>> thank you, mr. chairman. mr. horn, your statements so far don't give me much confidence that we're ever going to see a fix for this vehicles that are impacted. you know, you say that they can't be fixed by a software-only solution, you don't have a nsse timetable as to -- necessary timetable as to when the fix is going to begin. have you been given enough information about how the defeat device affects the engine to actually make informed judgments on whether the fix will actually work? ..

they were going to have good fuel economy. they were going to have good engine performance. can you guarantee that any fix you make to the vehicles doesn't affect fuel economy or fuel performance are both? >> at this time if we correct the knox -- the emission standards, the customer will get the mpg. that's my current understanding of whether the full performance of the car, this is something they said in germany, maybe top speed that might be one or two miles per hour might be missing but this is of course something which we will share with the agencies that current

understanding is that the customer will keep the miles per gallon. >> the concern i have is when you buy one of these cars you are relying not on only the commission says that the performance is good. i think you get to the issue of damages. in other words, if i'm an owner and the fix doesn't achieve good performance, good fuel mileage then i'm going to expect to become a sit in somewhat if that's not the case. i just remain concerned that any fixes which substantially change the cars and that it's unfair to the consumers who bought the cars and light on them. because they expected him to perform a certain way. you are telling me that the fix will guarantee good performance and will guarantee good fuel economy? >> i sent my current understanding in achieving the emission standards, the miles per gallon achieved. they might be a slight impact on the performance and this is

naturally not only the discussions with the agencies but, of course, we'll look into compensating our customers and, of course, they would be significant differences. this would be part of the discussion. >> let me get to another issue. what about the effect on clean air? we know that there's all kinds of health impacts, asthma, other respiratory illnesses that can seriously affect people, send them to the hospital or get sick because of these other problems. you agree not pollution can result in serious health and apartment to a facts, i would assume he would agree with that? >> i have also read the epa statement that in general, not specifically, they've indicated that there might be respiratory problems which could also lead, i'm coding yesterday basically to hospital visits. >> what i going to do to rectify that? how do you plan to mitigate that

over the last seven years? my understanding is the nox emissions from the affected vehicles up to 40 times the allowable limits to what i going to do with regard to this excess pollution and impact it may have had? >> i think that, first of all many different studies, and i would like to go back to the epa yesterday of what they said. i think it will be part of the discussion but i would also like to point out that if you look at 100% of nitrogen oxide emissions in the u.s., the car truck industry is having 5%. our group here in the us has 12% of the 5% which is pointed 2% and out of this 20% is pointed her05. now we can multiply this which is not belittling this is clearly unacceptable but within this context clearly discussion will come up and needs to be addressed. >> all right, thank you. thank you, mr. chairman. >> i now recognize ms. blackburn

for five minutes. >> thank you, mr. chairman. mr. horn the music profitability is your top priority when you were speaking speak for the dealers, yes. >> yes. i would hope that safety quality and integrity are toppers and profitability comes along there as a part of that picture. let me ask you about this are going to buy back the inventory that the dealers have? >> no. our plan is not to buy back the inventory. our plan is to fix the colors. >> okay. let me move on. have you identified individual or group of individuals that are responsible for the device to speak with these investigations are ongoing. >> you've known about this since the spring of 2014, a year and a half. >> we have known about this since september 3 at the violation is there. and since this time, and since september 18 notice of violation the board has acted at his past

speeches but you have known there was some activity around this device since the spring of 2014, correct? >> no, i did not know as i said. >> so you did not know in the spring of 2014? >> no. >> you just learned about speed is about the september 3 events, yes. >> let's go to your six-point remedy plan. you've talked some about .3 which is there developing remedies and i would assume will give this land on your plate september 3 that you all have put all efforts in energy into this plan, correct, into the remedy? >> correct. >> very good. been let's go to number one. used it to volkswagen will examine its compliance processes and standards and adopt measures to make certain that something like this cannot happen again.

so why don't you give us a little bit of specificity on that and want it any steps are currently underway -- what -- to handle these compliant issues. what did you start as of september 3, 2015 and what is your timeline? how long is it going to take you to bring this into compliance the? >> so as i am the ceo of volkswagen group of america i cannot report to you on what is managed by volkswagen headquarters worldwide at this point of time it and as i said, a man is all the investigations in terms of who did what, when, how and why and what we need to do in order to rectify this for the future insurance of processed adjustments and compliance adjustments. >> so as of now you do not have a plan to? >> as of now we are still in investigations, yes.

>> when can we expect you to have a plan to handle compliance, to make the owners of your vehicles whole, if you will, to make the dealers that have trusted in you, to make them whole? also the individuals that are employed by your facilities come when are they going to have some certainty as it relates to the job? so you'll say you are still investigating. so on your timeline, we do expect that you're going to be able to say, this is the way forward? >> dimension 6.7 started with the first complaint. i don't have a timeline for this yet. we are working instantaneously with the dealers and developing plans by the week as we go, as we go. and you ask those folks behind whether this works or not. and for the customer it depends on the technical remedies. this is generation three,

generated next year. we will start to give the software to the agencies. generation tool, middle of the year. most probably generation 3230 complexity will be a little later. so there's different timings and i apologize not for having full-fledged plan of worldwide volkswagen copyright now yet in my pocket. >> you are certain it would be a multi-year plan? >> excusing? >> you are certain the remedy will end up being a multi-year approach to? >> yes. if you look at, if you look alone a 430,000 cars and the repairs might take five to 10 hours even order to fix this, tactical success, and if you look at the recall history in this market, then these actions take one, two years minimum, minimum. when a fix is available for everybody, including parts and

discuss with the agencies and agree to them. >> let's see, my time has expired at a point of the question about point number two in your remedy plan. mr. chairman, a pacific and yelled back the time. >> thank you very much. now recognize ms. castor for five minutes. >> well, thank you, mr. chairman, for calling figuring. mr. horn, according to reports the diabetes to the device of the nearly 500,000 vehicles. are you confident in that number? could be more, less? >> we are very confident in this number. >> how to calculate allo the lo- the loss in value to customers, car owners to? >> no, not yet. that's not all investigations of the calculations are ongoing and on friday we will look at the first scenarios. >> you've called your investigation preliminary but

you've known about this for a year and a half from the problems first came to light in may 2014, is that correct? >> no. this is not correct. as i explained, a study is published and had no reason to believe that there was a defeat device in those cars. >> welcome you found out according to report in 2014 that there was an issue, isn't that correct? >> and in nations issue, yes, that's correct. >> what did you do at that point in time? >> at the point in time the plan was for engineers. in july 2014, middle of the year, present a plan to meet which was come and this is very important also, which was a great and discuss what product safety committee worldwide. those guys imagine all the recalls, ma all the service action worldwide, including tactical procuremeprocureme nt, legal service and those things, they came back with a plan for civil acknowledge in that those results were correct and cycling

with a pure -- clear timing line with a scarf with a software fix which is also mentioned in one of the opening statements as of end of last year. >> you feel like you have been personally received after he found out suddenly the defeat devices -- >> yes. >> explained that. >> look, i worked 25 years for this company, and beyond my personal objective of profitability of integrity, quality, and not cheating was always for me i given for this company. when i learned of this, i missed touched and moved commissar, as my employees spent another group to the effect of the vw defeat device, defrauding, are the dealers and hard-working employees all across this country in addition to consumers. a recent article noted dealers are facing a flood of angry calls, e-mails, et cetera from volkswagen others who feel betrayed because they believed they had bought a car that polluted last without

sacrificing the good gas mileage, the performance that comes with a diesel engine. transport how many vw dealerships are there in the u.s.? >> we have around six or 50 vw dealers. >> on average how much businesss -- >> 25% spent these dealers are now the frontline for unhappy customers who feel betrayed by the volkswagen brand. media can't yesterday quoted when he is in this is the biggest fraud i've ever seen. what do you have to say in response to that? what do you tell these business owners and there's -- their employees whose livelihood depend on -- >> i went to the dealer council on a covert i made it to your video that was sent out and they showed it to their children because, families and employees because they said that's the right thing by what we are approaching this. >> the detail for us, the solution to fix cars that

feature these defeat devices. >> as soon as web information necessary already and i discussed this with epa about the timing or alongside the dealers will be naturally informed. >> they are not getting information right of? >> of course they are getting information. first of all they could innovation we financially help them through this crisis. secondly, the first thing as we took the bonus treasures out. them free flowing to pick up a discretionary fund. we have increased the incentives by $2000 for loyal customers can for loyal volkswagen customers, loyalty program. >> what does that mean? >> that means we get them started and don't let them dry out in the field. >> is that a direct payment to customers or to dealers to? >> the first two points from the bonus payment a of the floor pln is directed to the dealers. discretionary funds is directly to the dealers. the incentives are for them come

certain cash incentives that they can manage to bring loyal customers in. whether the tdi customer or gas customer. >> is that for the dealers to contact customers have purchased cars since model year 2009? >> yes, as one of the possibilities, sure, yes. >> vw is not giving him directions to dealers and employees on contacting customers at this point in time? >> no, of course. we are set up in frequent asked questions, guiding the dealers with real-time, celebraticelebrati on which goes to all call centers as well because those, i visit the call center. those people are frontline. they need this information as soon as we have it the other people get it as well spirit what has bw told the dealers about how this would be affected, cars that use of our result and cars that are not sitting on the a lot?

>> we've inform the dealers directly on september 18 in a call from national dealer council. we followed up with letters and videos to do this. thank you. >> now recognize mr. barton for five minutes. >> thank you, mr. chairman. and thank you and ms. degette for organizing this hearing. i'm not a registered professional engineer in all but one time i was. i still am an engineer by training. my daughter drives a volkswagen beetle. my former stepdaughter drives a volkswagen jetta. i don't think they're diesel. i think their gasoline powered but they are both volkswagen. i've always had the highest respect for volkswagen. i think it's a fine company engineering lies and product wise. but i must tell you, it is extremely disappointing to look at, i don't hav know the right d

to use, and immorality, corporate decision to knowingly and willfully cheat on u.s. emissions standards. i mean, volkswagen is one of the premier name brands auto manufacturers in the world. and it's a reputation that has been gained over the last 50 or 60 years. and to have a company of your stature knowingly and willfully make a decision at the highest levels of the company, to put a software program in your products that are meant intentionally to deceive or to cheat on u.s. emissions standards to me is, i wouldn't have believed it if it wasn't actually proven. so my first question to you is,

i'm told that this was a decision made in germany at the corporate level, is that correct? >> two answers to this. first of all the investigations are ongoing but this was not a corporate decision from my point of view. to my best knowledge today the corporation in no board meeting on the supervisory board meeting has authorized this but this was a couple of software engineers who put this in for whatever reasons. i would also like to find out. i fully agree -- >> so, and this is an oversight hearing place in that you're testifying under oath from is that correct? >> i am under oath. i understand this, sir. >> what you're saying is that the senior, the president of volkswagen international did not know about this when it happens because what i said was to my understanding this was not a corporate decision. this is something individuals who did. >> okay. now that's not what i was led to

believe, but i take you at your word. double ask the second question. winded senior management, i.e. the president of volkswagen international, executive vice president, whoever your senior day-to-day corporate offices are, when did they learn of this action? >> to my understanding -- to but understand also run these september 3 notification of the agency's spinning but it occurred years ago. >> yes, sir. >> do you really believe as good, as well run as volkswagen has always been refuted to be, that senior level corporate managers, administrators had no knowledge for years and years?

>> i agree it's very hard to believe, especially i struggle as well. >> that's an honest answer. i appreciate that. well, i don't know what to do but i do know that you can have an honorable disagreement about emissions standards, and we've had that on this committee, but as somebody who voted for the clean air act amendments and as a conservative who believes that if it's a law, it should be implemented. and corporate, special international corporations, should honor those laws. your company has not. i don't know what the penalty should be, but it should be more than just a slap on the wrist. i mean, this, yeah, i'm going to listen to the rest of the testimony at the questions and the staff recommendations, but

in every other case since i've been a congressman when we've had problems with manufacturers of automobile manufacturers, in every case it's been something happened that was really a mistake, an accident, that they just didn't foresee it. that's not the case here. if there was a knowingly and willfully decision to deceive him in one of the most important markets in the world, and that, sir, is just wrong. >> i agreed. >> thank you, sir. >> i now recognize mr. kennedy for five minutes. >> thank you, mr. chairman. mr. horn, thank you for being here today. i understand you said several times per test with the limited and there are investigations ongoing so i appreciate that kind of recognize that. i do want to go back to what a number of my colleagues have got to with regards to the timeline. my understanding and from the testimony was the in the spring,

specifically mayor 2014, was when volkswagen became aware that there was some issue with regards to nation's, is that right? >> anyes. >> it was from may to december that ebay launched investigations into the emissions and the company itself, vw start an investigation as to what led to get audited if you with regards to the emissions testing, right? >> i can't answer this really. i know that the actions to remedy these findings were discussed with carpet epa. whether they have undergone out investigations between may 2014 and december 2014 i don't know. i know they did this afterwards. when we start to flesh the cars with the new software. >> if i tell you that bpa and carve continue the station at the preliminary report from a

identity, they continued their investigation, and december 22014 v. w. test results and proposed a recalibration fix, is that i could? >> yes. >> vw initiate a voluntary recall of about 500,000 vehicles to try to do without recalibration issue. in a carb commenced testing to me six ugly 2015 carve commenced testing to discern whether the fix because he had proposed adequate and i truly fixed the underlying issue. me six through july 2015 on protesting for the recall what i'm getting at is july 8, test results were shared with vw at p prompt a series of tactical meetings are my understanding. and according in the course of those meetings, vw disclosed that there were several issues that jim one from gentoo on the 2050 model of the improved

generation thread a second calibration ended in to run during, only during confirmatory testing through some knowledge at least in july of this year that there was some manipulation of software code with regards to testing, was there not? >> this meeting you are referring to i don't know. i contend that the first issue i got, got back to me and my attention was on the 20th of july when the people of product marketing came to me and said we don't get the model you're 16 diesel certified. then i wrote a letter or e-mail to research anything come and escalate this and said the explanation was twofold. there was the new systems come and i don't know whether this is right. and there's still information missing. so also my team with a national company did not have this information. only in the weeks afterwards it

started to unfold. >> if i'm understanding the protestants of your testimony correctly, this message was not a company decision, but the decision made by number of individuals yet to be ascertained. underneath the soap envelope of the company that does not affect a corporate decision by the board, by yourself is that i could? >> that's my understanding, yes. >> so as of this morning there's for individuals that have been suspended come is that right? >> i don't know. this is press reports. >> to your knowledge has anybody been suspended? >> i can't share names with you. >> has to been anybody suspended? as anybody as of now after volkswagen for knowing at least of some inconsistencies with test reports for the past 18 months has anybody been suspended or lost their job? >> to my understanding there has been three people suspended, but i don't, i cannot share the

names due to terminal. >> you mentioned the figure is roughly the this would take one to two years, five to 10 hours per car and roughly 403,000 cars. do you have any estimate as to what the direct losses for volkswagen would be because of this incident? >> i think the losses are dependent on the fines we will get, and we will have to pay, and then also on how much money it takes to fix those cars, and how much money will have to pay to compensate the customers for what we did. this is a whole lot of money come i'm quite sure. >> i think the overall question that you're sensing from his up and colleagues is that i understand this was a decision you indicated was made by people underneath you. it does get to the overall corporate integrity of the company, and so what if you can say is going to be done to restore faith in the overall corporate structure of volkswagen?

>> first, very important clarification. it was not done by people underneath it i'm the president and ceo of volkswagen group of america and those things been developed in the software department instrument which is totally out of my jurisdiction. the second to get your answer, hopefully in the right way, with a complaint investigations we have to streamline our processes and we have to come this company have to bloody learn and use this opportunity in order to get their act together. 600,000 people worldwide have to be managed in a different way. this is very, very clear. >> thank you, sir. yield back. >> now recognize the vice chair, mr. mckenna, for five minutes. >> thank you, mr. chairman. several things. first, you opted not to challenge the decision, the research that was done. you are not challenging the research that was done to everyone is recognized you did

knowingly and violent come is that correct? >> i don't understand this question, i'm sorry. >> you opted not to challenge or appeal the findings from the wb you. does mean you knowingly violated? >> no. no, sir. >> you did challenge and appeal the finding? >> i did not challenge because software actions, recalls, service campaign and the millions for this company is normal doing business. i was worldwide service and parts executive for volkswagen won't want to a bench the product safety committee. i know the system is working with all the experts and the we have a seal of approval to the actions and i'm not a technical expert. there's enough people in the system speed and let me get to the crux more of my question. i know the epa fines can we just have a situation where a small

poultry farm was fined 17,000 a day because they were allowing dust to come out of their chicken house into the neighbors. we've seen steel mills find three, five, $7 million in daily. we've seen coal mines and other operations. so there has to be, i think you can understand their ought to be consequences for this violation. so i'm curious, i assume you are a crooning something on your financial sheets for what could be, what could be an expected penalty for having violated the laws here in the united states. can you share with us, or will you share with us what you are accruing under balance sheet for penalties? >> for the time being, there's an official information that the company has accrued directly 6.5 billion euros in the first step in this year. maybe this is enough, maybe this is not enough i don't know.

the rest will have to be worked out with a specific expert as we have hired enough experts i can tell you. >> thank you. when you import your vehicles and yet to provide a certificate of conformity with the epa standards, and from what i understand, the defeat device was not included in that certificate of conformity, is that correct? >> that's my understanding. >> can you share with us why someone would try to deceive the american government? >> because those people who did the applications most probably did not know, did not know that it was in there. >> can you share with us, who's responsible for this failure to include a description? is a limited to one, two people?

>> we have an office which is called eat it all in auburn hills which is directly linked -- ee0. they get all the results, testing, technical specifications and then they file the application for conformity and all those. >> mr. horn, thank you for testified before us. one last question is we've all been to many of us haven't thought about this defeat device. for the american public to understand what this is, can you explain what this defeat device is and how it functions the? >> yes. to my understanding the defeat device is not the device but it's a software code in the engine and exhaust system management, and which detects, the software detects whether a court is on the dyno testified on whether the car is on the road to being driven. one example, for instance, this doing will angle and how many

times it's been change. once the car is on the dyno, nothing changes. if the cars on the street to student will change. this is one of the examples people gave me on how this device which is a software code again worked. but hidden in millions of software code so they don't know this come is very difficult to detect from my limited technical understanding. >> thank you. i yield back my time spent now recognize ms. schakowsky for five minutes. >> thank you, mr. chairman. i have in my hand a letter from volkswagen to listen to one of my senior staff. because she is an owner under carpet i remember when she bought the car and how excited she was about the clean diesel. the letter says your vehicle remains of safety drive and legal to drive. you do not need to take any action at this time. all we ask is for your patients. i have to tell you if i were a

driver of one of these vehicles that's been shipping up to 40 times the amount of emissions, i would want that addressed right away. i have a son and a grandchild who regularly uses an inhaler. i'm not excited about contributing to or driving a car that has that kind of emissions. so how much patience is my staff supposed to have? what's the timeline here? what's the best scenario and the worst scenario in terms of timeline for fixing this? >> for the generation three cars, models 15 and 16 the timeline is at the beginning of next year, complete fixed. for the generation two cars still in development, it won't start for my judgment before the middle of next year. and for the generation one card which is the biggest, which is the biggest fleet, i cannot give

you a big right now. over the next couple of weeks we will start discussing those scenarios with the epa and alongside the development guys spent so these cars unfixed to be on the road for more than a year or two years? >> more than a year, definitely. >> i wanted to follow up on a question that mr. pallone after it sounded like you were saying that the fix could manage fuel economy, engine performance and emissions, that all that could be fixed. if that's so why didn't volkswagen do that initially? why wouldn't you make a car that would achieve those goals of? >> i think it's a great question. >> i mean, i can only assume that maybe cheating was cheaper. >> to my understanding what i've learned, some people have made the wrong decision in order to get away with something which will have to be found out.

>> let me ask you this but have you considered financial compensation, for example, allowing customers to actually return the car for what they paid for it? >> this is one of the areas we are looking into right now in terms of how to compensate our customers, yes. >> are fighting rebates for lost value of the car of? >> sure. >> and what about right now and find one of those cars and they wanted a loner, which compensate the dealer to give me a loner and then of having to drive tha? >> we would have to discuss and consider this. right now i would say no, honestly, because the ep has said these cars are legal and safe to drive. >> and so even though you know that there's up to 40 times more pollution, if i went to my

dealer who might because they are in a fix right now say okay, we'll give you a loaner, the company would not do anything to make, to make your customer happy? >> there's a general policy and this is exactly the reason why we gave the dealers for discretionary funds which they could use at their discretion in order to help customers. very significant cases of what they do a loaner car program for the specific customer of whether they take them out of the car or whatever they think is best in this specific case but they can do what they want, no questions asked. >> but there is no policy that dealers could say, that loners would be unavailable? i realize 500,000 loaders would be probably a hard thing to do, but ucf that would be a desirable remedy for many people

speak what i understand your point, yes. >> i just want to tell you as a consumer advocate all of my life, this is pretty shocking for people to find out that a company we've had a number of recalls. ipad a recall on one of my cars. but you find out that a company has deliberately cheated, it seems to me that asking customers for patients is just really not sufficient. i heard people on the radio who were repeatedly saying i just want you to take back my car and give me the amount of money i tt i paid for it. i don't want that car. i don't want a fix because it may not provide exactly what i thought i was buying in the first place. i would hope that your company would consider that as a primary remedy, and i yield back. >> thank you. >> the chair recognizes dr. burgess for his five minutes of questions.

>> thank you, mr. chairman. let me just stress that i am as far ideologically from jan schakowsky as possible, but i think come and i am not here to provide you advise, but i think she is giving you good advice. i have been on the subcommittee for over 10 years. i've been through toyota, i've been through general motors and now we are doing this investigation. and let me just suggest to you and let me just suggest to your corporate structure in germany that being dismissive and minimizing the problem that is faced by consumers, dealers, suppliers is not in your best interest. and it will hurt you. so i would aggressively -- i would be aggressively compliant and aggressively trying to make it right for your customers, dealers and suppliers.

because in the grand scheme of things i actually believe that would be less costly in terms of dollars from in terms of reputation, and just in terms of the insurance of the brand in the united states, which have overheard from members of this committee is significant to our histories with your company all or a significant. they go back a significant way. i've gotten that off my chest. let me just ask you once again, you have been asked before but are these vehicles safe to drive? >> yes. the epa has said these vehicles are safe to drive spinning so this is unlike some of the other recalls we've talked about in this subcommittee, problems with airbags, public with electronic throttle control. these did not pose an immediate jeopardy to the life of the driver or the passengers? >> i trust the judgment of the epa, yes.

>> okay. trusting judgment is kind of what, that's what we're doing here today is we are talking that trust factor has been eroded. let me just ask you come used just ask you, you stress you're the ceo of volkswagen of america, direct? >> yes, sir speak to you travel back and forth to germany from time to time? >> usually once a month. >> so as this problem has evolved over the information about this problem, have you gone to the engineers over in germany and said, guys, what's up? how did this happen? have you looked at any lines of software code where someone has identified for you this has happened? or heavy helping and a defeat device that was added to an automobile? >> personally i've taken out mr. mill of conference rooms, the doctrine of conference rooms

and talking intensely to the engineers on how we make this right. and two other questions, how is this possible, who has done what, they said we did know ourselves. >> do you understand how that just defies credulity? here is a software program that -- i'm suggesting was written by one person in the basement in the dark of night. just had to be a team of people who are working on this. you've got these rascals over at the ep in the united states and in particular with the we want to do something that we'll be able to sell our cars and we will just trick them. we will just trick them. and then somehow you're going to integrate that into the supply chain of a multinational corporation, and nobody knows a darn thing about it? that's what you're asking us to believe. you understand why, and you heard it from a number of members, this incredulity that could, in fact, have been in a

large multinational corporation. >> i fully agree. >> have you asked that question to people who are secure to you at the volkswagen in germany speak with who are superior to me, that guy is not bored into longer. he decided to two other reasons. >> well, i almost don't know what to say. apparently in the public domain, and the early or middle part of the last decade there was some suggestion that volkswagen in effort to try to sell its diesel hi much vehicles in this country was in the process of leasing software to deal with this emissions problem from another company, is that correct? blue duck software i believe is the name that is used. >> i've read this in the newspapers, yes. >> so it's in the newspapers. have you yourself look at why did you look at this and then stop those negotiations for

those lisa's? what changed max did we develop some technology at the volkswagen? did we develop a defeat device that volkswagen? these are some of the questions that will have to be answered. mr. chairman, let me say i appreciate mr. horn being here. i think that we are doing this hearing prior to the time that your document production deadline has expired, so we recognize that you are here voluntarily and it is your sincere effort to comply with the wishes of the committee. but let me just say all of us represent dealers, consumers, suppliers, and their lives and livelihoods are extrema important to us and that's what we've got to keep first and foremost. i yield back, mr mr. chairman. >> thank you come at the chair recognizes the gentleman from texas, mr. green, for five minutes. >> thank you, mr. chairman. we of the subcommittee is going on so you'll see members come in and out during the day.

when i first heard about it i was amazed that a company that's as great as volkswagen could let this happen. even to the executives may be who didn't because the image of the company, not only in our country in europe and around the world is so great that our committee wants to get some answers and i'd like to understand more about volkswagens own investigations and your efforts to find the cause of the debacle. news reports that discuss several internal and external investigations initiated by volkswagen. mr. horn, please explain volkswagens don't investigation into this incident and how they're different from each other. >> the investigations started, i talked yesterday to our head of division on september 22, this year, went on with our own group revision department, audit

department, until september 29 for 1 week. and that all the documents go all the preliminary documents were turned over to the american law firm jones day whose investigators on behalf of our supervisory board. >> news reports are discussed several internal and external investigations. so that wasn't the only one you had that wasn't the auditors from september 22-29th? audit any other investigations volkswagen is conducting? >> to biogen after those of violation from september 18 from carbon epa these investigations have started right away and this is what i told you to my best knowledge but i do know of any other investigations. >> do you know if the actions are in the united states or germany or in both are everywhere were volkswagen has sold these vehicles?

>> worldwide. >> would you commit to sharing these investigations with the committee, the results of these investigations? >> i commit to get as much information as possible to this committee, yes. >> last week one news outlet reported that the string committed by the carmaker supervisor aboard met last wednesday to discuss primary findings and that's a quote. what were these preliminary findings that were revealed last wednesday speak with sorry, i'm still a little bit confused by those folks down there clicking all the time. could you maybe repeat your question, please speak with there's a quote that student committee of the carmaker supervisor board met last wednesdawednesday to discuss thr limited funds of an internal probe into the skin. what were these preliminary findings released last wednesday speak with our own supervisory board of volkswagen ag. i don't have access to these preliminary findings. >> can you get a copy of it and

share it with document speak with i can definitely try, sir spent okay. you are the ceo speak i am the ceo of this company come and then there's a supervisor board and there's a group of people who are quite above the in germany and the supervisor board has to make this decision. with the commitment our company has, there's a very good chance that the company will provide the necessary documents to provide more clarity to this issue spent i didn't like my colleague i appreciate you being here voluntarily but it would be great if we could actually get that in our committee for our investigations. according to september 30 news report, volkswagen's supervisory board member said these people allowed this to happen or who made the decision, they're acting criminally. they must take personal responsibility.

mr. horn, do you agree with that? >> yes, sir spent do i have to commitment to full cooperation in fighting, addressing the risk of the discretion speaker is yes, sir spent argument is ongoing. our investigation and appreciate you being here. mr. chairman, i will yield back my time. >> thank you. for the rest of the members that have questions i know it's got a break in 20 minutes but we have seven people that want to speak so we are going to be very short on the time frame with this. the chair recognizes mr. griffith for a short list of questions. >> thank you. i appreciate it. as you've heard from others, who have owned cars and learned to drive, i am one of those as well. my mother was able to afford her first new car which was a volkswagen square back and that's what i learned to drive on to it was a manual. i have inherited my grandmother

is 72 super beetle which i still have. in the '80s i drove a rapid. in the '90s i bought a gas powered jetta. when it got closer to what a thousand miles my mother convinced me that even volkswagens could go on forever. she might've been wrong. i sold the car and bought a 2003 gas powered assad which i drove until this summer i got 376,225 miles. the people who bought it from me are going to tell me when it crosses 400. they think they will not be any problem in doing that. as a backup to my 2003 car that was going and going and going like the energizer rabbit, or bunny, i bought a 2012 volkswagen diesel. but what else is love what our consumers thinking. you were looking at him. i am your consumer under volkswagen driver who's always trusted your company and i'm very disappointed.

so what are we going to do? first you indicate and it could be some differences in understanding and language. you've indicated you have notified the customer. i've checked with the previous owner i bought the car from a friend. they have not received any notice that this 2012 diesel passat is affected. when you go to the website it says the epa that you will receive notice from epa that some of your two-liter four-cylinder tdi vehicles don't comply, and among the included vehicles of course is the 2012. but if i didn't have, because i'm not skilled like a chairman murphy, i'm not skilled i couldn't take the car apart. i have a hard enough time to dedicate the top of the plastic lid off of the ancient teutonic to take a look at it. but when you see that and assess some of the guards are effective and his one individual articles referenced the 14 and 15 but is anything but 12 and 13, then you

see a volkswagen document that says discrepancies related vehicles with 58189 engine and am looking of interlochen does anything about the 189 engine. the team on the committee here aand my stuff figured out i'm affected. we know that. but this was done with great trouble. i received no letter. i can't tell for sure and don't play was interesting was we found that there was actually a site in the uk. i know you're just american and i'm just talking about america "freakonomics" a plug in your vin number annual tally after affected. while you may think of notified everybody come not everybody is capable of taking apart the internet they got it they are ea 189. the other question is my generation what our generation to. i found that surprising.

can you confirm i am a generation to? >> if you have a 2012 passat i would think so. >> this is something else you might want to put into, pretty simple website that takes the vin number that affected us as your generation one our generation to. it sounds like the fix to the generation two is more simple than that takes to cheat generation one. am i correct in her that today? >> yes. >> and then i would have to echo what jan schakowsky and dr. burgess had to say. when you buy a vehicle even if you bought it using your looking in the manual and it says under federal emissions control system defect working was designed, built and equipped so as to conform at the time of sale with all applicable regulations of the united states environmental protection agency, and is free from defects, materials, et cetera.

i believe that i was sold something that was different than what it was purported to be. and my friend didn't do the decoding. it was a volkswagen company. i think you're much better off to come up with a program that buys these cars back, because, you know, i understand it wasn't your folks in chattanooga that made this mistake. it was the folks in germany but budget cut restore trust and one of the ways is to stand behind your vehicle but one of the reasons i like the company is, i'm a 1990s version something was wrong with the pain. no questions asked when i took it into have fixed this is not a problem. we will take care of it and it was done. never had another problem. this is a much bigger problem. but volkswagen needs to stand up and say okay, we understand, we will buy your back with a fair market value was prior to this notice coming out.

with that i see my time is up and i yield back. >> thank you. we now have 12 minutes. i'm asking those again to please keep your question sure. the chair recognizes mr. jarman from kentucky. >> thank you, mr. chairman. thank you for a drink, mr. horn. i suspect i should be feeling a sense of schadenfreude here today because ford escapes the lincoln and cases are made in my district, and presumably we'll be selling more of those why you're out of the market place but i'm not taking any joy in any of us. i just had a couple of quick questions. the article i read said there were about 11 million vehicles worldwide affected by this. they contain the defeat device. i guess there is no added cost to put it in since it's just a line of computer code, would that be right? >> seems very logic, yes. >> so my question is, how many

countries have these 11 million vehicles were sold in have emissions standards that would have been defeated by this device? if the united states, talking half million cars probably out of 11 million, what are germany's emissions standards, for instance? are the stricter than the united states? >> i mean, there's many countries affected of all the countries injured or affected. emission standards are different to the u.s. you have currently the five going into the six. first of all nitrogen oxide is most -- much more stringent here, five grams i think per mile for whatever come and in europe it's not 30-40. this is quite higher in europe but in europe, what is the stricter is the particular

emissions, and the european laws are much stricter than the u.s. >> my question is what this defeat device that is an 11 million vehicles have helped d.c. the european countries standards as well? >> i can only give you my understand at this point in time, but there's lots of european countries investigating this and we are working with those agencies, also with the german kpa which is the responsible agency. people that report there and this is being investigated. since the standards are different my understand is the defeat device is in those cars as well but to what degree it's affecting the emission laws, i don't know. >> i appreciate that answer. i just want to say before closing that it's very refreshing to hear my colleagues from the other side defend the clean air act and talk about conditions. it's a rare occurrence. i yield back.

>> thank you, mr. chairman. since i'm always come again, one of the last question you, i guess what i picked up there and hope you can relate back to your board, the folks running volkswagen back in germany come is that the response so far is inadequate. i would tell you from my perspective it's a sign of arrogance. it's a sign of not admitting yet the severity of your problem. i will tell you i am an engineer and i've way of thinking. and i cannot accept k-9s portrayal of this is something -- vw's portrayal of this something but a couple of rogue software engineers. isn't bad with a very important part of what makes vw vw of course you're constantly looking for breakthrough technology that you can patent? that's a big part of the company. you pride yourself on that

engineering. so you're having us believe, i think this is a way, the way an engineer's mind works get back in 2000 you're trying to figure out a way to have clean diesel top performers come and your engineers got stumped. the nox in nations were not even close, would that be true speak with what is stoke? >> confused, they couldn't get through it. it was an insurmountable roadblock. they couldn't get performance pd emissions control at the same time. they were 40 times over the nox the nation's but it seems to be logic what you're saying but i don't know. >> if i'm working in vw engine and am always looking for intellectual property that i can patent, give you a competitive advantage in and i know this is the problem adapted to this problem was going way up the chain. we can't do it. the nox standards and the u.s. are not what they need to be. we can't do it. go work harder. go find a solution.

people are coming back. we still can't find a solution to the engineering manager, we can't find of a solution. then all of a sudden to software engineers like they found pixie dust come in and say, we found a solution. we've got a. we fixed it. now you're telling me these two engineers snuck that computer code into the software and no one said, this is breakthrough technology? i think we need to run this up the ladder with our attorneys under engineers. we need to patent this. this intellectual property is going to give us an advantage. we can meet the nox standards and the performance standards, and we had a breakthrough. we went from 40 times the nation's to we met the emissions come ensure trying, vw is trying to get the united states of america to believe these are a couple of rogue engineers? i categorically reject that. either your entire organization is incompetent when it comes to

trying to come up with intellectual property, and i don't believe that for a second, or they are complicit at the highest levels. in a massive cover up that continues today. just 35 minutes i've been here and as an engineer, and i'm not a ph.d, my mind immediately jumped to with this being true, why didn't we look for patents? why didn't we ask the question what the pixie dust was that fix this thing miraculously? this didn't happen in one day. this didn't happen in one month. your engineers working at the i can tell you for many months. they were stumped. they couldn't come up with a. then all of a sudden the solution they are in vw to try to tell us in the united states of america and his caucus there was a couple of rogue engineers. if it's true then your entire patent department should be terminated because this would've been massive breakthrough technology that would've given vw a true advantage not by

cheating but he took advantage clean diesel technology. i would like you to take that back to your board and have them ask that question. what was going on in the patent world? what was going on engineering world? i can tell you personally i categorically reject everything that vw is think about a couple of rogue engineers, and i can tell you that suspending three folks come it goes way, way higher than that. what i'd like to conclude with, kids i am also a financial guy, an entrepreneur that i would suggest that you be honest to your shareholders. 6.5 billion euros is off by an order of magnitude. 500,000 vehicles at $40,000 apiece if you divide the spectrum and i suggest you start doing that tomorrow, it's 20 billion. i would suggest you are off by an order of magnitude and if you told us you set aside 68 billion up with a your property in the ballpark. 6.8 not even close.

with that i yield back. .. >> number one, what will you, vw, be reading when you're in jail? number two, i just wonder what the hell you were thinking. three, how can we help out vermonters who got these lemons? four, why should the u.s. allow you to sell vehicles in this country? five, vw is the lance armstrong

of the industry. these questions go on and on and reflect the white-heat anger that folks have about the deception. one last question, how do you sleep at night? how do you call yourself a member of the human race when you knowingly poisoned the planet? and then i talked to some of our vw dealers. they care about their customers, and i know you individually do as well. and one of the dealers said this is on the scale of enron and bernie madoff, that's how deceitful and unnecessary and willful it was. they'll stand by their employees, our vw dealers, but this is going to be an expense to them, because they're not selling cars that are bringing in profits. so they're going to have to pay out of their own pocket, and they will do that because they're loyal to their employees. i have one major question. just last week bp reached a settlement with the justice department over the massive 2010

gulf oil spill that killed 11 workers and devastated the environment and the economy of gulf coast. that settlement allowed bp to shift more than half of its $21 billion fine to the american taxpayer by taking advantage of a loophole in the u.s. tax code. my view, that's wrong. the wrongdoer, not the taxpayer, should pay all of the settlement. and the question i have is this: will you commit here today under oath that vw will not use this loophole to write off any future settlement payments related to the fraudulent and deceptive activity to which vw has already admitted? sir? >> if you want a clear answer under oath, i would have to really understand these tax loopholes, and i don't understand them. >> let me explain it very

simply. bp got to write off about half of the cost of that and was -- that shifts the burden to the taxpayer instead of their shareholders. >> my understanding is that we will work very hard in order to get this right and that they should not be a burden to the taxpayers, should not be. >> thank you. another question taken up where mr. collins was, i know you individually are are appalled at what happened at vw. and you've asked your question, how did it happen. someone somewhere made a decision to make it happen. >> uh-huh. >> someone somewhere implemented that decision. you've asked yourself how that happened, correct? >> yes, sir. >> and your answer to yourself is what? >> my answer to myself is that i do everything -- and i don't

sleep at night -- to help our dealers, to help our customers and to be there for my company and my employees to get us through this crisis here in the u.s. >> i appreciate that, and i know that's true. you've got a good -- you individually have a very good reputation, sir. >> thank you. >> but i asked you another question. you know the company, you've asked yourself who and how. and in your own mind, i'm asking you to share with us your own view about who and what that could happen in the corporate structure of vw. >> i think this is a speculation if i would start now. but i'm reading newspapers as well, and there have been lots of articles around there. and from my be personal feeling -- personal feeling, this was pressure in the system to get resolutions and also in conjunction with cost pressure as well. this was discussed already here in one of the other instances. and i think it's dead wrong if you put corporate profits before people. >> and who --

>> we have to get to the point that we put people first and not the pressure and corporate profits. >> what people -- >> thank you. >> -- in what department. >> my time is up. i yield back. >> thank you. now recognize the gentleman from texas, mr. flores, for five minutes. >> thank you, mr. chairman. mr. horn, thank you for joining us today. obviously, a tough situation for your company. vw's actions damaged the trust of the american people as well as the environment for billions around the globe. they have also economically damaged their customers, their dealers and their shareholders, and i hope that vw will continue to work on the correct and fair resolution of those issues. i want to get more in the weeds now to try to go through and fill in the blanks and the record on some dates and the who, what, where, when as we've talked about before. in may of 2014, independent researchers published a report that first identified higher-than-expected on-road emissions of vw vehicles which

prompted the investigations by c.a.r.b. and the epa. so question number one is when did vw first become aware of this research? >> end of april when it was published. to my knowledge, it was published end of april. i got it may, i got information about this. >> okay. what steps did vw take to evaluate conclusions of the research are at that time? -- research at that time? >> first of all, to acknowledge that the emissions violations or higher emissions are not legal. secondly, engineering departments were supposed to recheck those testing results on our own equipments in order to validate this. and then, thirdly, to correct this with respect to software actions which have been implemented in the end of last year. >> okay. now, where would this done? was this done volkswagen germany or volkswagen u.s., and who was responsible for that? >> the software management are

being done in germany at the energy and drive train department at the research and development division. >> okay. the epa and c.a.r.b. both described a series of presentations or discussions with vw in the wake of the research in may of 2014. who from vw was interacting with epa and c.a.r.b.? were those individuals part of vw america or vw ag? >> that's something i would have to check. and maybe this is also in the records provided to you next week. >> okay, great. what did vw america understand about the cause of the higher-on-road emissions between may 2014 and the voluntary recall in december 2014? in other words, what did you and your team at vw america know what was going on? what had vw germany told you? >> that they have, to my understanding, validated those test results and developing software fixes in order to get this back online.

and three different, you know, tech-top versions which i didn't understand to be very honest in order to bring this in -- [inaudible] but also as a said, all these things are vetted through this product safety committee which is worldwide responsible for this and which is also looking at the -- [inaudible] and in this context, i trusted those guys and those processes that everything was according to the book 100%. >> okay. so at that time nobody in vw america knew that there was cheating going on in the software design. >> to my understanding, no. >> okay. then in december of 2014, vw conducted a voluntary recall that at least in part sought to address the higher on-road emissions in model year 2009 through model year 2014 vehicles that were subject to the allegations. would you explain what you understand this recall was spended to do? -- intended to do? >> to correct the studies of the -- i mean, the result ares

of the study of the university of west virginia, our retesting, to bring the cars, all the cars back into compliance. >> okay. but that fix to the emissions problems that was implemented as part of that recall didn't resolve the issue of higher on-road emissions. so the question is, who was responsible for developing that technical solution that was implemented in december of 2014? >> same engine and drive train division within the engineering and development department or division in germany. >> the folks in germany, okay. and so what role did vw of america have in developing or validating that solution? >> i've -- we just have this office in auburn hills who do the applications. there's also testing facility in oxnard in california who also had those folks in testing. but to my understanding, dino testing as far as the legal situation is concerned. >> okay. so just to be clear, vw america

did not develop this solution or played no part in the development of the solution. >> no. >> okay. it may have helped validate the solution. >> i don't think so. >> okay. you don't think so, okay. and at that time did you or anyone in vw of america have any knowledge of the alleged defeat device? >> at which point of time? >> at the time -- december of 2014 -- >> no. >> -- when you were beginning the rollout of the recall solution, did you have any knowledge of -- >> no. >> anybody in vw of america, to the best of your knowledging? >> not my understanding not, because otherwise i would have hoped they would have notified me about this. >> thank you. i yield back. >> thank you, mr. chairman. and i'd like to thank you, mr. horn, for taking the time and giving us as much background and as much knowledge of what has taken place to the best of your ability. i've heard a couple of my colleagues on the other side of the aisle refer to what has occurred as cheating, but i'd

like to say to you that i believe it was an intentional deception. and i think we need to say it as it is. this wasn't a game, this was an intentional deception to bring something on the market that did not meet standards. i want to go back to something my colleague just raised about your testing center at oxnard. i understand that for the better part of the past year, vw was interacting with c.a.r.b. about discrepancies related to the high emissions that were discovered in 2014 involving your vehicles. what is the purpose of the oxnard facility, and is it -- as the article suggests -- developed to help volkswagen meet emissions standards? >> to my understanding, yes. and it's directly connected to the research and development department in germany to help them or to get the cars into

legal compliance and to the u.s. standards. >> how many employees are there? >> oh, i would have to, i would have to guess this now. >> okay. if you could just provide us with that. what was the role of the oxnard facility in understanding the test results presented by c.a.r.b. showing unexpectedly high on-road emissions? what was its role once it had that information? >> at this point of time, i can't answer this. i don't have the understanding. i only know that our department in auburn hills was interfacing with c.a.r.b. and epa for the compliance for the applications and everything. >> so as you mention auburn hills, what is the role of that office? >> excuse me? >> what is the role of the auburn hills office? >> to do the compliance and the application for certification with the u.s. authorities, and i work directly on a working level, on a management level on a daily basis with epa and c.a.r.b. >> and so do the oxnard and

auburn hills facilities work together? >> now, yes. there's a structural change in terms of -- >> so prior to the unveiling of this deception, they were separate entities, they didn't interface? >> well, i think they worked together. my explanation is about the structural situation of these facilities, and they're now under one roof. >> okay. but they collaborate. >> i hope so. >> they're collaborators. okay, because, you know, my concern is that if we have these facilities designed specifically to address the issues of emissions, of testing and they failed, that speaks to a whole other level of perhaps collusion with respect to this whole software debacle. have you looked at or done any

internal investigation with respect to these facilities? >> that's part of the internal investigation, but my understanding is they're just testing on the basis of the legal test requirements. >> so the engineers would not have known software code, is that what you're saying? >> i think that they've tested the dino situation for the cars, and they didn't do independent road tests. that's what i, that's what i allude to. >> okay. let me jump to the whole idea of the environmental impact. how seriously does volkswagen take its commitment to the environmental responsibility? >> this is deeply, also, maybe it's difficult to understand now in this context, but it's deeply embedded in our corporate culture. we have three values which is innovative, valuable and responsible, responsible to our employees and the environment. our plant in tennessee is a

platinum leed certification, this is the most clean and energy-efficient plant in the world. and all of our plants have a commitment to reduce carbon footprint by 25% by 2018. whether these are in india, newly-built in china, they're always up to the highest volkswagen standards which go beyond, sometimes -- >> so this is part of the corporate culture -- >> yes. >> -- i'm assuming that's throughout, including your engineers and scientists, that this is sort of a part of the ethos. how do you explain this deviation, a massive deviation? >> it's -- myself and the majority of all volkswagen employees which is 600,000 ask the same question, same question. and it's a relevant question, and i hope that these investigations will definitely

find out what drove those people beyond newspaper articles and what we read out there, what drove these peoples into this decisions, into these actions. >> hope it won't be profit. i yield back. >> thank you. five minutes. >> performance without the nox emissions usually associated with diesel. i know other members have asked about how volkswagen intends to make consumers whole, and i do want to lend my voice to that briefly. because consumers, including people in my district, purchased a car believing it would be a clean, environmental will hi-friendly choice, they have every right to feel defrauded. consumers were sold a bill of goods that simply does not exist. and i think it is likely that whatever fixes to comply with emissions standards will hurt the vehicle's performance in other ways, this is not what consumers thought they were buying, and it is not what dealers thought they were selling. worse still, the resale value on

these vehicles which i am sure was a selling point has certainly been destroyed. so volkswagen has a lot to think about, i believe, in terms of how it intends to make right by consumers. now, let me ask, typically when deciding whether to issue a recall and develop a solution, does volkswagen conduct its own emissions testing? >> yes. >> and did you try to recreate or confirm the results of the icctc study from may of 2014? >> i can't speak to this, what they specifically tested n. july 2014 i was informed that they have, basically, acknowledged the test results and were developing those fixes in order to bring those cars back into compliance. >> a lot was said about defeat devices, and we're talking about a defeat device here. has the volkswagen operations been impacted by defeat devices in the past?

>> i have mt. context -- in the context after september 3rd understood that there was an issue, for instance, here in 1974, yes. that's what i understand. >> and so what measures were taken by the company to make certain that there was better scrutiny, better oversight of the potential for a defeat device application? >> at that point of time, that's a great question, senator, and i can't get you the answer now. >> well, but was something done? >> in 1974 i was 12 years old. i don't know. >> well, but history is history. we miss some of that, so we reach to the books and read about it. what was done, if anything -- >> yes. >> -- to address defeat device application. >> and i think the investigations will go back into this time -- >> well, that -- i don't think we need to investigate that. did a corporate measure get put into play to address defeat devices? >> back then, i don't know the answer now, sir. >> i would hope you could provide that to the committee. i'm certain the record will be

open. and if i could just confirm some of the information we've received. volkswagen initiated a voluntary recall in december of 2014 that was intended in part to address the issue of excess nox emissions, is that correct? >> excuse me. could you repeat the question, please? >> right. volkswagen initiated a voluntary recall in december of 2014? >> yes, that's correct. >> who at volkswagen proposed the recall? >> the technical engineering department in conjunction with the product safety committee worldwide which is steering all the recalls and campaigns and voluntary recall actions out of -- [inaudible] centrally for all markets. >> and what explanation was given to consumers about why that december 2014 recall was necessary? >> i would have to look into the document on how we, what we wrote to those consumers. i don't know now. >> you will provide that to the committee, please? >> definitely. it's public.

it's public anyhow. >> and what explanation was given to regulators about why that december 2014 recall was necessary? >> that's also something we will have to provide in the document, with the documents. >> and what fix did the volkswagen organization implement for cars brought in under that recall? >> all have been software fixes, new software versions have been flashed into the specific steering, onboard steering units. >> and who at volkswagen developed that fix? >> the engine and drive train development software after-treatment departments in germany. >> and did they know at the time that it would not work? >> i don't know that. my understanding was that it would work, and otherwise the by-product safety committee wouldn't have released this version for application in the markets. >> well, i thank you for your

responses. i look toward to the additional -- forward to the additional information you owe to the committee and, again, i would say on behalf of the consumers of the 20th congressional district of new york, those of the country and around the world impacted by this, deserve a sound explanation and a fix that will respond to the environmental damage done here and the consumer fraud. >> yes, sir. thank you. >> thank you. ms. degette has one final question real quick, and then we've got to leave. >> first, mr. chairman, i ask unanimous consent to put mr. welch's document into the record. >> so ordered. >> i just have one last question, mr. horn, because you told a whole bunch of us on this committee that after that west virginia university study in may of 2014 everybody was running around trying to figure out what was going on with these cars and why there was a discrepancy between the techs, that your engineers didn't know the answer. but, in fact, the discrepancy

was because of a willful act of some engineers in germany in the first place, correct? >> that's my understanding, yes. >> and those people, that information about that discrepancy never made it to germany so they could tell your people what was wrong? is that what you're testifying to here today? >> 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 -- >> my -- >> -- but there were people who knew, and those are the people who wrote that deceptive code in the fist place. are you telling me they never told your u.s. people what the problem was and why there was a discrepancy? >> the people who investigated the study in detail, the study and developed the software fixes were also the colleagues in germany. of course they were informing their u.s. colleagues in auburn hills. >> so did they tell the u.s. colleagues that there was this deceptive code, and that was

what was causing the discrepancy? >> i don't think so are. >> yes or no. >> i don't think so. >> thank you. >> otherwise we would be much earlier here. >> thank you. mr. horn, that concludes our questioning for now. this hearing is not other, but -- not over, but we would appreciate more questions will be coming from committee members. we would appreciate a quick and honest response to those as well. this hearing is going to adjourn for a couple hours while the republican -- to recess, excuse me, for a couple hours while the republican caucus is meeting. we will reconvene about 15 minutes after the call of the chair after that meeting. thank you very much. >> thank you. >> all right, we reconvene this subcommittee of oversight investigation hearing on volkswagen emissions cheating allegations and initial questions. we have mr. brooks here as witnesses, and let me just go

into this, as we reconvene this hearing. you are aware that the committee is holding an investigative hearing, and when doing so, has the practice of taking testimony under o*epgt. do you have any objections to testifying under oath? both witnesses say no. the chair then advises you under the rules of the house and the rules of the committee you are entitled to be advised by counsel. do either of you desire to be advised by counsel during your testimony today? both witnesses indicate no. in that case, would you please rise, raise your right hand, and i'll swear you in. do you swear the testimony you're about to give is the truth, the whole truth and nothing but the truth? thank you. the record, both witnesses have indicated yes. you are now under oath and subject to the penalties of the united states code. i will now allow you each to give a five-minute summary of your opening statement. mr. grunldly, you may begin. >> chairman murphy, ranking member degette and other

members of the subcommittee, we appreciate the opportunity to testify on the matter of the environmental protection agency's notice of violation issue to volkswagen. i am chris groundler, and i direct the epa's office of air quality which is responsible for the air pollution come minus program for all mobile sources, vehicles, engines and equipment including cars, trucks and fuels. i'm joined by my colleague, phil brooks, director of the air enforcement division. epa's civil enforcement program develops and prosecutes civil, administrative and judicial cases. on september 18, 2015, epa sent a notice of violation, an nov, of the clean air act to volkswagen. alleging that four-cylinder volkswagen and audi diesel cars sold from model years 2009-2015 include software that circumvents epa's emissions standards. volkswagen manufactured and

installed software in the electronic control module of these vehicles that sensed when the vehicle was being tested for compliance. put simply, these cars contain software that turns off or significantly reduces the effectiveness of emission controls when driving normally and turns them on when the car is undergoing an official emissions test. this is known as a defeat device. this design feature results in the cars emitting up to 40 times the emissions that are allowed to insure public health is protected. these devices contain, essentially, a switch that senses whether the vehicle is being tested or not based on various inputs including the position of the steering wheel, vehicle speed, the duration of the engine's operation and barometric pressure. the nov that epa issued covers roughly 482,000 diesel cars. all new cars sold in the united states must have an epa-issued certificate of conformity demonstrating that the car meets applicable federal are emissions standards to control air

pollution. by making and selling vehicles with defeat devices, vw violated multiple important clean air act provisions. these violations are very serious. not only because illegal defeat device results in excess emissions many times the allowable standard, but also because after the high emissions were discovered, vw concealed the facts from epa, the state of california and from consumers. these vehicles are emitting more nitrogen oxides than regulations allow contributing to particulate matter. we know that exposure to these pollutants has been linked with increased asthma attacks and other respiratory illnesses that can be serious enough to send people to the hospital. we are in the midst of an ongoing investigation into vw's actions. we will be working closely with the u.s. department of justice throughout this investigation and determinations regarding potential penalties and other remedies will be assessed as

part of the investigation. however, at this point we're unable to provide further details old investigation because the release of such information could jeopardize this ongoing enforcement investigation. epa will continue to work closely with the california air resources board during the investigation. c.a.r.b. led and contributed much of effort to get us to this point. our agencies worked very closely together on the implementation and oversight of the vehicle emissions program. as part of the investigation, we intend to assess the scope of vw's liability and whether there are additional vehicles with defeat devices. we also intend to assess the economic benefit of a noncompliance and pursue appropriate penalties as well as to assess the excess pollution and the appropriate ways to mitigate them. while our enforcement authority concerns air pollution, we are acutely aware of the impact on consumers, and we have provided frequently-asked questions and answers on our web site such as whether the cars are safe to

drive and whether epa's officially recalling the vehicles at this point. on september 25th my office sent a letter to all auto manufacturers notifying them we are stepping up our testing activities in response to these alleged violations. over the 40-plus-year history of our program, we have continuously adapted our approaches to compliance oversight as technologies and situations have changed. we take very seriously our responsibility to oversee the implementation and enforcement of our regulations. it is this oversight that insures the benefits of clean air emission standards are realized and that the industry is competing on a level playing field and the consumers are getting what they pay for. again, thank you for the opportunity to appear as witnesses this morning. we welcome your questions. >> thank you. mr. brooks, you don't have a statement. you issued a joint statement, correct? okay, thank you. now i'm going to recognize myself for five minutes. when you speak, just make sure you turn the mic on and bring it as close to your mouth as possible. so mr.grundler, in december of

2014, vw conducted a voluntary recall, as you know. what information did vw convey to you about the cause and the proposed solution for the higher emissions in advance of that recall? >> thank you, mr. chairman. throughout the 2014 once california and epa learned of these excess emissions, there was numerous technical conversations between the california air resources board and volkswagen. california took the lead on exploring what the, what the problem was with these vehicles. and my understanding is that they received multiple different stories, plausible reasons why these vehicles may not be performing as they were supposed to; chemical-based reasons, physical-based reasons. at the end what the remedy that was proposed was described to fix a problem with the vehicle

concerning how it operated under different temperatures, what kind of dosing sensors were used to make the emission controls system work properly ask that they -- and that they were confident of the fix. at the time he were told by the state of california to proceed but that california was going to test these vehicles to make sure that the fix was effective. and it was not effective based on the subsequent testing by california air resources board. >> did you conduct any further evaluation of their conclusions and propose solutions in advance of the recall? what was the operational process you had in interacting with them, discussions, conversations? how'd that go back and forth? >> so epa and california have a very strong partnership when it comes to oversight and compliance. sometimes california takes the lead on these matter as, sometimes epa takes the lead on these matters. for example, last year we had

the lead with respect to the hyundai/kia investigation and subsequent action. california volunteered to take the lead on this matter. and what happened during 2014 is, essentially, what is happening right now as we speak. trying to determine what is the right recall solution to the address these excess emissions. it was vw's responsibility to identify what was wrong and to propose a fix. hay did so. -- they did so. that fix did not work. so most of these interactions were between california and the company. epa, my team participated in some of them. we became much more activelyç involved in 2015 when california the supposed fix of these vehicles, and that data showed that there still remained very high and unexplained excess emissions. >> who did you have these

conversations with, with vw, going back and forth communicating while they're working, talking to you about these results? do you recall who that was? >> so i want to be clear, i was not part of those conversations. it was my team and the california counterparts. my understanding is those conversations included both officials from vw of america as well as from officials from germany. >> do you know their names for the record? >> i do not. >> can you identify those? are those things you could get for us? >> yes. >> would you please do so? that'd be important. now i have a technical question. i'm not sure if either one of you can answer this. so here is this switch that is when it is in one position for an emissions test, it made a change in how this was operation also the emissions would be lower. in the other position, the emissions were quite high. could it -- is it possible to just keep that switch in the position of lower missions and then they could be in compliance? or does that damage the engine

or reduce power significantly? be do you -- do you have any id? >> those are exactly the same kind of questions we are asking volkswagen right now. it's not actually a switch, sir. it is what we call a dual calibration strategy. >> right. >> so the vehicle is programmed to work two different ways. and when the vehicle senses when it's on a test, it very quickly goes into clean mode, and when it does not sense the very specific parameters that are specifiesed in -- specified in our federal are test procedures, it goes into a high pollution mode. i think what you're asking. >> -- yeah. >> can you just take this software off and will the vehicle operate normally, and we don't know yet. we're asking those questions. >> okay. >> and the answers will depend, as you heard this morning, on which generation of diesel engines we're talking about. we believe that the newer generation, the generation, so-called generation three

engines will be much easier to fix than the older versions. >> thank you. i'm out of time. now ms. degette for five minutes. >> thanks. just to continue along, the newer versions, they have these urrea tanks -- >> correct. >> -- and so it's a system that you can both adjust the nox filters and the urrea tanks. and, in fact, the vw dealers and the dealer in denver and also their mechanics told me they feel like it would be a pretty easy adjust arement even just in -- adjustment even just in the codes to fix it in the 2015 and '16 models. is that your understanding, mr. grundler? >> i don't want to speculate that. that seems logical to us. >> right. >> we want to see the software, we want to test the vehicle before -- >> obviously. >> -- any further action is taken. you can imagine that we're skeptical at this point. >> but it's the agency's position that these vehicles do

foote need to be fixed, right? >> absolutely. >> i mean, they're noncompliant under both federal law and california state law. >> that is correct. >> you know, i think some of the impressions given by the, by volkswagen is, well, you know, they're safe to drive. they might be safe to drive, but they don't comply with the emissions standards, right? >> that's right. >> now so for the, for the cars between 2009 and 2014, the fix is a bigger problem because they don't have the urrea containers, and so it's harder to see how -- without major structural changes to these cars -- how they could be wrought into compliance. is that your understanding? >> that is correct. they will require a more substantial engineering solution. >> they're either going to require installation of a urrea

system or different nox filters or both. so that's going to be quite elaborate, in my -- i'm not a mechanic and i don't pretend to be one, but i went over and looked at this, and it looked like a very knotty problem to me. >> what epa and california have directed volkswagen to do is present more than one option on how to address these excess emissions. and we want to look at these options very carefully, particularly with respect to what impacts they will have on the owners. >> right. and has vw -- have you given vw any kind of a deadline for coming up with that fix? or have they indicated to you when they might be able to come up with this? this is something that really concerned the panel in the earlier conversations today. >> i can assure you we have a very strong sense of urgency. we are pressing volkswagen for

that plan and for those solutions. we're meeting with them on practically a daily basis. we hope to get a proposal very, very soon. but we want to make sure that it's effective. so there's some risk in rushing, but we expect to see something as early as next week with respect to the generation -- >> and has the company told you that they believe they can fix the affected vehicles without affecting fuel economy, engine performance or both? >> they have not said so yet. >> okay. so i just want to say one last thing which is oftentimes we have the epa in here, and sometimes it's not the host pleasurable experience -- the most pleasurable experience testifying, but in this case the director of the international council on clean transportation which was the organization that commissioned the west virginia study said, quote -- this is a

powerful affirmation of u.s. federal and california vehicle emissions and of the agencies. clear protocol in-use requirements, clear enforcement follow through, the authority to fine and force recalls, these are the best practices that regulations worldwide should incorporate, and today's announcement shows why, end quote. so thank you and your agency for your efforts here. i want to ask you, mr. grundler, in light of vw's deception, are you adjusting testing going forward? >> yes. and we already have. >> and what have you done? >> so, well, we've learned from this episode. for sure. we wish we had found it sooner. as soon as we learned of this data, c.a.r.b. and epa focused -- >> so how are you adjusting the testing going forward? >> bottom line, ma'am, is that we are going to be unpredictable. what is required for a robust compliance and oversight program

is both testing of new vehicles in the lab, testing of what we call in-use vehicles in the lab and on-road measurements. >> thanks. i don't have much time. mr. brooks, are you adjusting enforcement efforts going forward, and if so, how? >> thank you for the question. the answer is, yes, although i think the prosecution, the investigation of this matter will proceed along our normal path. i think what we will see is we'll be getting a lot more phone calls from people. and so many that way it will change. -- in that way it will change. we'll have more to respond to. >> thank you. thank you very much, mr. chairman. >> [inaudible] i think mr. griffith is next. mr. griffith, you're next for five minutes. >> thank you very much, mr. chairman. appreciate you all being here and appreciate the questions that have already been asked. and, obviously, there are a

number of us, if you were listening to the previous testimony, you know i am one of the people who owns one of the diesel volkswagens. and so i have some questions in that regard. i think it's important that you change your testing methods, and first question i'm going to ask you is do you think it might be helpful in doing your job if we pass some legislation that would allow a portion of the fine money in a fraud case like this to go to the university that discovered it? i mean, wvu discovered the problem. you all didn't. believe it or not, i don't think that epa and should do everything. can and should be do everything x this might be of some assistance. just like we do with certain bad actors in other criminal-typesettings who are committing fraud on consumers or selling drugs, we take some of their ill-gained goods, we take it away from them, and the government gives it back to some of the folks who helped discover it, law enforcement and

prosecutors. do you think that might be a helpful piece of legislation for us to take a look at? either one of you or both. >> well, i don't think i could comment on what legislative changes might be necessary. i do understand that criminal contexts, those types of remedies have been imposed before. >> so the question is if you have that power now -- >> hold on one second. can you speak close to the mic? none of us can hear you. you're going to have to sit forward. >> if you currently have that power, let me know that. if you don't have that power in other words to, whenever you come up with a fine that's appropriate for volkswagen, it would seem to me -- and i don't know that you have that authority now -- to give wvu, west virginia university, that uncovered this problem part of the fine. to help them continue their research. i mean, that's what we do with prosecutors, with law enforcement agencies who uncover crime. we do that in some securities cases. there's different ways that's done. do you all think that would be

authority that would be helpful for the people of the united states of america? >> well, i can take that back, and we can respond in writing. >> all right. sounds like a good idea to me, i'll just tell ya. it is interesting that wvu found it and that you all did not be, but i understand you can't do everything, and you've answered some questions about how you're going to go forward. let's go to the other side of this. now, i will -- whatever you all come up with and whatever volkswagen comes up with, i'll get my car fixed. or if they do a buyback program, i'll have to debate whether it's better to fix it or to sell it back to the company, because it's not doing what it's supposed to. but i'm just curious at some point -- and right now i understand you're not doing that -- but at some point am i going to be subject or other consumers in my shoes, are they going to be subject to penalties from the epa for driving a vehicle that doesn't meet the standards that were supposed to

be in place when they bought the vehicle? >> that question depends on where the the particular owner of volkswagen, of one of these vehicles lives. if you live in an area that does regular emissions tests, that the state conducts these emissions inspections, some states require that in order to reregister the vehicle if it's subject to a recall to show that the fix has been made. other states do not have that requirement. >> so -- >> it depends on where you're living. >> okay. so for some people who may not be paying attention to whatever notices they might get or for whatever reason aren't following the news and, believe it or not, this is a whole bunch of those folks out there who don't follow day to day news, they could actually end up with some kind of a penalty from their state, but currently this is nothing nationally. >> that's right. >> would you anticipate that the epa would go in the direction of some kind of a national program

if enough of cars did not get bought back or fixed after a certain number of months? >> we certainly will be encouraging consumers to -- >> i understand that. [laughter] you're going to get the word out as best you can. >> that's right. >> but they don't -- [inaudible] >> i would not anticipate -- >> you would not anticipate that. >> -- epa going after individuals. >> but it is a possibility? >> i don't think that's a possibility under the clean air act. >> let me tell you, one of my concerns is, and it's a rhetorical question, so you don't have to answer it. i'll tell you that up front. yesterday we had an ema official in -- epa official in, and we were talking about the clean power plan and the cap and trade scream which they kept resisting that, but it talks about putting a limit on emissions and then being able to make trades, so it sounds like cap and trade. and what was interesting about it was was that i had a list of quotes from lisa jackson in 2011, gina mccarthy, 2011,

gina mccarthy, 2013, gina mccarthy, 2014 said they were never going to consider, and, in fact, it was not allowed under the law to do a cap and trade scheme. so i'm a little concerned, not for me. i'm gong to do what i need -- going to do what i need to do to make my car right or get rid of it, but there are a lot of folks that may get caught, and i just want to make sure epa isn't doubling down on their damages. every one of us that bought one of these vehicles -- mr. brooks looks like he wants to answer. >> i will assure you i'm aware of absolutely no provision of the clean air act which would allow are prosecution for the things that you're talking about. >> and that's exactly what lisa jackson told us two or three years ago, but that's okay. we'll move on. you know? >> all right. i'll say it won't happen. >> on gen-1 cars, i have read somewhere that it's going to

take -- it's a more complicated fix we heard this morning, but it's also going to take up some of the space in the trunk area of the vehicle. have you all heard that? >> sir, that would depend completely on what the remedy would be. and as i said earlier, we're going to take a very careful look at what impact this is going to have on owners and consumers. that will be central to how we review the options that volkswagen comes forward to. so we don't know that yet. >> all right. i appreciate it very much. thank you all for being here. i yield back. >> yesman yields -- gentleman yields back. now recognize mr. pallone for five minutes. >> thank you. mr. grundler, one of of the concerns that i raised with mr. horn earlier was this concern about whether we might find these defeat devices or similar problems with other cars. so i wanted to ask the question, do you have the tools and authority you need to insure there are no other cheaters out there? >> yes, we do.

>> but i'm also concerned about, and maybe this is for mr. brooks, about the comments that mr. ford made -- mr. horn made where he suggests, you know, there were a couple of rogue engineers that may have done this, but suggested that there was no corporate responsibility. do you -- is it the epa or is it the ag, who goes after the, you know, the individuals corporate or otherwise that might be responsible for this, or do you at some point envision even bringing charges, you know, like criminal charges against the corporation itself for this intentional deceit? >> thank you for the question. i can't speculate now as to exactly what course all of the enforcement actions will take. i can tell you that my office has already taken the initial enforcement action, and i can tell you that we are working with the department of justice on these matters. >> but i guess what i'm asking, and i won't keep repeating, but

one more time. we keep talking about the fines because of what happened. but is this, does this rise to individual responsibility for those responsible? or, and is there such a thing as criminal action against a corporation? i mean, i know i'm speculating, but are those possibilities? >> let me be careful in answering that. first of all, i think that the concern that has been expressed here by members is exactly our concern; who, what, when, where, why, how. and so i'm quite certain that the investigations that are ongoing and that will be begun will get into exactly that. i think it would be unfair for me to say much more about what the end result might be -- >> but it's a possibility. >> certainly, it's a possibility. >> okay. how does -- 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. i mean, he did say that. does it go beyond that? i mean, in other words, you know, he's admitting that this took place and that there could be some health and safety impacts because of the increased emissions. how does the epa hold volkswagen responsible? in other words, does the epa consider -- is it possible that they could be held responsible for the impact on, essentially, dirtier air? not just fix the cars, but that there might be some damages or some kind of payment that would have to be made because the air was made dirtier or the people were -- health and safety were impacted? >> thank you for that question. the answer to that is, yes. while it may go by different names, we tend to talk about it

in terms of mitigation. but the concept there is exactly what you articulated. looking for the opportunities, the ways in which the damage that has been done to the environment and, you know, which con scwebtly has impacted on public health can be addressed. obviously, we can't go back in time, take that pollution back out of the air. but many of our settlements look forward and ask the question, you know, how is it that we can make air quality better than what the law minimally requires in any given instance, and that additional reduction in pollutioning is what we refer to as mitigation, and we have many, many consent decrees that go about doing that in many different ways. >> so, for example, you could impose some penalties that might be used to mitigate air pollution in other ways possibly, not by cw, but, you know -- vw, but, you know, the epa would use that money somehow

to mitigate air pollution in some other way? just give me an example, and then i'll stop asking because my time's almost up. >> sure. in a lot of the power plant cases we have had projects, for example, where the company has had to go out and find a third party to implement a wood stove changeout program so that cleaner-burning stoves, more efficient wood stoves are substituted for dirtier stoves. and that has a direct impact on air quality in communities because there are lots of communities out there, as i'm sure you know, that rely very haley on wood-burning devices. so that's one example. >> all right. thank you very much. thank you, mr. chairman. >> gentleman yields back. now recognize dr. burgess for five minutes. >> thank you, mr. chairman, and i apologize for being out of the room for part of the hearing. so i'm going to ask a couple of questions. if they've been asked before, please bear with me and try to give an answer that's consistent

with how you answered previously. first off, what is the budget for the epa currently? >> i don't have the budget for the entire epa, i can give you the budget for my organization. >> sure, we'll take that. [laughter] >> so it's roughly $100 million a year and 340 full-time people that work in my organization. >> the overall budget for the epa, and i'm just relying on memory which is dangerous, but i think it is close to $15 billion. so the epa has resources available. it has funding available. >> i do want to correct that. i think epa's budget is around $7 billion, about 15,000 people. roughly. >> nevertheless, west virginia university had a budget for research project, my understanding is, around $50, $60, $70,000, is that correct? >> we are extremely grate beful

for the work that west virginia university and the icct did, and i'm not going to blame our bar budget for the fact that we missed this cheating. i do think we do a very good job of setting priorities at epa. once we learned of this excess emissions, we focused on it. we didn't ignore it. and we've also immediately changed how we're doing our testing regime to be more unpredictable so this doesn't happen again in the future. >> well, with all due respect, just looking at the situation i think the american people ought to ask ask that we fire you and hire west virginia university to do our, to do our work. they certainly are much more cost effective than this part of the federal agency. ..

>> that information will be under web site. >> yes. >> i went to the web site and they printed it off for me. very grateful for that. there was information about pesticides and pesticide web sites and emission recalls where i assume this would fall, is that correct? when you click on that link, you have a page not found. web site improvements underway,

so you let consumers know when they are likely to be able to get that information up on your web site? >> again sir we have not ordered a recall so there is no recall information. we have information on our web site that talks about her notice of violation and what vehicles are covered and what consumers need to know today which is that they can drive these cars. these gripe -- cars are safe to drive. they will not be held responsible for any repairs. i would be the responsible of the company. >> what mass do this. mr. pallone was asking you things about payments in damages and because of the issue that they air was dirtier and health and safety have been impacted so it's in all likelihood volkswagen of america is going to some significant fines and penalties by the environmental protection with agency are they not? >> i think that's very likely. >> and you heard my admonition

that the ceo folks wagon of america don't be dismissive and don't ramaz from the fact that this is happen. you need to be aggressively compliant and i hope they will be but i've got to tell you this summer i went to silverton colorado on my own dime and look at what had happened to the river and went to the goal king mine and that was entirely created and caused by the environmental protection agency so i have had a lot of people ask me if a private company had done that and turned the animus river yellow they would be held held -- they would be fines and mitigation costs but does the epa hold itself to the same standard to which it holds private corporations and if not why not? >> are you asking me to testify about the mine situation? >> just in general. if epa causes a problem

shouldn't be held to the same standards and in fact mr. chairman i think we should have a hearing on that is a separate issue but just answer the question. should epa be held to the same standards in which you are going to hold a private corporation and? >> all i can say serve because i'm not familiar with all the details but i certainly have seen and read it and have taken full responsibility for the situation there actively working on it. i want to acknowledge from the gentleman from virginia and texas counted my neighboring state it's nice to see them get the accolades for doing such good work. now ms. castor for five minutes. >> the epa issued another violation against volkswagen. the notice alleges certain volkswagen and audi cars from model years 2009 to 2015 includes software to circumvent a pai