Settlement requires Volkswagen to offer to buy back older vehicles, and spend $225 million to mitigate NOx pollution. Volkswagen will also repair newer vehicles to comply with the standards to which they were certified

In a second partial settlement announced today by the U.S. Environmental Protection Agency (EPA), the Department of Justice (DOJ), and the State of California, automakers Volkswagen AG, Audi AG, Porsche AG and related entities (collectively referred to as Volkswagen), have agreed to recall 83,000 model year 2009 through 2016 3.0 liter diesel vehicles sold or leased in the U.S. that are alleged to be equipped with “defeat devices” to cheat emissions tests, in violation of the Clean Air Act and California law. For the older vehicles, Volkswagen is required to offer to buy back the vehicles or terminate leases, and must also offer an emissions modification to substantially reduce emissions if one is proposed by Volkswagen and approved by regulators. For the newer vehicles, if Volkswagen demonstrates it can make the vehicles compliant with the certified exhaust emission standards, it will have to fix the vehicles and will not be required to buy the vehicles back. Volkswagen is also required to spend $225 million to fund projects that will reduce emissions of nitrogen oxide (NOx).

Today’s partial settlement does not resolve any pending claims for civil penalties, nor does it address any potential criminal liability. The settlement also does not resolve any consumer claims, claims by the Federal Trade Commission, or claims by individual owners or lessees who may have asserted claims in the ongoing multidistrict litigation. The state of California has secured a separate resolution for the 3.0 liter violations that addresses issues specific to vehicles and consumers in California.

The affected older vehicles (referred to as “generation 1” vehicles) are the 2009 through 2012 Volkswagen Touareg and Audi Q7 diesel models. The affected newer vehicles (referred to as “generation 2” vehicles) are the 2013-2016 Volkswagen Touareg diesels, 2013 through 2015 Audi Q7 diesels, 2013 through 2016 Porsche Cayenne diesels, and 2014 through 2016 Audi A6 quattro, A7 quattro, A8, A8L and Q5 diesel models.

“EPA has a public health imperative to hold Volkswagen accountable and remedy the illegal pollution their cars put into the air,” said Cynthia Giles, EPA’s Assistant Administrator for Enforcement and Compliance Assurance. “From the start, our team vigorously pursued this case to ensure these cars were fixed or taken off the road. Today we’ve secured another important settlement that delivers on EPA’s essential public health mission.”

“The settlement marks another significant step in holding Volkswagen accountable for cheating Americans out of the promise of cleaner air by selling vehicles equipped with defeat devices,” said Assistant Attorney General John C. Cruden. “This consent decree provides a remedy for every affected vehicle which will be removed from the road or meet enforceable standards that will reduce emissions, and will also require VW to provide additional funding to address the harmful impacts to human health and the environment from VW’s violations.”

“This settlement highlights the fact that cheating to get a car certified has consequences for air quality and the public’s health -- and that cheaters will be caught and held accountable, said CARB Executive Officer Richard Corey. “Because California is able to enforce its vehicle regulations, CARB was instrumental in uncovering the cheating in the 3-liter, and before that, in the 2-liter diesel engines. The mitigation in this settlement will now help California address its serious air quality and climate challenges with a focus on putting the very cleanest vehicles in disadvantaged communities where they are needed most.”

According to the civil complaint against Volkswagen filed by the Justice Department on behalf of EPA on January 4, 2016, and amended on October 7, 2016, Volkswagen allegedly equipped its 3.0 liter diesel vehicles with illegal software that detects when the car is being tested for compliance with EPA or California emissions standards and turns on required emissions controls only during that testing process. During normal driving conditions, the software renders these emissions control systems inoperative or reduces their effectiveness, resulting in increased emissions. This is known as a defeat device. By using a defeat device, these cars meet emissions standards in the laboratory, but emit up to nine times or more above the EPA-compliant levels for NOx during normal on-road driving conditions. The Clean Air Act requires manufacturers to certify to EPA that vehicles will meet federal emissions standards. Vehicles with defeat devices cannot be certified.

Because Volkswagen cannot modify the affected 2009 through 2012 Volkswagen Touareg and Audi Q7 generation 1 diesel vehicles to meet EPA-certified exhaust emissions standards, the settlement requires Volkswagen to offer owners of generation 1 vehicles the option to have the company buy back the car and to offer lessees a lease cancellation at no cost. If a plan is proposed by Volkswagen and approved by EPA and CARB to substantially reduce emissions from the generation 1 vehicles, Volkswagen will also have to offer that as an option for consumers.

For the generation 2 vehicles, Volkswagen will recall and fix these vehicles so they meet their certified exhaust emissions standards, after the technical solution is approved by regulators. If after extensive testing the solution does not perform as expected and is not approved, Volkswagen must offer to buy back the vehicles. In that case, the company can also seek approval of an emissions modification plan to substantially reduce emissions and, if approved, can offer that as an additional option for generation 2 vehicles.

Under the terms of the settlement, Volkswagen must achieve an overall recall rate of at least 85% for each of the generation 1 and generation 2 vehicles recall programs or pay additional sums into the mitigation trust fund. The buyback and lease termination program for generation 1 vehicles will begin within 30 days following court approval of the settlement. Vehicle modifications will become available to eligible owners and lessees once the modifications are approved by regulators.

Vehicle owners and lessees will receive updated information from Volkswagen, Audi, and Porsche concerning their available buyback or modification options after today’s settlement is approved by the court, and can also obtain information about these options at: www.VWCourtSettlement.com and www.AudiCourtSettlement.com.

The settlement requires Volkswagen to pay $225 million to fund projects across the country that will reduce emissions of NOx where the 3.0 liter vehicles were, are or will be operated. This funding is intended to fully mitigate the past and future NOx emissions from the 3.0 liter vehicles. That money will be placed in the same mitigation trust to be established under the partial settlement for the 2L vehicles. This $225 million is in addition to the $2.7 billion that Volkswagen is required to pay into that trust under the prior settlement. The mitigation trust will be administered by an independent trustee.  Beneficiaries, which may include states, Puerto Rico, the District of Columbia, and Indian tribes, may obtain funds for designated NOx reduction projects upon application to the trustee.

The emissions reduction program will help reduce NOx pollution that contributes to the formation of harmful smog and soot, exposure to which is linked to a number of respiratory- and cardiovascular-related health effects as well as premature death. Children, older adults, people who are active outdoors (including outdoor workers), and people with heart or lung disease are particularly at risk for health effects related to smog or soot exposure. NO2 formed by NOx emissions can aggravate respiratory diseases, particularly asthma, and may also contribute to asthma development in children.

The provisions of the settlement are contained in a proposed consent decree filed today in the U.S. District Court for the Northern District of California, as part of the ongoing multi-district litigation, and will be subject to public comment period of 30 days, which will be announced in the Federal Register in the coming days.

For more information: https://www.epa.gov/enforcement/volkswagen-clean-air-act-partial-settlement.

You can read this article on the EPA website.