Federal Court Approves $14.7 Billion Settlement in VW Cheating Case

Oct 25, 2016

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

Under the settlements, Volkswagen has agreed to:

  • Buy back, terminate leases or provide approved emissions modifications for nearly 475,000 2-liter TDI diesel cars in the U.S.
  • Provide cash payments to owners and lessees
  • Pay for environmental remediation
  • Promote zero emissions vehicle technology

Owners and lessees can choose to sell their car or agree to a terminated lease, or opt for vehicle modifications to ensure it is compliant with current EPA and CARB rules.

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, according to CARB. 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, according to CARB.

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, according to CARB.

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, according to CARB.

Click for details on the settlement for car owners and lessees.