In a second partial settlement disclosed 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).
The 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.
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 percent 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 this settlement is approved by the court, and can also obtain information about these options at: www.VWCourtSet lement.com and www.AudiCourtSettle ment.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 provisions of the settlement are contained in a proposed consent decree filed 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.
Published in the February 2017 Edition of American Recycler News
