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This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. NEAL R. GROSS & CO., INC. RPTS MORRISON HIF281020

VOLKSWAGEN'S EMISSIONS CHEATING ALLEGATIONS: INITIAL QUESTIONS THURSDAY, OCTOBER 8, 2015 House of Representatives Subcommittee on Oversight and Investigations Committee on Energy and Commerce Washington, D.C.

The subcommittee met, pursuant to call, at 10:00 a.m., in Room 2123 Rayburn House Office Building, Hon. Tim Murphy [chairman of the subcommittee] presiding. Members present: Representatives Murphy, Barton, McKinley, Burgess, Blackburn, Griffith, Bucshon, Flores, Brooks, Mullin, Collins, Upton (ex officio), DeGette, Schakowsky, Castor, Tonko, Yarmuth, Clarke, Kennedy, Green, Welch, and Pallone (ex officio). Staff present: Gary Andres, Staff Director; Sean Bonyun, 1

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. Communications Director; Leighton Brown, Press Assistant; Rebecca Card, Staff Assistant; Karen Christian, General Counsel; James Decker, Policy Coordinator, Commerce, Manufacturing, and Trade; Andy Duberstein, Deputy Press Secretary; Brittany Havens, Oversight Associate, Oversight and Investigations; Ben Lieberman, Counsel, Energy and Power; Paul Nagle, Chief Counsel, Commerce, Manufacturing, and Trade; John Ohly, Professional Staff, Oversight and Investigations; Tim Pataki, Professional Staff Member; Mark Ratner, Policy Advisor to the Chairman; Chris Santini, Policy Coordinator, Oversight and Investigations; Dan Schneider, Press Secretary; Peter Spencer, Professional Staff Member, Oversight; Dylan Vorbach, Staff Assistant; Greg Watson, Staff Assistant; Christine Brennan, Press Secretary; Jeff Carroll, Staff Director; Tiffany Guarascio, Deputy Staff Director and Chief Health Advisor; Ashley Jones, Director of Communications, Member Services and Outreach; Rick Kessler, Senior Advisor and Staff Director, Energy and Environment; Chris Knauer, Oversight Staff Director; Una Lee, Chief Oversight Counsel; Elizabeth Letter, Professional Staff Member; and Adam Lowenstein, Policy Analyst.

2

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 1

Mr. Murphy.

[presiding]

Thank you and good morning.

We

2

now convene this hearing of the Oversight and Investigations

3

Subcommittee on Volkswagen Emissions Cheating Allegations:

4

Initial Questions.

5

Let me start off by saying my first car was a Volkswagen.

6

It was a 1976 Volkswagen Beetle.

7

internal combustion engines.

8

put it back together, and it actually continued to work.

9

all the maintenance myself, because the Beetle and the Volkswagen

10 11 12

I learned a lot about cars and

I could take that thing apart and I did

had a legacy as the people's car, to be people-friendly. I loved that car, loved it a lot, not so much as to call it Brad, but I loved that car.

13

[Laughter.]

14

But I trusted the car to get me around, and I trusted that

15

Volkswagen would continue to build a reliable car.

16

"trust" alone, as you know, is a key factor in building customer

17

loyalty, and that trust is what helped the Volkswagen because we

18

believed this company looked out for customers first.

19

That word

Then, just three weeks ago, car owners around the world were

20

shocked to learn that Volkswagen AG, the world's largest

21

automaker, admitted that it installed software for a number of

22

years in millions of its diesel models that effectively defeated

23

emissions controls during routine driving. 3

This news followed

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 24

the Environmental Protection Agency's public announcement on

25

September 18th that it had sufficient evidence to support

26

allegations that VW was cheating on its emissions tests.

27

As EPA reported at the time, when the cars were subject to

28

emissions testing, the diesel vehicles switched into an

29

operational mode designed specifically to pass the test and, then,

30

switched back to a different mode during normal driving, a mode

31

that emitting nitrogen oxides up to 10 and 40 times the federal

32

limits.

33

In the United States alone, some 482,000 Volkswagen and Audi

34

models were affected by the cheating software.

Worldwide the

35

software was used in an estimated 11 million vehicles involving

36

several VW lines.

37

In the wake of this apparently massive deception, the Energy

38

and Commerce Committee opened a bipartisan investigation to get

39

answers for the American public.

40

to understand the facts and circumstances surrounding the VW

41

actions, the impact of its decisions, and related issues about

42

emissions compliance generally.

This investigation will seek

43

At this morning's hearing we will receive testimony from the

44

head of Volkswagen's American operations, Mr. Michael Horn, and

45

from EPA officials tasked with ensuring the automobiles on

46

American roads meet federal environmental standards. 4

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 47

In addition, this subcommittee intends to pursue answers to

48

critical initial questions concerning the troubling revelations

49

about VW's actions, what happened, who was involved, and, most

50

importantly, why.

51

Let me acknowledge that Mr. Horn is appearing before us

52

voluntarily today, and I can say that I expect that he and the

53

Volkswagen organization will continue to cooperate with our

54

inquiry.

55

committee as quickly as possible, including documents that have

56

already been discussed publicly in connection with Volkswagen's

57

various Board meetings in Germany.

This means providing documents and information to the

58

As I said before, there are a number of core questions that

59

we will begin to pursue today, both for Volkswagen and for the

60

EPA, most critically, what happened, who was involved, why were

61

these actions taken.

62

concerning the impact of these decisions on customers,

63

family-owned dealerships, and the American public.

64

We also have a number of questions

I hope today Mr. Horn can provide some important context for

65

us and expand upon the facts he represents in his testimony.

We

66

will look to him to explain the current understanding of VW

67

executives about what exactly was done to these engines and was

68

it done to deliberately deceive government regulations and

69

regulators.

And what is VW doing to fix the problem and make whole 5

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those who have been affected by the actions.

71

At some point prior to 2009, VW made a choice to move forward

72

with engines that evidence now suggests were not compliant with

73

U.S. emissions standards.

74

deployed in the first generation of these diesel engines, which

75

account for approximately 340,000 of the affected vehicles.

76

However, despite apparent advancement in their emissions control

77

systems in two future generations of these engines, the software

78

remained in place.

79

the company understand about the software cheat and what does this

80

mean for fixing these vehicles?

81

The illegal software was initially

And if the technology was improving, what did

Will some be easier than others?

Of course, for EPA, we have questions about its compliance

82

and recall programs.

83

from that agency.

84

audits fail to detect problems, especially in older technology?

85

What is EPA doing to ensure any fix it requires of the automaker

86

does not negatively affect vehicle performance?

87

I hope we can get some clear answers today

Why did EPA standard compliance tests and

There is some need for a sense of proportion regarding this

88

matter.

The 480,000 or so VW vehicles implicated in this scandal

89

represent only .2 percent of the cars and light trucks on the

90

United States highways.

91

software similar to what was used by VW is present in any other

92

U.S. vehicles.

And so far, we have no evidence that the

6

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 93

The EPA's ongoing testing will help address this question,

94

but I hope our witnesses from VW and EPA can understand where

95

confidence has been shaken.

96

admitted represents a fundamental violation of public trust, and

97

reverberations of this violation can be seen across the United

98

States and across the world, as people grapple with the

99

implications.

At root, the behavior to which VW

100

We need to develop a clear understanding of the facts and

101

circumstances surrounding this case, and this hearing will be a

102

first important step towards that goal.

103 104

I now recognize the ranking member of the subcommittee, Ms. DeGette, for five minutes.

105

Ms. DeGette.

Thank you, Mr. Chairman.

106

In the spirit of bipartisanship of this investigation, I will

107

tell you my first car was also a Volkswagen.

108

Beetle with a rag top sunroof that I inherited from my grandmother.

109

And I will tell you that that 1960 Beetle, I still miss that car.

110

It didn't have any lines of computer code required to operate that

111

vehicle.

112

In this situation, fast forward to today, we know some

113

things, but we don't know enough.

114

are having this investigation.

115

It was a 1960 VW

And that is why I am glad we

We know that in May 2014 West Virginia University published 7

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a study commissioned by the International Council on Clean

117

Transportation that found that on-road emissions from Volkswagen

118

cars were well above VW standards.

119

emissions outputs found under testing conditions.

They also did not match the

120

We know that VW tried to justify this discrepancy to

121

regulators with explanations of technical issues and unexpected

122

in-use conditions.

123

a voluntary recall of nearly half a million vehicles to resolve,

124

among other things, the emissions issues.

125

California Air Resources Board tested the fixed vehicles, they

126

found that the emissions were still above the legal standards.

127

And we know that, by July of this year, the EPA and CARB told

128

VW that they would not approve the company's 2016 model year diesel

129

vehicles for sale unless the emissions could be explained.

130

was essentially forced to come clean, and they ultimately

131

confessed that they had installed a defeat device in their diesel

132

cars designed to circumvent EPA emission standard for certain air

133

pollutants.

134

We know that in December 2014 VW initiated

Yet, when the

VW

We know that this defeat device sensed when the vehicles were

135

undergoing emissions testing and ensured emissions control

136

systems were operating to pass.

137

road use the emissions controls were reduced and the cars were

138

producing up to 40 times more nitrogen oxide than is allowed by 8

And we know that during normal

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 139

emissions standards.

We know that almost half a million cars in

140

the United States might be affected by this.

141

Now, Mr. Horn, I am glad you have come today to testify here

142

because, while we know all of the things I just talked about, there

143

are a lot more things we don't know and that we need answers for.

144

For example, VW hasn't revealed how the defeat device affects the

145

engine, why it was installed, and how it was able to evade

146

emissions tests.

147

equipped with this defeat device will be fixed.

148

us whether this fix will affect fuel economy or performance of

149

the vehicles.

150

You haven't revealed when and how the engines You haven't told

You haven't revealed what Volkswagen told regulators over

151

the last year, as EPA and the California Board were trying to

152

figure out why the vehicles' emissions were out of compliance.

153

You haven't revealed whether the voluntary recall that VW set in

154

place in 2014 was just merely a ruse.

155

actually trying to find out what was wrong with the cars and fix

156

them or did VW know that the cars had defeat devices on them and

157

were only trying to buy time with the regulators?

Was the VW Group of America

158

You haven't revealed who is responsible for this scheme.

159

don't know if it came from Germany and who knew about it in the

160

United States.

161

Now we have all seen the press reports, and we can all 9

We

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 162

speculate about what happened here and why.

163

Volkswagen comes forward with some answers and provides some

164

assurances that we can trust about what they are saying, the

165

American people, the regulators, and Congress are all left in the

166

dark.

167

of these questions, and I also hope that VW will be prepared to

168

work with this committee as we move forward.

169

But, until

So, I hope, Mr. Horn, that you come prepared to answer some

Hundreds of thousands of owners invested money and trust in

170

VW.

171

seeking environmentally-friendly vehicles.

172

with cars with much higher levels of pollution.

173

any answers about when or how their car will be fixed or what kind

174

of car they will be left with.

175

Many of them bought those cars specifically because they were Now they are left They don't have

Earlier this week, I visited a Volkswagen dealership in

176

Denver.

177

vehicles firsthand.

178

the sales at that particular dealership and a significant

179

percentage of sales at VW dealerships in Colorado and across this

180

country.

181

I saw the pollution control equipment on VW diesel These cars account for almost 25 percent of

Now, because they can't sell them, these cars are just

182

sitting on the lots, which is a scene that is being repeated across

183

the country.

184

percentage of all the cars on the road in the U.S.; it is a

So, as, Mr. Chairman, you say, it is a small

10

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 185

tremendous economic impact to these dealers and, also, to the

186

consumers who don't know what is going to happen to their cars.

187

And so, that is perhaps the key answer that I am looking for today:

188

what do we do moving forward?

189

Now, Mr. Chairman, this subcommittee has been here before.

190

In the last 15 years, we have had Ford and Firestone, Toyota, GM,

191

and Takata before this committee.

192

from all these companies to help us understand what happened.

193

But, most importantly, we have used this information to chart a

194

path forward and to help the consumers affected by this event.

195

I hope that Volkswagen can similarly tell us today what is

196

happening, and I hope that they will get beyond this series of

197

terrible decisions and do something to restore the public trust.

We were able to get information

198

Thank you, and I yield back.

199

Mr. Murphy.

200

I now recognize the chairman of the full committee, the

201

The gentlelady yields back.

gentleman from Michigan, Mr. Upton, for five minutes.

202

The Chairman. Good morning.

Thank you, Mr. Chairman.

203

Fahrvergnugen, it makes a car a Volkswagen. That ad campaign

204

swept the nation in the nineties.

VW has long enjoyed an almost

205

cultish following, dating back to the Beetle, VW Van, and the

206

Rabbit.

207

rotten in Wolfsburg and cheating and betrayal became part of that

But, through the years, something apparently became

11

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 208

game plan.

209

There is a lot that we don't know about VW's actions or their

210

motivations in attempting to skirt emission standards.

211

regardless of intent, they have betrayed the trust of regulators,

212

dealers and suppliers, and, most important, the driving public.

213

Probably the most famous congressional hearing question is,

214

"What did you know and when did you know it?", asked by Senator

215

Howard Baker back in the seventies at Watergate.

216

that you knew some 18 months ago.

217

do to fix it and come clean versus simply going along?

218

But,

Now we learn

So, we add, what did you really

Ultimately, this saying rings true:

cheaters never

219

prosper.

220

questions about how we got here and the road ahead.

221

one of the world's largest automakers go to such lengths to avoid

222

emissions requirements?

223

and why did they for years, even as the technology improved,

224

continue that path?

225

And that is why we are here today.

We have many Why would

Who was responsible for these decisions

If they were willing to cut corners here, what else have they

226

done?

How will you fix the flaw and when?

Will the fix affect

227

the performance of these vehicles?

228

will take time, and I don't expect that we are going to discover

229

all the answers today.

230

broken trust, its leaders will need to demonstrate a serious

Unraveling these questions

But if VW is serious about rebuilding this

12

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 231

commitment to answer these and many other questions prompted by

232

its actions.

233

This requires transparency, cooperation, and clear,

234

consistent communication not only with this committee, the EPA,

235

and other ongoing investigations, but also with its customers,

236

suppliers, dealers, and the general public.

237

pay a steep price for this dirty little secret.

238

to the failure will go a long way to rebuilding or further eroding

239

the public's trust.

VW will inevitably How it responds

240

VW must also consider what implications these actions have

241

for the thousands of Americans that it employs, including their

242

facility in Auburn Hills, Michigan.

243

has ties to Michigan is proud of our rich tradition that is so

244

closely intertwined with the success of the automobile.

245

Michigan is one of several states that have launched their own

246

investigations.

247

innovation, not by gaming the system and breaking the law.

248

Every single one of us who

All automakers must advance by imagination and

We will get some additional insight today, but the

249

committee's investigation is just beginning.

250

important step.

251

details are certain to emerge.

252

bottom of this issue as quickly as possible.

253

In fact,

This hearing is an

As we receive documents and information, new I look forward to getting to the

I take this very personally. 13

As the author of the TREAD Act

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 254

to protect the public, Congress was very clear in our work to

255

protect consumers from abuses from automakers, which included

256

steep fines and, yes, criminal prosecution.

257

VW has betrayed a nation, a nation of regulators, loyalists,

258

suppliers, and innocent customers.

259

get off the road.

260 261

It is time to clean it up or

I yield the balance of my time to Marsha Blackburn, the vice chairman.

262

Mrs. Blackburn.

Thank you, Mr. Chairman.

263

Mr. Horn, thank you for being here, and I think it is

264

completely appropriate that you come before the committee, that

265

you apologize for the actions, and that you and VW take full

266

responsibility for what has transpired.

267

It is disappointing.

I am fully aware that our governor has been at the Chattanooga

268

facility.

269

other members of the congressional delegation, and I are quite

270

concerned about this.

271

Tennesseans who were at that Chattanooga facility, and we are

272

quite concerned about the actions of a few, a few VW employees,

273

not Chattanoogans and not Tennesseans.

274

And I know that the governor, state legislators, the

You have got a lot of hard-working, honest

We are going to be very precise with you and VW.

It is, as

275

the chairman said and as Chairman Murphy has said, it is basically

276

the who, what, when, where, how, and why. 14

Why you did it, how

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 277

you did it, when you did it, when you knew, who carried this out.

278

Where did this take place?

Did it go across the brands?

279

pointed at EU regulations?

Was it pointed at some of the climate

280

regulations?

281

Is the EPA to overburdened to have noticed this?

This is a systemic failure.

282

want to say it is a safety issue.

283

integrity.

284 285 286 287

Was it

And I will also point out some No, sir, this is an issue of

So, we appreciate that you are here.

We look forward to

hearing from you. And I want to yield the balance of my time to the vice chair of the subcommittee, Mr. McKinley.

288

Mr. McKinley.

Thank you.

289

And thank you, Mr. Chairman, for ordering this meeting that

290

the others of you have talked about the car.

291

Volkswagen.

My first was a 1957

I think I have got everybody beat on that.

292

But, listen, there should be zero tolerance for this

293

unethical behavior and flagrant disregard of the U.S. laws, public

294

health, and the consumer.

295

to us today.

296

happened, how it happened, and how it will be resolved.

That is why this hearing is important

The impaired people need to understand what

297

And they feel in West Virginia that they have been deceived.

298

So, on Monday there was action taken by the attorney general to

299

file action against this. 15

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I also just want to touch on the University.

At West

301

Virginia University they use a fraction of the money that we spend

302

with EPA, just a fraction of the money to make this discovery.

303

And they found out, as you know, that one of the cars that they

304

tested was 15 to 35 times more emissions than they were allowed.

305

Another was 5 to 20 times more emissions.

306

So, Mr. Chairman, I want to touch on the fact that this

307

opportunity about WVU and what its research, how research dollars

308

can work.

309

a university that would have accomplished this.

310

And this is what happened, not the EPA, but this was

So, I am looking forward to this hearing and getting some

311

clarity as to what this is.

312

this session --

I thank you very much for holding

313

Mr. Murphy.

314

Mr. McKinley.

315

Mr. Murphy.

316

We now recognize the ranking member of the committee, Mr.

317 318 319 320

Thank you. -- and look forward to the conversation. Thank you.

Pallone, for five minutes. Mr. Pallone.

Mr. Chairman, thank you for holding this

hearing. We are here today because Volkswagen lied.

They lied to

321

regulators, they lied to their customers, and they lied to the

322

American people. 16

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 323

We all have many important questions that deserve answers.

324

What did Volkswagen do to its cars?

325

knew this was happening, both in Germany and here in the United

326

States?

327

Why did they do it?

And who

This whole scheme makes me question how much we should trust

328

Volkswagen.

329

the last five years make me question how much we should trust the

330

auto industry in general.

331

To be honest, this committee's investigations over

Let me remind the committee of the difficult history the

332

American driver has had with the auto industry in recent years.

333

In 2010, this committee investigated Toyota's recall of 9

334

million vehicles worldwide for unexplained cases of sudden

335

unintended acceleration.

336

linked to runaway Toyota vehicles.

337

hearings and, in the end, it was determined that Toyota knew about

338

certain problems with their vehicles that, if fixed early, would

339

likely have saved lives.

340

Dozens of people died in accidents Our committee held multiple

In early 2014, we launched an investigation of General

341

Motors' ignition switches that killed many people.

342

committee's investigation found that individuals within GM knew

343

about the deadly ignition defect for nearly a decade before the

344

company initiated a recall.

345

Our

Later in 2014, we learned of the exploding Takata airbags 17

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installed in vehicles made by at least 11 auto manufacturers.

347

recalls for airbag problems began as early as 2008.

348

and NHTSA continued to investigate whether additional recalls are

349

still necessary, and Takata still has not determined the root

350

cause of the defect, which has killed a number of people worldwide

351

and injured hundreds more.

352

The

Yet, Takata

And now, we have Volkswagen, a company that told regulators

353

that their vehicles met emission standards, but had actually

354

installed defeat devices to bypass emission controls.

355

Over the past five years, the world's three largest

356

automakers have come before this committee to admit that they have

357

cheated the system and lied to American customers.

358

to be a pervasive culture of deception in the auto industry, and

359

it has to stop now.

This seems

360

Mr. Chairman, the American people need to know that they are

361

safe on our roads, and they need to know that when they decide

362

to buy a car, they are actually getting what they paid for.

363

auto industry has deliberately chosen to perpetuate lies and

364

mislead consumers, but the American public are not crash-test

365

dummies and cannot be treated as such.

366

The

Mr. Horn, I understand that you won't have all the answers

367

here today, but please don't hide behind an internal

368

investigations excuse.

It is time for Volkswagen to be 18

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forthcoming with its customers, regulators, and Congress about

370

what you did to these cars and why.

371 372

We deserve an explanation.

And I would like to yield, Mr. Chairman, my remaining time to Ms. Schakowsky.

373

Ms. Schakowsky.

Thank you for yielding, Mr. Ranking Member.

374

We will hear a lot from Volkswagen today.

We will hear

375

apologies, I'm sure, for Volkswagen's deliberate deception of the

376

American people and federal and state public health agencies.

377

will hear a pledge to get to the bottom of this issue without delay

378

and to fully cooperate with investigators.

379

use of so-called defeat devices is incompatible with Volkswagen's

380

corporate culture.

381

it.

382

We

We will hear how the

And I want to tell you, Mr. Horn, I don't buy

The American people, the EPA, and their counterparts around

383

the world have been defrauded by Volkswagen.

384

isn't worth a dime.

385

The company's word

The only thing I want to hear today is exactly how will

386

Volkswagen make this right by consumers.

Saying it will take time

387

to design and implement a fix is insufficient and I think

388

unacceptable.

389

economy, the low emissions, and performance that they already paid

390

for.

391

should be able to get their money back, all of it.

People shouldn't have to wait to get the fuel

If they wanted, every Volkswagen clean diesel vehicle owner

19

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The American people deserve answers.

Yes, there are a lot

393

of questions, but there are also thousands of owners of clean

394

diesel Volkswagens out there, and what they are wanting to know

395

is what are you going to do for them and when.

396

So, I expect those answers to be provided today.

And I say now.

397

And I yield back to the ranking member of the full committee.

398

Mr. Pallone.

399

Unless anyone else on this side would like the time, I am

Thank you, Mr. Chairman.

400

going to yield back.

I yield back, Mr. Chairman.

401

Mr. Murphy.

402

I also ask unanimous consent that the written opening

Thank you.

The gentleman yields back.

403

statements by other members of the committee be introduced into

404

the record, and without objection, the documents will be entered

405

into the record.

406

Mr. Murphy.

You are aware that the committee is holding an

407

investigative hearing, and when doing so, has the practice of

408

taking testimony under oath, Mr. Horn.

409

to testifying under oath?

Do you have any objections

410

Mr. Horn.

No.

411

Mr. Murphy.

412

The Chair then advises you that, under the rules of the House

413

and the rules of the committee, you are entitled to be advised

414

by counsel.

Thank you.

Do you desire to be advised by counsel during your 20

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testimony today?

416

Mr. Horn.

417

Mr. Murphy.

418

No. Then, in that case, will you please raise your

right hand and I will swear you in?

Stand and raise your hand.

419

[Witness sworn.]

420

Mr. Murphy.

421

Let the record show the witness answered yes.

Thank you. You are now

422

under oath and subject to the penalties set forth in Title 18,

423

Section 1011 of the United States Code.

424

You may now give a 5-minute summary of your written

425

statement.

If you will please make sure your microphone is on

426

and pull it close to you, so we can hear you?

427

the button.

Is it on?

21

You have to press

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STATEMENT OF MICHAEL HORN, PRESIDENT AND CHIEF EXECUTIVE OFFICER,

429

VOLKSWAGEN GROUP OF AMERICA

430 431

Mr. Horn.

Thank you very much, Chairman Upton, Chairman

432

Murphy, Ranking Member Pallone, Ranking Member DeGette, other

433

members of the committee.

434

to testify before the committee.

Thank you for inviting me here today

435

My name is Michael Horn, and I am president and CEO of

436

Volkswagen Group of America, a subsidiary of Volkswagen AG,

437

headquartered in Germany, in Wolfsburg.

438

I volunteered to come here before this committee at the very

439

outset of these inquiries in an effort to show our commitment to

440

cooperation.

441

aspects of this matter.

442

beginning.

443

questions will be, by necessity, have to be considered preliminary

444

and based on my best current recollection and information.

We have not had the opportunity to review all Indeed, the investigation is just

Therefore, my testimony and my answers to your

445

On behalf of our company and my colleagues in Germany and

446

me personally, I would like to offer a sincere apology, sincere

447

apology for Volkswagen's use of a software program that served

448

to defeat the regular emissions testing regime.

449 450

In the spring of 2014, when the West Virginia University study was published, I was told that there was a possible emissions 22

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non-compliance that could be remedied.

452

regulations included various penalties for non-compliance with

453

the emissions standards and, also, that the agency could conduct

454

engineering tests on their own which could include analysis on

455

defeat devices or other auxiliary equipment.

456

Let me be very clear about this.

I was informed that EPA

While I was told about the

457

EPA process, I was not then told, nor did I have any reason to

458

suspect or to believe, that our vehicles included such a device.

459

I was also informed that the company engineers would work

460

with the agencies to resolve the issue.

Later in 2014, I was

461

informed that the technical teams had a specific plan for remedies

462

to bring the vehicle into compliance and that they were engaged

463

with the agencies about the process.

464

also, in your statements.

And you mentioned this,

465

On September 3rd, 2015, Volkswagen AG disclosed at a meeting

466

with the California Air Resources Board and the U.S. Environmental

467

Protection Agency that emission software in four-cylinder diesel

468

vehicles for model years 2009 until 2015 contained a defeat device

469

in the form of hidden software that could recognize whether a

470

vehicle was being operated in a test laboratory or on the road.

471

The software made those vehicles emit high levels of nitrogen

472

oxides when the vehicles were driven in actual road use rather

473

than laboratory testing. 23

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In Volkswagen's recent, ongoing discussions with the

475

regulators, we described to the EPA and CARB that our emissions

476

control strategy also included a software feature that should be

477

disclosed to and approved by them as an Auxiliary Emissions

478

Control Device, which is also called AECD, in connection with the

479

certification process.

480

acted immediately, we have withdrawn the application for

481

certification for all model year 2016 vehicles and we are now

482

working with the agencies to continue the certification process.

483

As a result, in order to show that we

These events -- and I fully agree on this -- are deeply

484

troubling.

I did not think that something like this was possible

485

at the Volkswagen Group.

486

customers, dealerships, employees, as well as the public and the

487

regulators.

488

responsibility for our actions and we are working with all the

489

relevant authorities in a cooperative way.

We have broken the trust of our

And let me be very clear.

We at Volkswagen take full

490

I am here to offer the commitment of Volkswagen AG to work

491

with this committee to understand what happened and how we will

492

move forward.

493

attorneys general, as well as other authorities are fulfilling

494

their duties to investigate this matter, and we are determined

495

to make things right.

496

EPA, CARB, the U.S. Department of Justice, state

This includes accepting the consequences of our acts, 24

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providing a remedy, and beginning to restore the trust of our

498

customers, dealerships, employees, the regulators, and the

499

American public.

500

more than 2 million people worldwide, including dealers and

501

suppliers, rely upon for their livelihoods.

We will rebuild the reputation of a company that

502

Our immediate goal is to develop a remedy for our customers.

503

While much work is still to be done, I would like to talk today

504

about how we get from where we are now to that goal.

505

First, we are conducting investigations on a worldwide scale

506

on how these matters could have happened.

Responsible parties

507

will be identified and held accountable.

508

investigations have already begun, but any information

509

development at this stage is preliminary.

510

understanding as we complete this work.

Thorough

We ask for your

511

Second, it is important for the public to know that, as the

512

EPA has said, these vehicles do not present a safety hazard and

513

remain safe and legal to drive.

514

Third, technical teams are working tirelessly to develop

515

remedies for each of the affected group of vehicles.

516

solutions will be tested and validated and, then, shared with the

517

responsible authorities for approval.

518 519

These

There are three groups of vehicles involved, each containing one of the three generations of the two-liter diesel engine. 25

Each

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will require a different remedy, but these remedies can only be

521

our first step to our customers.

522

Fourth, we will examine our compliance processes and

523

standards at Volkswagen and adopt measures to make certain that

524

something like this cannot happen again.

525

Fifth, we commit to regular and open communication with our

526

customers, dealers, employees, and the public as we move forward.

527

And as first steps, we have set up a designated service line,

528

website, micro-site, to be a channel for this communication.

529

I have sent a personal letter to every affected customer.

530

And

I can offer today this outline of a path forward towards the

531

goal of making things right.

532

we will be judged not by our words, but clearly by our actions

533

over the coming weeks and months.

534

Nevertheless, Volkswagen knows that

These events are fundamentally contrary to Volkswagent's

535

core principles of providing value to our customers, innovation,

536

and responsibility to our communities and our environment.

537

do not reflect the company that I know and to which I have dedicated

538

25 years of my life.

539

involved in this emissions issue is also a company that has

540

invested in environmental efforts to reduce the carbon footprint

541

in our factories around the world, where our plant in Tennessee

542

is the best factory in this respect.

They

It is inconsistent that this company

26

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In closing, again, I apologize on behalf of everyone at

544

Volkswagen.

545

authorities.

546

work to ensure that this will never happen again.

547 548 549

We will fully cooperate with the responsible We will find remedies for our customers and we will

Thank you again for allowing me to testify today, and I look forward to your questions.

Thank you.

[The prepared statement of Mr. Horn follows:]

550 551

********** INSERT 1**********

27

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 552

Mr. Murphy.

553

I now recognize myself for five minutes of questioning.

554

On September 3rd, 2015, VW admitted to CARB and EPA that it

555

had installed defeat devices in certain model year 2009 and model

556

year 2015 vehicles.

557

this software for the express purpose of defeating emissions

558

controls?

559

Mr. Horn.

Thank you, Mr. Horn.

To the best of your knowledge, did VW install

To our understanding -- and this is also part of

560

the investigation -- it was installed to this purpose, yes, for

561

this purpose.

562

Mr. Murphy.

Now in your written testimony you noted that

563

you were made aware of potential emissions compliances in the

564

spring of 2014.

565

Mr. Horn.

Uh-hum.

566

Mr. Murphy.

You also noted discussions at the time about

567

penalties for non-compliance and the EPA's ability to test for

568

defeat devices.

569

these vehicles contained defeat devices?

570

Mr. Horn.

571

Mr. Murphy.

572 573 574

At that time were you aware or informed that

No. When did you first learn, then, that VW vehicles

contained a defeat device? Mr. Horn.

Around the September 3rd meeting, a couple of days

before. 28

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Mr. Murphy.

And then, why were you having discussions about

576

defeat devices in the spring of 2014, then, if there was no

577

knowledge or at least a concern that these vehicles contained a

578

defeat device?

579

Mr. Horn.

So, the University of West Virginia made the

580

study.

581

vehicle.

582

were communicated.

583

in the Auburn Hills office -- and it was also, you know, into this

584

market -- that, of course, you know, not complying with the mission

585

standards is relating to fines, and hefty fines, specifically here

586

in the U.S., and that those experts, including the German

587

Technology Department, will check on the study and the study

588

results.

589

There was a Jetta and Passat in there and another off-road I don't want to name the brand now.

And the results

In this context, I was told by our experts

As you also mentioned, it was a small team.

Results have

590

been published with all the emissions, which went overboard, and

591

that they will check this, point 1.

592

Point 2 is they would also look with all the responsible

593

departments, and there was a number of experts at the Department

594

in Germany, and then, how to possibly fix this.

595

was the notion in this communication that, also, the EPA or the

596

agencies could check also on their own, which to my degree is

597

normally around the world that agencies check once in a while on 29

And then, there

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their own, for auxiliary devices, including defeat devices.

599

At that point of time, I had no understanding what a defeat

600

device was and I had no indication whatsoever that a defeat device

601

could have been in our cars.

602

Mr. Murphy.

So, let me go back.

Mr. Horn, the new Chief

603

Executive, Volkswagen, Mr. Mueller, has been quoted in media

604

reports this morning saying that only a few people were involved

605

with the deception.

606

comfort in that, especially knowing that Volkswagen has been know

607

for superb engineers and mechanics, who I wonder shouldn't they

608

have picked up on this.

609

was installed in the automobiles at least initially because the

610

cars could not meet the new, more stringent emissions standards

611

for diesel engines?

612

Mr. Horn.

Now I have to say that I don't take much

But isn't it true that the technology

Yes, to your last question, this appears to be

613

this way, and to newspaper articles about possible quotes of Mr.

614

Mueller, I don't want to quote this.

615

As I said, also, the investigations are preliminary.

One

616

week our group revision did the investigation from September 22nd

617

to October 1st.

618

matter is turned over to an external agency, a law firm called

619

Jones Day, an American company, which is now going through the

620

systems, outside advice, outside counsel.

And then, the entire investigations on this

30

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Mr. Murphy.

I think what we find amazing is that West

622

Virginia University discovered this, and your army of brilliant

623

engineers and talented mechanics didn't know something was amiss.

624

And I am sure we will have more questions about that.

625

But I want to ask you this:

in terms of VW's status for

626

remedying these defeat devices, who is responsible for developing

627

and testing the solution?

628

Mr. Horn.

The responsibility for developing and testing the

629

engine and drivetrain software lies within the Engine and

630

Drivetrain Division in Germany, in Wolfsburg, for the

631

two-cylinder, for the four-cylinder TDI engines.

632 633 634

Mr. Murphy.

Now will this require a software patch or

changes to the actual vehicle's architecture and hardware? Mr. McKinley.

Yes, thank you for this question.

I think

635

we have to do a different change now into the three groups of cars.

636

You've mentioned that roughly 500,000 cars are affected.

637

those, round about 430,000 cars are the Gen 1 vehicles, which were

638

the very early vehicles, started here in 2009.

639

we believe that a software-only solution will not be possible

640

because, also, to be quite frank and logic, you know, if it would

641

have been possible, they would have done it in the first place.

642 643

Out of

For those cars,

So, for those cars, we are working on both software and hardware solutions, and there are different strategies about an 31

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additional NOx catalytic converter as well as an SCR Urea Tank.

645

But this is something which is hardware engineering, which is a

646

little bit -- it's complex and it takes time to develop and to

647

test this.

648

This is one of the strategies.

The Generation 2 vehicles, which is just the Passat model,

649

I feel there are 90,000 cars here in the U.S.

This will be most

650

probably a software solution.

651

involve one or the other, let's say, sensor.

652

explain to you now, anyway, this is being discussed in a timely

653

manner now in the next couple of weeks with the California Air

654

Resources Board and the CARB.

This is tested now, and could But whatever I

655

For the Generation 3 vehicles, so the actual --

656

Mr. Murphy.

657

Can I ask, because I have gone way over time

--

658

Mr. Horn.

659

Mr. Murphy.

660

Sure, sure. I am sure other colleagues are going to be

asking some more detailed questions that we will get today.

661

Mr. Horn.

662

Mr. Murphy.

663

Okay. But I now need to yield five minutes.

I

recognize Ms. DeGette for five minutes.

664

Ms. DeGette.

Thank you, Mr. Chairman.

665

Now, Mr. Horn, your company acknowledged that it installed

666

these defeat devices on a number of models dating back to 2009, 32

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correct?

668

Mr. Horn.

Sorry, I have a problem understanding with all

669

this noise stuff.

670

Ms. DeGette.

671

Oh, Mr. Chairman, Mr. Chairman, can you please

have quiet in the room, so Mr. Horn can understand me?

672

Mr. Murphy.

673

The room will please be quiet, especially upfront.

674

you.

675 676

Yes.

Thank you.

So, you are not distracted. Ms. DeGette.

All right.

Thank

Thank you.

I will ask that again.

And if I

can have the clock reset to five minutes?

677

Mr. Horn, your company has acknowledged that it installed

678

these defeat devices on a number of models back to 2009, yes or

679

no?

680

Mr. Horn.

681

Ms. DeGette.

682

Yes.

installed in the cars actually work at this point?

683

Mr. Horn.

684

Ms. DeGette.

685 686

And do you know how the various defeat devices

Personally, no, I'm not an engineer. Does someone at VW know how these defeat

devices work? Mr. Horn.

I believe this is also within the investigations,

687

and I believe that --

688

Ms. DeGette.

689

Can you please give us the information when

you find out? 33

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 690

Mr. Horn.

We will.

We will if we have it.

691

Ms. DeGette.

692

Now you mentioned this West Virginia University study that

Thank you very much.

693

was conducted in May of 2014 which found that there real NOx

694

submissions on several Volkswagen vehicles exceeded EPA standards

695

by as much as 35 times.

696

represented to the California Air Resources Board, or CARB, and

697

to the EPA that the increased emissions were due to technical

698

issues and unexpected in-use conditions.

699

Mr. Horn.

Following publication of that study, VW

Correct?

I'm sorry, you guys cough here all the time, and

700

I have trouble --

701

Ms. DeGette.

702

Mr. Horn.

703

Ms. DeGette.

All right.

I will ask the question again.

Thank you. After that study by West Virginia University,

704

isn't it true that VW told the EPA and the California Board that

705

the increased emissions were due to technical issues and

706

unexpected --

707

Mr. Horn.

Yes.

708

Ms. DeGette.

709

Mr. Horn.

710

Ms. DeGette.

711

Mr. Horn.

712

Ms. DeGette.

-- in-use conditions?

Yes. Yes.

True. And those representations at that time were, 34

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in fact, incorrect and false, weren't they, sir?

714

Mr. Horn.

Yes.

715

Ms. DeGette.

716

Now, to your knowledge, did anybody at the Volkswagen Group

717

of America know at that time that, in fact, those discrepancies

718

were due to these defeat devices when they made those

719

representations to the regulators?

720

Mr. Horn.

721

Ms. DeGette.

722

Mr. Horn.

723

Ms. DeGette.

Yes, they were.

To my knowledge at this point of time, no. No one in the U.S. did?

No. Okay.

Now, in December 2014, VW proposed a

724

recall of 500,000 vehicles to resolve the, quote, "technical

725

issues".

Is that correct?

726

Mr. Horn.

727

Ms. DeGette.

728

recalled.

Uh-hum. And, in fact, a number of those vehicles were

Is that correct?

729

Mr. Horn.

Yes, most of them.

730

Ms. DeGette.

But, after they were recalled, the California

731

regulator still said that that fix did not work, isn't that

732

correct?

733

Mr. Horn.

734

Ms. DeGette.

735

That is correct. Now, to your knowledge, did anyone at the

Volkswagen Group of America know about the existence of these 35

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defeat devices when the company announced that recall in December

737

of 2014?

738

Mr. Horn.

739

Ms. DeGette.

740

743

Mr. Horn, when did you personally learn of the

defeat device and under what circumstances?

741 742

To my best knowledge today, no.

Mr. Horn.

Around the meeting on September 3rd with CARB and

EPA. Ms. DeGette.

Okay.

Now you talked, when the chairman asked

744

you about these cars -- I am concerned about what we are going

745

to do about the 500,000 cars we have on the road in the U.S.

746

the first thing is, as you just testified, about 430,000 of those

747

cars cannot be fixed by a software-only solution.

748

correct?

749

Mr. Horn.

750

Ms. DeGette.

751 752 753 754

Is that

Yes. And that is because of the way that the engine

is designed in these vehicles. Mr. Horn.

And

Correct?

I would say not the engine is designed, but all

the after-treatment systems. Ms. DeGette.

Right.

And I have got to say, I have got to

755

acknowledge my wonderful dealer Fred Emich, who is here today.

756

And he let me come and talk to his wonderful mechanics on Monday.

757

They gave me this chart right here.

758

itself, but it was too heavy and they told me I would have to 36

I tried to take the card

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probably pay them $2,000 if I lost it.

760

chart instead.

So, I decided to take the

761

This is the chart of the exhaust on these 430,000 cars.

762

as I could clearly see, you can't do a minor little fix to fix

763

this problem.

764

so that the users can use them and so that they can pass the

765

emissions test?

766

Mr. Horn.

And

So, what is VW going to do for these 430,000 cars,

So, from this distance, I can't see the chart,

767

but I believe it is maybe something out of our service literature

768

or customer literature.

769

Ms. DeGette.

770

Mr. Horn.

771

Ms. DeGette.

772

Mr. Horn.

773 774 775 776 777

It is the exhaust system for these cars.

Yes, but -What can be done to fix that?

There's two scenarios next to the software

adjustments and one scenario -Ms. DeGette.

But these are for the cars that can't have,

that the software adjustments will not work. Mr. Horn.

We are talking now about Generation 1 cars, the

430,000 cars.

778

Ms. DeGette.

779

Mr. Horn.

That's right.

The picture you have shown and the treatment,

780

software alone doesn't work because, otherwise, they would have

781

done it right in the first place. 37

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Ms. DeGette.

Right.

So, what are you going to do for those

cars?

784

Mr. Horn.

Two technical scenarios.

Either a Urea Tank, SCR

785

Tank, to put, add glue in there, or a specific catalyzer for the

786

NOx.

787 788

Two technical scenarios. Ms. DeGette.

right now?

789

Mr. Horn.

790

Ms. DeGette.

791

Mr. Horn.

792

Ms. DeGette.

793 794 795 796 797 798

Okay, but those cars don't have the Urea Tank

No.

That's why it has to -So, this would be a major fix, correct?

Yes, ma'am. Now what is the timeframe VW has set for that

fix? Mr. Horn.

We are still working on the timeframe, and it's

too early to say when this fix exactly is going to take place. Ms. DeGette.

When are these dealers going to be allowed to

sell these cars? Mr. Horn.

The dealers, the issue with the dealers, as Fred

799

Emich told you, is that we have not the model year '16 certified

800

and we have stopped sale on our own, on our own --

801

Ms. DeGette.

802

Mr. Horn.

803

Ms. DeGette.

804

Mr. Horn.

Right.

When is that going to be fixed?

The model year '15 -So you are going to be able to sell those cars?

There's two scenarios. 38

A scenario, we are now

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trying to get a conditional approval with the EPA until we have

806

the final software fix beginning of next year.

807

Ms. DeGette.

The beginning of next year?

And in the

808

meantime, what are the dealers and the customers supposed to do,

809

the ones who have these cars?

810

Mr. Horn.

Well, in the meantime, no customer can buy a car

811

because it's not available for them.

812

have very early started a program to work with them to also help

813

them financially and to communicate with them --

814

Ms. DeGette.

And with the dealers, we

Okay, but the 430,000 cars that are already

815

on the road, what are those customers supposed to do?

816

cannot pass the emissions test.

817 818

Mr. Horn.

The EPA has said, and they have repeated this also

in their statement, that these cars are legal and safe to drive.

819

Mr. Murphy.

820

Mr. Horn.

821

Their cars

Thank you.

Until now, there's no indication that they didn't

pass any emissions test.

822

Mr. Murphy.

823

Now we need to recognize the chairman of the full committee,

824

Thank you.

The gentlelady's time has expired.

Mr. Upton of Michigan, for five minutes.

825

The Chairman.

826

I want to go back to the specifics of the defeat device.

827

I live in Michigan.

Thank you, Mr. Chairman. So,

Where I live we don't need to test our cars 39

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for emissions on an annual basis, as many states require.

829

Certainly, in this region here in D.C. I know they do.

830

So, how is this defeat device actually set up, so that it

831

was different when an individual drove it down the road versus

832

taking it to a service station and getting the emissions sticker

833

that is often required in the states that require such?

834

Mr. Horn.

835

The Chairman.

836

So, I'm --

want to know if you can walk --

837

Mr. Horn.

838

The Chairman.

839 840 841

I've been told a couple of things, but I just

I can't tell you --

emissions system. Mr. Horn.

-- me through how that could change the What happens?

I can share my best knowledge, but I'm not an

engineer, neither, a software engineer.

842

The Chairman.

843

Mr. Horn.

Well, I --

But let me try to explain.

Let me try to explain.

844

My understanding at this point of time is that the software was

845

designed that the vehicle or the software could detect whether

846

it was on a dyno, in a testing laboratory environment, or whether

847

it was on the street.

848

And one example of this, as experts have explained to me,

849

is that the software could detect whether the steering wheel made

850

an angle.

So, there might have been and there will be other 40

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parameters, like maybe speed and, then, change of speed and those

852

things.

853 854

The Chairman. seat?

855

Mr. Horn.

856

The Chairman.

857

860 861 862

I don't think so, but maybe.

I don't know.

So, wouldn't it be easy to develop the

software that would just remove that?

858 859

Maybe the weight of the driver in the driver's

Mr. Horn.

Yes.

This will be, this software will be ready

-The Chairman.

But, of course, when that happens, the car

isn't going to meet the emissions test. Mr. Horn.

Regarding the model year '16 and '15, which were

863

the Generation 3 cars, which we are discussing right now with the

864

agencies, the defeat device will be either switched off, and from

865

January onwards will be completely taken out of the car.

866

those cars will pass the emissions test.

867 868

The Chairman.

So, how many vehicles will not pass the

emissions test or the ones that you have identified?

869

Mr. Horn.

870

The Chairman.

871

And

Now, I mean, my question -So, you will be able to do that with the later

versions, right?

872

Mr. Horn.

We have --

873

The Chairman.

But not the earlier versions of the vehicle? 41

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They won't be able to pass?

875

device, there will be a number of cars that, in fact, will not

876

meet the current standards.

877

Mr. Horn.

878

The Chairman.

879 880

By turning off the device, the defeat

And that is your big goal.

The burn standards, yes, you're right. And how many of those vehicles are there on

the road? Mr. Horn.

Well, we have a total of 500,000; 430,000

881

Generation 1 vehicles, 95,000 Generation 2 vehicles, and then,

882

it's around 70,000 Generation 1 vehicles.

883

of these cars are out of the legal compliance, clearly.

884

EPA has said, all these cars are legal and safe to drive for the

885

owners.

886

legally drive and safely drive their cars.

887

And so, you know, all But, as

So, we are not selling the cars, but the owners can

The Chairman.

So, your dealers across the country, they

888

have their finance plans, where they have quite an inventory, I

889

would guess, of cars that they are now unable to sell.

890

paid in advance for those under the financing plan that dealers

891

have, and they are not going to be able to sell them for a number

892

of months, perhaps even as long as six months at a minimum, until

893

the fixes can be done.

They have

894

What type of remedies are you offering the dealers in terms

895

of financial incentives, knowing that they have paid for these

896

cars and, frankly, lost a boatload, I would imagine? 42

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Mr. Horn.

898

The Chairman.

899 900

Yes, and this is also -That inventory has got to be a pretty big

loss. Mr. Horn.

This is also one of the things which troubles me

901

personally very much because the last one, yes, we've worked very

902

hard and we've brought profitability up and all of those things.

903

But I'll tell you exactly.

On Friday, the 18th, the Notice

904

of Violation was communicated.

We had a call with the National

905

Dealer Counsel.

906

Monday, we issued our first financial relief aid.

907

the TDIs, used cars, CPO cars, and new cars on free flooring.

908

took all the bonus thresholds out for car sales.

909

maximum bonus for each car sold, and we took also out the customer

910

satisfaction targets objectives and we paid maximum customer

911

satisfaction bonus on those cars.

912

$1,500 per car.

913

Some of the folks are sitting behind me.

On

So, we put all We

So, we paid

And this is more than $1,000,

Coming towards October now, we provided every dealer around

914

the U.S. with a discretionary fund, with a discretionary fund

915

which was explained to them through the District Managers, the

916

Sales Operations Managers, and which was wired to the dealers on

917

October 1st.

918 919

I don't want to call out the number, but it is a significant amount of money in order for them to have flexibility. 43

So, no

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accountability towards us; flexibility to solve the most urgent

921

customer cases or to invest or to put the money where they think

922

it would be fit.

923

And now, when I come out of this congressional hearing, on

924

Friday we look at the next programs in order how can we help the

925

dealers with the cashflow of their cars, for the cash position.

926

Because one thing is very, very clear -- and I'm damned sincere

927

about this -- the dealer profitability of this country is my first

928

objective.

929

this.

930

And I said this on January 1st and I continue to say

So, this is one part. And also, on Friday we look very intensively into the

931

customer remedies and what we need to do to the customers.

932

there will be the first scenarios on the table.

933 934 935 936

Mr. Murphy.

All right.

Thank you.

And

The gentleman's time

has expired. I now recognize the ranking member of the full committee, Mr. Pallone, for five minutes.

937

Mr. Pallone.

Thank you, Mr. Chairman.

938

Mr. Horn, your statements so far don't give me much

939

confidence that we are ever going to see a fix for these vehicles

940

that are impacted.

941

a software-only solution.

942

as to when the fix is going to begin.

You know, you say that you can't be fixed by You don't have the necessary timetable

44

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Have you been given enough information about how the defeat

944

device affects the engine to actually make informed judgments on

945

whether the fix will actually work?

946

what you are proposing to do is actually going to work?

947

Mr. Horn.

I mean, how do we know that

Whatever I tell you here today is agreed and is

948

coming from the Technical Engineering Department in Wolfsburg.

949

And alongside our actions in Europe, we have to have our actions

950

in the U.S.

951

And the technical --

Mr. Pallone.

No, I understand, but is it fair to say that

952

you really don't know whether you can fix these vehicles to achieve

953

the emissions standards?

954

Mr. Horn.

955

emission standards.

956

We know that we can fix these vehicles to achieve

Mr. Pallone.

All right.

But, then, what happens with

957

regard to other things like fuel economy, engine performance?

958

You know, people bought these vehicles thinking that they were

959

going to meet the emissions standards.

960

good fuel economy.

961

performance.

962

vehicles doesn't affect fuel economy or engine performance or

963

both?

964 965

Mr. Horn.

They were going to have

They were going to have good engine

Can you guarantee that any fix you make to the

At this point of time, my understanding is, if

we correct the nitrogen oxide emissions to the emissions 45

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 966

standards, the customer will get the MPG on the Monroney label.

967

That's my current understanding.

968

of the car -- and this is something also our Chairman Matthias

969

Mueller or CEO Matthias Mueller said in Germany -- maybe on top

970

speed they might be, one or two miles per hour might be missing,

971

but this is, of course, something which we will share with the

972

agencies.

973

keep the Monroney label miles per gallon.

974

Whether the full performance

But current understanding is that the customer will

Mr. Pallone.

I mean, the concern I have is, you know, when

975

you buy one of these cars, you are relying on not only the emissions

976

standards, but the fuel economy is good and the performance is

977

good.

978

words, if I am an owner and the fix doesn't achieve good

979

performance, good fuel mileage, then I am going to expect to be

980

compensated in some way if that is not the case.

981

I think you get to the issue of damages here.

In other

And I just remain concerned that any fix is going to

982

substantially change the cars and that it is unfair to the

983

consumers who bought the cars and relied on them because they

984

expected them to perform a certain way.

985

that the fix will guarantee good performance and will guarantee

986

good fuel economy?

987

Mr. Horn.

988

But you are telling me

I said, to my current understanding, in achieving

the emissions standards, the Monroney label miles per gallon will 46

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be achieved.

990

And this is naturally not only the discussions with the agencies,

991

but, of course, we will look into compensating our customers.

992

And, of course, if there would be significant differences, this

993

would be part of the discussion.

994

There might be a slight impact on the performance.

Mr. Pallone.

Well, let me get to another issue.

What about

995

the impact on clean air?

996

of health impacts, asthma, other respiratory illnesses that can

997

seriously affect people, send them to the hospital that get sick

998

because of NOx and these other problems.

999

agree that NOx pollution can result in serious health and

1000 1001

environmental effects. Mr. Horn.

I mean, we know that there's all kinds

I mean, you obviously

I would assume you would agree with that.

I have also read the EPA statement, that in

1002

general, and not specifically to Volkswagen, they have indicated

1003

that there might be respiratory problems which could also lead

1004

-- I mean, I am quoting yesterday, basically -- to hospital visits.

1005

Mr. Pallone.

Well, what are you going to do to rectify that?

1006

How do you plan to mitigate the harm caused by this excess

1007

pollution emitted into the air over the last seven years?

1008

understanding is that the NOx emissions from the affected vehicles

1009

are up to 40 times the allowable limit.

1010

to do with regard to this excess pollution and the impact it may

1011

have had? 47

My

So, what are you going

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Mr. Horn.

I think there's, first of all, many different

1013

studies.

And so, I would like to go back to the EPA yesterday,

1014

of what they said.

I think it will be part of the discussion.

1015

But I would also like to point out that, if you look at 100

1016

percent of nitrogen oxide emissions in the U.S., the car and truck

1017

industry is having 5 percent.

1018

percent of the 5 percent, which is .2 percent.

1019

percent is TDI, which is .05.

1020

is not belittling this and it's clearly unacceptable.

1021

within this context, clearly, the discussion will come up and

1022

needs to be addressed.

1023

Mr. Pallone.

1024

Thank you, Mr. Chairman.

1025

Mr. Murphy.

1026

Mrs. Blackburn.

1027

Mr. Horn, you said profitability is your top priority when

1028

Our group here in the U.S. has 4 And of this, 20

And now, we can multiply this, which

All right.

But,

Thank you.

I now recognize Ms. Blackburn for 5 minutes. Thank you, Mr. Chairman.

you were speaking of the dealers and --

1029

Mr. Horn.

For the dealers, yes.

1030

Mrs. Blackburn.

Yes.

I would hope that safety, quality,

1031

integrity are top priorities, and profitability comes along there

1032

as a part of that picture.

1033 1034

Let me ask you about this. inventory that the dealers have? 48

Are you going to buy back the

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Mr. Horn.

No, our plan is not to buy back --

1036

Mrs. Blackburn.

1037

Mr. Horn.

1038

Mrs. Blackburn.

1039

Mr. Horn.

1040

Mrs. Blackburn.

No?

-- the inventory. Not to buy back?

Okay.

Our plan is to fix the cars. Okay.

Let me move on with you.

Have you

1041

identified the individual or group of individuals that are

1042

responsible for the defeat device?

1043

Mr. Horn.

1044

Mrs. Blackburn.

1045

These investigations are ongoing. You have known about this since the spring

of 2014, a year and a half.

1046

Mr. Horn.

1047

violation is there.

1048

18th Notice of Violation, the Board has acted and has asked Jones

1049

Day to investigate.

1050

We know about this since September 3rd, that the

Mrs. Blackburn.

And since this time and since the September

But you have known that there was some

1051

activity around this defeat device since the spring of 2014,

1052

correct?

1053

Mr. Horn.

1054

Mrs. Blackburn.

1055

No, I did not know. Okay.

So, you did not know it in the spring

--

1056

Mr. Horn.

1057

Mrs. Blackburn.

As I have said --

No. -- of 2014? 49

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Mr. Horn.

1059

Mrs. Blackburn.

1060

No, again. So, you just learned about it September

3rd, 2015?

1061

Mr. Horn.

Around the September 3rd events, yes.

1062

Mrs. Blackburn.

Okay.

All right.

Let's go to your

1063

six-point remedy plan.

1064

is that they are developing remedies.

1065

landed on your plate September 3rd, that you all have put all

1066

efforts and energy into this plan, correct, into the remedies?

1067

Mr. Horn.

1068

Mrs. Blackburn.

1069

All right.

You have talked some about point 3, which And I would assume, if this

Yes, correct. Very good.

Then, let's go to point No. 1.

You state that

1070

Volkswagen will examine its compliance processes and standards

1071

and adopt measures to make certain that something like this cannot

1072

happen again.

1073

Mr. Horn.

Uh-hum.

1074

Mrs. Blackburn.

So, why don't you give us a little bit of

1075

specificity on that and what, if any, steps are currently underway

1076

to handle this compliance issues?

1077

September 3rd, 2015 and what is your timeline?

1078

going to take you to bring this into compliance?

1079 1080

Mr. Horn.

What did you start as of How long is it

So, as I am the CEO of Volkswagen Group of America,

I can only report to you on what is managed by Volkswagen 50

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headquarters worldwide at this point of time.

1082

it's Jones Day.

1083

who did what, when, how, and why, and what do we need to do in

1084

order to rectify this for the future in terms of process

1085

adjustments and compliance adjustments.

1086 1087 1088 1089 1090

And as I've said,

They manage all the investigations in terms of

Mrs. Blackburn.

So, then, you are saying that, as of now,

you do not have a plan? Mr. Horn.

As of now, we are still in the investigation

phase. Mrs. Blackburn.

Okay.

When can we expect you to have a plan

1091

to handle compliance, to make the owners of your vehicles whole,

1092

if you will, to make the dealers that have trusted in you, to make

1093

them whole?

1094

facilities, when are they going to have some certainty as it

1095

relates to the jobs?

1096

Also, the individuals that are employed by your

So, you all say you are still investigating.

So, on your

1097

timeline, when do you expect that you are going to be able to say

1098

this is the way forward?

1099 1100

Mr. Horn.

You mentioned six points, and we started with the

first point, compliance.

1101

Mrs. Blackburn.

1102

Mr. Horn.

1103

I don't have a timeline for this yet.

Okay.

We are working instantaneously with the dealers

and developing plans by the week as we go, as we go. 51

And you can

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ask those folks behind me on whether this works or not. And for the customer, it depends on the technical remedies.

1106

So, again, this is Generation 3.

1107

year -- sorry -- we will start to give the software to the agencies.

1108

Generation 2, the middle of the year; most probably Generation

1109

3, due to the technical complexity, will be a little bit later.

1110

So, there's different timings, and I apologize not for having a

1111

full-fledged plan of the Board by Volkswagen company right now

1112

here in my pocket.

1113 1114

Mrs. Blackburn.

Mr. Horn.

1116

Mrs. Blackburn.

1118

So, you are certain it is going to be a

multi-year plan?

1115

1117

January this year, January next

Excuse me? You are certain the remedy will end up being

a multi-year approach? Mr. Horn.

Yes.

If you look alone at 430,000 cars and the

1119

repairs might take 5 to 10 hours even in order to fix this, you

1120

know, technical fixes, and if you look at your recall history in

1121

this market, also with NHTSA, then these actions take, you know,

1122

1 or 2 years minimum -- minimum -- when the fix is available for

1123

everybody, including parts and discussed with the agencies and

1124

agreed to.

1125

Mrs. Blackburn.

Okay.

Let's see, my time has expired.

1126

I do have one other question about point 2 in your remedy 52

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plan.

Mr. Chairman, I will submit that and yield back the time.

1128

Mr. Murphy.

1129

Now I recognize Ms. Castor for 5 minutes.

1130

Ms. Castor.

1131 1132

Thank you.

Well, thank you, Mr. Chairman, for calling the

hearing. Mr. Horn, according to reports, VW's defeat device is found

1133

in nearly 500,000 vehicles.

1134

Could it be more?

1135

Mr. Horn.

1136

Ms. Castor.

1137

Mr. Horn.

1138

Ms. Castor.

1139 1140

Thank you very much.

Are you confident in that number?

Could it be less?

We are very confident in this number. Pardon me? We are very confident in this number. Okay.

Have you calculated the loss in value

to customers, car owners? Mr. Horn.

No, not yet.

That's a matter of not only the

1141

investigations, but the calculations are ongoing.

1142

we will look at the first scenarios.

1143

Ms. Castor.

Okay.

And on Friday,

You have called your investigation

1144

preliminary, but you have known about this for a year and a half.

1145

The problems first came to light in May 2014, is that correct?

1146

Mr. Horn.

No, this is not correct.

As I explained, the

1147

study was published, and I had no reason to believe that there

1148

was a defeat device in those cars.

1149

Ms. Castor.

Well, you found out, according to reports, in 53

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2014 that there was an issue, isn't that correct?

1151

Mr. Horn.

An emissions issue, yes, that's correct.

1152

Ms. Castor.

1153

Mr. Horn.

1154

the engineers.

1155

presented a plan to me which was -- and this is very important

1156

also -- which was agreed and discussed with the Product Safety

1157

Committee worldwide.

1158

recalls, all the service actions worldwide, including technical,

1159

procurement, legal, service, and those things.

So, what did you do at that point in time?

At that point of time, a plan was asked for from And in July 2014, middle of the year, they

And these are those guys who manage all the

1160

They came back with a plan, first of all, acknowledging that

1161

those results were correct and, secondly, with a clear timing on

1162

when those cars would get a software fix, which was also mentioned

1163

in one of the opening statements, as of the end of last year.

1164

Ms. Castor.

Do you feel like you have been personally

1165

deceived now, after you found out subsequently that the defeat

1166

devices --

1167

Mr. Horn.

Yes.

1168

Ms. Castor.

1169

Mr. Horn.

Yes, and --

Explain that.

Look, I worked 25 years for this company.

And

1170

beyond my personal objective of dealer profitability, integrity,

1171

quality, you know, and not cheating, was always for me a given

1172

for this company. 54

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Ms. Castor.

1174

Mr. Horn.

1175 1176

And another --

When I learned this, I am as touched and moved

-- sorry -- as my employees and as my -Ms. Castor.

Another group feeling the effects of the VW

1177

defeat device defrauding are the VW dealers and their hard-working

1178

employees all across this country, in addition to consumers.

1179

recent Associated Press article noted that dealers are facing,

1180

quote, "a lot of angry calls, emails, et cetera, from Volkswagen

1181

owners" who feel betrayed because they believed they had bought

1182

a car that polluted less without sacrificing all the good gas

1183

mileage and the performance that comes with a diesel engine.

A

1184

Mr. Horn, how many VW dealerships are there in the U.S.?

1185

Mr. Horn.

1186 1187 1188

We have round about 650 VW dealers and 350 Audi

dealers. Ms. Castor.

And on average, how much of a VW's business do

these diesel models --

1189

Mr. Horn.

Twenty-five percent.

1190

Ms. Castor.

1191

Mr. Horn.

1192

Ms. Castor.

1193

the Volkswagen brand.

1194

dealer as saying, "This is the biggest fraud I've ever seen."

1195

What do you have to say in response to that?

And these dealers are now the frontline -Yes. -- for unhappy customers who feel betrayed by And a media account yesterday quoted one

55

What do you tell

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these business owners and their employees whose livelihoods

1197

depend on --

1198

Mr. Horn.

I went immediately out with the Dealer Counsel

1199

on a call.

1200

dealers even showed it to their children, and their families, and

1201

their employees, because they said that's the right thing on what

1202

we are approaching this.

1203

I made a dealer video which was sent out, and the

Ms. Castor.

So, detail for us how VW is informing dealers

1204

about the defeat devices and the solutions to fix cars that feature

1205

these defeat devices.

1206

Mr. Horn.

As soon as we have the information necessary

1207

already and have discussed this with EPA and CARB about the timing

1208

or alongside, the dealers will be naturally informed.

1209

Ms. Castor.

They are not getting any information right now?

1210

Mr. Horn.

1211

Ms. Castor.

1212

Mr. Horn.

No, of course, they get information. So, detail that for us.

First of all, they get the information that we

1213

financially help them through this crisis.

1214

thing is we took the bonus thresholds out.

1215

flooring.

1216

the incentives by $2,000 for a loyal customer, for loyal

1217

Volkswagen customers, you know, a loyalty program.

1218

They got the discretionary fund.

Ms. Castor.

What does that mean? 56

Secondly, the first They have free We have increased

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Mr. Horn.

That means we get them started and don't let them

1220

dry out in the field.

1221

Ms. Castor.

1222 1223

Is that a direct payment to customers or to

dealers? Mr. Horn.

The first two points, the bonus payments and the

1224

floor plan, is directly to the dealers.

1225

is directly to the dealers.

1226

this is a certain cash incentive that they can manage to bring

1227

loyal customers in, whether that is a TDI customer or a gas

1228

customer.

1229

Ms. Castor.

The discretionary funds

And the incentives are, for them,

So, is the intention there for the dealers,

1230

then, to contact customers who have purchased cars since the model

1231

year 2009?

1232

Mr. Horn.

1233

Ms. Castor.

1234 1235

Yes, as one of the possibilities, sure, yes. Well, VW is not giving any direction to dealers

and their employees on contacting customers at this point in time? Mr. Horn.

No, of course, we are having -- we have set up

1236

frequently-asked questions.

We are guiding the dealers with

1237

real-time the same information we have, and which goes to all call

1238

centers as well, because those, you know, I have visited the call

1239

center in Auburn Hills.

1240

need the same information, and as soon as we have it, the other

1241

people get it as well.

Those people are also frontline.

57

They

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Ms. Castor.

All right.

What has VW told dealers about how

1243

existing Volkswagen models will be affected, cars that dealers

1244

have already sold and cars that are now sitting on the lots?

1245

Mr. Horn.

We've informed the dealers directly on September

1246

18 in a call to the National Dealer Counsel.

1247

letters and videos to do this.

We followed up with

1248

Mr. Murphy.

Thank you.

1249

Ms. Castor.

Okay, I am out of time.

1250

Mr. Murphy.

The gentlelady's time has expired.

1251

I now recognize Mr. Barton for 5 minutes, from Texas.

1252

Mr. Barton.

1253 1254

Thank you, Mr. Chairman.

And thank you and Ms.

DeGette for organizing this hearing. I am not a Registered Professional Engineer anymore, but at

1255

one time I was.

1256

drives a Volkswagen Beetle.

1257

Volkswagen Jetta.

1258

are gasoline-powered, but they are both Volkswagens.

1259

I still am an engineer by training.

My daughter

My former stepdaughter drives a

I don't think they are diesel; I think they

I have always had the highest respect for Volkswagen.

I

1260

think it is a fine company engineering-wise, you know,

1261

product-wise.

1262

disappointing to look at the -- I don't know the right word to

1263

use -- immorality of the corporate decision to knowingly and

1264

willfully cheat on U.S. emissions standards.

But I must tell you, sir, that it is extremely

58

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I mean, Volkswagen is one of the premiere name brands of auto

1266

manufacturing in the world, and it is a reputation that has been

1267

gained over the last 50 or 60 years.

1268

your stature knowingly and willfully make a decision at the

1269

highest levels of the company to put a software program in your

1270

products that are meant intentionally to deceive or to cheat on

1271

U.S. emission standards, to me, I wouldn't have believed it if

1272

it wasn't factually proven.

1273 1274 1275

And to have a company of

So, my first question to you is, I am told that this was a decision made in Germany at the corporate level. Mr. Horn.

Two answers to this.

Is that correct?

First of all, the

1276

investigations are ongoing, but this was not a corporate decision,

1277

from my point of view.

1278

corporation in no Board meeting or no Supervisory Board meeting

1279

has authorized this, but this was a couple of software engineers

1280

who put this in, for whatever reasons.

1281

find out, and I fully agree to your other statement.

1282 1283

Mr. Barton.

To my best knowledge today, the

And I would also like to

And this is an oversight hearing, so I assume

that you are testifying under oath, is that correct?

1284

Mr. Horn.

1285

Mr. Barton.

I am under oath. Okay.

I understand this, sir.

So, what you are saying is that the

1286

senior, the president of Volkswagen International did not know

1287

about this when it happened? 59

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 1288 1289 1290

Mr. Horn.

What I said was, to my understanding, this was

not a corporate decision. Mr. Barton.

Okay.

This was something individuals did. Now that is not what I was led to

1291

believe, but I take you at your word.

1292

question.

1293

So, I will ask the second

When did senior management, i.e., the president of

1294

Volkswagen International, the executive vice present, whoever

1295

your senior day-to-day corporate officers are, when did they learn

1296

of this action?

1297 1298

Mr. Horn.

To my understanding, also around the September

3rd notification of the agencies.

1299

Mr. Barton.

1300

Mr. Horn.

1301

Mr. Barton.

But it occurred years ago. Yes, sir. Do you really believe, as good, as well-run as

1302

Volkswagen has always been reported to be, that senior-level

1303

corporate managers/administrators had no knowledge for years and

1304

years?

1305

Mr. Horn.

I agree it's very hard to believe.

1306

Mr. Barton.

1307

Mr. Horn.

1308

Mr. Barton.

1309

Well, I don't know what to do, but I do know that you can

1310

have an honorable disagreement about emissions standards, and we

Yes. And personally, I struggle as well, yes. That is an honest answer.

60

I appreciate that.

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 1311

have had that on this committee.

1312

the Clean Air Act Amendments and as a conservative who believes

1313

that, if it is the law, it should be implemented, and corporate,

1314

especially international corporations should honor those laws,

1315

your company has not.

1316

but it should be more than just a slap on the wrist.

1317

But, as somebody who voted for

I don't know what the penalty should be,

I mean, I am going to listen to the rest of the testimony

1318

and the questions and the staff recommendations, but in every

1319

other case since I have been a Congressman, when we have had

1320

problems with manufacturers, automobile manufacturers, in every

1321

case it has been something happened that was really a mistake,

1322

an accident, that they just didn't foresee it.

1323

case here.

1324

Mr. Horn.

1325

Mr. Barton.

That is not the

Yes. There was a knowingly and willful decision to

1326

deceive in one of the most important markets in the world, and

1327

that, sir, is just wrong.

1328

And with that, I --

1329

Mr. Horn.

1330

Mr. Barton.

Thank you, sir.

1331

Mr. Murphy.

Thank you.

1332

I now recognize Mr. Kennedy for 5 minutes.

1333

Mr. Kennedy.

We agree.

Thank you, Mr. Chairman. 61

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Mr. Horn, thank you for being here today.

1335

I understand you have said several times your testimony is

1336

preliminary and there are investigations ongoing.

1337

appreciate that and I recognize that.

1338

So, I

I do want to go back to what a number of my colleagues has

1339

gone to with regard to the timeline here.

1340

from your testimony, was that in the spring, I think specifically

1341

May of 2014, was when Volkswagen became aware that there was some

1342

issue with regard to emissions, is that right?

1343

Mr. Horn.

1344

Mr. Kennedy.

My understanding, and

Yes. And then, it was from May to December that CARB

1345

and EPA launched investigations into those, the emissions, and

1346

the company itself, VW, started an investigation as to what led

1347

to the oddities, if you will, with regard to the emissions testing,

1348

right?

1349

Mr. Horn.

I can't answer this really.

I mean, I know that

1350

the actions to remedy these findings were discussed with CARB and

1351

EPA.

1352

between May 2014 and December 2014, I don't know.

1353

did this afterwards, when we started to flesh the cars with the

1354

new software.

1355 1356

Whether they have undergone their own investigations

Mr. Kennedy.

So, okay.

I know they

If I tell you that EPA and CARB

continued an investigation after that preliminary report from May 62

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 1357

and they continued their investigations, then December 2nd, 2014,

1358

VW shared test results with EPA and CARB and proposed a

1359

recalibration fix, is that accurate?

1360

Mr. Horn.

Yes.

1361

Mr. Kennedy.

And then, VW initiated a voluntary recall of

1362

approximately 500,000 vehicles to try to deal with that

1363

recalibration issue.

1364

I believe, 2015, CARB commenced testing to discern whether the

1365

fix that VW had proposed adequately and accurately fixed the

1366

underlying issue.

1367

Mr. Horn.

1368

Mr. Kennedy.

In May, CARB commenced testing, May 6th,

Uh-hum. May 6th through July 2015, CARB conducted

1369

laboratory and on-road testing to confirm the efficacy of the

1370

recall.

1371

test results with VW and the EPA, prompting a series of technical

1372

meetings, from my understanding.

1373

course of those meetings, VW disclosed that there were several

1374

issues, that Gen 1, Gen 2, and the 2015 model of the improved SCR

1375

vehicle known as Gen 3 had a second calibration intended to run

1376

only during confirmatory testing.

1377

at least in July of this year that there was some manipulation

1378

of software code with regard to the testing, was there not?

1379

What I am getting at here, sir, is July 8th CARB shared

Mr. Horn.

And according to CARB, in the

So, there was some knowledge

This meeting you're referring to, I don't know. 63

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I can tell you that the first issue that got back to me and to

1381

my attention was on the 20th of July when my people of Product

1382

Marketing came to me and said we don't get the model year '16 diesel

1383

certified.

1384

And then, I immediately wrote a letter or an email to Dr.

1385

Jakob Neusser, the EDP for Research and Engineering in Wolfsburg,

1386

and I escalated this.

1387

There was new systems, and I don't know whether this is rights,

1388

and (B) there is still information missing. So, also my teams in

1389

Herndon with the National Science Company did not have this

1390

information.

1391

to unfold.

1392

And the explanation was twofold.

(A)

And then, only in the weeks afterwards it started

Mr. Kennedy.

And so, sir, if I am understanding kind of the

1393

broad aspects of your testimony correctly, this is something --

1394

as you have said a number of times, this was not a company decision;

1395

this was a decision made by a number of individuals yet to be

1396

ascertained underneath at some other levels of the company that

1397

does not affect a corporate decision by the Board, by yourself.

1398

Is that accurate?

1399

Mr. Horn.

That's my understanding, yes.

1400

Mr. Kennedy.

So, as of now, at least according to press

1401

reports as of this morning, there's four individuals that have

1402

been suspended.

Is that right? 64

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 1403

Mr. Horn.

1404

Mr. Kennedy.

1405

to this point?

1406

Mr. Horn.

1407

information --

1408

I don't know.

This is press reports.

To your knowledge, has anybody been suspended

I can't share names with you.

Mr. Kennedy.

I am not asking for names.

There is no

Has there been

1409

anybody that has been suspended at this point?

1410

of now, after Volkswagen, for knowing at least of some

1411

inconsistencies with test reports for the past 18 months, has

1412

anybody been suspended or lost their job?

1413 1414

Mr. Horn.

Has anybody, as

To my understanding, there have been three people

suspended, but I cannot share the names here, due to German law.

1415

Mr. Kennedy.

And I am not asking for the names, sir.

1416

You mentioned the figures, roughly, that this would take one

1417

to two years, 5 to 10 hours per car, in roughly 430,000 cars.

1418

you have any estimate at this point as to what the direct losses

1419

for Volkswagen would be because of this incident?

1420

Mr. Horn.

Do

I think the losses are depending (A) on the fines

1421

we will get and we will have to pay, and then, also, (B), on how

1422

much money it takes to fix those cars, and (C) on how much money

1423

we will have to pay to compensate the customers for what we did.

1424

And this is a whole lot of money, I'm quite sure.

1425

Mr. Kennedy.

And so, sir, I think the overall question that 65

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 1426

you are sensing from myself and colleagues is that I understand

1427

that this was a decision that you are indicating was made by people

1428

underneath you.

It does get to the overall corporate integrity

1429

of the company.

And so, what, if you can say, is going to be done

1430

to restore faith in the overall corporate structure of Volkswagen?

1431

Mr. Horn.

First, a very important clarification.

It was

1432

not done by people under me.

I'm the CEO, president and CEO of

1433

Volkswagen Group of America.

1434

developed in the relevant software departments in Germany, which

1435

is totally out of my jurisdiction or steering.

And those things have been

1436

And the second, to get your answer hopefully in the right

1437

way, with the compliance investigations, we have to streamline

1438

our processes and this company has to bloody learn and use this

1439

opportunity in order to get their act together.

1440

people worldwide have to be managed in a different way.

1441

very, very clear.

1442

Mr. Kennedy.

1443

Mr. Murphy.

1444

And 600,000 This is

Thank you, sir. I recognize the vice chair of the full

committee, Mr. McKinley, for 5 minutes.

1445

Mr. McKinley.

1446

Several things.

Well, thank you, Mr. Chairman. First, you opted not to challenge the WVU

1447

decision, the research that was done.

1448

the research that was done.

So, you have not challenged

Everyone has recognized you did 66

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knowingly, then, violate, is that correct? Mr. Horn.

I don't understand this question, sir.

sorry.

1452

Mr. McKinley.

1453

findings from the WVU.

You opted not to challenge or appeal the So, does that mean --

1454

Mr. Horn.

1455

Mr. McKinley.

-- that you knowingly violated?

1456

Mr. Horn.

No, sir.

1457

Mr. McKinley.

1458 1459

I'm

From?

No.

You did challenge and appeal the WVU

findings? Mr. Horn.

I did not challenge because software actions,

1460

recalls, service complaints, in the millions for this company,

1461

is normally doing business.

1462

executive for Volkswagen worldwide.

1463

Safety Committee.

1464

experts and that we got a seal of approval onto those actions,

1465

and I'm not the technical experts.

1466

Mr. McKinley.

1467

Mr. Horn.

1468

Mr. McKinley.

I was worldwide Service and Parts I've been to the Product

I know how the system is working with all the

Okay.

It has enough people in the system -Let me get to the crux more of my question.

1469

I know the EPA fines.

We just had a situation where a small

1470

poultry farm was fined $17,000 a day because they were allowing

1471

dust to come out of their chicken house out into the neighbor. 67

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And we have seen steel mills being fined $3, $5, $7 million daily

1473

until they clean up their discharge into a river.

1474

coal mines and other operations.

1475

We have seen

So, there has to be, I think you can understand there ought

1476

to be consequences for this violation.

1477

you are accruing something on your financial sheets for what could

1478

be a fair, what could be an expected penalty for having violated

1479

the laws here of the United States.

1480

you share with us what you are accruing on your balance sheet for

1481

penalties, expected penalties?

1482

Mr. Horn.

Yes, yes.

So, I am curious, I assume

Can you share with us or will

For the time being, I mean, there an

1483

official information that the company has accrued directly 6.5

1484

billion euros in the first step in this year.

1485

enough; maybe this is not enough.

1486

will have to be worked out with the specific experts, as we have

1487

hired enough experts, I can tell you.

Maybe this is

I don't know.

And the rest

1488

Mr. McKinley.

Thank you.

1489

Now, when you import your vehicles in, you have to provide

1490

a Certificate of Conformity with the EPA standards.

1491

I understand, the defeat device was not included in that

1492

Certificate of Conformity, is that correct?

1493

Mr. Horn.

1494

Mr. McKinley.

And from what

That's my understanding, yes, sir. Can you share with us why someone tried to 68

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deceive the American Government, why that wasn't included in the

1496

application of conformity?

1497 1498 1499

Mr. Horn.

Because those people who did the applications

most probably did not know, did not know that it was in there. Mr. McKinley.

Can you share with us who is responsible for

1500

this failure to include a description?

1501

two people?

1502

Mr. Horn.

Is this limited to one,

We have an office which is called EEO in Auburn

1503

Hills which is directly linked to the German Research and

1504

Development Department.

1505

informations, all the results testing things, technical

1506

specifications, and then, they file the applications for

1507

conformity and all those.

They work together.

They get all the

1508

Mr. McKinley.

Mr. Horn, thank you for testifying before us.

1509

Just one question is, we have all, many of us have been

1510

talking about this defeat device.

1511

understand what this is, can you explain what this defeat device

1512

is and how it functions?

1513

Mr. Horn.

Yes.

For the American public to

To my understanding, the defeat device is

1514

not a device, but it's a software code in the engine and exhaust

1515

system management which detects, this software detects whether

1516

a car is on the dyno testing environment or whether the car is

1517

on the road being driven. 69

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And one example, for instance, is the steering wheel angle

1519

and how many times it has been changed.

1520

on the dyno, it is on the dyno; nothing changes.

1521

is on the street, the steering wheel changes.

1522

there's so many sensors in there, these are one of the examples

1523

people gave me on how this device, which is a software code again,

1524

worked, but hidden in million of software codes.

1525

know this, it is very difficult to detect, from my limited

1526

technical understanding. Thank you.

Because once a car is And if the car And that since

So, if you don't

1527

Mr. McKinley.

1528

Mr. Murphy.

1529

I now recognize Ms. Schakowsky for 5 minutes.

1530

Ms. Schakowsky.

1531

I have in my hand a letter from Volkswagen that was sent to

Thank you.

I yield back my time. The gentleman yields back.

Thank you, Mr. Chairman.

1532

one of my senior staff because she is an owner of your car.

1533

remember when she bought the car and how excited she was about

1534

the clean diesel.

1535

I

The letter says, "Your vehicle remains both safe to drive

1536

and legal to drive.

1537

time.

You do not need to take any action at this

All we ask is for your patience."

1538

I have to tell you, if I were a driver of one of these vehicles

1539

that is contributing up to 40 times the amount of emissions, I

1540

would want that addressed right away. 70

I have a son and a

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grandchild who regularly uses an inhaler.

1542

contributing to or driving a car that has that kind of emissions.

1543

I am not excited about

So, how much patience is my staff supposed to have?

1544

is the timeline here?

1545

scenario in terms of timeline for fixing this?

1546

Mr. Horn.

What

What is the best scenario and the worst

For the Generation 3 cars, this is model years

1547

'16 and '15, the timeline is beginning of next year a complete

1548

fix.

1549

This won't start, from my judgment, before the middle of next year.

1550

And for the Generation 1 cars, which is the biggest feat, I cannot

1551

give you a date right now, but within the next couple of weeks

1552

we will start discussing those scenarios with EPA and CARB, and

1553

alongside the development guys will have to do that --

1554 1555

For the Generation 2 cars, it's still under development.

Ms. Schakowsky.

So, these cars unfixed could be on the road

for more than a year, let's say?

1556

Mr. Horn.

Yes.

1557

Ms. Schakowsky.

1558

Mr. Horn.

1559

Ms. Schakowsky.

Or two years?

More than a year, definitely. I wanted to follow up on a question that

1560

Mr. Pallone asked.

It sounded like you were saying that the fix

1561

could manage fuel economy, engine performance, and emissions,

1562

that all of that could be fixed.

1563

Volkswagen do that initially?

If that is so, why didn't

Why wouldn't you make a car that 71

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 1564

would achieve those goals?

1565

Mr. Horn.

1566

Ms. Schakowsky.

1567 1568

I think it's a great question. I mean, I can only assume that maybe

cheating was cheaper? Mr. Horn.

To my understanding, what I've learned, some

1569

people have made the wrong decisions in order to get away with

1570

something which will have to be found out.

1571

Ms. Schakowsky.

Let me ask you this:

have you considered

1572

financial compensation; for example, allowing customers to

1573

actually return the car for what they paid for it?

1574 1575

Mr. Horn.

This is one of the areas we're looking into right

now in terms of how to compensate our customers, yes.

1576

Ms. Schakowsky.

1577

Mr. Horn.

1578

Ms. Schakowsky.

Providing rebate for lost value of the car?

Sure. And what about right now, if I had one of

1579

those cars and I wanted a loaner, would you compensate the dealer

1580

to give me a loaner instead of having to drive that polluting car?

1581

Mr. Horn.

We would have to discuss and consider this.

1582

Right now, I would say no, honestly, because the EPA has said these

1583

cars are legal and safe to drive.

1584

Ms. Schakowsky.

And so, even you know that there is up to

1585

40 times more pollution, if I went to my dealer, who might because

1586

they are in a fix right now say, "Okay, well, we will give you 72

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 1587

a loaner," the company would not do anything to make ultimately

1588

your customer happy?

1589

Mr. Horn.

So, there's a general policy, and this is exactly

1590

the reason why we gave the dealers the discretionary funds which

1591

they could use at their discretion in order to help customers,

1592

very significant cases.

1593

for the specific customer or whether they take them out of the

1594

car, or whatever they think is best in this specific customer's

1595

situation, they can do it with this money.

1596

yes.

1597

Ms. Schakowsky.

And whether they do a loaner car program

But there is no policy that dealers could

1598

say that loaners would be available?

1599

would be probably a hard thing to do.

1600

Mr. Horn.

1601

Ms. Schakowsky.

1602

No questions asked,

I realize 500,000 loaners

Right. But you see how that would be a desirable

remedy for many people?

1603

Mr. Horn.

I understand your point, yes.

1604

Ms. Schakowsky.

Yes.

Well, I just want to tell you, as a

1605

consumer advocate all of my life, this is pretty shocking for

1606

people to find out that a company -- we have had a number of

1607

recalls.

1608

that a company has deliberately cheated, it seems to me that asking

1609

customers for patience is just really not sufficient.

I have had a recall on one of my cars.

73

But to find out

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 1610

I heard people on the radio who were repeatedly saying, "I

1611

just want you to take back my car and give me the amount of money

1612

that I paid for it.

1613

because it may not provide exactly what I thought I was buying

1614

in the first place."

1615

consider that as a primary remedy.

I don't want that car.

I don't want a fix

I would hope that your company would

1616

And I yield back.

1617

Mr. Murphy.

1618

The Chair recognizes Dr. Burgess for his 5 minutes of

1619

Thank you.

questioning.

1620

Mr. Burgess.

Thank you, Mr. Chairman.

1621

And let me just stress that I am as far ideologically from

1622

Jan Schakowsky as possible, and I am not here to provide you

1623

advice, but I think she is giving you good advice.

1624

on this subcommittee for over 10 years.

1625

I have been through Toyota.

I have been

I have been through General

1626

Motors.

And now, we are doing this investigation.

1627

just suggest to you, and let me just suggest to your corporate

1628

structure in Germany, that being dismissive and minimizing the

1629

problem that is faced by consumers, dealers, suppliers is not in

1630

your best interest and it will hurt you.

1631

aggressively compliant and aggressively trying to make it right

1632

for your customers, dealers, and suppliers because in the grand 74

And let me

So, I would be

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 1633

scheme of things I actually believe that will be less costly in

1634

terms of dollars, in terms of reputation, and just in terms of

1635

the endurance of the brand in the United States, which you have

1636

already heard from members of this committee is significant.

1637

histories with your company all are significant.

1638

a significant way.

1639

Our

They go back

Now that I have gotten that off my chest, let me just ask

1640

you once again -- you have been asked before -- but are these

1641

vehicles safe to drive?

1642

Mr. Horn.

1643

safe to drive.

1644

Yes.

Mr. Burgess.

Yes, the EPA has said these vehicles are

So, this is unlike some of the other recalls

1645

that we have talked about in this subcommittee, problems with

1646

airbags, problems with electronic throttle controls.

1647

not pose an immediate jeopardy to the life of the driver or the

1648

passengers?

1649

Mr. Horn.

1650

Mr. Burgess.

These do

I trust the judgment of the EPA, yes. Now, trusting judgment, that is what we are

1651

doing here today, is we are talking that trust factor has been

1652

eroded.

1653 1654 1655

Let me just ask you, when you stress that you are the CEO for Volkswagen of America, is that correct? Mr. Horn.

Yes, sir. 75

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 1656

Mr. Burgess.

1657

from time to time?

1658

Mr. Horn.

1659

Mr. Burgess.

1660

But do you travel back and forth to Germany

Too often right now not much. Yes, well, have you been in the month of

September?

1661

Mr. Horn.

Yes, usually once a month, yes.

1662

Mr. Burgess.

Usually once a month?

So, as this problem has

1663

evolved or the information about this problem, have you gone to

1664

the engineers over in Germany and said, "Guys, what's up here?

1665

How did this happen?"

1666

code where someone has identified for you this has happened or

1667

have you held in your hand a defeat device that was added to an

1668

automobile?

1669

Mr. Horn.

Have you looked at any lines of software

Personally, I have taken out Mr. Mueller of

1670

conference rooms, Dr. Diess out of conference rooms, and

1671

personally talking intensively to the engineers on how we make

1672

this right.

1673

possible?", "Who has done what?", they said, "We didn't know

1674

ourselves."

1675 1676

And to other questions, you know, "How is this

Mr. Burgess. credulity?

Yes, but do you understand how that just defies

I mean, here is a software program --

1677

Mr. Horn.

Yes.

1678

Mr. Burgess.

-- that wasn't just written, I mean, I am 76

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 1679

suggesting here it was written by one person in their basement

1680

in the dark of night.

1681

who were working on this.

1682

I mean, this had to be a team of people

You have got these rascals over here at the EPA in the United

1683

States, and they are just hard to deal.

1684

something that we will be able to sell our cars and we will just

1685

trick them.

1686

going to integrate that into the supply chain of a multinational

1687

corporation and nobody knows a darn thing about it?

1688

is what you are asking us to believe.

1689

and you have heard it from a number of members, the incredulity

1690

that that could, in fact, happen in a large multinational

1691

corporation.

We will just trick them.

1692

Mr. Horn.

1693

Mr. Burgess.

1694

Mr. Horn.

1695

Mr. Burgess.

1696 1697

And then, somehow you are

I mean, that

And you understand why,

I fully agree, sir. Have you asked that question to the people --

Yes. -- who are superior to you at Volkswagen in

Germany? Mr. Horn.

Who was superior to me, the guy is not onboard

1698

any longer.

1699

to other reasons.

1700

Mr. Burgess.

1701

So, we want to do

He is called Christian Klingler.

He resigned due

Well, I almost just don't know what to say.

Apparently, in the public domain in the early or middle part of 77

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 1702

the last decade there was some suggestion that Volkswagen, in an

1703

effort to try to sell its diesel high-mileage vehicles in this

1704

country, was in the process of leasing software to deal with this

1705

emissions problem from another company, is that correct?

1706

Tech Software I believe is the name that is used.

1707

Mr. Horn.

1708

Mr. Burgess.

Blue

I have read this in the newspapers, yes. Okay.

So, it is in the newspapers.

Have you,

1709

yourself, looked at why did they look at this and, then, stop those

1710

negotiations for those leases?

What changed?

1711

some technology at Volkswagen?

Did we develop a defeat device

1712

at Volkswagen?

1713

just going have to be answered.

1714

Did we develop

I mean, these are some of the questions that are

Mr. Chairman, let me just say that I recognize and I

1715

appreciate Mr. Horn being here.

I think that we are doing this

1716

hearing prior to the time that your document production deadline

1717

expired.

1718

is your sincere effort to comply with the wishes of the committee.

1719

But let me just say, all of us represent dealers, consumers,

So, we recognize that you are here voluntarily and it

1720

suppliers, and their lives and livelihoods are extremely

1721

important to us.

1722

foremost.

And that is what we have got to keep first and

1723

I yield back, Mr. Chairman.

1724

Mr. Murphy.

Thank you. 78

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 1725 1726

And the Chair recognizes the gentleman from Texas, Mr. Green, for 5 minutes.

1727

Mr. Green.

1728

And for our witness, we have other subcommittees going on.

1729

Thank you, Mr. Chairman.

So, you will see members come in and out during the day.

1730

When I first heard about it, I was amazed that a company that

1731

is as great as Volkswagen could let this happen, and even to the

1732

executives maybe who didn't know, because the image of the

1733

company, not only in our country, but in Europe and around the

1734

world, is so great.

1735

Our committee wants to get some answers, and I would like

1736

to understand more about Volkswagen's own investigations in your

1737

efforts to find the cause of the debacle.

1738

several internal and external investigations initiated by

1739

Volkswagen.

1740

investigations into this incident and how they are different from

1741

each other.

1742

News reports discuss

Mr. Horn, please explain Volkswagen's own

Mr. Horn.

The investigations started -- I talked yesterday

1743

to our head of Group Revision -- on September 22nd, this year,

1744

went on with our own Group Revision Department, Group Compliance

1745

Audit Department until September 29th, for one week.

1746

all the documents, all the preliminary documents were turned over

1747

to the American law firm Jones Day, who is investigating this on 79

And then,

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 1748 1749

behalf of our Supervisory Board. Mr. Green.

Okay.

News reports have discussed several

1750

internal and external investigations.

1751

you had, that was the auditors from September the 22nd to the 29th?

1752

Are there any other investigations Volkswagen is conducting?

1753

Mr. Horn.

So, that was the only one

To my understanding, after the Notice of

1754

Violation, and from September 18th, from CARB and EPA, these

1755

investigations have started right away.

1756

told you, to my best knowledge.

1757

investigations.

1758

Mr. Green.

And this is what I have

I don't know of any other

Do you know if the actions are in the United

1759

States or Germany or in both or everywhere where Volkswagen has

1760

sold these vehicles?

1761

Mr. Horn.

1762

Mr. Green.

Worldwide. Okay.

Would you commit to sharing these

1763

investigations with the committee, the results of these

1764

investigations?

1765 1766

Mr. Horn.

I commit to get as much information as possible

to this committee, yes.

1767

Mr. Green.

Okay.

Thank you.

1768

Last week one news outlet reported that, quote, "The Steering

1769

Committee of the carmaker's Supervisory Board met last Wednesday

1770

to discuss the preliminary findings of the probe into the scam." 80

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 1771

And that is a quote.

1772

were revealed last Wednesday?

1773

Mr. Horn.

What were these preliminary findings that

Sorry, I'm still a little bit confused by those

1774

folks here down there clicking all the time.

1775

repeat your question, please?

1776

Mr. Green.

Okay.

Could you please

There is a quote, "The Steering Committee

1777

of the carmaker's Supervisory Board met last Wednesday to discuss

1778

preliminary findings of an internal probe into the scam."

1779

were these preliminary findings that were released last

1780

Wednesday?

1781 1782 1783 1784

Mr. Horn.

What

Our own Supervisory Board of Volkswagen AG.

I

don't have access to these preliminary findings. Mr. Green.

Can you get a copy of it and share it with our

committee?

1785

Mr. Horn.

1786

Mr. Green.

1787

Mr. Horn.

1788

Mr. Green.

1789

Mr. Horn.

I can definitely try, sir. Pardon? I can try, sir. Okay.

You are the CEO.

I am the CEO of this company, and then, there's

1790

the Supervisory Board and there's a group of people who are quite

1791

above me in Germany, and the Supervisory Board has to make this

1792

decision.

1793

And I think, you know, with the commitment that our company 81

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 1794

has, there is a very good chance that the company will provide

1795

at one point of time the necessary documents to provide more

1796

clarity into these facts here and to this issue.

1797

Mr. Green.

Again, like my colleague, I appreciate you being

1798

here voluntarily, but it would be great if we could actually get

1799

that in our committee for our investigations.

1800

According to a September 30th news report, Volkswagen's

1801

Supervisory Board member Olaf Lies said, quote, "These people who

1802

allowed to this happen or who made the decision and saw this offer,

1803

they're acting criminally.

1804

responsibility."

1805

Mr. Horn.

1806

Mr. Green.

1807

Mr. Horn, do you agree with that?

Yes, sir. Okay.

Do I have your commitment to full

cooperation in finding and addressing the roots of the deception?

1808

Mr. Horn.

1809

Mr. Green.

1810

They must take personal

Sure.

Yes, sir.

And again, our committee is ongoing, our

investigation.

And I appreciate your being here.

1811

Mr. Chairman, I will yield back my time.

1812

Mr. Murphy.

1813

For the rest of the members with questions, I know we have

1814

got a break here in 20 minutes, but we have got seven people that

1815

want to speak.

1816

with this.

Thank you.

Thank you.

So, we are going to be very short on the timeframe

82

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 1817 1818

But the Chair recognizes Mr. Griffith for a short list of questions.

1819

Mr. Griffith.

Thank you.

I appreciate it.

1820

As you have heard from others who have owned cars and learned

1821

to drive, I am one of those as well.

1822

her first new car, which was a Volkswagen Squareback.

1823

is what I learned to drive on.

1824

my grandmother's 1972 Super Beetle, which I still have.

1825

My mother was able to afford

It was a manual.

In the eighties I drove a Rabbit.

And that

I have inherited

In the nineties, I bought

1826

a gas-powered Jetta.

1827

mother convinced me that even Volkswagens couldn't go on forever.

1828

She might have been wrong.

1829

gas-powered Passat, which I drove until this summer and got

1830

376,225 miles.

1831

to tell me when it crosses 400,000.

1832

be any problem in doing that.

1833

When it got close to 200,000 miles, my

I sold that car and bought a 2003

And the people who bought it from me are going They think that there won't

As a backup to my 2003 Passat that was going and going and

1834

going like the Energizer rabbit or bunny, I bought a 2012

1835

Volkswagen diesel.

1836

consumers thinking.

1837

I am your Volkswagen driver who has always trusted your company,

1838

and I am very disappointed.

1839

So, everybody else is talking about what are You are looking at him.

So, what are we going to do? 83

I am your consumer.

First, you have indicated --

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 1840

and there could be some differences in understanding in language

1841

-- you have indicated that you have notified the customer.

1842

checked with the previous owner.

1843

They have not received any notice that this 2012 diesel Passat

1844

is affected.

1845

received notice from the EPA that some of your two-liter,

1846

four-cylinder TDI vehicles don't comply, and among the included

1847

vehicles, of course, is the 2012.

1848

I have

I bought the car from a friend.

When you go to the website, it says that you all

Because I am not skilled like Chairman Murphy, I am not

1849

skilled and I couldn't take a car apart.

1850

figuring out how to get the top off, the plastic lid off of the

1851

engine to try to take a look at it.

1852

I had a hard enough time

But, when you see that and it says some of the cars are

1853

affected, and here's one, and the original articles referenced

1854

the '14s and '15s, but didn't say anything about the '12s and the

1855

'13s, and then, you see a Volkswagen document that says

1856

discrepancies relate to vehicles with Type EA 189 engine, and I

1857

am looking in my manual and I am looking at things on the engine

1858

block, and it doesn't say anything about an EA 189 engine.

1859

Now the team on the committee here and, then, my staff have

1860

figured out I am affected.

1861

great trouble.

1862

We know that.

I have received no letter.

But this was done at I can't tell for sure.

And I will tell you what was interesting was we found that 84

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 1863

there was actually a site in the UK -- and I know you are just

1864

America and I am just talking about America -- where you can

1865

actually plug in your VIN number and it will tell you if you are

1866

affected.

1867

you may think you have notified everybody, not everybody is

1868

capable of taking apart the engine and figuring out if they are

1869

an EA 189.

1870

I would encourage you to consider that because, while

And then, the other big question is, am I Generation 1 or

1871

Generation 2?

1872

surprising based on the numbers that you have testified here

1873

today.

1874 1875

They tell me I am Generation 2, which I found

Can you confirm that I am a Generation 2?

Mr. Horn.

If you have 2012 Passat, I would think so now,

right.

1876

Mr. Griffith.

1877

Mr. Horn.

1878

Mr. Griffith.

Okay.

Yes. And so, this is something else that you might

1879

want to put into your -- it is a pretty simple website that takes

1880

the VIN numbers that are affected and says you are Generation 1,

1881

you are Generation 2.

1882

listening today, the fix to the Generation 2 is more simple than

1883

the fix to the Generation 1.

1884

It is a simpler fix for Generation 2 than for 1?

1885

Mr. Horn.

Because it sounds like the fix, as I am

Am I correct in hearing that today?

Yes. 85

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 1886

Mr. Griffith.

And then, I would have to echo what

1887

Representative Schakowsky and Dr. Burgess had to say.

1888

when you buy a vehicle, even if you bought it used, and you are

1889

looking in the manual and it says, "Under Federal Emissions

1890

Control System Defect Warranty, was designed, built, and equipped

1891

so as to conform at the time of sale with all applicable

1892

regulations of the United States Environmental Protection Agency

1893

(EPA), and is free from defects in material," et cetera, I believe

1894

that I was sold something that was different than what it was

1895

purported to be.

1896

And my friend didn't do the defrauding.

You know,

It was the

1897

Volkswagen company.

1898

with a program that buys these cars back because, you know, I

1899

understand it wasn't your folks in Chattanooga that made this

1900

mistake; it was the folks in Germany.

1901

trust, and one of the ways to do that is to stand behind your

1902

vehicle.

1903

I think you are much better off to come up

But you have got to restore

One of the reasons that I have liked the company is that on

1904

my 1990s version something was wrong with the paint.

1905

asked.

1906

said, "Not a problem.

1907

Never had another problem.

1908

No questions

When I took it into First Team Auto Mall in Roanoke, they We'll take care of it."

And it was done.

This is a much bigger problem, but Volkswagen needs to stand 86

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up and say, "Okay, we understand.

We will buy your car back at

1910

what the fair market value of that vehicle was prior to this notice

1911

coming out."

1912

With that, I see my time is up and I yield back.

1913

But thank you for being here.

1914

Mr. Murphy.

Again, thank you again.

1915

minutes.

1916

questions short.

We have now 12

So, I am asking those again, please, to keep their

1917

The Chair recognizes Mr. Yarmuth from Kentucky.

1918

Mr. Yarmuth.

1919

Thank you for appearing, Mr. Horn.

1920

I suspect that I should be feeling a sense of schadenfreude

1921

here today because Ford Escapes and Lincoln MKCs are made in my

1922

district, and presumably, we will be selling some more of those

1923

while you are out of the marketplace.

1924

any joy in any of this.

1925

Thank you, Mr. Chairman.

But I am not really taking

I just have a couple of quick questions.

The article I read

1926

said that there were about 11 million vehicles worldwide affected

1927

by this.

1928

Mr. Horn.

Yes.

1929

Mr. Yarmuth.

So, they contain the defeat device.

I guess

1930

there is no added cost to put it in since it is just a line of

1931

computer code.

Would that be right? 87

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Mr. Horn.

It seems very logic, sir, yes.

1933

Mr. Yarmuth.

Yes.

So, my question is, how many countries

1934

that these 11 million vehicles were sold in have emission

1935

standards that would have been defeated by this device?

1936

if the United States we are talking about a half a million cars,

1937

roughly, out of 11 million, what are Germany's emission standards,

1938

for stance?

1939

Are they stricter than the United States?

Mr. Horn.

I mean, there's many countries affected.

1940

countries in Europe are affected.

1941

diesel cars in Europe are different to the U.S.

1942

currently the E05 and going into E06 here.

1943

I mean,

And there's two differences.

All the

The emission standards for You have

You have been 5.

First of all, nitrogen oxides

1944

are much more stringent here.

1945

or whatever.

1946

-- it is higher.

1947

stricter is the diesel part of the particle filter emissions.

1948

There are these little diesel particle filters coming out.

1949

that, the European laws are much stricter than the U.S.

1950

It's 5 grams, I think, per mile,

And in Europe it is now 32 to 40.

So, this is quite

It is higher in Europe, but in Europe what is

Mr. Yarmuth.

On

My question is, would this defeat device that

1951

is 11 million vehicles have helped deceive the European countries'

1952

standards as well?

1953

Mr. Horn.

1954

of time.

I can only give you my understanding at this point

But, as you know, there's lots of European countries investigating this, and we are 88

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working with those agencies; also, with the German KBA, which is the responsible agency.

1956

report there, and this is being investigated.

1957

People had to

Since the standards are different, my understanding is that the defeat device is in those cars as well ,

1958

but to what degree it is really affecting the emission laws, I

1959

don't know.

1960

Mr. Yarmuth.

Okay.

I appreciate that answer.

1961

And I just want to say before closing that it is very

1962

refreshing to hear my colleagues from the other side defend the

1963

Clean Air Act and talk about emissions.

1964

is a rare occurrence.

I appreciate that.

It

1965

I yield back.

1966

Mr. Murphy.

1967

Mr. Collins.

1968

Since I am always, and again this time, one of the last to

1969

question you, I guess what I have picked up here, and I hope you

1970

can relay back to your Board, the folks running Volkswagen back

1971

in Germany, is that the response so far is inadequate.

1972

Mr. Collins is recognized for 5 minutes. Thank you, Mr. Chairman.

I would tell you from my perspective it is a sign of

1973

arrogance.

1974

problem.

It is a sign of not admitting yet the severity of your

1975

I will tell you I am an engineer and I have a way of thinking.

1976

And I cannot accept VW's portrayal of this as something by a couple

1977

of rogue software engineers. 89

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I would begin by saying, isn't intellectual property and

1979

patented work a very important part of what makes VW VW?

1980

constantly looking for breakthrough technology that you can

1981

patent?

1982

yourself on that engineering.

That is a big part of your company, isn't it?

You are

You pride

1983

So, you are having us believe -- and I think this is the way

1984

an engineer's mind works -- back in 2009 you were trying to figure

1985

out a way to have clean diesel, top performance, and your engineers

1986

got stumped.

1987

be true?

The NOx emissions were not even close.

1988

Mr. Horn.

1989

Mr. Collins.

Would that

What is stumped? Stumped, confused.

They couldn't get through

1990

it.

It was an insurmountable roadblock.

1991

performance and emission control at the same time.

1992

times over the NOx emissions.

1993

Mr. Horn.

1994

Mr. Collins.

1995

Mr. Horn.

1996

Mr. Collins.

They couldn't give They were 40

It seems to be logic, what you are saying -Right. -- but I don't know. So, then, if I am working in VW engineering

1997

and I am always looking for intellectual property that I can patent

1998

and give me a competitive advantage -- and I know this is a problem,

1999

and I have to tell you this problem was going way up the chain.

2000

"We can't do it.

The NOx standards in the U.S. are not what they 90

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need to be.

We can't do it."

2002

"Well, go work harder.

2003

People are coming back.

2004

Go find a solution." "We still can't find a solution."

The Engineering Manager, "We can't find a solution."

2005

And then, all of a sudden, two software engineers, like they

2006

found pixie dust, come in and say, "We found a solution.

2007

got it.

2008

We've

We fixed it."

Now you are telling me these two engineers snuck that

2009

computer code into the software and no one said, "This is

2010

breakthrough technology.

2011

ladder with our attorneys and our engineers.

2012

this.

2013

advantage.

2014

standards, and we had a breakthrough.

2015

emissions to we met the emissions"?

2016

I think we need to run this up the We need to patent

This is intellectual property that is going to give us an We can meet the NOx standards and the performance We went from 40 times the

And VW is trying to get the United States of America to

2017

believe these are a couple of rogue engineers?

I categorically

2018

reject that.

2019

it comes to trying to come up with intellectual property -- and

2020

I don't believe that for a second -- or they are complicit at the

2021

highest levels in a massive coverup that continues today.

Either your entire organization is incompetent when

2022

Because just the very 5 minutes that I have been here, and

2023

as an engineer, and I am not a PhD, my mind immediately jumped 91

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to, with this being true, why didn't we look for patents?

2025

didn't we ask the questions what the pixie dust was?

2026

fixed this thing miraculously.

This didn't happen in one day.

2027

This didn't happen in one month.

Your engineers were looking at

2028

this, I can tell you, for many months.

2029

couldn't come up with it.

2030

Why

They have

They were stumped.

They

And then, all of a sudden, the solution is there, and VW is

2031

trying to tell us in the United States of America, in this

2032

Congress, that it was a couple of rogue engineers.

2033

is true, then your entire Patent Department should be terminated

2034

because this would have been massive breakthrough technology that

2035

would have given VW a true advantage, not by cheating, but a true

2036

advantage in clean diesel technology.

2037

Well, if that

I would like you to take that back to your Board and have

2038

them ask that question:

what was going on in the patent world?

2039

What was going on in the engineering world?

2040

you personally I categorically reject everything that VW is saying

2041

about a couple of rogue engineers.

2042

suspending three folks, it goes way, way higher than that.

Because I can tell

And I can tell you that

2043

And what I would like to conclude with, sir -- again, I am

2044

also a financial guy; I am an entrepreneur -- I would suggest that

2045

you be honest to your shareholders.

2046

is off by an order of magnitude. 92

Six point five billion euros

Five hundred thousand vehicles

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at $40,000 apiece, if you were to buy those back -- and I would

2048

suggest you start doing that tomorrow -- that is 20 billion there.

2049

I would suggest you are off by an order of magnitude.

2050

had told us today you had set aside 68 billion, I would say you

2051

are probably in the ballpark.

And if you

Six point eight, not even close.

2052

With that, Mr. Chairman, I yield back.

2053

Mr. Murphy.

2054

I now recognize Mr. Welch for 5 minutes.

2055

Mr. Welch.

2056

Sir, thank you for coming in.

The gentleman yields back.

Thank you very much. But I just want to express

2057

to you some of the things that I have been hearing from Vermonters.

2058

First of all, we have got VW customers, we have got VW dealers

2059

in red states and in blue states, and they are mad as hell.

2060

of the questions that came to me from Vermonters, and I want to

2061

submit this to the record and ask you, VW, to answer these

2062

questions from Vermonters.

2063 2064

Mr. Welch.

Some

But let me just give a reflection of what these

say.

2065

No. 1, "What will you, VW, be reading when you are in jail?"

2066

No. 2, "I just wonder what the hell you were thinking."

2067

Three, "How can we help out Vermonters who got these lemons?"

2068

Four, "Why should the U.S. allow you to sell vehicles in this

2069

country?" 93

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Five, "VW is the Lance Armstrong of the industry."

2071

These questions go on and on and reflect the white-heat anger

2072 2073

that folks have about the deception. One last question, "How do you sleep at night?

How do you

2074

call yourself a member of the human race when you knowingly

2075

poisoned the planet?"

2076

And then, I talked to some of our VW dealers.

They care about

2077

their customers, and I know you individually do as well.

And one

2078

of the dealers said this is on the scale of Enron and Bernie Madoff.

2079

That is how deceitful and unnecessary and willful it was.

2080

They will stand by their employees, our VW dealers, but this

2081

is going to be an expense to them because they are not selling

2082

cars that are bringing in profits.

2083

to pay out of their own pocket, and they will do that because they

2084

are loyal to their employees.

2085

But I have one major question.

So, they are going to have

Just last week, BP reached

2086

a settlement with the Justice Department over the massive 2010

2087

Gulf oil spill that killed 11 workers and devastated the

2088

environment and the economy of the Gulf Coast.

2089

allowed BP to shift more than half of its $21 billion fine to the

2090

American taxpayer by taking advantage of a loophole in the U.S.

2091

Tax Code.

2092

taxpayer, should pay all of the settlement.

That settlement

In my view, that is wrong. The wrongdoer, not the

94

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And the question I have is this:

will you commit here today

2094

under oath that VW will not use this loophole to write off any

2095

future settlement payments related to the fraudulent and

2096

deceptive activity to which VW has already admitted, sir?

2097

Mr. Horn.

If you want a clear answer under oath, I would

2098

have to really understand these tax loopholes, and I don't

2099

understand them.

2100

Mr. Welch.

But I -Let me explain it very simply.

BP got to write

2101

off about half of the cost of that, and that shifts the burden

2102

to the taxpayer instead of their shareholders.

2103

Mr. Horn.

My understanding is that we will work very hard

2104

in order to get this right and that there should not be a burden

2105

to the taxpayers -- should not be.

2106

Mr. Welch.

2107

Another question, taking up where Mr. Collins was, I know

2108

you individually are appalled at what happened at VW, and you have

2109

asked your question, "How did it happen?"

2110

a decision to make it happen.

2111

Mr. Horn.

2112

Mr. Welch.

2113

Thank you.

Someone somewhere made

Uh-hum. Someone somewhere implemented that decision.

You have asked yourself how that happened, correct?

2114

Mr. Horn.

2115

Mr. Welch.

Yes, sir. And your answer to yourself is what? 95

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Mr. Horn.

My answer to myself is that I do everything, and

2117

I don't sleep at night, to help our dealers, to help our customers,

2118

and to be there for my company and my employees to get us through

2119

this crisis here in the U.S.

2120 2121

Mr. Welch.

I appreciate that and I know that is true.

You

individually have a very good reputation, sir.

2122

Mr. Horn.

2123

Mr. Welch.

Thank you. But I asked you another question.

2124

company.

2125

mind, I am asking you to share with us your own view about who

2126

and what, that it could happen in the corporate structure of VW.

2127

You have asked yourself who and how.

You know the

Mr. Horn.

And in your own

I think this is a speculation if I would start

2128

now.

But, you know, I'm reading newspapers as well, and there's

2129

been lots of articles around there.

2130

this was pressure in the system to get resolutions and, also, in

2131

conjunction with cost pressure as well.

2132

already here in one of the other instances.

And from my personal feeling,

This was discussed

2133

And I think it is dead wrong if you put corporate profits

2134

before people, and I think we have to get to the point that we

2135

put people first and not the pressure and corporate profits.

2136

Mr. Murphy.

2137

Mr. Welch.

2138

Mr. Murphy.

Thank you. What people in what department -- my time is up? Yes, your time is up. 96

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Mr. Welch.

I yield back.

2140

Mr. Murphy.

Thank you.

2141

I now recognize the gentleman from Texas, Mr. Flores, for

2142

5 minutes.

2143

Mr. Flores.

2144

Mr. Horn, thank you for joining us today in an obviously tough

2145

Thank you, Mr. Chairman.

situation for your company.

2146

VW's actions damaged the trust of the American people as well

2147

as the environment for billions around the globe.

They have also

2148

economically damaged their customers, their dealers, and their

2149

shareholders.

2150

correct and fair resolution of those issues.

And I hope that VW will continue to work on the

2151

I want to get more in the weeds now to try to go through and

2152

fill in the blanks in the record on some dates and the who, what,

2153

where, when, as we have talked about before.

2154

In May of 2014, independent researchers published a report

2155

that first identified higher-than-expected on-road emissions in

2156

VW vehicles, which prompted the investigations by CARB and the

2157

EPA.

2158 2159 2160 2161

So, question No. 1 is, when did VW first become aware of this research? Mr. Horn.

end of April.

The end of April when it was published.

Mid-May I got information about this. 97

To my knowledge, it was published the

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 2162

Mr. Flores.

Okay.

What steps did VW take to evaluate the conclusions of the research at that time?

2163

Mr. Horn.

First of all, to acknowledge that emission violations or higher emissions are not legal.

2164

Secondly, the engineering departments were supposed to recheck those testing results on our own equipment in

2165

order to validate this.

2166

been implemented in the end of last year.

2167

And then, thirdly, to correct this with respect to software actions which have

Mr. Flores.

Okay.

Now where was this done?

2168

Volkswagen Germany or Volkswagen U.S.?

2169

was responsible for that?

2170

Mr. Horn.

Was this done

And who did that?

Who

The software applications management for the

2171

engines and, also, for the exhaust systems are being done in

2172

Germany at the Engine and Drivetrain Department within the

2173

Research and Development Division.

2174

Mr. Flores.

Okay.

The EPA and CARB both described a series

2175

of presentations or discussions with VW in the wake of the research

2176

in May of 2014.

2177

Were those individuals part of VW America or VW AG or both?

2178 2179

Mr. Horn.

Who for VW was interacting with EPA and CARB?

That's something I would have to check, and maybe

this is also in the records provided to you next week.

2180

Mr. Flores.

Okay.

Great.

2181

What did VW America understand about the cause of the higher

2182

on-road emissions between May of 2014 and the voluntary recall

2183

in December 2014?

2184

VW America know what was going on?

In other words, what did you and your team at

98

What had VW Germany told you?

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Mr. Horn.

That they have, to my understanding, validated

2186

those test results and developing software fixes in order to get

2187

this back in line, and three different tech talk versions which

2188

I didn't understand, to be also very honest, in order to bring

2189

this in the car.

2190

But, also, as I said, all these things are vetted through

2191

this Product Safety Committee which is worldwide responsible for

2192

this and which is also looking at the track, for instance.

2193

in this context, I trusted those guys and those processes, that

2194

everything was according to the book 100 percent.

2195 2196

Mr. Flores.

Okay.

And

So, at that time, nobody in VW America

knew that there was cheating going on in the software design?

2197

Mr. Horn.

To my understanding, no.

2198

Mr. Flores.

Okay.

Then, in December of 2014, VW conducted

2199

a voluntary recall that, at least in part, sought to address the

2200

higher on-road emissions in the model year 2009 through model year

2201

2014 vehicles that were subject to the allegations.

2202

explain what you understand this recall was intended to do?

2203

Mr. Horn.

Would you

To correct the studies of the University, I think

2204

the results of the study of the University of West Virginia, our

2205

retesting to bring the cars, all the cars, back into compliance.

2206 2207

Mr. Flores.

Okay.

But that fix to the emissions problems

that was implemented as part of that recall didn't resolve the 99

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issue of higher on-road emissions.

2209

responsible for developing that technical solution that was

2210

implemented in December of 2014?

2211

Mr. Horn.

So, the question is, who was

The same Engine and Drivetrain Division within

2212

the Engineering and Development Department or Division in

2213

Germany.

2214

Mr. Flores.

2215

And so, what role did VW of America have in developing or

2216 2217

The folks in Germany?

Okay.

validating that solution? Mr. Horn.

We just have this office in Auburn Hills who do

2218

the applications.

2219

California who also had those folks in testing, but, to my

2220

understanding, dyno testing, as far as the legal situation was

2221

concerned.

2222

Mr. Flores.

There's also a testing facility in Oxnard in

Okay.

So, just to be clear, VW America did not

2223

develop the solution or played no part in development of the

2224

solution?

2225

Mr. Horn.

2226

Mr. Flores.

2227

No. Okay.

It may have helped validate the

solution?

2228

Mr. Horn.

I don't think so.

2229

Mr. Flores.

2230

And at that time, did you or anyone in VW of America have

Okay.

You don't think so?

100

Okay.

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any knowledge of the alleged defeat device?

2232

Mr. Horn.

2233

Mr. Flores.

2234

Mr. Horn.

2235

Mr. Flores.

2236

At which point of time? At the time, December of 2014 -No. -- when you were beginning to roll out the

recall solution, did you have any knowledge of the --

2237

Mr. Horn.

2238

Mr. Flores.

2239 2240 2241

No. Anybody in VW America, to the best of your

knowledge? Mr. Horn.

To my understanding, not, because, otherwise, I

would have hoped that they would inform me about this.

2242

Mr. Flores.

Thank you.

I yield back.

2243

Mr. Murphy.

Thank you.

2244

I now recognize Ms. Clarke of New York for 5 minutes.

2245

Ms. Clarke.

2246

And I would like to thank you, Mr. Horn, for taking the time

2247

and giving us as much background and as much knowledge of what

2248

has taken place, to the best of your ability.

Thank you, Mr. Chairman.

2249

I have heard a couple of my colleagues on the other side of

2250

the aisle refer to what has occurred as cheating, but I would like

2251

to say to you that I believe it was an intentional deception.

2252

I think we need to say it as it is.

2253

was an intentional deception to bring something on the market that 101

This wasn't a game.

And This

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 2254 2255

did not meet standards. I want to go back to something my colleague just raised about

2256

your testing center at Oxnard.

2257

part of the past year, VW was interacting with CARB about

2258

discrepancies related to the high emissions that were discovered

2259

in 2014 involving your vehicles.

2260

Oxnard facility?

2261

to help Volkswagen meet emission standards?

2262

I understand that, for the better

What is the purpose of the

And is it, as the article suggests, developed

Mr. Horn.

To my understanding, yes, and it's directly

2263

connected to the Research and Development Department in Germany

2264

to help them to get the cars into legal compliance and to the U.S.

2265

standards.

2266

Ms. Clarke.

2267

Mr. Horn.

2268

Ms. Clarke.

2269

Mr. Horn.

2270

Ms. Clarke.

How many employees are there? Oh, I would have to guess this number. Okay.

If you could just provide us with that?

Just everything -What was the role of the Oxnard facility in

2271

understanding the test results presented by CARB showing

2272

unexpectedly high on-road emissions?

2273

had that information?

2274

Mr. Horn.

What was its role once it

At this point of time, I can't answer this.

2275

don't have the understanding.

2276

in Auburn Hills was interfacing with CARB and EPA for the

I

I only know that our Department

102

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compliance, for the applications and everything.

2278 2279

Ms. Clarke.

So, as you have mentioned Auburn Hills, what

is the role of that office?

2280

Mr. Horn.

Excuse me?

2281

Ms. Clarke.

2282

Mr. Horn.

What is the role of the Auburn Hills office?

And to do the compliance and the application for

2283

certification with the U.S. authorities, and they work directly

2284

on a working level, on a management level, on a daily basis with

2285

EPA and CARB.

2286 2287

Ms. Clarke.

facilities work together?

2288 2289 2290 2291 2292

And so, do the Oxnard and Auburn Hills

Mr. Horn.

Now, yes, there's a structural change in terms

of -Ms. Clarke.

So, prior to the unveiling of this deception,

they were separate entities? Mr. Horn.

They didn't interface?

Well, I think they worked together.

My

2293

explanation is about the structure of the situation of these

2294

facilities.

And they are now under one roof.

2295

Ms. Clarke.

2296

Mr. Horn.

2297

Ms. Clarke.

Okay, but they collaborate?

I hope so. They are collaborators?

Because, you know, my

2298

concern is that, if we have these facilities designed specifically

2299

to address the issues of emissions, of testing, and they failed, 103

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that speaks to a whole other level of perhaps collusion with

2301

respect to this whole software debacle.

2302 2303

Have you looked at or done any internal investigation with respect to these facilities?

2304

Mr. Horn.

That's part of the internal investigation, but

2305

my understanding is they're just testing on the basis of the legal

2306

test requirements.

2307 2308 2309

Ms. Clarke. code?

So, the engineers would not have known software

Is that what you are saying? Mr. Horn.

I think that they have tested the dyno situation

2310

for the cars and they didn't do independent road tests.

2311

what I allude to.

2312

Ms. Clarke.

2313

environmental impact.

2314

commitment to the environmental responsibility?

2315

Mr. Horn.

Okay.

That's

Let me jump to the whole idea of the How seriously does Volkswagen take its

This is deeply -- also, maybe it's difficult to

2316

understand now in this context -- but it is deeply embedded in

2317

our corporate culture.

2318

valuable, and responsible, and responsible towards our employees

2319

and the environment.

2320

We have three values which is innovative,

Our plant in Tennessee is a Platinum LEED certification.

2321

This is the most clean and energy-efficient plant in the world.

2322

And all of our plants have a commitment to reduce carbon footprint 104

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by 25 percent in 2018.

2324

newly built, or in China, they are always up really to the highest

2325

Volkswagen standards, which go beyond sometimes conventional

2326

standards.

2327 2328

Ms. Clarke.

And whether these plants are in India,

So, if this is part of the corporate culture

--

2329

Mr. Horn.

2330

Ms. Clarke.

Yes. -- I am assuming that that is throughout,

2331

including your engineers and scientists, that this is sort of a

2332

part of the ethos.

2333

deviation?

2334

Mr. Horn.

How do you explain this deviation, a massive

Myself and the majority of all Volkswagen

2335

employees, which is 600,000, asked the same question, the same

2336

question, and it's a relevant question.

2337

investigations will definitely find out what drove those people,

2338

beyond newspaper articles and what we read out there, what drove

2339

those people into these decisions, into these actions.

And I hope that these

2340

Ms. Clarke.

2341

I yield back, Mr. Chairman.

2342

Mr. Murphy.

2343

Mr. Tonko.

2344

Mr. Horn, these vehicles promised unrivaled fuel economy and

2345

Hope it won't be profits.

Mr. Tonko is recognized for 5 minutes. Thank you, Mr. Chairman.

performance without the NOx emissions usually associated with 105

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 2346

diesel.

2347

intends to make consumers whole, and I do want to lend my voice

2348

to that briefly.

2349

I know other members have asked about how Volkswagen

Because consumers, including people in my district,

2350

purchased a car believing it would be a clean,

2351

environmentally-friendly choice, they have every right to feel

2352

defrauded.

2353

not exist.

Consumers were sold a bill of goods that simply does

2354

And I think it is likely that whatever fixes to comply with

2355

emissions standards will hurt the vehicles' performance in other

2356

ways.

2357

it is not what dealers thought they were selling.

2358

the resell value on these vehicles, which I am sure was a selling

2359

point, has certainly been destroyed.

2360

to think about, I believe, in terms of how it intends to make right

2361

by consumers.

This is not what consumers thought they were buying, and Worse still,

So, Volkswagen has a lot

2362

Now let me ask, typically, when deciding whether to issue

2363

a recall and develop a solution, does Volkswagen conduct its own

2364

emissions testing?

2365

Mr. Horn.

2366

Mr. Tonko.

2367 2368

Yes. And did you try to recreate or confirm the

results of the ICCT study from May of 2014? Mr. Horn.

I can't speak to this, what they specifically 106

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 2369

tested.

2370

acknowledged the testing results and were developing those fixes

2371

in order to bring those cars back into compliance.

2372

In July 2014, I was informed that they have basically

Mr. Tonko.

Now a lot was said about defeat devices, and we

2373

are talking about a defeat device here.

2374

operations been impacted by defeat devices in the past?

2375

Mr. Horn.

Has the Volkswagen

I have, in the context after September 3rd,

2376

understood that there was an issue, for instance, here in 1974,

2377

yes.

2378

That's what I understand. Mr. Tonko.

And so, what measures were taken by the company

2379

to make certain that there was better scrutiny, better oversight

2380

of the potential for defeat device application?

2381 2382

Mr. Horn.

and I can't get you the answer now.

2383

Mr. Tonko.

2384

Mr. Horn.

2385

Mr. Tonko.

2386

that.

2387

if anything --

2388

Mr. Horn.

2389

Mr. Tonko.

2390

Mr. Horn.

2391

At that point of time, that's a great question,

But was something done? In 1974, I was 12 years old. Well, history is history.

I don't know. We missed some of

So, we reach to the books and read about it.

What was done,

Yes. -- to address defeat device application? And I think the investigations will go back into

this time and -107

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 2392

Mr. Tonko.

Well, I don't think we need to investigate that.

2393

Did a corporate measure get put into play to address defeat

2394

devices?

2395

Mr. Horn.

2396

Mr. Tonko.

2397

committee.

2398

Back then, I don't know the answer, no, sir. I would hope you could provide that to the

I am certain the record will be open.

Mr. Tonko.

And if I could just confirm some of the

2399

information we have received, Volkswagen initiated a voluntary

2400

recall in December of 2014 that was intended, in part, to address

2401

the issue of excess NOx emissions, is that correct?

2402 2403

Mr. Horn.

Mr. Tonko.

Mr. Horn.

2407

Mr. Tonko.

2408

Mr. Horn.

2409

Mr. Tonko.

2411

Right.

Volkswagen initiated a voluntary recall

--

2406

2410

Could you repeat the question,

please?

2404 2405

Excuse me.

Yes. -- in December of 2014? That's correct, yes. That's correct?

Who at Volkswagen proposed the

recall? Mr. Horn.

The Technical Engineering Department in

2412

conjunction with the Product Safety Committee worldwide, which

2413

is steering all the recalls campaigns and voluntary recall actions

2414

out of Wolfsburg essentially for all the markets. 108

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 2415 2416

Mr. Tonko.

about why that December 2014 recall was necessary?

2417 2418

Mr. Horn.

Mr. Tonko.

2420

Mr. Horn.

2421

Mr. Tonko.

Mr. Horn.

You will provide that to the committee, please? Definitely.

It's public.

It's public anyhow.

And what explanation was given to regulators

That's also something we will have to provide in

the document, with the documents.

2425 2426

I don't know now.

about why that December 2014 recall was necessary?

2423 2424

I would have to look into the document on what

we wrote to those consumers.

2419

2422

And what explanation was given to consumers

Mr. Tonko.

And what fix did the Volkswagen organization

implement for cars brought in under that recall?

2427

Mr. Horn.

All have been software fixes.

New software

2428

versions have been fleshed into the specific onboard steering

2429

units.

2430

Mr. Tonko.

2431

Mr. Horn.

2432

2435

The Engine and Drivetrain Development, Software

After-Treatment Departments in Germany, Wolfsburg.

2433 2434

And who at Volkswagen developed that fix?

Mr. Tonko.

And did they know at the time that it would not

work? Mr. Horn.

I don't know that.

My understanding was that it

2436

would work and, otherwise, also the work by the Product Safety

2437

Committee wouldn't have released this version for application in 109

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the markets. Mr. Tonko.

Well, I thank you for your responses.

I look

2440

forward to the additional information you owe to the committee.

2441

And again, I would say on behalf of the consumers of the 20th

2442

Congressional District of New York, those of the country, and

2443

around the world impacted by this, they deserve a sound

2444

explanation and a fix that will respond to the environmental

2445

damage done here and the consumer fraud.

2446

Mr. Horn.

2447

Mr. Murphy.

2448

Ms. DeGette has one final question real quick, and then, we

2449 2450 2451

Yes, sir.

Thank you.

Thank you.

have got to leave. Ms. DeGette.

First, Mr. Chairman, I ask unanimous consent

to put Mr. Welch's document into the record.

2452

Mr. Murphy.

2453

Ms. DeGette.

So ordered. I just have on last question, Mr. Horn, because

2454

you told a whole bunch of us on this committee that, after that

2455

West Virginia University study in May of 2014, everybody was

2456

running around trying to figure out what was going on with these

2457

cars and why there was a discrepancy between the tasks; that your

2458

engineers didn't know the answer.

2459

was because of a willful act of some engineers in Germany in the

2460

first place, correct? 110

But, in fact, the discrepancy

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 2461

Mr. Horn.

That's my understanding, yes.

2462

Ms. DeGette.

And those people, that information about that

2463

discrepancy never made it to Germany, so they could tell your

2464

people what was wrong?

2465

today?

2466

Mr. Horn.

2467

Ms. DeGette.

2468

Is that what you are testifying to here

I don't understand what you're trying to say. Well, you said your people were trying to

figure out why there was a discrepancy.

2469

Mr. Horn.

Right.

2470

Ms. DeGette.

But there were some people who knew, and those

2471

were the people who wrote that deceptive code in the first place.

2472

Are you telling me that they never told your U.S. people what the

2473

problem was and why there was a discrepancy?

2474

Mr. Horn.

The people who investigated the study in detail,

2475

the study and developed those software fixes were also the

2476

colleagues in Germany.

2477

colleagues in Auburn Hills.

2478

Ms. DeGette.

Of course, they were informing their U.S.

So, did they tell the U.S. colleagues that

2479

there was this deceptive code and that was what was causing the

2480

discrepancy, yes or no?

2481

Mr. Horn.

I don't think so.

2482

Ms. DeGette.

2483

Mr. Horn.

I don't think so.

Thank you.

Otherwise, we would be much earlier here. 111

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 2484

Mr. Murphy.

Thank you.

2485

Mr. Horn, that concludes our questioning for now.

This

2486

hearing is not over, but we would appreciate -- more questions

2487

will be coming from committee members -- we would appreciate a

2488

quick and honest response to those as well.

2489

Mr. Murphy.

This hearing is going to adjourn for a couple

2490

of hours, to recess -- excuse me -- for a couple of hours while

2491

the Republican Conference is meeting.

2492

15 minutes after the call of the Chair after that meeting.

We will reconvene about

2493

Thank you much.

2494

Mr. Horn.

2495

Mr. Murphy.

2496

[Whereupon, at 12:18 p.m., the subcommittee recessed, to

2497 2498

We will be back.

Thank you. And thank you.

reconvene at 1:39 p.m., the same day.] Mr. Murphy.

All right, we reconvene this Subcommittee of

2499

Oversight and Investigations hearing on Volkswagen's Emissions

2500

Cheating Allegations:

Initial Questions.

2501

We have Mr. Grundler and Mr. Brooks here as witnesses.

2502

And let me just go into this, as we reconvene this hearing.

2503

You are aware that the committee is holding an investigative

2504

hearing, and when doing so, has the practice of taking testimony

2505

under oath.

2506

Do you have any objections to testifying under oath?

Mr. Brooks.

No. 112

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 2507

Mr. Grundler.

No.

2508

Mr. Murphy.

2509

The Chair then advises you that, under the rules of the House

2510

and the rules of the committee, you are entitled to be advised

2511

by counsel.

2512

during your testimony today?

Both witnesses say no.

Do either of you desire to be advised by counsel

2513

Mr. Brooks.

2514

Mr. Grundler.

2515

Mr. Murphy.

2516

In that case, would you please rise and raise your right hand,

2517

No. No. Both witnesses indicate no.

and I will swear you in?

2518

[Witnesses sworn.]

2519

Mr. Murphy.

2520

For the record, both witnesses have indicated yes.

Thank you. You are

2521

now under oath and subject to the penalties set forth in Title

2522

18, Section 1001, of the United States Code.

2523 2524 2525

We will now allow you each to give a 5-minute summary of your opening statement. Mr. Grundler, you may begin.

113

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 2526

JOINT STATEMENT OF CHRISTOPHER GRUNDLER, DIRECTOR, OFFICE OF

2527

TRANSPORTATION AND AIR QUALITY, OFFICE OF AIR AND RADIATION, U.S.

2528

ENVIRONMENTAL PROTECTION AGENCY, AND PHILLIP BROOKS, DIRECTOR,

2529

OFFICE OF CIVIL ENFORCEMENT, AIR ENFORCEMENT DIVISION, OFFICE OF

2530

ENFORCEMENT AND COMPLIANCE ASSURANCE, U.S. ENVIRONMENTAL

2531

PROTECTION AGENCY

2532 2533

Mr. Grundler.

Chairman Murphy, Ranking Member DeGette, and

2534

other members of the subcommittee, we appreciate the opportunity

2535

to testify on the matter of the Environmental Protection Agency's

2536

Notice of Violation issued to Volkswagen.

2537

I am Chris Grundler and I direct the EPA's Office of

2538

Transportation and Air Quality, which is responsible for EPA's

2539

Air Pollution Compliance Program for all mobile sources,

2540

vehicles, engines, and equipment, including cars, trucks, and

2541

fuels.

2542

I am joined today by my colleague Phil Brooks, Director of

2543

the Office of Civil Enforcement's Air Enforcement Division.

2544

EPA's Civil Enforcement Program develops and prosecutes civil

2545

administrative and judicial cases.

2546

On September 18th, 2015, EPA sent a Notice of Violation, an

2547

NOV, of the Clean Air Act to Volkswagen, including Volkswagen AG,

2548

Audi AG, and Volkswagen Group of America, alleging that 114

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 2549

four-cylinder Volkswagen and Audi diesel cars sold in the U.S.

2550

for model years 2009 to 2015 include software that circumvents

2551

EPA's emissions standards.

2552

installed software in the electronic control module of these

2553

vehicles that sensed when the vehicle was being tested for

2554

compliance with EPA emissions standards.

2555

contain software that turns off or significantly reduces the

2556

effectiveness of emissions controls when driving normally and

2557

turns them on when the car is undergoing an official emissions

2558

test.

2559

Volkswagen manufactured and

This is known as a defeat device.

Put simply, these cars

This design feature

2560

results in the car's emitting up to 40 times the emissions that

2561

are allowed to ensure public health is protected.

2562

contain essentially a switch that senses whether the vehicle is

2563

being tested or not based on various inputs, including the

2564

position of the steering wheel, vehicle speed, the duration of

2565

the engine's operation, and barometric pressure.

2566

EPA issued covers roughly 482,000 diesel cars.

2567

These devices

The NOV that

All new cars sold in the United States must have an EPA-issued

2568

Certificate of Conformity demonstrating that the car meets

2569

applicable federal emissions standards to control air pollution.

2570

By making and selling vehicles with defeat devices that allow for

2571

higher levels of air emissions than were certified to EPA, VW 115

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 2572

violated multiple important Clean Air Act provisions.

2573

violations are very serious not only because the illegal defeat

2574

device results in excess emissions many times the allowable

2575

standard, but also because, after the high emissions were

2576

discovered, VW concealed the facts from EPA, the State of

2577

California, and from consumers.

2578

These

These vehicles are emitting more nitrogen oxides, or NOx,

2579

than regulations allow.

2580

ground-level ozone and particulate matter.

2581

to these pollutants has been linked with a range of serious health

2582

effects, including increased asthma attacks and other respiratory

2583

illnesses that can be serious enough to send people to the

2584

hospital.

2585

NOx pollution contributes to We know that exposure

We are in the midst of an ongoing investigation into VW's

2586

actions.

2587

Justice throughout this investigation, and determinations

2588

regarding potential penalties and other remedies will be assessed

2589

as part of the investigation. However, at this point we are unable

2590

to provide further details of the investigation because the

2591

release of such information could jeopardize this ongoing

2592

enforcement investigation.

2593 2594

We will be working closely with the U.S. Department of

EPA will continue to work closely with the California Air Resources Board during the investigation. 116

CARB led and

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 2595

contributed much of the effort to get us to this point.

Our

2596

agencies work very closely together on the implementation and

2597

oversight of the Vehicle Emissions Program.

2598

As part of the investigation, we intend to assess the scope

2599

of VW's liability under the Clean Air Act and whether there are

2600

additional vehicles with defeat devices.

2601

assess the economic benefit to VW of a non-compliance and pursue

2602

appropriate penalties, as well as to assess the excess pollution

2603

from VW's violations and the appropriate ways to mitigate them.

2604

While our enforcement authority concerns air pollution, we

2605

are acutely aware of the impact of these violations on consumers,

2606

and we have provided frequently-asked questions and answers for

2607

consumers on our website, such as whether the cars are safe to

2608

drive and whether EPA is officially recalling the vehicles at this

2609

point.

2610

We also intend to

On September 25th, my office sent a letter to all auto

2611

manufacturers notifying them that we are stepping up our testing

2612

activities in response to these alleged violations.

2613

40-plus-year history of our program, we have continuously updated

2614

and adapted our approaches to compliance oversight as

2615

technologies and situations have changed.

2616

our responsibility to oversee the implementation and enforcement

2617

of our regulations. 117

Over the

We take very seriously

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 2618

It is this oversight that ensures the benefits of clean air

2619

emissions standards are realized and that the industry is

2620

competing on a level playing field, and the consumers are getting

2621

what they pay for.

2622 2623 2624 2625

Again, thank you for the opportunity to appear as witnesses this morning.

We welcome your questions.

[The prepared statement of Mr. Grundler and Mr. Brooks follows:]

2626 2627

********** INSERT 2**********

118

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 2628

Mr. Murphy.

2629

Mr. Brooks, you don't have a statement?

2630

Thank you. You issued a joint

statement, correct?

2631

Mr. Brooks.

That is correct.

2632

Mr. Murphy.

Okay.

2633

Now I am going to recognize myself for 5 minutes.

2634

When you speak, just make sure you turn the mic on and bring

2635 2636

Thank you.

it as close to your mouth as possible. So, Mr. Grundler, in December of 2014, VW conducted a

2637

voluntary recall to address the on-road emissions, as you know.

2638

What information did VW convey to you about the cause and the

2639

proposed solution for the higher emissions in advance of that

2640

recall?

2641

Mr. Grundler.

Thank you, Mr. Chairman.

2642

Throughout the 2014, once California and EPA learned of these

2643

excess emissions, there were numerous technical conversations

2644

between the California Air Resources Board and Volkswagen.

2645

California took the lead on exploring what the problem was with

2646

these vehicles, and my understanding is that they received

2647

multiple different stories, plausible reasons why these vehicles

2648

may not be performing as they are supposed to, chemical-based

2649

reasons, physical-based reasons.

2650

At the end, the remedy that was proposed was described to 119

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 2651

fix a problem with the vehicle concerning how it is operated under

2652

different temperatures, what kind of dosing sensors were used to

2653

make the emissions control, the system work properly, and that

2654

they were confident in the fix.

2655

At the time, they were told by the State of California to

2656

proceed, but that California was going to test these vehicles to

2657

make sure that the fix was effective.

2658

based on the subsequent testing by the California Air Resources

2659

Board.

And it was not effective,

2660

Mr. Murphy.

Thank you.

2661

Did you conduct any further evaluation of their conclusions

2662

and proposed solutions in advance of the recall?

2663

the operational process you had in interacting with them,

2664

discussions/conversations that go back and forth?

2665

Mr. Grundler.

So, what was

So, EPA and California have a very strong

2666

partnership when it comes to oversight and compliance.

Sometimes

2667

California takes the lead on these matters.

2668

the lead on these matters.

2669

with respect to the Hyundai/Kia investigation and subsequent

2670

action.

Sometimes EPA takes

For example, last year we had the lead

California volunteered to take the lead on this matter.

2671

And what happened during 2014 is essentially what is

2672

happening right now as we speak, which is trying to determine what

2673

is the right recall solution to address these excess emissions. 120

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 2674

It was VW's responsibility to identify what was wrong and to

2675

propose a fix.

2676

They did so.

That fix did not work.

So, most of these interactions were between California and

2677

the company.

2678

became much more actively involved in 2015, when California

2679

produced their test results on the supposed fix of these vehicles

2680

and that data showed that there still remained very high and

2681

unexplained excess emissions.

2682

EPA, my team, participated in some of them.

Mr. Murphy.

We

Who did you have these conversations with, with

2683

VW, going back and forth, communicating while they are working

2684

or they are talking to you about these results?

2685

who that was?

2686

Mr. Grundler.

So, I want to be clear.

Do you recall

I was not part of

2687

those conversations.

2688

counterparts.

2689

both officials from VW of America as well as officials from

2690

Germany.

My understanding is those conversations included

2691

Mr. Murphy.

2692

Mr. Grundler.

2693

Mr. Murphy.

2694

It was my team and the California

Do you know their names for the record? I do not.

Can you identify those?

Are those things you

could get for us?

2695

Mr. Grundler.

2696

Mr. Murphy.

Yes. Would you please do so? 121

That would be

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 2697 2698

important. Mr. Murphy.

Now I have a technical question.

I am not sure

2699

if either of you can answer this.

2700

when it is in one position for an emissions test, it made a change

2701

in how this was operational, so the emissions would be lower; in

2702

the other position, the emissions were quite high.

2703

to just keep that switch in the position of low emissions, and

2704

then, they could be in compliance or does that damage the engine

2705

or reduce power significantly?

2706

Mr. Grundler.

So, here is this switch that,

Is it possible

Do you have any idea?

Well, those are exactly the same kind of

2707

questions we are asking Volkswagen right now.

It's not actually

2708

a switch, sir.

2709

So, the vehicle is programmed to work two different ways.

2710

when the vehicle senses when it's on a test, it very quickly goes

2711

into clean mode, and when it does not sense the very specific

2712

parameters that are specified in our federal test procedures, it

2713

goes into a high-pollution mode.

It is what we call a dual-calibration strategy.

2714

So, I think what you're asking is --

2715

Mr. Murphy.

2716

Mr. Grundler.

And

Yes, that's what we --- can you just take this software and will

2717

the vehicle operate normally?

And we don't know yet.

We're

2718

asking those questions.

2719

this morning, on which generation of diesel engines we're talking

And the answers will depend, as you heard

122

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 2720

about.

We believe that the newer generation, the so-called

2721

Generation 3 engines, will be much easier to fix than the older

2722

versions.

2723

Mr. Murphy.

2724

Ms. DeGette, 5 minutes.

2725

Ms. DeGette.

2726

Just to continue along, the newer versions, they have these

2727

Thank you.

I am out of time now.

Thanks.

Urea Tanks.

2728

Mr. Grundler.

2729

Ms. DeGette.

Right. And so, it is a system that you can both adjust

2730

the NOx filters and the Urea Tanks?

2731

the dealer in Denver and also their mechanics told me they feel

2732

like it would be a pretty easy adjustment, even just in the codes,

2733

to fix it in the 2015 and 2016 models.

2734

Mr. Grundler?

2735

Mr. Grundler.

2736

Ms. DeGette.

2737

Mr. Grundler.

2738

Ms. DeGette.

2739

Mr. Grundler.

And in fact, the VW dealer,

Is that your understanding,

I don't want to speculate that. Yes. That seems logical to us. Right. We want to see the software.

2740

the vehicle before --

2741

Ms. DeGette.

2742

Mr. Grundler.

We want to test

Obviously, yes. -- any further action is taken. 123

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 2743

Ms. DeGette.

2744

Mr. Grundler.

2745

Ms. DeGette.

2746

You can imagine that we're skeptical. But it is the agency's position that these

vehicles do need to be fixed, right?

2747

Mr. Grundler.

2748

Ms. DeGette.

2749

Yes, obviously.

Absolutely. I mean, they are non-compliant under both

federal law and California State law?

2750

Mr. Grundler.

2751

Ms. DeGette.

That is correct. You know, I think some of the impressions given

2752

by Volkswagen is, well, you know, they are safe to drive.

2753

might be safe to drive, but they don't comply with the emissions

2754

standards, right?

2755

Mr. Grundler.

2756

Ms. DeGette.

They

That's right. So, for the cars between 2009 and 2014, the

2757

fix is a bigger problem because they don't have the Urea

2758

Containers.

2759

structural changes to these cars, how they could be brought into

2760

compliance?

2761 2762 2763

And so, it is harder to see how, without major

Is that your understanding?

Mr. Grundler.

That is correct.

They will require a more

substantial engineering solution. Ms. DeGette.

They are either going to require installation

2764

of a Urea System or different NOx filters or both.

2765

going to be quite elaborate.

So, that is

I am not a mechanic, and I don't 124

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 2766

pretend to be one, but I went over and looked at this.

2767

looked like a very knotty problem to me.

2768

Mr. Grundler.

And it

What California and EPA have directed

2769

Volkswagen to do is to present more than one option on how to

2770

address these excess emissions.

2771

options very carefully, particularly with respect to what impacts

2772

they will have on the owners.

2773

Ms. DeGette.

Right.

And we want to look at these

And have you given VW any kind of a

2774

deadline for coming up with that fix or have they indicated to

2775

you when they might be able to come up with this?

2776

something that really concerned the panel in the earlier

2777

conversations today.

2778

Mr. Grundler.

This is

I can assure you we have a very strong sense

2779

of urgency.

2780

those solutions.

2781

basis.

2782

to make sure that it's effective.

2783

rushing, but we expect to see something as early as next week with

2784

respect to the Generation 2 vehicles.

2785

We are pressing Volkswagen for that plan and for We're meeting with them on practically a daily

We hope to get a proposal very, very soon.

Ms. DeGette.

But we want

So, there's some risk in

And has the company told you that they believe

2786

they can fix the affected vehicles without affecting fuel economy,

2787

engine performance, or both?

2788

Mr. Grundler.

They have not said so. 125

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 2789

Ms. DeGette.

Okay.

So, I just want to say one last thing,

2790

which is oftentimes we have the EPA in here, and sometimes it is

2791

not the most pleasurable experience testifying.

2792

the Director of the International Council on Clean

2793

Transportation, which was the organization that commissioned the

2794

West Virginia study, said, quote, "This is a powerful affirmation

2795

of U.S. federal and California vehicle emissions regulations and

2796

of the agencies.

2797

useful life of vehicles, clear enforcement follow-through, the

2798

authority to fine and force recalls, these are the best practices

2799

that regulations worldwide should incorporate, and today's

2800

announcement shows why."

But in this case

Clear protocols, in-use requirements for the

End quote.

2801

So, thank you and your agency for your efforts here.

2802

I want to ask you, Mr. Grundler, in light of VW's deception,

2803

are you adjusting testing going forward?

2804

Mr. Grundler.

2805

Ms. DeGette.

2806

Mr. Grundler.

Yes, and we already have. And what have you done? Well, we have learned from this episode for

2807

sure.

2808

this data, CARB and EPA focused --

2809 2810 2811

We wish we had found it sooner.

Ms. DeGette.

As soon as we learned of

So, how are you adjusting the testing going

forward? Mr. Grundler.

The bottom line, madam, is that we are going 126

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to be unpredictable.

What is required for a robust compliance

2813

and oversight program is both testing of new vehicles in the lab,

2814

testing of what we call in-use vehicles in the lab as on-road

2815

measurements.

2816

Ms. DeGette.

2817

Mr. Brooks, are you adjusting enforcement efforts going

2818 2819

Thanks.

I don't have much time.

forward and, if so, how? Mr. Brooks.

Thank you for the question.

The answer is yes,

2820

although I think the prosecution, the investigation of this matter

2821

will proceed along our normal path.

2822

we will be getting a lot more phone calls from people.

2823

in that way, it will change.

I think what we will see is

We will have more to respond to.

2824

Ms. DeGette.

2825

Thank you very much, Mr. Chairman.

2826

Mr. Murphy.

2827

And so,

Thank you.

I think Mr. Griffith is next.

Mr. Griffith,

you are next for 5 minutes.

2828

Mr. Griffith.

2829

And I appreciate you all being here and appreciate the

2830

Thank you very much, Mr. Chairman.

questions that have already been asked.

2831

Obviously, there are a number of us, if you were listening

2832

to the previous testimony, you know I am one of the people who

2833

owns one of the diesel Volkswagens.

2834

in that regard. 127

And so, I have some questions

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 2835

I think it is important that you change your testing methods.

2836

The first question I am going to ask you is, do you think it might

2837

be helpful in doing your job if we passed some legislation that

2838

would allow a portion of the fine money in a fraud case like this

2839

to go to the university that discovered it?

2840

discovered the problem.

2841

I mean, WVU

You all didn't.

Believe it or not, I don't think the EPA can and should do

2842

everything, and that this might be of some assistance.

Just like

2843

we do with certain bad actors in other criminal-type settings who

2844

are committing fraud on consumers or selling drugs, we take some

2845

of their ill-gained goods.

2846

government gives it back to some of the folks who helped discover

2847

it, law enforcement and prosecutors.

2848

a helpful piece of legislation for us to take a look at?

2849

one of you, or both.

2850

Mr. Brooks.

We take it away from them, and the

Do you think that might be Either

Well, I don't think I could comment on what

2851

legislative changes might be necessary.

2852

the criminal context those kinds of remedies have been imposed

2853

before.

2854

Mr. Griffith.

I do understand that in

So, the question is, if you have that power

2855

now, please tell us.

2856

Mr. Murphy.

2857

Could you speak close to the mic?

Excuse me one second.

128

None of us can hear you.

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 2858 2859

You are going to have to sit forward and into the mic. Mr. Griffith.

If you currently have that power, then let

2860

me know that.

2861

whenever you come up with the fine that is appropriate for

2862

Volkswagen, it would seem to me -- and I don't know that you have

2863

that authority now -- to give WVU, West Virginia University, that

2864

uncovered this problem part of the fine to help them continue their

2865

research.

2866

that with law enforcement agencies who uncover crime.

2867

in some securities cases.

2868 2869 2870 2871

But, if you don't have that power, in other words,

I mean, that is what we do with prosecutors.

We do

We do that

There are different ways that is done.

Do you all think that would be an authority that would be helpful for the people of the United States of America? Mr. Brooks.

Well, I can take that back and we can respond

in writing.

2872

Mr. Griffith.

All right.

2873

Mr. Griffith.

It sounds like a good idea to me, I will just

2874 2875

tell you. It is interesting that WVU found it and that you all did not,

2876

but I understand you can't do everything.

2877

some questions about how you are going to go forward.

2878

Let's go to the other side of this.

And you have answered

Now I will, whatever

2879

you all come up with and whatever Volkswagen comes up with, I will

2880

get my car fixed.

Or, if they do a buy-back program, I will have 129

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 2881

to debate whether it is better to fix it or to sell it back to

2882

the company because it is not doing what it is supposed to.

2883

But I am just curious, at some point -- and right now, I

2884

understand you are not doing that -- but, at some point, am I going

2885

to be subject, or other consumers in my shoes, are they going to

2886

be subject to penalties from the EPA for driving a vehicle that

2887

doesn't meet the standards that were supposed to be in place when

2888

they bought the vehicle?

2889

Mr. Grundler.

That question depends on where the particular

2890

owner of a Volkswagen, of one of these vehicles, lives.

2891

live in an area that does regular emissions tests, that the State

2892

conducts these inspections, emissions inspections, some states

2893

require that, in order to re-register the vehicle, if it is subject

2894

to a recall, to show that the fix has been made.

2895

do not have that requirement.

2896

Mr. Griffith.

Okay.

If you

Other states

It depends on where you're living.

So, for some people who may not be

2897

paying attention to whatever notices they might get or, for

2898

whatever reason, aren't following the news -- and believe it or

2899

not, there's a whole bunch of those folks out there who don't

2900

follow day-to-day news -- they could actually end up with some

2901

kind of a penalty from their state.

2902

nothing nationally?

2903

Mr. Grundler.

That's right. 130

But, currently, there is

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 2904

Mr. Griffith.

Would you anticipate that the EPA would go

2905

in the direction of some kind of a national program if enough of

2906

the cars did not get bought back or fixed after a certain number

2907

of months?

2908 2909 2910 2911

Mr. Grundler.

We certainly will be encouraging consumers

Mr. Griffith.

I understand that.

to -You are going to get the

word out as best you can?

2912

Mr. Grundler.

That's right, but --

2913

Mr. Griffith.

But they don't get the message; there's still

2914

a million cars or 100,000 cars, I think.

2915

Mr. Grundler.

I would not anticipate --

2916

Mr. Griffith.

You would not anticipate that?

2917

Mr. Grundler.

2918

Mr. Griffith.

But it is a possibility?

2919

Mr. Grundler.

I don't think that's a possibility under the

2920 2921

-- EPA going after individuals.

Clean Air Act. Mr. Griffith.

Because let me tell you one of my concerns

2922

is -- and it doesn't have anything to do with you all, and it is

2923

a rhetorical question, so you don't have to answer it.

2924

tell you that upfront.

2925

and we were talking about the Clean Power Plan and the

2926

cap-and-trade scheme, which they didn't call it the cap-and-trade

I will

But yesterday we had an EPA official in

131

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 2927

scheme; they kept resisting that.

2928

limit on emissions and, then, being able to make trades.

2929

sounds like cap-and-trade.

2930

But it talks about putting a So, it

And what was interesting about it was that I had a list of

2931

quotes from Lisa Jackson in 2011; Gina McCarthy, 2011, Gina

2932

McCarthy, 2013; Gina McCarthy, 2014, that said they were never

2933

going to consider, and, in fact, it wasn't allowed under the law,

2934

to do a cap-and-trade scheme.

2935

cap-and-trade scheme.

2936

And then, I am looking at some

So, I am a little concerned, not for me.

I am going to do

2937

what I need to do to make my car right or get rid of it.

2938

are going to be a lot of folks out there who may be caught, and

2939

I just want to make sure that the EPA isn't doubling down on their

2940

damages, because every one of us that bought one of these vehicles

2941

is damaged in some form or another.

2942

So, I appreciate you listening to that.

2943

answer, I will give you a chance to answer.

2944

he wants to answer.

2945

Mr. Brooks.

But there

If you want to

Mr. Brooks looks like

I will assure you that I am aware of absolutely

2946

no provision of the Clean Air Act which would allow a prosecution

2947

for the things that you are talking about.

2948 2949

Mr. Griffith.

And that is exactly what Lisa Jackson told

us two or three years ago, but that is okay. 132

We will move on.

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 2950

You know, last but not least --

2951

Mr. Brooks.

2952

Mr. Griffith.

I'll say it won't happen. Yes.

On Gen 1 cars, I have read somewhere

2953

that it is going to take -- it is a more complicated fix, we heard

2954

this morning, but it is also going to take up some of the space

2955

probably in the trunk area of the vehicle.

2956

that?

2957

Mr. Grundler.

Have you all heard

Sir, that would depend completely on what the

2958

remedy would be.

2959

very careful look at what impact this is going to have on owners

2960

and consumers.

2961

that Volkswagen comes forward to.

2962 2963

And as I said earlier, we are going to take a

That will be central to how we review the options

Mr. Griffith.

All right.

So, we don't know that yet.

I appreciate it very much.

Thank you all for being here.

2964

I yield back.

2965

Mr. Murphy.

The gentleman yields back, and I recognize Mr.

2966

Pallone for 5 minutes.

2967

Mr. Pallone.

2968

Mr. Grundler, one of the concerns that I raised with Mr. Horn

2969

earlier was this concern about whether we might find these defeat

2970

devices or similar problems with other cars.

2971

the question, do yo have the tools and authority you need to ensure

2972

there are no other cheaters out there?

Thank you.

133

So, I wanted to ask

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 2973

Mr. Grundler.

2974

Mr. Pallone.

Yes, we do. But I am also concerned about -- and maybe this

2975

is for Mr. Brooks -- about the comments that Mr. Horn made where

2976

he suggested, you know, there were a couple of rogue engineers

2977

that may have done this, but suggested that there was no corporate

2978

responsibility.

2979

Is it the EPA or is it the AG?

Who goes after the

2980

individuals, corporate or otherwise, that might be responsible

2981

for this?

2982

you know, like criminal charges against the corporation itself

2983

for this intentional deceit?

2984

Or do you at some point envision even bringing charges,

Mr. Brooks.

Thank you for the question.

I can't speculate

2985

now as to exactly what course all the enforcement actions will

2986

take.

2987

enforcement action, and I can tell you that we are working with the Department of Justice on these matters.

2988

I can tell you that my office has already taken the initial

Mr. Pallone.

But I guess what I am asking -- and I won't keep repeating, but one more time -- you

2989

know, we keep talking about the fines because of what happened.

2990

responsibility for those responsible?

2991

mean, I know I am speculating, but are those possibilities?

2992

Mr. Brooks.

But does this rise to individual

And is there such a thing as criminal action against the corporation?

Let me be careful in answering that.

First of all, I think that the concern that has been

2993

expressed here by members is exactly our concern.

2994

certain that the investigations that are ongoing and that will be begun will get into exactly that.

2995

Who, what, when, where, why, how?

And so, I'm quite

I think it would be unfair for me to say much more about what the end result might be. 134

I

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 2996

Mr. Pallone.

But it is a possibility?

2997

Mr. Brooks.

Certainly it is a possibility.

2998

Mr. Pallone.

Okay.

2999 3000

You know, I was glad that Mr. Horn actually said that he understood the

impact of these emissions and they could have health and safety impacts. But does it go beyond that?

I mean, he did say that.

I mean, in other words, you know, he is admitting that this took place

3001

and that there could be some health and safety impacts because of the increased emissions.

3002

EPA hold Volkswagen responsible for the environmental effects of their decision to evade emissions standards?

3003

In other words, does the EPA consider, is it possible that they could be held responsible for the impact on

3004

essentially dirtier air, not just fix the cars, but that there might be some damages or some kind of payment that

3005

would have to be made because the air was made dirtier or that people's health and safety were impacted?

3006

Mr. Brooks.

Thank you for that question.

The answer to that is yes.

How does the

While it may go by different

3007

names, we tend to talk about it in terms of mitigation, but the concept there is exactly what you articulated.

3008

We're looking for the opportunities, the ways in which the damage that has been done to the environment, and

3009

which consequently has impacts on public health, can be addressed.

3010

Obviously, we can't go back in time and take that pollution back out of the air, but many of our

3011

settlements look forward and ask the question, how is it that we can make air quality better than what the law

3012

minimally requires in any given instance?

3013

mitigation, and we have many, many consent decrees that go about doing that in many different ways.

3014

Mr. Pallone.

And that additional reduction in pollution is what we refer to as

So, for example, you could impose some

3015

penalties that might be used to mitigate air pollution in other

3016

ways possibly, not by VW, but, you know, that the EPA would use

3017

that money somehow to mitigate air pollution in some other way?

3018

Just give me an example, and then, I will stop asking, because 135

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 3019 3020

my time is almost up anyway. Mr. Brooks.

Okay.

A lot of the power plant cases we have

3021

had projects, for example, where the company has had to go out

3022

and find a third party to implement a wood stove changeout program,

3023

so that cleaner burning stoves, more efficient wood stoves are

3024

substituted for dirtier stoves.

3025

air quality in communities because there are lots of communities

3026

out there, as I'm sure you know, that rely very heavily on

3027

wood-burning devices.

3028

Mr. Pallone.

3029

Thank you, Mr. Chairman.

3030

Mr. Murphy.

3031

I recognize Dr. Burgess for 5 minutes.

3032

Mr. Burgess.

And that has a direct impact on

So, that's one example.

All right.

Thank you very much.

The gentleman yields back.

Thank you, Mr. Chairman, and I apologize for

3033

being out of the room for part of the hearing.

So, I am going

3034

to ask a couple of questions.

3035

please bear with me and try to give an answer that is consistent

3036

with how you answered previously.

If they have been asked before,

3037

First off, what is the budget for the EPA currently?

3038

Mr. Grundler.

3039

I don't have the budget for the entire EPA.

I can give you the budget for my organization.

3040

Mr. Burgess.

3041

Mr. Grundler.

Sure, we will take that. So, it's roughly $100 million a year and 340 136

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 3042

full-time people that work in my organization.

3043

Mr. Burgess.

The overall budget for the EPA -- and I am just

3044

relying on memory, which is dangerous -- but I think it is close

3045

to $15 billion.

3046

funding available.

3047

Mr. Grundler.

3048

So, the EPA has resources available.

I do want to correct that.

It has

I think EPA's

budget is around $7 billion and about 15,000 people, roughly.

3049

Mr. Burgess.

Nevertheless, West Virginia University had a

3050

budget for this research project, my understanding is, around $50,

3051

$60, $70 thousand, is that correct?

3052

Mr. Grundler.

We are extraordinarily grateful for the work

3053

that West Virginia University and the ICCT did.

And I am not going

3054

to blame our budget for the fact that we missed this cheating.

3055

I do think we do a very good job of setting priorities at

3056

EPA.

3057

We didn't ignore it.

3058

how we are doing our testing regime to be more unpredictable, so

3059

this doesn't happen again in the future.

3060

Once we learned of this excess emissions, we focused on it.

Mr. Burgess.

And then, we have also immediately changed

Well, with all due respect, just looking at

3061

the situation, I think the American people ought to ask that we

3062

fire you and hire West Virginia University to do our work.

3063

certainly are much more cost-effective than this part of the

3064

federal agency. 137

They

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 3065

Let me ask you this:

I sit on another subcommittee.

We have

3066

jurisdiction over the National Highway Traffic Safety

3067

Administration.

3068

heard Mr. Horn testify earlier today that this is not a safety

3069

issue with these cars as they are driven.

3070

issues, but there are not safety issues.

So, I am familiar with safety recalls, but we

3071

Mr. Grundler.

3072

Mr. Burgess.

There are emissions Is that correct?

That's correct. So, does EPA do its own kind of recall that

3073

is separate and apart from the National Highway Traffic Safety

3074

Administration?

3075

Mr. Grundler.

3076

Mr. Burgess.

We do. And would this be www.recalls.gov that is the

3077

website that consumers can go to, to find out information about

3078

the recall or the possible recall on their vehicle?

3079 3080

Mr. Grundler.

We have not ordered a recall yet.

When we

do, we will provide that information for sure.

3081

Mr. Burgess.

3082

Mr. Grundler.

3083

Mr. Burgess.

That information will be on your website? Yes. So, I went to the website.

3084

staff went to the website.

3085

grateful for that.

In truthfulness,

They printed it off for me.

I am very

3086

You can get information about pesticides, pesticide

3087

websites, EPA emissions recalls where I assume this would fall. 138

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 3088

Is that correct?

3089

Mr. Grundler.

3090

Mr. Burgess.

Yes. When you click on that link, you get a "Page

3091

not found.

3092

consumers know when they are likely to be able to get that

3093

information off of your website?

3094

Website improvements underway."

Mr. Grundler.

So, can you let

Again, sir, we have not ordered a recall.

3095

So, there is no recall information.

3096

website that talks about our Notice of Violation, what vehicles

3097

are covered, and what consumers need to know today, which is that

3098

they can drive these cars.

3099

will not be held responsible for any repairs.

3100

responsibility of the company.

3101

Mr. Burgess.

We have information on our

These cars are safe to drive.

They

That would be the

Let me ask you this because Mr. Pallone was

3102

asking you things about payment and damages, and because of the

3103

issue that the air was dirtier and health and safety have been

3104

impacted.

3105

is going to face some significant fines and penalties by the

3106

Environmental Protection Agency, are they not?

So, it is, in all likelihood, Volkswagen of America

3107

Mr. Grundler.

I think that's very likely.

3108

Mr. Burgess.

3109

Volkswagen of America:

3110

fact that this has happened.

And you heard my admonition to the CEO of don't be dismissive.

Don't run from the

You need to be aggressively 139

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 3111

compliant.

And I hope they will be.

3112

But I have got to tell you, this summer I went to Silverton,

3113

Colorado on my own dime and looked at what had happened to the

3114

Animas River, went to the Gold King Mine.

3115

and caused by the Environmental Protection Agency.

3116

And that was entirely created

So, I have had a lot of people ask me, that if a private company had done that and turned the Animas

3117

River yellow, they would be held -- the same thing we are talking about here -- there would be fines; there would

3118

be mitigation costs.

3119

if not, why not?

3120 3121 3122

Does the EPA hold itself to the same standard to which it holds private corporations and,

Mr. Grundler.

Are you asking me to testify about the Gold

King Mine situation? Mr. Burgess.

Just in general.

The EPA causes a problem.

3123

Should they be held to the same standards?

3124

asking you to testify.

3125 3126 3127 3128 3129

And, no, I am not

In fact, Mr. Chairman, I think we should have a hearing on that as a separate issue. But just answer the question.

Should EPA be held to the same

standards to which you are going to hold a private corporation? Mr. Grundler.

All I can say, sir, because I'm not familiar

3130

with all the details, is I certainly have seen and read that the

3131

Administrator has taken full responsibility for that situation

3132

and we're acting accordingly.

3133

Mr. Burgess.

It looked like a scene out of Ghostbusters. 140

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 3134

I will just tell you that.

3135

Thank you, Mr. Chairman.

3136

Mr. Murphy.

I will yield back.

I do want to acknowledge that the gentleman from

3137

Virginia and the gentleman from Texas are both touting my

3138

neighboring state, West Virginia University, a rival of Pitt, but

3139

it is nice to see them get the accolades for doing such good work.

3140

I now recognize Ms. Castor for 5 minutes.

3141

Ms. Castor.

3142

Gentlemen, on September 18th, the EPA issued a Notice of

Thank you, Mr. Chairman.

3143

Violation against Volkswagen.

3144

Volkswagen and Audi diesel cars for model years 2009 to 2015

3145

include software that circumvents EPA emissions standards for

3146

certain air pollutants.

3147

by Volkswagen is a defeat device, as defined by the Clean Air Act.

3148

The notice alleges that certain

According to EPA, the software produced

Mr. Grundler, I understand that VW admitted in August to

3149

installing defeat devices on their vehicles.

3150

Correct?

3151

That is correct?

It is accurate?

Mr. Grundler.

I would describe it in mid-to-late August

3152

California and we got a heads-up that they had, in fact, installed

3153

a defeat device, and we were officially notified on September 3rd.

3154

Ms. Castor.

From Volkswagen?

3155

Mr. Grundler.

3156

Ms. Castor.

Correct.

And what specifically did VW tell EPA they had 141

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 3157 3158

done to the engines to circumvent emissions standards? Mr. Grundler.

We were informed that the vehicles had a

3159

dual-calibration strategy on their engine control units which

3160

allowed the vehicle to operate one way when it sensed it was being

3161

tested by the EPA and in a completely different way when the

3162

vehicle was on the road.

3163

Ms. Castor.

And has VW provided EPA with an engine map that

3164

shows specifically how the defeat device works for each model car

3165

in which it was installed?

3166 3167 3168

Mr. Grundler.

That is my understanding, but I would like

to double-check that for you. Ms. Castor.

Okay.

I understand the affected vehicles fall

3169

into three generations based on the model and the year.

3170

defeat devices may work differently for each of these generations

3171

of vehicles.

3172

The

Mr. Grundler, at this point, does the EPA have a full

3173

understanding of how the defeat devices work in each of these

3174

generations of vehicles?

3175

Mr. Grundler.

We do not.

3176

Volkswagen to answer.

3177

Ms. Castor.

Okay.

We still have many questions for

So, what else do you need and has VW been

3178

helpful?

What else do they need to provide EPA to give you the

3179

information that you need? 142

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 3180

Mr. Grundler.

The information that we're focused on now

3181

like a laser is what are they going to do to address these excess

3182

emissions and take this software off these vehicles, so that they

3183

comply.

3184

each line of code.

3185

think the most important thing going forward is that those defeat

3186

devices are removed, that these vehicles are addressed in a way

3187

that will work for consumers and the environment.

3188 3189

We don't need to know specifically how they cheated with

Ms. Castor.

We have got some information on that, but I

But you have said you have learned some lessons

here.

3190

Mr. Grundler.

3191

Ms. Castor.

3192 3193

We have.

Does EPA have the expertise right now in-house

or do you hire consultants that -Mr. Grundler.

We do.

We don't need to unpack 100 million

3194

lines of code to find these defeat devices.

3195

testing them in unpredictable ways, so that we activate these

3196

devices.

3197

tailpipe and does it meet our standard?

3198

The bottom line is

That's the bottom line, is what's coming out of the

Ms. Castor.

Are you taking broader action now that you have

3199

learned these lessons about how software code can be deceptively

3200

used to avoid emissions standards?

3201

to go and look at other code in other automobiles and trucks?

3202

Mr. Grundler.

Yes, we do. 143

Do you have the expertise now

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 3203

Ms. Castor.

Are you going to do that?

3204

Mr. Grundler.

3205

Ms. Castor.

3206

Mr. Grundler.

We are. Can you explain that a little bit further? Yes.

So, we have a number of different kinds

3207

of testing we do.

3208

sorry.

3209

vehicle and submit that data to us, which we review along with

3210

design.

3211

in our laboratory on prescribed test cycles.

3212

by measuring real-world emissions using these mobile devices.

3213

And it is going to be, going forward, a combination of both

3214

laboratory testing, activity testing -- we know how to download

3215

this software -- as well as this real-world monitoring.

3216 3217

So, we test every new model of vehicle.

We require the manufacturers to test every new model of

We audit a certain percentage of those by testing them

Ms. Castor.

And we also audit

And back to VW, does EPA know yet whether VW

can successfully fix the cars here in the U.S.?

3218

Mr. Grundler.

3219

Ms. Castor.

We don't know that yet.

Okay.

And VW has a number of ongoing internal

3220

and external investigations.

3221

sharing the results of those investigations with EPA?

3222

Mr. Grundler.

3223

Ms. Castor.

3224

Mr. Grundler.

3225

I'm

Has Volkswagen committed to

They have not. Have you asked them -Let me defer to my colleague here to confirm

that. 144

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 3226 3227

Ms. Castor.

Okay.

So, have you asked them for that

information?

3228

Mr. Grundler.

3229

Ms. Castor.

They have not agreed at this time.

Don't you think that would be a good -- have

3230

you asked them whether or not they would share that information

3231

with EPA?

3232

Mr. Brooks.

We have outstanding official document

3233

requests, and we will be promulgating more of those.

3234

learned from this morning's session about one particular

3235

investigation, and that is certainly one that we --

3236 3237

Ms. Castor.

Okay.

Today we

Will you let the committee know if VW

does not provide the results of their internal investigation?

3238

Mr. Brooks.

Yes, we will.

3239

Ms. Castor.

Thanks.

3240

And to Representative DeGette and Representative --

3241

Mr. Murphy.

3242 3243

I'm sorry, we have a vote coming up, although

if you have another question -Ms. Castor.

I just wanted to make one point here and submit

3244

this with unanimous consent.

Drew Kojak, the executive director

3245

from the International Council on Clean Transportation, the

3246

nonprofit that discovered the issue, said the easiest solution

3247

is to give EPA more resources, so it can perform the real-world

3248

testing, which may be more expensive, but he said you don't want 145

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 3249

to rely on the happenstance investigation of a small NGO to trigger

3250

one of the largest global recalls around.

3251

thing for all of us.

3252

Mr. Murphy.

Without objection.

3253

Mr. Murphy.

We have got three members who need to ask

3254

questions.

3255

it.

3256

other members, please do.

So, that is the last

I have got eight minutes and 50 seconds.

Let's do

So, if you can shorten your questions out of respect for the So, that takes us down to zero.

3257

How many votes do we have?

3258

Ms. DeGette.

3259

Mr. Murphy.

Two votes?

3260

All right.

Dr. Bucshon?

3261

Mr. Bucshon.

Two votes.

Yes, on September 25th, 2015, the agency

3262

announced that it would be conducting additional testing to

3263

evaluate use of defeat devices in all vehicles.

3264

current status of the testing?

3265

Mr. Grundler.

Thank you for that question.

What is the

Our first

3266

priority is to test all light-duty diesel vehicles.

3267

the midst of that testing.

3268

Environment Canada, both who have the capabilities, as we do.

3269 3270 3271

Mr. Bucshon.

We are in

We have teamed up with California and

And how many vehicles have you tested so far?

Do you know? Mr. Grundler.

We are still testing the first batch of 146

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 3272

vehicles.

3273

Mr. Bucshon.

3274

Mr. Grundler.

3275

Mr. Bucshon.

3276 3277

Okay.

What are you seeing so far?

I have not seen any data yet, sir. Okay.

And what criteria are you using and

what is the procedure for implementing the testing, this testing? Mr. Grundler.

We're being careful not to share with the

3278

automakers how we're going to do this new testing because we want

3279

to be unpredictable.

3280

five cycles that we test on today, what we call off-cycle dyno

3281

testing as well as this real-world onboard monitoring.

3282 3283

Mr. Bucshon.

But it will be a combination of both these

And does this include all light-duty vehicles

or just diesel technology?

3284

Mr. Grundler.

3285

Mr. Bucshon.

We're starting with diesels. And then, would you be willing to commit to

3286

keeping the committee informed of your progress and provide us

3287

associated details regarding the testing procedures, data, and

3288

results?

3289

Mr. Grundler.

3290

Mr. Bucshon.

Yes. And do you think that this is an isolated

3291

incident or do you have concerns with diesel technology in

3292

general?

3293 3294

Mr. Grundler. in general.

I don't have concerns with diesel technology

I don't expect to find widespread problems, but we 147

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 3295

are going to be taking a very close look.

3296

Mr. Bucshon.

Okay.

3297

Mr. Murphy.

3298

Ms. Schakowsky.

3299

Mr. Murphy.

I yield back, Mr. Chairman.

Ms. Schakowsky is next, yes. Thank you.

And we had asked members if you don't have a

3300

lot of questions to ask because we only have six minutes to get

3301

to the Floor.

3302

Ms. Schakowsky.

3303

Mr. Murphy.

3304

Ms. Schakowsky.

3305 3306

Okay.

Thank you. Mr. Grundler, whose job is it to make

consumers whole? Mr. Grundler.

We are not the Consumer Protection Agency.

3307

There are other federal agencies and state agencies that have that

3308

responsibility.

3309

going to be central to how we are reviewing the options to address

3310

these excess emissions.

3311 3312

But, as I testified earlier, the consumer is

Ms. Schakowsky.

So, let me ask you about the excess

emissions now are violating the EPA standards, right?

3313

Mr. Grundler.

Correct.

3314

Ms. Schakowsky.

But we just heard testimony from

3315

Volkswagen, and I have a letter sent to owners that says you can

3316

still drive them.

3317

say that these cars that are emitting 10 to 40 times the allowed

So, under what authority, then, does the EPA

148

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 3318

amount to continue to be on the road?

3319

Mr. Grundler.

Well, the responsibility and the liability

3320

for those excess emissions lies with Volkswagen, and that's why

3321

we're conducting this investigation and learning what the remedy

3322

is, and then, pursuing mitigation to address the environmental

3323

harm.

3324

Ms. Schakowsky.

But you already said that some states, if

3325

they were to bring their car in and for some reason that defeat

3326

device were not on, then the consumer actually could be

3327

responsible for the increased emissions.

3328

Mr. Grundler.

Is that right?

It's our understanding and belief that this

3329

defeat device will also defeat those state inspections.

3330

do not expect these vehicles, were they to be called in for an

3331

annual or biannual inspection, to fail.

3332 3333

Ms. Schakowsky.

So, we

So, in the meantime, though, there are half

a million cars running around that are emitting greater emissions.

3334

Mr. Grundler.

Yes.

3335

Ms. Schakowsky.

So, what, then, does the EPA do?

We heard

3336

it could be for a year, maybe more than a year, before there is

3337

any real fix.

3338

Mr. Grundler.

So, I don't know how long it is going to take

3339

to get the real fix, but the goal of our enforcement action will

3340

certainly be to make the environment whole. 149

That is our job.

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 3341

Ms. Schakowsky.

Okay.

3342

half a million cars --

3343

Mr. Grundler.

3344

Ms. Schakowsky.

3345

So, you know already that there are

Yes. -- that consumers are told they can

legally drive that are emitting more than your rules say?

3346

Mr. Grundler.

3347

Ms. Schakowsky.

3348

accountable for that?

3349

they are already over the line.

3350 3351

Mr. Grundler.

Right. So, what is happening now to hold them You don't have to test them.

You know that

The owners of these vehicles are innocent in

this matter.

3352

Ms. Schakowsky.

3353

Mr. Grundler.

Right.

And we are working intently with California

3354

and the company to identify how to make these vehicles compliant.

3355

Once we are confident that we have the right remedy, we will order

3356

those recalls, and it will be the company's responsibility to fix

3357

those vehicles.

3358 3359

Ms. Schakowsky.

And in the meantime, will they be penalized

for having these non-compliant cars?

3360

Mr. Grundler.

3361

Ms. Schakowsky.

3362

Mr. Grundler.

3363

Ms. Schakowsky.

The consumers? No. The company? The company. 150

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 3364

Mr. Grundler.

3365

ongoing investigation.

3366

ongoing investigation.

3367

No.

Ms. Schakowsky.

No, that will be the result of our That's what will be determined by the

What part of this don't you know already?

3368

What part don't you know already?

3369

are exceeding your rules.

3370 3371

Mr. Grundler.

We don't know the why, the what, the where, who was responsible. Ms. Schakowsky.

3373

Mr. Grundler.

3375 3376 3377 3378

No, you know the fact of it, though. But we know the fact.

The fact is that

Volkswagen designed and installed illegal software on -Ms. Schakowsky.

And the consequence you know, that they are

emitting all these extra emissions? Mr. Grundler.

We have not done that calculation yet, but

we know that they can be anywhere from 10 to 40 times.

3379

Ms. Schakowsky.

3380

Mr. Grundler.

3381

I don't get it.

Well, there are many things we don't know.

3372

3374

You know that all those cars

Right.

We have not done the math to figure out what

those excess tons are and how we are going to mitigate them.

3382

Ms. Schakowsky.

I yield back.

3383

Mr. Murphy.

3384

Right now, Ms. Clarke, you are recognized for 5 minutes.

3385

Ms. Clarke.

3386

Gentlemen, I would like to pick up on the point just raised

The gentlewoman yields.

Thank you, Mr. Chairman.

151

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 3387

by my colleague Ms. Schakowsky with respect to the emissions

3388

testing.

3389

emissions testing.

3390

emissions test, you can be fined, right?

3391

because of the defeat device, most likely those vehicles would

3392

not be detected?

New York State is one of those states that requires

3393

Mr. Grundler.

3394

Ms. Clarke.

And typically, if your vehicle fails an So, we know that,

Correct. However, that doesn't change the fact that

3395

under normal circumstances these vehicles would not be permitted

3396

on the road.

3397

not your fault, you can continue to drive," doesn't it sort of

3398

undermine the state's requirement for certain emissions levels

3399

to be contained?

3400

for people, notwithstanding the fact that it is not their fault,

3401

most people, when their vehicle has an emissions problem don't

3402

recognize it and don't typically think it is their fault, either.

3403

However, we have to remedy it before we can take our vehicles on

3404

the road.

3405

those stickers indicate whether our vehicles are in compliance.

3406

Here we have these stealth vehicles running around in certain

3407

jurisdictions that do fail that, that would fail that under normal

3408

circumstances.

3409

So, to have your agency say, "Well, because it's

For you to then undermine that with the ability

Otherwise, we are fined.

We receive stickers, and

How do you reconcile that?

Mr. Grundler.

The fines are a matter of state law. 152

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 3410

Ms. Clarke.

3411

Mr. Grundler.

Right. The way to reconcile that is to identify an

3412

effective remedy, and once that remedy is fixed, those vehicles

3413

will pass those state inspections and those owners will not be

3414

subject to fines.

3415

Ms. Clarke.

The challenge is the fact that this has been

3416

happening with vehicles since 2009.

We have no idea when this

3417

remedy is going to be cooked up.

3418

is going to be hard and fast, something that we can rely on.

3419

are hoping, but there is going to be testing.

3420

be concerns going forward because of the deception of how all of

3421

this occurred.

We don't know whether the remedy We

There is going to

I mean, we are talking about software here, right?

3422

Mr. Grundler.

3423

Ms. Clarke.

That's right.

How do we reconcile that?

And let me ask, in

3424

addition to that, are we able to determine those states that do

3425

require -- we know California, for instance.

3426

other states with emissions testing.

3427

of the 500,000 vehicles are resident within those states, and what

3428

the effect or the immediate impact would be to the environment

3429

of the people that reside in those states?

3430

get a sense of that?

3431 3432

Mr. Grundler.

There are probably

How many vehicles, how many

Have we been able to

That's all going to be determined as a result

of our investigation.

It is knowable where these vehicles are 153

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 3433

registered --

3434

Ms. Clarke.

Yes.

3435

Mr. Grundler.

-- and where they reside.

It is not

3436

knowable yet how it is going to be fixed.

3437

confidence that it will be effective, but that will require some

3438

time.

3439

Ms. Clarke.

We want to have the

Do you anticipate that you will be hearing from

3440

states' attorneys general and other concerned entities within

3441

these states, probably their own environmental protection

3442

organizations at the state level, to try to get a handle around

3443

this?

3444

of emission exacerbates already-troubled circumstances for

3445

individuals who have health compromised.

3446

sense of urgency for really dealing with this?

3447 3448

Because, you know, there are certain areas where this type

Mr. Grundler.

I mean, do we see a

We've already heard from both state attorneys

general and state environmental --

3449

Ms. Clarke.

3450

Mr. Grundler.

I'm sure. I met with all the state environmental

3451

directors just this week in New Orleans.

The air directors, they

3452

are concerned.

3453

are we, to identify how these excess tons, this excess air

3454

pollution will be mitigated.

3455

how we are going to resolve this once and for all.

They want to help and they are very anxious, as

And that will all go into part of

154

We want to

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 3456 3457

get to the bottom of it. Ms. Clarke.

In closing, Mr. Chairman, when you have been

3458

able to complete your analysis, if you can get to this committee

3459

a breakdown by state, that would be very helpful.

3460

seen spikes in public health issues that have been exacerbated

3461

in some form or fashion based on clusters and where these cars

3462

reside.

3463

form or fashion to maybe the changes that occurred in the

3464

atmosphere as a result of maybe a cluster of ownership in a

3465

particular jurisdiction.

3466

important for us to know.

3467 3468

We may have

And we would like to be able to attribute that in some

Mr. Grundler.

I think that is going to be very

I understand, and we will do whatever we can

to serve the committee's work here.

3469

Ms. Clarke.

3470

I yield back, Mr. Chairman.

3471

Mr. Murphy.

3472

I just want to add, on top of the questions Ms. Clarke just

3473

gave, if you gather information with regard to state rules, with

3474

regard to anti-tampering laws, fines, and also whether it is

3475

criminal penalties and other aspects along those lines, we would

3476

appreciate that, as you are gathering this information for us.

3477

This would be helpful for the committee.

3478

Very well.

Thank you.

I want to say I ask unanimous consent that the contents of 155

This is a preliminary, unedited transcript. The statements within may be inaccurate, incomplete, or misattributed to the speaker. A link to the final, official transcript will be posted on the Committee’s website as soon as it is available. 3479

the documents to be introduced into the record and authorize staff

3480

to make any appropriate redactions.

3481

documents will be entered into the record, and any redactions that

3482

staff determines are appropriate.

3483

Mr. Murphy.

So, without objection, the

And I want to thank the witnesses for coming

3484

today.

3485

difficult matter, but it is important to us.

3486

the testimony and to the members for their devotion to this hearing

3487

today.

3488

We appreciate your time and your attention in this And thank you for

The committee rules provide that members have 10 days to

3489

submit additional questions to the record to the witnesses, and

3490

we hope you will respond promptly to that.

3491

With that, this hearing is adjourned.

3492

[Whereupon, at 2:32 p.m., the subcommittee was adjourned.]

156