U.S. Volkswagen hearing will have implications for industry, EPA

By David Morgan
WASHINGTON, Oct 6 (Reuters) - Volkswagen's top U.S.
executive on Thursday will field questions from U.S. lawmakers
on how the automaker managed to evade pollution rules, kicking
off a congressional probe into the scandal and whether other
automakers might be implicated.
But the high-profile proceedings will also scrutinize the
U.S. Environmental Protection Agency's failure to identify
Volkswagen (XETRA:VOWG) AG's VOWG_p.DE admitted cheating strategy for
years, lawmakers and aides told Reuters.
Any issue with EPA's operations could lead Congress to
request independent government inquiries of the agency by the
watchdog Government Accountability Office and the EPA Inspector
General, the aides said.
"The first thing is to look at the Volkswagen issue, in and
of itself. Second is to ask the same question of other carmakers
and see if there is any such activity taking place," said U.S.
Representative Marsha Blackburn, the Tennessee Republican who is
vice chairman of the House Energy and Commerce Committee.
Any evidence that other auto manufacturers have also used
so-called defeat devices to evade EPA emissions standards could
prompt lawmakers to consider legislation to tighten EPA test
procedures, according to aides.
But Thursday's proceedings, which formally kick off the
congressional probe, will focus specifically on the case of
Volkswagen, Germany's largest carmaker.
Volkswagen America's President and Chief Executive Officer
Michael Horn will testify alone and under oath before the
panel's oversight and investigations subcommittee.
The lawmakers will also evaluate whether the current U.S.
environmental regulations are too strict for companies to
comply, when questions turn to a second panel including two
senior EPA officials - Christopher Grundler, director of the
Office of Transportation and Air Quality and Phillip Brooks,
director of the Air Enforcement Division.
"If the standards are too strict for diesel cars, we'll have
to figure that out," said Representative Diana DeGette of
Colorado, the top Democrat for subcommittee.
The Volkswagen scandal, which affects about 480,000 vehicles
in the United States and 11 million worldwide, has sent tremors
through the global auto industry, while slashing nearly 40
percent of the German carmaker's market value and raising the
prospect of massive job cuts for Volkswagen's workforce.
The carmaker also faces numerous official investigations
worldwide and lawsuits from U.S. states and consumers over its
admission that it used a device that reduced emissions only when
a vehicle was being tested.
Knowing how the defeat device worked could help
investigators determine how easily other automakers could evade
regulatory scrutiny.
"We still don't know how this switch works," DeGette said.
"We have a lot of questions. We have very few answers."
Aides say the company has also been slow to respond to
committee requests for documents on the scandal, possibly
because of internal turmoil. Volkswagen officials were not
immediately available to comment.
"The message to Volkswagen is that you don't want to mess
with us on this one," said one congressional aide, who noted the
committee's powers to subpoena information.
Current emissions requirements for new cars have been
required since model year 2009, when Volkswagen said its
vehicles equipped with the defeat device software began rolling
off the production line. The standards require manufacturers to
reduce fleet-wide nitrous oxide emissions by 88 percent to 95
percent, depending on the type of vehicle.
Blackburn said that once the committee can determine a "root
cause" for the cheating strategy, lawmakers could try to
determine whether EPA regulations are appropriate and "make a
determination about what is helpful and what is not."
"Once you hit that tipping point where there are so many
regulations on the books that they can't get to all of them,
they end up doing nothing well," Blackburn said.