obama administration.
Meanwhile, the auto industry has already received a sizable
advantage from the Trump administration--an indefinite delay of
the civil penalty increases for CAFE violations that were
finalized at the end of last year.
Industry must find ways to continue their investment in
vehicles that are more fuel efficient, particularly those that
don't rely on fossil fuel for power. The joint standards
developed by NHTSA and EPA in conjunction with the State of
California are ambitious, but clearly achievable. They will
deliver tremendous benefits to consumers and make our Nation
more energy secure. They will also play a critical role in our
effort to slow the pace and severity of climate change. And,
lowering emissions will improve air quality and public health.
We know that technologies to produce more efficient and
less polluting vehicles are available and affordable today.
Those vehicles must be produced, and they must be marketed with
at least the same level of resources used to market the large,
inefficient sport utility vehicles currently being pushed by
industry. There is simply no justification for easing up on
this important effort that will benefit public health, the
environment, and American manufacturers, who will reap the
benefits of our Nation being out in front, instead of being
dragged behind.
Thank you, I yield back.
Mr. Latta. Thank you. The gentleman yields back, and this
now concludes our Member opening statements.
The Chair would like to remind Members that, pursuant to
committee rules, all Members' opening statements will be made
part of the record.
Again, we want to thank all of our witnesses for being with
us today and taking time to testify before our subcommittees.
Today's witnesses will have the opportunity to give 5-minute
opening statements followed by a round of questions from
Members.
Our witness panel for today's hearing will include Mr.
Mitch Bainwol, president and CEO, Alliance of Automobile
Manufacturers; Mr. Forrest McConnell III, president, McConnell
Honda and Acura, Montgomery, Alabama, on behalf of the National
Automobile Dealers Association; Dr. Dave Cooke, senior vehicle
analyst, Union of Concerned Scientists; and Mr. John Bozzella,
the president and CEO of Global Automakers.
We thank you again for all being here, and, Mr. Bainwol,
you are recognized for your 5-minute opening statement.
Thanks again for being here.
STATEMENTS OF MITCH BAINWOL, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, ALLIANCE OF AUTOMOBILE MANUFACTURERS; FORREST
MCCONNELL III, PRESIDENT, MCCONNELL HONDA & ACURA, ON BEHALF OF
THE NATIONAL AUTOMOBILE DEALERS ASSOCIATION; DAVE COOKE, PH.D.,
SENIOR VEHICLES ANALYST, UNION OF CONCERNED SCIENTISTS; AND
JOHN BOZZELLA, PRESIDENT AND CHIEF EXECUTIVE OFFICER,
ASSOCIATION OF GLOBAL AUTOMAKERS, INC.
STATEMENT OF MITCH BAINWOL
Mr. Bainwol. Thank you, Chairman Latta, and members of the
distinguished committee.
I have an extensive deck to go through, and so I ask for
your patience because I am going to zip through it fairly
quickly.
I am here today on behalf of the Alliance of Automobile
Manufacturers. We are 12 manufacturers from the U.S., from
Europe, and from Japan. We represent about 80 percent of the
cars on the road in the U.S.
So let me jump in. I've got eight points to make. First
point--next slide--is that sales have peaked. We went through 7
years of growth. We are a cyclical industry. We have now
peaked.
If you look at the bottom right, you will see that, year
over year, we are now down about a point from the first 9
months of '16. You also see a very significant shift in the
fleet mix. Cars, over the 5 years, are down 19 percent. Trucks,
over the 5 years, are up 38 percent.
Point 2: There has been very broad and strong support for
harmonization from environmental voices. Chris Grundler is a
senior career guy at EPA who opens up his presentations around
the country with a picture of the planet and talks about the
importance of saving the planet.
So his bona fides in this area are strong. He says, ``I am
all in on harmonization. It should not be acceptable for an
automaker to pay penalties under CAFE.'' The ICCT testified
here before and said, ``Based on the well-designed EPA
flexibilities, a harmonized One National Program would best be
addressed with NHTSA's program matching EPA's.''
The Obama DOT talked about building a single fleet of U.S.
vehicles, helping to reduce costs and regulatory complexity.
Carol Browner:``A clear and uniform national policy is not only
good news for consumers, but also good news for the auto
industry, which would no longer be subject to a costly
patchwork.'' We still are.
And, of course, the President of the United States,
President Obama, when he was in office: ``clear certainty that
will allow these companies to plan for a future, in which they
are building cars of the 21st century.''
So there is strong support from, really, both sides of the
aisle.
Point 3: The determination, as has been suggested in some
of the opening statements, was rushed. On November 29th, that
was a screen shot of the EPA website, which talked about the
determination coming out in April of 2018 simultaneously with
NHTSA.
November 30th, the screen shot disappeared. It was like
those old Soviet photos where the picture of the guy leaves
and, bingo, they are gone. So the process changed. The
determination was rushed.
The industry is completely united on the idea of rebooting
the MTR. Eighteen CEOs from all the major companies that
operate in the U.S.--some of whom are based here, some of whom
chose to invest here--all signed a letter asking that we not
prejudge the outcome but that we reboot the MTR to the original
schedule that was promised when the deal was done in 2011.
Next slide. Point 4: Reality is now contradicting theory.
When the final determination came out in January, the line was,
``the automakers were overcomplying, everything is fine.''
A few weeks later, NHTSA came out with new evidence on
compliance and showed that, for '16 and '17, we are now
undercomplying. So the reality on the ground is undercompliance
in '16-'17.
Point 5: The math here is really, really important. If you
go from 10 to 20 mpg over a thousand miles, you save 50
gallons. If you go from 40 to 50 over a thousand miles, you
save 5 gallons. There's a 10-to-1 multiplier focusing on the
front end of the curve rather than the back end of the curve.
That suggests that the most important thing you guys can do is
to make sure that fleet turnover happens as rapidly as
possible.
This next slide shows that the bulk of the savings through
2025 has already been realized. NHTSA has proposed through
2025, in terms of gallons saved, 179 million gallons.
If you take 2021 and you plus it up 1, 2, or 3 percent, you
get somewhere between 97 and 99 percent of the savings. So we
can talk about this big gap in terms of the politics of the
issue. But in terms of the substance, through 2025 we're 97
percent to 99 percent there. That's pretty impressive.
I am really running out of time. Gas prices were profoundly
wrong--point 6. That's changed the fleet mix in a dramatic way.
What you see here in this next slide is a--four lines. The 54
line is the original deal. The 51.4 line is the same deal
recalculated with the change in the fleet mix.
And the third line is if you recalculate based on the
subsequent fleet mix changes where the deal now is. That's not
a stringency adjustment. That is where the number now is,
roughly, 50.
The final point here is that consumers have a very
important role in this. This is a program that gets measured by
what consumers buy, not by what we produce. They are saying
they'd like fuel economy, but they are not willing to pay for
it.
I will go through, if I can, just two slides. One in three
said they would pay nothing for additional fuel economy. One in
10 would be willing to pay more than 2,500 bucks. And then,
finally, because they say they like fuel economy, it's
important to understand contextually where it fits.
Affordability and reliability are top priorities. Fuel
economy and safety follow. So when a consumer goes into the
showroom, they're looking for lots and lots of factors and lots
of features.
Fuel economy is one of those, but it's not the sole
determinant of their choice.
Thank you very much.
[The prepared statement of Mr. Bainwol follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Latta. Thank you very much.
Mr. McConnell, you're recognized for 5 minutes.
STATEMENT OF FORREST MCCONNELL III
Mr. McConnell. Mr. Chairman, ranking members of this joint
subcommittee, thank you for allowing me to testify on the topic
of fuel economy.
My name is Forrest McConnell. I am a third-generation Honda
dealer from Montgomery, Alabama. I am also former chairman of
the National Automobile Dealers Association, which represents
over 16,000 dealers who employ 1.1 million people.
I've been in the car business for about 40 years selling
fuel-efficient Hondas through good times and bad. But one thing
never changes. People buy new vehicles based on two factors:
one, does it fit their needs, and two, can they afford it?
So how fuel economy is regulated is very important to my
customers. Mr. Chairman, Rube Goldberg would be proud of the
convoluted way our Nation regulates fuel economy.
As Members know, there are not one but three fuel economy
programs that automakers must follow. These different fuel
economy programs are administered by three different agencies--
NHTSA, EPA, and the California Air Resources Board--under three
different sets of rules pursuant to three different laws,
potentially resulting in three different standards, all of
which must be separately followed.
These sometimes contrary regulations were labeled by the
Obama administration as One National Program, but they're
actually three separate programs.
When Congress established CAFE, they gave NHTSA the sole
authority for setting fuel economy standards. To avoid a
patchwork of State standards, Congress also correctly preempted
States from regulating fuel economy.
Since 2009, we've had something very different. Multiple
regimes under the One National Program flow from judicial and
executive branch actions. This program put EPA in charge of
setting fuel economy policy and allowed California for the
first time to set its own standard.
These actions have undermined the CAFE program that
Congress created. Congress should return to one actual fuel
economy program. There are benefits to having regulatory
clarity.
For example, the CAFE program was written to regulate fuel
economy. When setting standards, NHTSA must balance job loss,
consumer choice, safety, and market demands.
In contrast, the Clean Air Act was not designed to regulate
fuel economy. The EPA is not required to balance factors such
as consumer choice, safety, or job loss when setting a
standard.
California's regulation only considers economic factors in
that State, which is why it makes poor national policy.
California and every State is expressly--expressly--preempted
from regulating fuel economy. Yet, this has been ignored since
2009.
All this unnecessary regulation costs money. Multiple fuel
economy regimes harm customers because auto manufacturers must
charge more for the cars that customers want to subsidize the
cars the regulators demand.
These regulatory costs help make the One National Program
the most expensive set of rules ever, at a cost of $209
billion. Now, I've never seen a billion dollars, but I
understand it's a lot of money.
This will raise the average price of a vehicle nearly
$3,000 and will price over 6 million people entirely out of the
new car market.
America will benefit from returning to one real national
fuel economy program established by Congress. This is not a new
idea.
In 2011, the House passed a bipartisan bill sponsored by
Congressman Upton that would have re-established CAFE as the
sole fuel economy program.
Mr. Chairman, we can do better than this Rube Goldberg way
of setting fuel economy policy. Let's bring accountability back
by returning to one national policy. This approach will create
continuous fuel economy improvements that customers want and
that they can afford. The power rests with you.
Thank you.
[The prepared statement of Mr. McConnell follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Latta. Thank you very much, and at this time, Dr.
Cooke, you're recognized for 5 minutes. Thanks for your
testimony.
STATEMENT OF DAVE COOKE
Dr. Cooke. Thanks. Good morning, Mr. Chairman and ranking
members.
My name is Dr. Dave Cooke, and I am a senior vehicles
analyst with the Union of Concerned Scientists, a nonprofit
advocacy organization whose primary mission is to ensure that
policy is crafted on the best available science without
political interference.
I appreciate the opportunity to comment this morning on the
current fuel economy and emission standards. Transportation is
now the leading source of carbon dioxide emissions in the
United States, and the 2012 to 2025 light-duty vehicle
standards represent the largest single step towards reducing
greenhouse gas emissions and oil use in the U.S.
One National Program recognizes the independent authorities
of the National Highway Traffic Safety Administration,
Environmental Protection Agency, and California, as well as the
States that follow California's lead on tailpipe pollution
regulations.
At the same time, it helps provide a coordinated approach
to achieving reductions in oil use and emissions that allows
manufacturers to be able to design a single fleet capable of
complying with all fuel economy and greenhouse gas regulations,
should they choose to.
Separately, California and other States have adopted a Zero
Emissions Vehicle program in order to address air quality
issues. These States currently face $37 billion in annual
health impacts related to passenger vehicle pollution.
By 2030, the ZEV program will cut that by 35 percent. While
increasing the sales of electric vehicles will ultimately help
manufacturers comply with greenhouse gas regulations, that is
not the program's primary purpose, and it appropriately is not
part of One National Program.
Of course, the implications of One National Program extend
beyond national security and under EPCA or greenhouse gas
emissions under the Clean Air Act.
These cost-effective standards help put money back into the
hands of consumers by saving them money at the gas pump.
Improving the efficiency of new vehicles is especially critical
for lower- and middle-class families who spend a greater share
of their income on fuel, and these standards disproportionately
benefit those individuals by making the new and used car market
more fuel efficient.
The efficiency of cars and trucks continues to improve as a
result of these standards, with SUVs showing some of the
greatest levels of improvement year over year precisely because
these size-based standards encourage manufacturers to offer
more fuel-efficient options in all vehicle classes.
And even as the fleet is becoming more efficient,
automakers are setting sales records. At the same time, the
success of these standards cannot be taken for granted.
Suppliers have invested nearly $50 billion building and
expanding factories around the U.S. as a result of the
certainty these standards provide, growing manufacturing jobs
by more than 20 percent.
Anything done to weaken the standards and undermine those
investments could have drastic consequences for a supplier base
with a broad national footprint and, in turn, the U.S. economy.
This technology investment is part of why we are confident
that manufacturers can achieve the 2025 standards. Automakers
have barely begun deploying many off-the-shelf technologies
that can improve the efficiency of conventional gasoline-
powered vehicles, and new unanticipated developments continue
to emerge that can reduce fuel use even further.
As a result of this progress, NHTSA and EPA were able to
jointly show in the technical assessment report that cost to
comply with fuel economy and greenhouse gas emission standards
had declined.
As required under the midterm evaluation process agreed to
by all parties to the One National Program, EPA reviewed the
comments on the TAR and moved forward with the determination on
whether its standards for 2022 to 2025 remained appropriate.
Based on the best available economic and technical data,
including data provided by manufacturers, EPA concluded that
the 2025 standards remained appropriate. In fact, EPA agreed
with our assessment that the data shows that manufacturers
could meet even stronger standards by 2025.
But the agency chose instead to leave the standards as is
to provide the certainty needed for continued investment and
efficiency.
By seeking to renegotiate the terms of the One National
Program, automakers are injecting uncertainty into the
progress, stymieing progress and forestalling investment.
This directly harms consumers and risks long-term impacts
for the industry. Ceding leadership as the rest of the world
moves forward signals a repeat of the failings that required
American taxpayers to bail out the industry in 2008, and
suppliers could exit to China or Europe in response.
Rather than wriggling out of their commitment to seek
relief, as the alliance puts it, ``any way we can get it,''
manufacturers should be doubling down on improving efficiency
to protect American investment and American jobs.
One National Program is working now to provide fuel savings
for Americans, improve national security, and reduce emissions.
But this progress is in jeopardy as a direct result of
automakers' recent actions to undermine these standards.
It is critical to continue to hold automakers accountable
for the promises they have made to the American people.
[The prepared statement of Mr. Cooke follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Latta. Thank you very much for your testimony.
Mr. Bozzella, you are recognized for 5 minutes.
STATEMENT OF JOHN BOZZELLA
Mr. Bozzella. Thank you, Chairman Latta, Chairman Shimkus,
Ranking Member Schakowsky, Ranking Member Tonko.
On behalf of the Association of Global Automakers, thank
you for the opportunity to testify today.
Global Automakers represents the U.S. operations of
international automobile manufacturers that design, build, and
sell cars and light trucks in the United States.
Our member companies have invested $59 billion in U.S.-
based facilities and directly employ over 100,000 Americans.
Our members are building cars and trucks that are more fuel
efficient and cleaner than ever, and making tremendous strides
in vehicle electrification.
Our future progress in reducing emissions and fuel
consumption depends on a number of factors, some of which are
not fully within the control of manufacturers.
The most important factor is the customer. As we have seen,
when gas prices are low, fuel economy is less important to
customers when they purchase a new car or truck.
Government regulations are also important. Manufacturers
are required to produce vehicles to meet regulatory
requirements that may have been set in different times and
under very different circumstances.
To that end, as we talk about the fuel efficiency of
vehicles, we should also talk about the efficiency of public
policy. The auto industry, Federal Government, and State of
California established One National Program, ONP, to address
the fact that multiple agencies across 15 jurisdictions were
using different tools to regulate similar aspects of the
vehicle.
The resulting program aims to harmonize CAFE and GHG
standards for light-duty vehicles. The ONP provides substantial
year-over-year reductions in petroleum consumption across the
Nation for all light-duty vehicles while reducing unnecessary
regulatory duplication.
Recognizing the nationwide benefits produced by the Federal
program, California accepts compliance with Federal standards
as compliance with its GHG program.
But despite ONP's efforts to better align, notable
differences among the programs remain. That makes no sense.
The current scheme creates friction and drag in the system
that slows innovation and imposes unnecessary compliance costs
ultimately borne by consumers, with no added environmental or
energy benefits.
In fact, under the current standards, as you have heard, a
manufacturer could comply with one standard but not the other.
This is a prescription for wasted time, talent, and
resources which would be more productively directed toward
engineering and other challenges associated with actually
reducing vehicle emissions. Some of these problems can be
solved in a straightforward manner.
In mid-2016, Global Automakers and the auto alliance
jointly submitted a petition to EPA and NHTSA requesting
regulatory changes permissible within the statutory constructs
of each relating primarily to the banking accruing and
applications of credits and process improvements that will
promote additional innovative technologies with real fuel
savings benefits. The agencies should respond to this petition
without delay.
These regulatory changes, however, cannot fully address the
differences in Federal statutes, which means that legislation
is necessary.
Global Automakers supports congressional action to provide
greater certainty and consistency between the Federal programs.
These problems all have solutions. We simply haven't put
them to action, and that creates a dilemma. The auto industry
is in the middle of fundamental transformations to
electrification and automation.
The cars we sell today need to be able to generate the
resources to fund these transitions, and we need to be
thoughtful about public policy to support these efforts.
Finally, it's critically important that all of the parties
remain at the table to work through these issues. It is far
preferable that we resolve these issues without litigation or a
retreat from One National Program.
Those paths would only create uncertainty, which would
discourage investments in innovation and freeze further
progress in emissions reductions.
Global Automakers remains committed to a harmonized
national approach, and we look forward to working with you
toward that goal.
Thank you, and I will be happy to answer any questions.
[The prepared statement of Mr. Bozzella follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Latta. Thank you very much and we appreciate your
testimony, and we will now move into our question-and-answer
portion of the hearing.
I will begin the questioning and recognize myself for 5
minutes.
Mr. McConnell, as a dealer, how can you tell the
subcommittees about consumer trends, especially with respect to
the types of vehicles they are purchasing today?
Mr. McConnell. Thank you very much for your question.
You know, the customer makes their own decision of what car
to buy. You can build cars. That doesn't mean that the
customers--the demand is there.
So the two things that I've found is customers buy their
needs for a car. For example, we had a customer the other day.
She was pregnant, with her second child. Big soccer mom.
You know, they had moved from a smaller car up to Odyssey
minivan that suits her needs. But the demand for cars right now
is, 63 percent of the people are trucks versus about 34 percent
cars. So it's changed tremendously in the last couple of years,
and that's because the price of gas went down from $4 a gallon
basically into the $2s.
Mr. Latta. Thank you.
Mr. Bainwol, with the current rules and regulations in
place, do we in fact have one national standard for CAFE and
greenhouse gas emission standards?
Mr. Bainwol. We do not, effectively.
Mr. Latta. And how did the EPA's less than 7-week process
from public hearing to final determination impact the midterm
review?
Mr. Bainwol. Well, it disconnected first from NHTSA. So,
if you go back to 2011, there was essentially a trade, and the
agreement was the industry would agree to very ambitious,
aggressive targets over a very long period of time through
2025. In exchange, the industry would get a commonsense
analytic lookback to make sure that the projections were
accurate, and we would get one national program.
What we've gotten is neither. We are pledged to try to get
there, but we do not have one national program, and the midterm
review was premature.
When the TAR came out, we asked for an extension. We were
told, ``Don't worry, there's going to be plenty of time.'' The
extension request was denied.
When the original proposed determination came out, we asked
for an extension, and it was denied. And over the course--we
had about 20 days over the course of the Christmas holidays.
And so everything was very compressed, and there was a very
strong disagreement about the substance of the report, which we
never really got to work our way through.
Mr. Latta. Let me ask you this, because I believe that you
made some comments, and were any of the flawed assumptions that
you raised addressed by the agency?
Mr. Bainwol. Not really, and I think it's worth pointing
out there has been an attitude on the part of some that the TAR
and the subsequent work was the Holy Grail--that it was without
dispute. And I would just simply like to point out that the EPA
made many assumptions, and if you go through and just look at
the points, they've been proven false.
There was a massive failure on projecting gas. The fleet
mix question was completely butchered. There was a view that we
were overcomplying, and we were under complying. So we can talk
about the substantive value of that report under which the
midterm was set and was finalized. But they made mistakes that
were really quite profound.
Mr. Latta. Let me ask you, because you're pointing out all
these mistakes. And your pointing these mistakes out--what did
they say?
Mr. Bainwol. Well, originally, they said there would be
time to talk about it later on, and we kind of lost that time.
There are substantive disagreements. We believe--I think
the most important mistake, in our view, is just the amount of
electrification necessary to comply.
They believe we can comply over the schedule with minimal
electrification. We believe much more is required, and if you
look at the purchase pattern in the marketplace, that's the
real problem.
Mr. Latta. OK.
Mr. Bozzella, if I could, in my last minute here--by having
different standards from multiple agencies leads to automakers
building cars consumers are not buying, what effect will that
have on jobs and growth in the United States auto industry?
Mr. Bozzella. I think it certainly could have a fairly
significant impact on jobs and on the growth of the industry.
You know, what's happening here is we are having to waste
time and resources on compliance when we ought to devote that
time and resources to innovation that improves fuel economy.
So with one standard, what you can do is focus that
investment, and it's massive investment, and all of you know
and many of you on both sides of the aisle have praised that
investment. Many of you represent States and communities where
you see that investment firsthand.
What we want to make sure is every dollar of those
investments is focused on improving fuel economy as opposed to
efforts to comply for the sake of compliance with no benefit.
Mr. Latta. Thank you very much. My time has expired, and
at this time the Chair recognizes the ranking member of the
subcommittee, the gentlelady from Illinois, for 5 minutes.
Ms. Schakowsky. I would just like to point out this is the
2-year anniversary of the Paris Accords and, unfortunately, in
my view, the United States is no longer part of that. And it
seems to me that what's being considered today might actually
increase the pollution caused by weakening fuel economy
standards.
So the plea for harmonization between EPA's and NHTSA's
program isn't about aligning different regulations. It's about
weakening fuel economy standards.
All the credits that the automakers want to be added to
NHTSA's program are going to cause stagnation of fuel economy's
goals and not harmonizations.
Dr. Cooke, let me first ask you, are these programs
working, and are U.S. cars more efficient and less polluting
than they used to be?
Dr. Cooke. Absolutely. Vehicles have gotten significantly
more efficient over the past 5 years.
Ms. Schakowsky. Are the yearly goals for the two programs
stifling innovation, or actually helping to drive it?
Dr. Cooke. I think the fact that fuel economy is improving
and that you see continued new research--every, you know,
announcement from automakers shows that they're investing and
that this is driving innovation.
Ms. Schakowsky. And as I understand, the car makers want
to reinstate expired credits from earlier years when standards
were much more lax, and they want to extend the life of those
credits from 5 to 11 years, and they want to add a whole new
category of credits to the mix, and they want to relax the caps
on their ability to transfer the credits they earn on their
cars to their pickup trucks.
Dr. Cooke, have I left anything out in that list of what
they want?
Dr. Cooke. No, I think that sounds about right.
Ms. Schakowsky. Do automakers, Dr. Cooke, really need such
a substantial expansion of credits to meet the fuel economy
standards?
Dr. Cooke. No, I think the TAR and the work since the vast
body of evidence shows that there are plenty of technologies
that they could be applying to their vehicles in order to meet
the standard, and if they met the CAFE standard, which they're
trying to weaken through these credits, they would be in
compliance with the EPA standard as well. So----
Ms. Schakowsky. If automakers were to get all the
retroactive credits they're asking for, what would this mean
for real improvements in fuel economy, going forward?
Dr. Cooke. The vast volume of credits could really offset
and forestall continued investment in inefficiency, and so you
could see manufacturers using their credits to stall progress
on the fuel economy of the pickup trucks that many drivers are
looking to purchase, and that affects our ability in the long
term as--through the midterm process, that would set up a
trajectory where we have weaker vehicles going into the 2022
model year and the standards are then further weakened through
this lack of progress, and we could see 8-to-10-mile-per-gallon
reduction in the 2025 targets as a result.
Ms. Schakowsky. Well, while we are on the topic of
credits, car makers have complained about the fact that the EPA
has allowed them to get extra credits for using certain
technologies like stop-start ignitions systems, but NHTSA has
not given them credits.
I am referring to off-cycle credits. We are told that NHTSA
needs to harmonize with the EPA and allow these credits to
count retroactively toward both emissions goals and fuel
economy standards.
So Dr. Cooke, aren't these off-cycle technologies already
factored into NHTSA's fuel economy goals?
Dr. Cooke. Yes, that's right. NHTSA explicitly excluded
them from the 2012 to 2016 regulations when they set the
standards.
Ms. Schakowsky. And, in fact, didn't NHTSA intentionally
set its fuel economy goals lower than EPA's emission goals
precisely because its program didn't include these credits?
Dr. Cooke. That's right. Its standard was about 1 mile per
gallon lower as a result.
Ms. Schakowsky. And if NHTSA were to allow off-cycle
credits to apply retroactively to its already discounted fuel
economy standards, shouldn't it also reset those standards to
make them more stringent?
Dr. Cooke. That's correct.
Ms. Schakowsky. So do you buy the estimate that this would
raise the cost of a car $3,000? Does that take into account
what the lower gas price would be?
Dr. Cooke. I have no idea where that $3,000 number is
coming from. It is outdated.
Ms. Schakowsky. Thank you. I yield back.
Mr. Latta. Thank you very much. The gentlelady yields
back.
The Chair now recognizes the chairman of the Subcommittee
on Environment, the gentleman from Illinois, for 5 minutes.
Mr. Shimkus. Thank you, Mr. Chairman.
I guess, first, following a couple of the lines of
questions, to the automakers, first of all, it's just a--it's
just a thank you, and to the auto dealer.
You represent America, in which you raise capital, assume a
risk, try to prove it's a good, and try to sell a good. You pay
living wages. Many times you pay health benefits. You're paying
taxes to the country. You're paying local taxes that fund our
schools, our towns, and our communities. You probably are
supporting local sports leagues and sport teams and stuff like
that.
So I always get frustrated when we bring people before us
who are doing everything we ask, and they seem like they're on
trial and that they're under attack. It just--it is
unfortunate.
So, first of all, thank you. Now, to the point--part of
this debate is that Obama administration moved the goalpost in
this midterm review. Is that correct? Mr. Bainwol and then Mr.
Bozzella.
Mr. Bainwol. Yes, it is correct.
Mr. Bozzella. Correct.
Mr. Shimkus. And your request is what?
Mr. Bainwol. Our request is simply to go back to the
original Obama time line.
Mr. Bozzella. And have a fact-based, evidence-driven
process.
Mr. Shimkus. Because--and you want that because?
Mr. Bozzella. Because we need to get it right. It is
critically important to the customer, it is important to
investors who are investing in this country, and it is
important for all of us who care about reducing greenhouse gas
emissions and improving fuel economy. That is why.
Mr. Shimkus. And isn't it safe to say that when you do a
formula, over time variables in the formula could change?
Mr. Bainwol. That's correct, and they have changed.
Mr. Shimkus. And then give me some examples of those
changes in those areas.
Mr. Bainwol. Well, we talked about the gas price reality,
and there's nothing that drives behavior in the marketplace
more than the price of gas. So that's the biggest factor, and
that has changed the fleet mix, and that has changed ultimately
the compliance reality. So we are now undercomplying.
And I think it's important to point out there are two
different programs. EPA was estimated to save something like
65.6 billion gallons. The NHTSA program was going to save
something like 65.3 billion--essentially, the same thing.
And we are complying with the more numerically stringent
EPA program. So, in the discussion of harmonization, that
doesn't change. We are not touching the EPA at all.
Mr. Shimkus. Let me go to the--Mr. McConnell, just from
your observations of the consumers in this process and based
upon this discussion, the consumers have changed in their
choices of what they want to pull off the lot, right? And can
you give me that observation?
Mr. McConnell. Yes. The one thing I wanted to mention, the
$3,000 additional cost to my customers is from the three
rules--the total cost. It's in the Federal Registry.
The TAR is in a rule. Customers, as you in life, they make
decisions, times change, you have different stages, you have
different desires. But, you know, Congress got it right the
first time by not having a patchwork.
You want to consider affordability to customers and their
consumer choice, and they get the car that fits their needs,
and the one thing I want to point out is, this is the
customer's money.
A regulator can demand a certain car gets built. But a
customer has the right to spend his money. Maybe it's a Prius
because that works for you. Maybe you have to have a truck
because you have a business, and that's how you earn your
livelihood.
Mr. Shimkus. Yes. Let me reclaim my time because I am
running short. But I am from rural America. We like big
vehicles. We like big trucks. So I know what's being sold in,
as we say, my neck of the woods.
Let me finish with the auto manufacturers, and this may not
be a surprise to some of my friends. There is a Government
initiative, Co-Optima, which is underway to define and
understand the costs and benefits of high-compression engines
and high-octane, low-carbon fuels.
If your industry were to go in that direction, what do you
think it would mean in terms of emission reductions or consumer
affordability for vehicles in the model year 2021 and beyond?
Mr. Bainwol. Well, high-octane absolutely has value in
terms of fuel efficiency, and I've seen it estimated something
in the order of 4 or 5 percent as a plateau shift.
So there's real value on high-octane, and then there's a
question of how you get it, and on that question we're a little
bit agnostic, but we'd be happy to work with you.
Mr. Shimkus. But certainty is part of that process too,
right?
Mr. Bainwol. Yes.
Mr. Shimkus. Mr. Bozzella?
Mr. Bozzella. Yes. I think you have to look at the vehicle
and the fuel are one system. And so that's what's driving that
type of work, right. So, if you have more efficient engines and
cleaner engines you want to have a fuel that matches one
system.
Mr. Shimkus. Excellent. I yield back my time.
I thank the chairman.
Mr. Latta. Thank you. The gentleman yields back.
The Chair now recognizes the ranking member of the
Environment Subcommittee, the gentleman from New York, 5
minutes.
Mr. Tonko. Thank you.
Dr. Cooke, as I mentioned in my opening statement, this
committee received testimony that automakers are already ahead
of schedule to meet standards for upcoming model years.
Did the TAR find that the targets for later model years can
be met by mostly efficiency improvements to gas-powered
engines?
Dr. Cooke. Yes, that's correct. There's not a significant
deployment needed of electrification.
Mr. Tonko. Thank you.
And numerous comments to the TAR and proposed determination
outlined a number of technologies that reduce greenhouse gas
emissions that are commercially available.
Your testimony mentions a number of proven technologies
have not been widely deployed. Some of these have existed for
years but still are only found in 10 or 20 percent of new
vehicles.
Dr. Cooke, can you discuss how off-the-shelf technologies
could be more widely adopted?
Dr. Cooke. Sure. I think you look at what Ford has done
with its turbocharged downsized engines, where you can provide
equivalent amount of power from a smaller engine. Even they
haven't sort of moved that technology across the board, and
they're certainly a leader, and other vehicle manufacturers can
either move in that same direction with something that's proven
or define a new pathway, and we are seeing those developments
routinely come out in new announcements every few months.
Mr. Tonko. Why haven't these commercially available
technologies been adapted more quickly?
Dr. Cooke. I think one of the challenges is that product
cycles are long. They're about 5 years, and so it does take
time to redesign a vehicle.
But, at the same time, we've seen instances where, for
example, Toyota's large trucks haven't seen a power train
upgrade in a decade.
So I think there's inconsistency in the industry in how
quickly they're moving these technologies through.
Mr. Tonko. Thank you.
And would additional vehicle models meet higher fuel
efficiency standards if more of these commercially available
technologies were more broadly utilized?
Dr. Cooke. Absolutely. There is plenty of room for them to
meet the standards.
Mr. Tonko. Thank you.
It's also my understanding that there are also several
other well-known technologies that are under development and
will very likely provide alternative cost-effective pathways
toward meeting these standards.
Dr. Cooke, is that accurate?
Dr. Cooke. Yes. I think one of the things that the
modeling shows and the fact that the TAR was done both by NHTSA
and EPA using slightly different assumptions and different
modeling results resulted in a number of different pathways
that manufacturers could choose to meet the standards.
So it's a robust analysis that proves that there are
multiple pathways of getting there.
Mr. Tonko. And despite the likelihood of these
technologies become available in the near future, is it
accurate that EPA did not consider them when determining the
appropriateness of the model years 2022 to 2025 standards?
Dr. Cooke. I think there are a number of technologies
which have been developed since EPA's proposal that show that
we can go even further, and developments that were completely
unanticipated, not just when the agencies wrote the original
rule but even since the final determination.
Mr. Tonko. And why do you believe the EPA and
manufacturers have consistently underestimated how fast
technologies can be developed?
Dr. Cooke. It's obviously in their interest to only
provide regulators data which will result in the standards that
are most easily achievable. So, at the same time, I don't
understand fully why they underestimate what their engineers
are capable of. But history has certainly shown that to be
true.
Mr. Tonko. Well, thank you, Dr. Cooke.
I think it's clear that these standards are achievable.
They're cost effective and appropriate, and I have full faith
in American automakers as well as the existing flexibility of
the program to reach these standards.
So I can't support the uncertainty created by reopening the
midterm review determination.
Dr. Cooke, last week Administrator Pruitt testified before
this committee that the midterm evaluation process was flawed
because it did not happen at the April 2018 deadline.
I know we are used to EPA missing deadlines, but is there
anything in the regulations that prevented EPA from evaluating
the appropriateness of the standards before April 2018?
Dr. Cooke. No. Absolutely not. And given the long product
cycles, more advanced notice is preferable.
Mr. Tonko. And do you think there's anything included in
the TAR or the determination that makes it incomplete or
inaccurate?
Dr. Cooke. I think there was a fairly thorough analysis.
It was 1,200 pages and 4-plus years of careful technical and
economic analysis, many studies, many peer-reviewed studies,
many benchmarking tests in their own labs. There was a lot of
data that this was based on.
Mr. Tonko. Thank you very much.
With that, I yield back.
Mr. Latta. The gentleman yields back and the Chair now
recognizes the gentleman from West Virginia for 5 minutes.
Mr. McKinley. Thank you, Mr. Chairman.
I want to deviate a little bit from this issue over the '22
to '25 series and more looking--there was a comment earlier in
one of the opening statements about safety.
I am still curious. I see there are competing reports out
there, depending upon your perspective, of whether or not the
efficiency--and Congressman Tonko and I work together
frequently on legislation over efficiency.
So, as an engineer here in Congress, I like the idea of
efficiency but I also want to measure the, I suppose, the cost-
benefit ratio of what's it doing on safety.
Because some cars are getting lighter. They're using more
aluminum, less steel. But yet, you will hear some reports will
talk about the fact that in real-world conditions there are
more accidents, more people--last year, we had an increase in
deaths on the highways. So others will say under a model
situation, if all cars were the same size on the highway, there
wouldn't be. That's not the real world.
So I would like to hear back a little bit from you about
the safety aspects when we continue this, because I want us to
continue down the road of increasing efficiency of our cars.
But I don't want to do it at the risk of our people that are
driving the cars. So that's my first question, and I want to
get, if we could, just some quick responses back to safety.
Mr. Bainwol. I'll jump in. You have hit, obviously, a very
important point, and it's one of the reasons why EPA jumping
ahead of NHTSA was a problem. NHTSA, under statute, has to look
at a range of factors, including safety.
EPA does not. So your concern about safety is valid, and it
ought to be incorporated in the analysis, and so I think it's a
good thing.
Mr. McConnell. He's 100 percent right. The good thing
about what Congress set it up with CAFE is, you had to consider
safety was one of the factors.
EPA does not. California does not have to consider anything
but economic factors only in that State, and as you know
they've reduced the massive cars tremendously so that----
Mr. McKinley. Well, let me, if I could, reclaim--let me
ask a more definite--rather than to keep it open ended. Do you
think increasing the efficiency has caused or contributed to
the increased accident rate or fatalities on our highways?
Mr. McConnell. I don't know if I have the expertise to
answer that question. But I will say that Congress got it right
because they required CAFE to consider safety, and EPA does not
have to consider safety at all.
Mr. McKinley. OK. I am running out of time on this, but--
--
Dr. Cooke. There is no evidence to support the conclusion
that these are having an adverse effect on accidents.
Mr. Bainwol. But what we do know is that the older the
car, the bigger the safety risk. A new car has technology to
avoid accidents. A new car has structural integrity and is
better maintained.
So, if your priority is safety on the roads, the ability to
move fleet turnover is crucial.
Mr. McKinley. I am sorry I didn't call on you, Mr.
Bozzella.
During the testimony--Dr. Cooke's testimony, I saw your
body language was very illuminating--that you were shaking your
head. Do you want to express yourself in the time--I've got a
minute and 13 seconds left--either one of you, to say where you
disagree with Dr. Cooke?
Mr. Bozzella. I think--and, again, I appreciate Dr.
Cooke's testimony--but I think there's a fundamental
misunderstanding of the notion of credits.
It's almost as if they're gifts that have been delivered
from some magical place. The fact of the matter is these
credits are the result of investments that car companies have
made that have resulted in progress.
So they've made more achievement, and so this credit is a
reward for innovation. It's actually earned for the investment
that companies are making. And so the point of this is not--we
are almost having an abstract conversation about credits.
It's really important to recognize that these are important
tools in the toolbox, because what they do is they encourage
innovation and they also help balance and smooth the ups and
downs of product development cycles in a program where year-
over-year fuel economy increases are required.
Mr. McKinley. Thank you.
Mr. Bainwol, do you have anything to add to that?
Mr. Bainwol. That was the right analytic answer. My body
language was, I was just imagining Dr. Cooke running a car
company, because he seems to have a vision that is profitable,
but real car companies have apparently not the capacity to do
that. So----
Mr. McKinley. I yield back.
Mr. Latta. Thank you. The gentleman yields back.
And the Chair now recognizes the gentlelady from California
for 5 minutes.
Ms. Matsui. Thank you very much, Mr. Chairman.
The Clean Air Act gives the EPA the authority to grant the
State of California a so-called waiver to adopt its own air
pollution standards for vehicles.
Approximately a dozen States have adopted California
standards as well. Mr. Cooke, can you please tell us why
California was given the ability to adopt its own emission
standards?
Dr. Cooke. Sure. California's leadership predates the
Clean Air Act. They were the first body to regulate tailpipe
emissions from the vehicle industry.
Ms. Matsui. And also because of the huge pollution that
they had in the State also?
Dr. Cooke. Exactly.
Ms. Matsui. When California applies for a waiver to set
its own standards, what conditions does the EPA consider while
deciding whether to grant that waiver?
Dr. Cooke. First, it's important to point out that the
default is that the waiver is accepted unless it meets one of
three criteria: either that the regulations were arbitrary and
capricious, so not a well-thought-out standard--inconsistent
with EPA's authority under the Clean Air Act, or not compelling
or extraordinary circumstances, and I think it's very clear
when you look at the wildfires burning why the greenhouse gas
emission standards are compelling and, clearly, the air quality
issues in California create extraordinary circumstances for
ZEV.
Ms. Matsui. So has the EPA ever revoked one of
California's waivers?
Dr. Cooke. No waiver has ever been revoked once it's been
granted, and it's not even clear what the process would be to
do so.
Ms. Matsui. OK. There are over 25 million registered cars
and licensed drivers in the State of California. I am
particularly interested in how CAFE standards and greenhouse
gas emissions standards impact drivers in my State and across
the country.
Mr. Cooke, I think we've heard this here before, but I've
heard the argument that the vehicle efficiency standards raise
costs for consumers. But I understand your organization has
found otherwise. Do you know how much money drivers are saved
because of the standards on a per-vehicle basis?
Dr. Cooke. Yes. Consumers would stand to save about a
little over $3,000 on the purchase of a new car or about nearly
$5,000 over the lifetime of a purchase of a new truck, and
that's at gas prices that we are at now.
Clearly, if they increase in the meantime that would be
significantly higher.
Ms. Matsui. OK. And do Americans generally support strong
fuel efficiency standards?
Dr. Cooke. Absolutely. Poll after poll shows that folks
support strong fuel economy standards. Seven in 10 Americans
specifically support Government setting strong fuel economy
standards, and that finding crosses aisles.
Ms. Matsui. OK.
Mr. Cooke, you mentioned that both the EPA and your
organization found manufacturers could meet stronger standards
than are currently written for 2025.
What data and information do you study to come to this
conclusion?
Dr. Cooke. Sure.
You know, the analysis that's been conducted has been
extensive. But each month that passes, we see a new data point.
The fact that both EPA's and NHTSA's models confirmed that
the costs had come down shows robust evidence. Then vast amount
of peer-reviewed literature the EPA has been generating.
The Indiana University study that was funded by the
alliance actually shows that hundreds of thousands of jobs are
created as a result of these standards. So there are positive
economic outcomes, new data based on suppliers that ICCT has
put out. I mean, the list is extensive.
Ms. Matsui. OK. And as I mentioned earlier, the
International Energy Agency has found that the transportation
sector is the only sector in which energy efficiency has grown
worse in this country over the past 15 years.
Have you seen any factors, Mr. Cooke, here in the United
States that explained this trend? Why do you think we've become
less efficient in the transportation space while more efficient
elsewhere?
Dr. Cooke. I think one of the things that's critical is
the result of the mix shift. So we are seeing a swing back to
the purchase of larger cars and trucks--SUVs and pickups. And
so it's really critical that these standards remain strong
because they drive improvements across those vehicles and
ensure that cars, trucks, and SUVs get more efficient over
time.
And so we've seen a plateau as a result of that fleet mix,
but these standards will continue to drive that and put us back
on the right course.
Ms. Matsui. OK. Thank you, and I yield back.
Mr. Latta. Thank you very much. The gentlelady yields
back, and the Chair now recognizes the gentleman from Illinois
for 5 minutes.
Mr. Kinzinger. Thank you, Mr. Chairman. Thank you for
yielding, and I want to thank all of you for being here and
spending time with us today on this really important issue, and
it's essential.
We'll start with Mr. McConnell. I know it's been mentioned
prior but in your testimony you state that the national program
set by the last administration raised the price of each vehicle
by nearly $3,000, and that doing so will price out over 6
million people from the new car market.
Can you please explain how you arrived at those numbers and
how consumers would react, based on your experience?
Mr. McConnell. Well, the $3,000 is the total cost for the
three rules. It's been noted in the Federal Register. The most
important thing to know is fleet turnover.
You know, everybody here is--we'd be in agreement on one
thing. We want the fleet to turn over faster to put more people
in more fuel-efficient cars. And so, if you make them
unaffordable or you make them not as desirable with the
customer, you have less people buy cars. So that's it.
To give you an example, the structure that you had set up
under CAFE was the right one. I don't think you want California
setting the standard for the rest of the country, and I will
give you one example.
There is probably many of you in here that own a black car.
California CARB had proposed a regulation called cool paint--
cool paint. They would eliminate black cars because they become
hotter and you have to run your air conditioner a little bit
longer. I don't know what Uber would do without a black car but
it would be a----
Mr. Kinzinger. I have a black car, too.
Mr. McConnell. So it's just--it's what the customer wants.
Mr. Kinzinger. That's real? They actually considered
banning black cars?
Mr. McConnell. Yes. It's black paint. It's called a cool
paint. You can look it up.
Mr. Kinzinger. And is it fair to say that the dealers are
concerned that these rules will force them into a position in
which they won't be able to provide the cars and trucks to
people that want to buy and have prices they can afford?
Mr. McConnell. That's right. You know, ultimately we buy
the cars that the manufacturers make. They sit on our lots. We
own them. But ultimately, to put them in the fleet, the
customer has to make a decision, and any business that's
successful has to consider what the customer wants--can they
afford it? And 90 percent of the cars are financed in this
country.
There is not one bank--I've asked at least 12 banks--that
will not loan additional money just because your car gets
better gas mileage.
Mr. Kinzinger. So most of the people in this room could
probably afford a more expensive car, but there's a vast
majority--it seems like kind of a regressive tax, in essence.
Mr. Bozzella, from automakers, engineers in the Department
of Energy, and many other technical experts--and I know Mr.
Shimkus touched on this--but I understand there's been an
ongoing evaluation of how high-octane, low-carbon fuels such as
midlevel ethanol blend can help reduce emissions and improve
efficiency when used with new optimized engines.
In its most recent request from comments on the midterm
evaluation, EPA specifically asked for information about the
impact of high-octane fuel, and Administrator Pruitt also
mentioned consideration of high octane in his responses to
questions in this committee's hearing with him last week.
What types of work have automakers undertaken to help
evaluate the benefits of high-octane fuels?
Mr. Bozzella. Thanks, Congressman.
As you are aware, we are constantly researching and working
on the combinations of vehicle systems, power train systems,
and fuels. I mentioned in response to Mr. Shimkus' question
that you have to think of it as one system--hardware software,
engines and fuels--and so we are constantly evaluating new fuel
and engine combinations, and we think octane certainly
contributes to efficiency, and so there's an opportunity there,
right. The way to think about it is, we can--you know, that
brings additional benefits to the process while we are still
working on gasoline-powered engines.
Mr. Kinzinger. So you're talking about, you know,
obviously, that innovation and experimentation. You state in
your testimony that the current system is stifling innovation
and resulted in increased costs for consumers. Can you explain
what factors are predominantly driving this increased cost for
consumers?
Mr. Bozzella. Yes. It's primarily the bureaucratic drag of
trying to comply with three different fuel economy systems as
well as a technology-forcing mandate managed by three different
agencies across 15 jurisdictions.
It doesn't really make much sense. I think if we can get
further alignment and ultimately to one national program as we
all--that was the aspiration we all had--we will be able to
devote that investment, those substantial resources ,to
improving fuel economy and reducing emissions.
Mr. Kinzinger. So in the couple seconds I have left, will
the existing gap between Federal and State programs, if they're
not harmonized, do you expect to see that gap increase over the
years?
Mr. Bozzella. There is no question about it.
Mr. Kinzinger. All right. Thank you. I yield back.
Mr. Latta. Thank you. The gentleman yields back and the
Chair now recognizes the gentleman from California for 5
minutes.
Mr. McNerney. I thank the chairman. I thank the gentleman
from Illinois for giving me 5 seconds there.
I thank the members of the panel this morning. Dr. Cooke,
do you think the current standards have helped make the
American auto manufacturers more competitive?
Dr. Cooke. I do. I think we saw what happened when they're
allowed to sort of stagnate.
Mr. McNerney. Thank you. Well, how do you think--and you
have already sort of answered this question, but how do you
think the regulations have driven employment with U.S.
automakers, and is this hurting the industry?
Dr. Cooke. I am sorry. You said employment, correct?
Mr. McNerney. Yes. How is it driving employment?
Dr. Cooke. Yes. The fact that you are moving forward with
new research and development on new technologies, this is
providing a catalyst for increased investment, not just at
automakers but specifically it's drawing suppliers to invest in
the U.S. as well, and they are a critical tool and they
outnumber automaker manufacturing 3 to 1. So it's driving
investment in new technologies that's supportive of increased
job growth.
Mr. McNerney. And is it hurting the automakers to have to
hire these people or----
Dr. Cooke. They don't seem to be--you know, many
automakers are seeing extremely high profits right now, and I
defer to them on whether they feel like their industry is
failing.
Mr. McNerney. OK. What about harmonization? How difficult
do you believe that it is--the automakers can meet the
different sets of standards that we are hearing about this
morning?
Dr. Cooke. It's not very difficult at all, and
particularly when it was pointed out explicitly in the
rulemaking exactly the pitfalls that would face them and
exactly the differences between the two programs, and that was
finalized as--you know, when they signed off on One National
Program, and nothing has changed about One National Program
since they signed off on those rules. They were well aware of
the differences between the two programs, and it seems that
they are choosing instead to invest in compliance with just
one.
Mr. McNerney. OK. You're answering my questions pretty
directly here, Dr. Cooke. I appreciate that.
You mentioned that off-the-shelf technologies already
available would greatly increase fuel efficiency if it was
employed. Could you expand on that a little bit?
Dr. Cooke. Yes. So the fact that automakers have invested
and that there are proven technologies shows that the potential
is there.
But it takes time to move them across the remainder of
their platforms, because a new car is redesigned every 5 years,
and maybe there's a significant refresh in the middle at about
the 3-year mark.
But, because of that, it takes a long time for even
technology that is ready to go to get into the fleet.
But what we've seen established is that there are a
plethora of these technologies that are well established,
everyone understands, and are still in the low fractions of the
fleet.
And so over time, there's plenty of room for improvement
without having to resort to the most expensive technologies.
Mr. McNerney. So there is a internal combustion research
facility at Sandia Labs there in Livermore, which is near my
district. How effective is that, do you know, in terms of
providing technology that automakers can use to increase their
efficiency?
Dr. Cooke. I am not aware of that specific lab. But the
National Labs in general do play a significant proving ground
for some of the more advanced types of combustion technologies,
and they're certainly--you know, we've heard the Co-Optima
program.
That was in coordination with National Labs, and investment
in that basic science, just as in any other field, certainly
plays a strong role in development of advanced technologies.
Mr. McNerney. Well, you point out that fuel economy and
greenhouse gas emission standards have benefited our economy,
our environment, and saved consumers billions.
Since these standards are working, why is the industry
seeking to halt this progress and move backwards and maybe hurt
itself?
Dr. Cooke. That is a very good question. I think you look
at what the industry could be doing, and they could be moving
forward.
But we also look at the history of what they have done in
the past, and I think there is a little bit of a return to that
mindset when you look at testimony in front of House committees
over the past 35, 40 years. This is par for the course. They
continue--automakers routinely say, ``We can't possibly hit
that target,'' and they are still standing. So----
Mr. McNerney. The chairman is going to cut me off, so I am
going to yield back.
Mr. Latta. I didn't cut you off yet.
[Laughter.]
Mr. Latta. The gentleman yields back. The Chair now
recognizes the gentleman from Michigan for 5 minutes.
Mr. Upton. Well, thank you, Mr. Chairman. I just want to--
a lot of good questions asked on both sides. I want to bring my
historical perspective into play here for a moment.
I was co-chair of the Auto Caucus for a lot of years.
Bipartisan caucus. We all want better fuel efficiency.
Consumers want that.
We have made some wonderful strides. Real kudos to the
industry for where we are and, frankly, because we have gas
prices--saw prices this weekend for $2.24 a gallon. That's a
lot better than $3.84 8--almost 9 years ago.
And I would dare--when we worked with the industry and with
the administration on getting better fuel economy standards, it
was never the intent of this Congress and, frankly, I didn't
think it was the intent of the administration, the Obama
administration, to have something that was different than One
National Program, and we thought that that was going to be the
case. I think they indicated that back in 2009 and again in
2012.
And I would--Mr. Bainwol, your testimony here, I think we
were all surprised, based on their testimony earlier on and
where they ended up, literally, as Chairman Walden said, just a
week before the election, or a week before the end of the Obama
presidency.
When we worked with the industry and with the
administration on establishing the time frame for mileage, we
put in the provision that, in 2018--years down the road--that
there would be a look back: Can the industry actually make
these changes at what, hopefully, would be a reasonable price
for consumers?
I wouldn't say it was set in to halt the progress. It was
to actually measure the science, the efficiencies, and the new
vehicles as to whether they would meet those.
Then it was 54 miles per gallon. It was revised down a
little bit, so it's about 50. I am averaging here. But, under
the rules, I mean, Mr. Bainwol and Mr. Bozzella, I think your
best answer--the industry, if you didn't have that look back--
what will it take to actually meet 50 miles per gallon,
literally, in the year, what, 2024, 2025? Mr. Bainwol.
Mr. Bainwol. A tough question. I think the premise that we
are going to halt progress is false. The only question here is
the degree of the slope, and we want the slope of progress to
be one that's consistent with selling cars and encouraging the
fleet turnover, and that's really what all this boils down to.
So I understand we live in a political system and rhetoric
gets heated. But we are talking about getting to the Obama
numbers and beyond at some point over time, and the question is
how do we manage this in a fashion that's consistent with
marketplace realities?
Mr. Bozzella. Yes, and just to add to that: I think we are
making outstanding progress. There is no question about that.
Mr. Upton. Yes.
Mr. Bozzella. The question really is, Are we testing the
assumptions we made? For example, it's unclear to us really
what types of technologies will be into the cars and trucks
that people will need to buy in 2025.
There is not a single gasoline-powered engine that meets
those standards today. So I think we should be honest and
straightforward about the types of technology pathways we are
going to see forward--more electrification, more hybrids.
And so really this is about not only making sure we get the
assumptions right for innovators and investors, but also that
the customers recognize what the marketplace will look like and
are prepared.
Mr. Upton. Mr. Bainwol, as you know, my colleague and
friend from Michigan, Mrs. Dingell, and I have introduced
legislation called the Fuel Economy Harmonization Act of 2017
that is designed to correct the inconsistency of having three
different standards, in essence, and go back to one.
What are your thoughts on that legislation?
Mr. Bainwol. We think it's a terrific bill. We think that
the impact of the bill is to reduce regulatory friction, and by
reducing regulatory friction, that allows for compliance
strategies that make sense, and you end up reducing the cost of
product, enhancing the ability of people to buy those cars, and
that's crucial to employment in your States. So it really is
very valuable.
And in terms of dollars, I was told the other day--I am not
sure where the data comes from, but if anywhere near the
magnitude is right--a billion dollars in savings in terms of
costs translates into a thousand dollars on the bonus for a guy
who works on the line.
So this is a multibillion-dollar savings in terms of the
regulatory friction. That means real disposable income for the
workers of this industry.
Mr. Upton. Thank you. I yield back.
Mr. Shimkus [presiding]. Gentleman's time has expired.
The Chair now recognizes the gentlelady from Michigan, Mrs.
Dingell, for 5 minutes.
Mrs. Dingell. Thank you, Mr. Chairman.
I have a lot of questions. I am going to go to my last one
first, because I want to follow up on my colleague from
Michigan.
When we are talking about--first of all, I am an idealist.
Someday we are going to bring permanent peace between Michigan
and California--that's my goal here--because I think we all
want to have a better environment.
But when we talk about the assumptions that were made when
these standards were, here is one example of a technology I
would like to pursue. Could all of you answer this question
quickly?
Was it not assumed that there would be a far higher
penetration in the market of electric vehicles? And people keep
making this comment that the companies aren't building EVs.
But is it not a fact that the consumer is not buying EVs?
They don't believe that there is an infrastructure in place,
and even the 13 States that have ZEV mandates that should be
putting them into their fleet are not buying them. Quickly.
Mr. Bainwol. So yes, yes, and yes.
Mr. McConnell. You absolutely are correct.
Mrs. Dingell. Dr. Cooke.
Dr. Cooke. There was little penetration of electrification
assumed, and 4\1/2\ percent in California right now, electric
vehicle penetration.
Mr. Bozzella. But a half a point nationwide.
Mrs. Dingell. And it was--that's a part of the problem.
And I've talked to Governor Brown. And we are eliminating the
tax credit for the EV in the tax bill, and right now we are
losing money on those electric vehicles.
Dr. Cooke, how do we get at that?
Dr. Cooke. Sorry. Say that again.
Mrs. Dingell. How do we get at making the consumer want to
buy that electric vehicle?
Dr. Cooke. I think the fact that we are at nearly 5
percent in California shows that, if you put the incentives in
place, you do drive----
Mrs. Dingell. But the incentives are in place--the same
incentives, quite frankly, sir. The tax credit is there. The
infrastructure needs to be built out. So do we have to work
together?
All right. I am going to go to my other questions, because
I actually think we are more together than people are thinking.
So I would like to ask Mr. Bainwol and Mr. Bozzella, are the
members of your trade associations committed to continued fuel
economy improvements that are balanced, both technological
feasibility and consumer affordability?
Mr. Bainwol. Yes. So life does not end in 2025. We know
that, and we are----
Mrs. Dingell. Are you for post-2025 standards, which I, by
the way, am and want to talk about it.
Mr. Bainwol. That conversation has to happen, yes.
Mr. Bozzella. Yes. I would agree to both points. We are
committed to improving fuel economy and over the long haul.
Mrs. Dingell. This question is for all witnesses, and
please answer yes or no.
Do you believe that there is a benefit for having a single
set of fuel economy standards across the country?
Mr. Bainwol. Absolutely.
Mr. McConnell. Yes, under NHTSA.
Mrs. Dingell. Dr. Cooke.
Dr. Cooke. Yes.
Mrs. Dingell. No?
Dr. Cooke. Yes.
Mrs. Dingell. Oh, yes? OK.
Mr. Bozzella. Yes.
Mrs. Dingell. And isn't what the Obama administration
tried to do in 2010 and 2012 with the creation of one ONP--
having a unified approach between NHTSA, EPA, and CARB--isn't
that what they tried to do?
Mr. Bainwol. It was the goal, but it was broken at the end
of the administration.
Mrs. Dingell. Mr. McConnell.
Mr. McConnell. I believe that Congress had it right the
first time not to have a patchwork, that NHTSA should be in
charge.
Mrs. Dingell. Dr. Cooke.
Dr. Cooke. That was the goal and is still in place.
Mr. Bozzella. It was the aspiration, and it hasn't been
realized.
Mrs. Dingell. And, in fact, EPA and NHTSA both clearly
stated in their joint MPRM issued in 2012--I have it right
here--the need to create a unified approach so that the
manufacturers could design one fleet of vehicles to comply with
both programs.
And isn't it true that the 2012 joint final rule had two
main phases, the first being CAFE standards from model years
2017 to 2021 and then separate projected standards from model
years 2022 to 2025?
Mr. Bainwol. Yes.
Mrs. Dingell. Dr. Cooke.
Dr. Cooke. Yes.
Mr. Bozzella. Yes.
Mrs. Dingell. OK. So it is my understanding that, when the
2012 joint final rule was released, that the 2022 through 2025
standards were what was called augural standards--in other
words, estimated--which represent NHTSA's best estimate of what
would be maximally feasible at that time. Is that correct?
Mr. Bainwol. Yes.
Mr. McConnell. I just represent the consumer who wants to
be able to afford the vehicle.
Mrs. Dingell. OK. Dr Cooke.
Dr. Cooke. Yes.
Mrs. Dingell. John.
Mr. Bozzella. Yes.
Mrs. Dingell. OK. So, right now, we are going through the
midterm review as we speak. Whether some of you like it or not,
it's very important.
We are in the early process, but it's important that it
play out and encourage stakeholders to engage responsibly
towards a negotiated solution that continues the gains we've
seen in fuel economy since 2012, takes current conditions and
real-world data into account, and establishes standards past
2025.
People aren't talking about who's at the table. We need all
the stakeholders, including California, and quite frankly, I
trust Governor Brown and Mary Nichols--you can quote me on that
today--at that table, the Trump administration, automakers, and
the environmentalists--it was California I trusted--around the
table and working productively in order to make it happen.
Was that not the strength of the original agreement, all
the players at the same table giving people certainty and
investing for the customer? A failure to reach a negotiated
solution will result in less certainty for the industry, weaker
standards, and less savings at the pump for consumers.
With that being said, there are still ways that we can
improve our fuel economy systems while the midterm review is
playing out. This is for all the witnesses. Even though we
all--and I am out of time. I have to quit, Mr. Chairman.
Mr. Shimkus. You are close to out of time. You going to--
was that a question or are you just filibustering or what are
you----
Mrs. Dingell. Well, I actually had a bunch more, but I
will put them in the record. Thank you, sir.
Mr. Shimkus. Without objection----
Mrs. Dingell. I just looked up.
Mr. Shimkus [continuing]. The gentlelady's time is
expired.
Mrs. Dingell. Thank you.
Mr. Shimkus. How fortunate we have the gentleman from
Texas, who is recognized for 5 minutes.
Mr. Olson. I thank my friend, who graduated from West
Point. Congratulations one more time, the big victory
Saturday--Army again beat Navy for the second time in now 16
years.
With all due respect to my friend from Michigan, I am a
bigger optimist. I believe that maybe today we can have this
dream: California and Texas working together as opposed to
California and Michigan on these issues.
Mrs. Dingell. How about all three?
Mr. Olson. Pardon me?
Mrs. Dingell. How about all three?
Mr. Olson. All three works, too.
I thank the Chair and welcome our four witnesses. A special
welcome, Mr. Bainwol. We share a common bond, my friend: I was
Rice University, you got an MBA from Rice University, and my
first question is for you, Mr. Bainwol.
In your testimony, you talked about how the 2012 final rule
projected a very different mix of cars and trucks than we see
on the road today.
Any business has the same motto: The consumer comes first.
Can you talk about how consumer preferences shapes your ability
to make these rules workable? How do these put the consumer
first?
Mr. Bainwol. So both the CAFE program and other Government
programs that are mandates are mandates not on what we produce,
but on what people buy.
So, in effect, the consumer--it's not just a phrase--the
consumer is king, because they dictate the success of these
programs. And when consumers don't buy what policymakers want,
it's not the consumers' fault. They're expressing their own
market opinions about what's right for their families.
And what we've seen over time with the plummeting in the
price of gas is a very different mix of purchases in the
marketplace--so pickups, trucks, SUVs, crossovers--and that has
made life more complicated.
Now, there is something called a footprint. So the
footprint accommodates some of the fleet mix, but it doesn't
accommodate other dimensions of the fleet mix, including power
train choices.
Mr. Olson. Doesn't that show the need for an adaptable,
responsive set of rules across the country?
Mr. Bainwol. Yes, it sure does.
Mr. Olson. OK. Another question for you, Mr. Bainwol, and
you, Mr. Bozzella.
I would like to discuss the harmonization of rules you all
work under. To what extent does the lack of harmonization
between the two Federal programs impact consumers and
innovation?
Mr. Bainwol. It's basically what I would call a Government
externality. The Government is imposing costs on the
marketplace that consumers then have to absorb.
And so it is a problem. It make fewer people able to buy
cars, it retards the process of fleet turnover, and it has bad
social outcomes.
Mr. Olson. Mr. Bozzella, sir.
Mr. Bozzella. And I would just add to that, why, if we are
trying to achieve one goal, would we have different tools in
different toolboxes? What that does is it creates compliance
for the sake of compliance without benefits to consumers, and I
think we got to get back to benefits for consumers.
Mr. Olson. If this is so controversial, then why did the
Obama administration grant your consideration of your petition
last December? Any idea why?
Mr. Bainwol. Had there been a different outcome in the
election, perhaps we'd be having a more rational conversation
about harmonization. So I think some of this gets filtered
through the lens of national politics.
Mr. Bozzella. I agree with that, Congressman. You ask a
great question. We are very close. We are very close. We have
the same aspirations and desires, and what we want to do is to
create better benefits, more fuel economy, and reduced
emissions for consumers, and let's focus on that.
Mr. Bainwol. And could I add also?
Mr. Olson. Yes, sir.
Mr. Bainwol. The conversation we are having today has a
feel that somehow that there's a problem, and what we really
need to understand is we should be celebrating success. I mean,
I had that one slide that showed, if you take the 2021 numbers
and you add 1, 2, or 3 percent, we are at 97 percent
realization of fuel savings. That's pretty darn good.
Now, we have invested $100 billion a year in safety, fuel
economy, technologies like AVs, and we are producing dividends
for the marketplace.
That's a good story, and we should be thankful for the
success of this program. And now what we are talking about
doing is finding a way to make the economics of the program--
the regulatory piece of the program--more efficient so that
more consumers can benefit from new cars.
Mr. Olson. And, well, too, I see you guys make a great
difference. My first car was a 1977 Silverado pickup truck.
Just one cab, nothing behind the seats. That truck, you could
watch the gas gauge go down as you hit the gas pedal. Just
boom, maybe 8 miles per gallon.
I now have a 2014 Silverado crew cab--big cab, big truck. I
drove from Houston, Texas, to watch my high school play in San
Antonio--a basketball game--and drove back on one tank of gas.
I would like to close, Mr. Chairman, by asking unanimous
consent to enter into the record a Federal Register from
Wednesday, December 20th, about the proposed rule I was talking
about. Department of Transportation and Safety--NHTSA, 2016,
10135.
Mr. Shimkus. Is there objection?
Hearing none, so ordered.
[The information appears at the conclusion of the hearing.]
Mr. Shimkus. Gentleman's time has expired. The Chair now
recognizes the gentleman from California, Mr. Cardenas, for 5
minutes.
Mr. Cardenas. Thank you very much. I am proud to represent
California but also equally proud of the fact that California
has led the way, sometimes with hiccups and fits and starts,
but California has improved its emissions standards and has set
the tone quite often.
Let me just give you one example. There are three
generations between me and my grandson now--myself, our four
children, and my grandson.
I used to tease my kids that used to not be allowed to play
outside sometimes--I grew up in Los Angeles when I was a little
boy--because of the smog, and then I used to tease my kids that
they never had that problem. They never had to deal with a smog
alert.
But yet, we have to be careful, because the last thing I
want is for my 18-month-old grandson, for me or his parents or
his teachers to say, ``You can't play outside.'' We have to be
careful and make sure that whatever we do, we preserve the
environment for our children and we make sure that whatever it
is that we do improves on everything that we've done in the
past--the knowledge, the technology that we are capable of.
So my statement is that fuel efficiency is an important
goal across the board. It also allows low-income and middle-
class families to have access to cars that run economically.
Less money goes to the gas pumps and more stays in their
pockets. That's a good thing. The One National Program also
gives low-income folks access to used cars that are fuel
efficient. It also impacts the air we breathe.
My district and many in southern California have dealt with
wildfires late in the season, last week and ongoing, as we
speak. It is no coincidence that these fires are devastating
our communities with greater frequency and ferocity. California
has been a leader in fuel efficiency and emission standards,
and the Nation needs to follow suit.
Dr. Cooke, can you please talk a little bit about the
California emission standards?
Dr. Cooke. Yes. So tailpipe standards that were originally
set formed the basis for Federal action, and the reason why we
can breathe in Washington, DC, is largely a result of the fact
that California set those standards way back in the '60s, and
that trend has continued with Tier 1 standards and Tier 2
standards that were first set in California and then
essentially codified by the Federal agencies and that, again,
happened with the LEV 3 standards that are part of the Advanced
Clean Cars program.
So we've seen this trend over and over. But, at the same
time, California is still struggling to meet its air quality
goals for 2030. And so that's why we have the Zero Emission
Vehicle program.
Mr. Cardenas. Well, California has approximately--
approaches about 40 million people. It is still, what, the
fifth, sixth largest economy. It bounces around there.
So the bottom line is anytime you're that large and you're
that impactful, especially economically with all the issues
that are going on with the population and also with the
business, which is to me is a good thing--I am very proud to be
from California and the fact that we, if we were our own
country, would be ranked fifth or sixth largest economy in the
world.
So, that being the case, it is complicated but it's not
impossible for us to continue to thrive and strive to be better
and cleaner and more efficient and to drive the markets as
well.
Dr. Cooke, I would also like to see if you could respond to
the idea that the former NHTSA standards with rules designed by
Congress were preferable to the current One National Program.
Who does the former NHTSA standards benefit, by and large?
Dr. Cooke. So the single number standard, and one of the
reasons why we moved to the size-based standard, was especially
detrimental to the domestic manufacturers, and it advantaged
imported vehicles, and so folks who sell more cars and less
trucks.
The fact that we have a size-dependent standard now helps
drive investment and competitiveness of the Big Three as well
as it does Honda and Toyota.
Mr. Cardenas. So, if I heard you correctly, the current
One National Program benefits mostly foreign vehicle makers?
Dr. Cooke. No. Sorry. Prior to the One National Program
attribute size-based standards.
Mr. Cardenas. OK.
Dr. Cooke. You know, the old CAFE program used to benefit
primarily the imported vehicles, which is why, frankly, CAFE
stalled for 20 years.
Mr. Cardenas. OK. All right.
Well, thank you very much, and to go off what one of my
colleagues said, again, to add a famous quote, ``You can't
always get what you want, but you can get what you need,'' and
I think that's the balance we are trying to strike here.
Thank you very much. I yield back.
Mr. Shimkus. The gentleman yields back his time.
The Chair recognizes the gentleman from Oklahoma, Mr.
Mullin, for 5 minutes.
Mr. Mullin. Thank you, Mr. Chairman.
You know, we are talking about achieving certain fuel
standards, and we've kind of touched on it, kind of bounced
around a little bit about it. But we are talking about the
consumer benefit, too.
There has to be a balance between the two, and we are
trying to hit our standards that are set forth to us. When
Congress had to look back in 2018, I think that was a look back
of not only seeing, hey, is it feasible for the industry to hit
it, but is it cost productive, too?
So looking forward, what is this going to cost our
consumers? And this is open. I am really not too worried about
who takes it. What is this going to cost us?
I mean, we see vehicles rising each day in cost. I drive an
F-250 crew cab diesel--same vehicle I've driven for the last, I
guess, 17 years. The exact same vehicle I bought in 2000 versus
today is about $50,000 difference in price.
Is that due to the regulations we are putting on us? Is
that being passed on to the consumers? Mr. Cooke, do you want
to take that? I see your finger on the button.
Dr. Cooke. Yes, I would. I mean, I think one of the things
that's really important to recognize is what's causing the
increase in retail price today.
You know, entry-level vehicles today cost the same when
adjusted for inflation as they did 10 years ago. So it's not
the technology that's driving people out of the market.
If you want to look at what's the biggest factor that's
causing the increase in retail price, it's the fact that now we
are selling more SUVs and pickup trucks, which do have higher
profit margins. So----
Mr. Mullin. Well, no, no. My F-250 Lariat crew cab four-
wheel drive, I paid just below $30,000 for that vehicle. So in
17 years the inflation has increased $50,000? I mean, we've
seen that increase across with pay wages and grocery prices?
All of them have inflated 100--what is that? Someone help me
with the math there. Well over 100 percent?
Dr. Cooke. So I just want to flag that I was specifically
talking about the entry-level vehicles. When you look at trucks
and SUVs, what we've seen is a large increase in profit margin
as a result of moving to higher and higher luxury trims. That's
why the fact that you have, like, a $65,000 F-150 now at the
King Ranch version--those SUVs have always been higher profit
margins, but we've seen----
Mr. Mullin. So, but what I am saying is, is this being
passed on to the consumer? What we are seeing by fuel savings,
because we are talking about keeping more money in the pocket--
I think my colleague from California said that--if they can't
afford the vehicle to begin with, then what difference does it
make?
Mr. Boswell--Bozzella, I am sorry.
Mr. Bozzella. It's OK. Bozzella. Thank you.
Mr. Mullin. Bozzella.
Mr. Bozzella. You're right. There is more technology in
vehicles today than there ever has been. These cars are
cleaner, safer, and more fuel efficient than they ever have
been and, of course, there has to be some cost associated with
that.
The real question is not only the cost, but the cost
combined with where the market ultimately needs to go, and I
think, to your question, I think we have to be clear that we
need more electric vehicles, more higher priced, more expensive
technologies in order to really drive the shift that we are
looking for here.
Mr. Mullin. Go ahead, Mr. McConnell.
Mr. McConnell. Yes. You make a great point. I will say
that the cars that are $15,000 or less have been regulated out
of existence. The cost is $3,000 a car.
I know Dr. Cooke is an extremely smart gentleman. But he
keeps talking about what can be built. But the question is, you
can't save anything on fuel economy until you're able to afford
to buy the car.
Mr. Mullin. Agreed.
Mr. McConnell. And 6.8 million people will be knocked out
by a $3,000 price increase, and that's done because 90 percent
of the people finance a vehicle, and that takes people's debt-
to-income-ratio out, it knocks them out of the new car market.
We are all about fleet turnover. Until somebody buys
something, and you can build whatever, but as you said, a smart
business has to listen to the customer, and we are----
Mr. Mullin. So is it reasonable then--on what we are
trying to do here, is it reasonable to say that a customer is
going to be able to afford it and see the cost savings--to be
able to pay the difference of what we are going to spend trying
to get to fuel standards, what they're going to save on gas?
Mr. McConnell. The realities of the market, though, when
the price of gas goes from $4 to close to $2, their savings are
cut in half.
Mr. Mullin. Right.
Mr. McConnell. So people make a decision based on what's
best for them, as they should, and the National Automobile
Association and dealers, we want to sell whatever the customer
wants--EV, whatever it may be. But it's the customer, and
that's the one thing.
We are--I live my life, and I know dealers--we want higher
gas mileage. But you know what? You have to listen to the
customer--what they can afford and what they want, not
necessarily what Washington wants or California wants.
Mr. Mullin. Right.
Mr. Chairman, I yield back.
Mr. Shimkus. Gentleman's time has expired. The Chair now
recognizes the gentleman from Texas, Mr. Green, for 5 minutes.
Mr. Green. Thank you, Mr. Chairman, and you have a couple
of guys from Texas and one from Oklahoma.
I want to thank the chairman and ranking member for holding
this hearing, though. But transportation is a leading source of
carbon dioxide emissions.
I have a very urban district in Houston, an industrial
district with refineries. By the way, our gasoline over the
weekend--the lowest price I found was $1.99 per gallon, and
even with a $57 barrel of oil, there's a benefit from having a
refinery down the road.
But Houston is a car-dependent city. Ninety-four point four
percent of all our households have a car, and each household
has at least 1.8 cars. My wife and I, I think, share five cars
in different locations.
After Hurricane Harvey hit, nearly a million cars will be
replaced in the Houston metro area, with analysis estimating
that 30 to 40 percent will be new vehicles. The standards are
more important than ever when it comes to helping our air
quality in Houston.
One of the things I am concerned about, the lower market
penetration for electric vehicles anywhere except in
California, and we have some in Houston. But, you know, you're
not going to drive from Houston to San Antonio--that's 199
miles--on an electric car that may not--you know, you have sit
and let it charge up for a few hours when you get there.
So Mr. Bainwol, how has the low price of gas affected
purchasing habits among consumers when they come to fuel
economy?
Mr. Bainwol. So, in a profound way. The average age of a
car is about 11 years old, and when you think about the
improvement in the conventional engine, there's two factors
going on.
If you turn in a Camaro for a Camaro or a Civic for a
Civic, whatever the case may be, over 11 years you have got
about a 25 percent increase in fuel economy, on average.
So you have a combination of two effects. One is the
improvement of the engine, and the second is the lower price of
gas. The combination of the two has made electrification kind
of a niche product, and it's just an economic reality. That may
change over time.
But those two factors, the starkness of the improvement and
the lower price of gas, combined to really impact penetration.
Electrification of the fleet nationwide in 2017 is 0.5. If
you look at the numbers of gas, in '08 it was 97.6 percent of
the marketplace. In '17, it's 96.9 percent. It has moved less
than a point in a decade.
And what's happening with--electrification is coming out of
the hide of hybrids. So we are at a very, very slow uptick in
terms of these alternative power trains. At some point it may
take off, but we are not there yet.
Mr. Green. Well, people will typically vote with their
pocketbook. But you're right, you're going to hear all of us
have different cars.
Again, I like big trucks, and so in Texas I bought a Tahoe
in '06. I couldn't get better than 16 miles per gallon. But the
new Tahoe I bought in 2016, we are getting 24 miles per gallon
at certain times. And so you're right, it has increased, and
people are going to vote with their pocketbook, and unless you
can have a product that can do----
And following up, were there any models of vehicles from
the same year that an equally priced hybrid version of the
vehicles outsold the nonhybrid version?
Mr. Bainwol. I'm not fully aware of the marketplace to
that degree. But there are examples where the hybrid has been
priced at the same levels as a conventional engine, and people
still choose a conventional engine.
Mr. McConnell. I can think of one particular example. The
Lincoln had a hybrid and a nonhybrid priced at identical price.
Customer had a choice. Seventy percent chose the nonhybrid, and
30 percent chose the hybrid. Same cost.
Mr. Green. Well, that's still better than 5 percent
penetration of electric vehicles in California and a half a
point for the rest of the country.
Mr. Cooke, regarding the proposed legislation by
Representative Upton and Representative Dingell, can we know
the full effect that the legislation will have on GHG and CAFE
standards while the EPA's midterm review is still not
completed?
Dr. Cooke. No. It's difficult to say. All we know is that
in the short term it sets it up for long-term failure.
Mr. Green. OK. Well, and thank you, Mr. Chairman, for the
time, and I guess I batted cleanup today. Thank you.
Mr. Shimkus. I think you did. Thank you. Gentleman's time
is expired.
Seeing no further Members wishing to ask questions, I would
like to thank all of our witnesses for being here today. Before
we conclude, I would like to include the following documents to
be submitted for the record by unanimous consent.
Mr. Olson's already was taken care of. We have a letter
from the Motor and Equipment Manufacturers Association. I think
it's been viewed by the minority, and without objection, that
gets accepted.
[The information appears at the conclusion of the hearing.]
Mr. Shimkus. Pursuant to committee rules, I remind Members
that they have 10 business days to submit additional questions
for the record, and I ask that witnesses submit their response
within 10 business days upon receipt of the questions.
Without objection, the subcommittee is adjourned.
[Whereupon, at 12:08 p.m., the joint subcommittee was
adjourned.]
[Material submitted for inclusion in the record follows:]
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