VW to pay California additional $86M in civil penalties over defeat device
08 July 2016
California Attorney General Kamala D. Harris announced that, in addition to the historic $14.7-billion settlement with Volkswagen announced last week (earlier post), the company will also pay California $86 million in civil penalties as part of a second partial settlement over the company’s use of “defeat devices” to evade emissions testing in its diesel vehicles. California will secure $1.18 billion from the initial $14.7-billion settlement.
Volkswagen will also agree to significant injunctive terms to deter future misconduct, including a new requirement that Volkswagen contractors and employees report to the California Attorney General’s office any request for or use of “defeat devices.” The agreement, which is subject to court approval, represents the largest amount of money recovered by the state of California from an automaker and resolves certain aspects of the California Attorney General’s claims against Volkswagen under California’s Unfair Competition Law as well as the Dodd-Frank Consumer Financial Protection Act of 2010.
Of the $86 million in penalties, the Attorney General will direct $10 million in grants to local government agencies or academic institutions to research and develop technology to detect “defeat devices” and better assess on-road emissions, as well as to monitor, model, and mitigate the environmental and public health impacts of vehicle emissions, especially on children and other vulnerable populations.
As part of the initial $14.7-billion agreement, Volkswagen agreed to spend an estimated $10 billion to compensate consumers and buy back or modify hundreds of thousands of its polluting cars; pay $2.7 billion into a trust fund for environmental mitigation projects; and spend $2 billion over 10 years on zero-emission technology. Of the $4.7 billion in mitigation funding and investments, $1.18 billion will come to California ($800 million in zero-emissions technology investments and $380 million for environmental mitigation projects in the state).
The new partial settlement relates to Volkswagen’s 2.0- and 3.0-liter diesel vehicles that deployed “defeat devices” to deceive regulators and consumers about levels of harmful emissions. An estimated 86,000 2.0- and 3.0-liter diesel vehicles were sold or leased in California between 2009 and 2015.
The settlement preserves California’s potential criminal claims and claims for additional civil penalties and injunctive relief under state environmental laws, as well as the Attorney General’s claims for consumer relief and environmental mitigation related to the 3.0 liter vehicles.
In addition to the $86 million in civil penalties, Volkswagen agrees to strict injunctive terms as part of the settlement, including:
- Prohibitions on false and deceptive advertising.
- Affirmatively disclosing defeat devices in certification applications and other submissions to the California Air Resources Board (CARB).
- Notifying the California Attorney General’s office and CARB of whistleblower and other complaints.
- Requiring Volkswagen contractors and employees who are designing engine control units or engine control software to report to the California Attorney General’s office and to CARB any request for or use of defeat devices, and to keep accurate records of software features and changes that could be used as defeat devices.
- Provide the California Attorney General’s office with reports of any violations, along with periodic reports regarding its efforts to implement the injunction and effectiveness of those efforts.
The consent decree was filed today in US District Court, Northern District of California.
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