Federal court approves $14.7 billion settlement in VW cheating case, California’s settlement is $2.7 billion

16 November 2016
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Federal court approves $14.7 billion settlement in VW cheating case

Pollution mitigation and zero-emission vehicle infrastructure and outreach projects to be subject of public workshops, comment

SACRAMENTO – US District Judge Charles Breyer today approved a partial Consent Decree agreed upon by automaker Volkswagen (VW), the California Air Resources Board (CARB), the Environmental Protection Agency (US EPA) and the US Department of Justice (US DOJ). The $14.7 billion agreement is the largest settlement in history involving an automaker.

VW admitted to CARB engineers in September 2015 that it installed “defeat devices” that altered the operation of emissions control equipment in light-duty, 2.0-liter passenger vehicles manufactured and sold between model years 2009 and 2015. There are approximately a half-million of these vehicles in the US and about 71,000 in California.

California will receive about $1.2 billion from the approved Consent Decree for mitigation of the environmental damage caused by VW’s deception.  About $381 million  will be spent on projects to reduce smog-producing pollution, such as incentivizing clean heavy-duty vehicles and equipment in disadvantaged communities.  Approximately $800 million dollars (ZEV Investment Commitment) will be invested to advance California’s groundbreaking Zero Emission Vehicle (ZEV) programs. VW will make these payments and investments in installments over several years, and the two sums together will provide funding to mitigate all past and future environmental harm, including harm to California’s clean vehicle market, that resulted from VW’s cheating.

The state will undertake a public process to allow members of the Legislature and the public to provide input and comments on potential projects to be funded by the settlement.

“The court’s approval of the largest settlement for California under the Clean Air Act sets in motion a public process that will develop a range of projects to mitigate the harmful health effects of smog,” said CARB’s Chair Mary D. Nichols. “While we continue to pursue penalties for these violations — and a resolution for 3.0-liter vehicles which were also equipped with defeat devices — this decision sends a clear message that California will continue  to ensure cars and tailpipes meet the standards designed to protect the public from pollution and smog.”

Background:
Following publication of a report indicating high emissions from Volkswagen vehicles in over-the-road testing, CARB conducted a focused investigation which ultimately led to Volkswagen’s admissions in September 2015 that the company had installed defeat devices in all of their diesel vehicles manufactured between model years 2009 and 2015. Because CARB’s technical staff played a chief role in revealing VW’s deceit, and due to CARB’s longstanding role in setting and enforcing tough vehicle standards, California played a major role in leading, shaping and structuring the Consent Decree.  In California, VW’s cheating was particularly harmful, because our air quality is worse than anywhere else in the nation. Twenty-three million people living within the nation’s only severe nonattainment areas for ozone pollution, of which NOx is a primary component, and 12 million living in areas with nation-leading levels of fine particle pollution reside in California. These pollutants cause lung disease, heart disease, and premature death, especially among our most vulnerable populations. To put California on track to ensure healthy air for all, California has adopted the most stringent air quality regulatory and enforcement program in the United States.

California’s Share of the National Mitigation Trust:
To address all past and future excess emissions of NOx from the 2.0-liter cars sold in California, under the terms of the Consent Decree, VW must pay about $381 million over a three-year period into a trust for projects to replace older and dirtier heavy duty diesel vehicles and equipment with cleaner vehicles and equipment, including advanced zero- or near-zero technologies. This provides an opportunity to focus reductions of emissions in disadvantaged communities.  Californians will have the opportunity for public input on potential projects to be funded with this money.  California’s share of the $2.7 billion mitigation fund is proportional to its share of the total number of affected diesel cars.

ZEV Investment Commitment:
The Consent Decree also requires Volkswagen to invest $800 million dollars in ZEV projects over a 10-year period in California. Eligible projects under this program include installing zero-emission vehicle fueling infrastructure (for both electric and hydrogen-powered cars), funding brand-neutral consumer awareness campaigns to increase the zero-emission vehicle market, and investing in projects such as car-sharing programs that will increase access to zero-emission vehicles for all consumers in California including those in lower-income and disadvantaged communities. These projects will support the next generation of zero-emission vehicles that will be sold in California, helping to grow the state’s burgeoning ZEV program, and will help lay the zero-emissions foundation for achieving the State’s air quality and climate goals.

The Consent Decree does not resolve pending claims for civil penalties or any claims concerning 3.0-liter diesel vehicles, and does not address any potential criminal liability.

An FAQ on California’s portion of the settlement is available here.

https://www.arb.ca.gov/newsrel/newsrelease.php?id=870