Volkswagen pleads guilty to criminal felony count, civil complaints, agrees to $4.3B settlement

Departments - Regulations

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February 8, 2017

Volkswagen AG (VW) agreed to plead guilty to three criminal felony counts and pay a $2.8 billion criminal penalty for software code that shut off diesel emissions controls when vehicles were undergoing testing by the U.S. Environmental Protection Agency (EPA) and the California Air Resources Board (CARB). The company also agreed to pay $1.5 billion to settle civil complaints. A federal grand jury in the Eastern District of Michigan returned an indictment charging six VW executives and employees for their roles in the nearly 10-year conspiracy, including one who was arrested in Florida in early January. The others are believed to reside in Germany.

VW CEO Matthias Müller says, “Since all of this came to light, we have worked tirelessly to make things right for our affected customers and have already achieved some progress on this path. The agreements that we have reached with the U.S. government reflect our determination to address misconduct.”

Attorney General Loretta E. Lynch says, “Volkswagen’s attempts to dodge emissions standards and import falsely certified vehicles into the country represent an egregious violation of our nation’s environmental, consumer protection, and financial laws... We will continue to examine Volkswagen’s attempts to mislead consumers and deceive the government.” www.justice.gov

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Outgoing Obama EPA finalizes fuel economy rules through 2025

A week before Donald Trump took the presidential oath of office, President Barack Obama’s administration finalized rules requiring automakers to reach more than 50mpg fuel economy by 2025. Automakers and trade groups hope the incoming president will reverse the decision.

In December 2016, U.S. Environmental Protection Agency (EPA) Administrator Gina McCarthy proposed that automakers can fulfill higher mileage requirements agreed to in 2012. The regulations included a mid-term review, during which environmentalists, lawmakers, regulators, and automakers were to submit comments, seeking to either strengthen or weaken the standards. That determination wasn’t due until April 2018. Automakers and their allies blasted the ruling.

National Automobile Dealers Association President and CEO Peter Welch says, “The Obama administration just made new cars and trucks thousands of dollars more expensive for America’s working men and women. Expensive and unaffordable new cars will drive Americans into less efficient, less clean, and less safe used cars – undermining the very goals of this policy. We urge the incoming Trump administration to withdraw today’s action.”

Because the regulatory action was the final stage of a long-running EPA rules-making procedure, the incoming Trump administration won’t be able to simply void the policy. Environmental groups have pledged to go to court to fight any attempts to weaken the new rules or delay enforcement. www.epa.gov

EPA accuses Fiat Chrysler of diesel emissions cheating; automaker refutes claims

The U.S. Environmental Protection Agency (EPA) has accused Fiat Chrysler Automobiles US LLC (FCA US) of cheating on diesel emissions for about 100,000 Ram 1500 trucks and Jeep Grand Cherokee sport utility vehicles for the 2014, 2015, and 2016 model years. EPA officials claim FCA US failed to disclose engine management software in the diesels that could impact emissions.

FCA US officials say they were disappointed by the ruling, stating the software in question does not impact emissions. The EPA began probing all diesel vehicles sold in the U.S. following Volkswagen’s emissions cheating. While EPA officials say they are still investigating whether the undisclosed software qualifies as a defeat device – its term for hardware or software installed only to trick tests – FCA US executives say the software was not designed for emissions.

“Failing to disclose software that affects emissions in a vehicle’s engine is a serious violation of the law, which can result in harmful pollution in the air we breathe,” says Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “We continue to investigate the nature and impact of these devices. All automakers must play by the same rules, and we will continue to hold companies accountable that gain an unfair and illegal competitive advantage.”

FCA US executives responded, saying, “FCA US diesel engines are equipped with state-of-the-art emission control systems hardware, including selective catalytic reduction (SCR).”

FCA US executives say they spent months providing software details to the EPA and have proposed software updates that could improve emissions performance. The notice of violation was issued in early January 2017, before Donald Trump took office. www.epa.gov