Car-maker Volkswagen has agreed to a settlement worth over $14 billion following action over allegations that it cheated emissions tests.
The agreement will see the company spend up to $10 billion in settlement to terminate leases, buy back or modify affected vehicles and compensate consumers, and another $4.7 billion to mitigate pollution and invest in zero-emission vehicle technology.
The settlements relate to two cases, one with the United States and the State of California and one with the U.S. Federal Trade Commission (FTC).
Volkswagen will offer consumers a buyback and lease termination for nearly 500,000 of its 2009-2015 2.0 litre diesel vehicles sold or leased in the United States, and spend up to $10.03 billion to compensate consumers under the program.
The settlements partially resolve allegations under the Clean Air Act, California Health and Safety Code and California’s unfair competition laws, relating to the vehicles’ use of “defeat devicesâ€? to cheat emissions tests. They also resolve claims by the FTC that Volkswagen violated the FTC Act through the deceptive and unfair advertising and sale of its “clean dieselâ€? vehicles.
According to the civil complaint against Volkswagen filed by the justice department on behalf of the US Environmental Protection Agency (EPA) on 4 January 2016, Volkswagen allegedly equipped its 2.0 litre diesel vehicles with illegal software that detects when the car is being tested for compliance with EPA or California emissions standards and turns on full emissions controls only during that testing process.
During normal driving conditions, the software renders certain emission control systems inoperative, greatly increasing emissions. This is known as a “defeat device.â€? Use of the defeat device results in cars that meet emissions standards in the laboratory, but emit NOx at harmful levels during normal driving conditions.
Deputy attorney general, Sally Q. Yates, said: “By duping the regulators, Volkswagen turned nearly half a million American drivers into unwitting accomplices in an unprecedented assault on our atmosphere.
“This partial settlement marks a significant first step towards holding Volkswagen accountable for what was a breach of its legal duties and a breach of the public’s trust. And while this announcement is an important step forward, let me be clear, it is by no means the last. We will continue to follow the facts wherever they go.â€?
The FTC sued Volkswagen in March, claiming that the company had misled consumers with the advertising campaign used to promote ‘clean diesel’ vehicles.
EPA administrator, Gina McCarthy, said: “Today’s settlement restores clean air protections that Volkswagen so blatantly violated. And it secures billions of dollars in investments to make our air and our auto industry even cleaner for generations of Americans to come.
“This agreement shows that EPA is committed to upholding standards to protect public health, enforce the law, and to find innovative ways to protect clean air.â€?
Executive director or the Diesel Technology Forum, Allen Schaeffer, issued a statement on Thursday (30 June) in response to the settlement.
Commenting on the $2.7 billion mitigation trust established through the settlement, which is intended to reduce excess emissions of oxides of nitrogen (NOx), Mr Schaeffer said: “Today, the most proven, available opportunity for mitigating excess emissions of NOx comes from the accelerated turnover of older heavy-duty trucks, buses and off-road machines and equipment to newer technology clean diesel models.â€?
If more of these older commercial vehicles are replaced with new or newer diesel engines, Mr Schaeffer said, emissions will be drastically reduced and “significant air quality benefits will accrue to communities across the country.â€?
“The diesel engine is the most energy efficient internal combustion engine,â€? he said. “Consumers will continue to find the new generation of clean diesel cars, trucks and SUVs a competitive choice to meet their personal transportation needs, and clean diesel technology is a key strategy to achieving current and future energy and climate goals.â€?
The Diesel Technology Forum is a non-profit national organisation that raises awareness about the importance of diesel engines, fuel and technology.