Volkswagen’s Partial Settlement Under the Clean Air Act (July 2016)

A recent settlement reached between Volkswagen and various US entities will cost the German automaker $14.7 billion for cheating on emissions tests.

According to the Environmental Protection Agency’s website, nearly 500,000 Volkswagen vehicles were installed with “defeat devices,” software in their engine controls that triggered the mechanisms necessary to reduce emissions when the cars were being tested. However, under normal driving conditions the software would disable the emission reducing components, yielding emissions levels up to 40 times those compliant with the EPA.

VW has set aside $10 billion to recall at least 85% of the affected 2.0-liter vehicles. The recall entails offering those with a defective vehicle the right to a buyback or lease termination, and pardoning the loans of the consumers that will not be adequately compensated from a straight buyback. Additionally, VW could submit a proposal to upgrade the vehicles with cleaner technologies and offer owners and lessees the option of an emissions modification.

In light of the company’s violations of the Clean Air Act, VW will also be required to subsidize $2.7 billion to a trust fund for emissions mitigation projects across the country and spend an additional $2 billion to support the development of zero emission vehicles.

EPA
reports that the settlements “partially resolve allegations by the EPA, as well as the California Attorney General’s Office and the CARB under the Clean Air Act, California Health and Safety Code, and California’s Unfair Competition Laws, relating to the vehicles’ use of “defeat devices” to cheat emissions tests.” They are still, however, only a preliminary step in the case and are indeterminate of other matters such as civil penalties and possible criminal liability.

EPA provides a
summary of the Clean Air Act, a federal law that works to keep the level of air emissions under control, on their website. Its regulations aim to protect both human health and the environment, partially by reducing harmful air pollutants from vehicles.