Volkswagen AG, Audi AG and Porsche AG ey have agreed to pay a total of about $157.45 million in penalties to 10 states to resolve environmental claims stemming from the companies’ emissions cheating scandal, as well as some consumer claims that weren’t covered in a prior settlement. The companies and their American subsidiaries reached a settlement to end environmental claims brought by Connecticut, Delaware, Maine, Massachusetts, New York, Oregon, Pennsylvania, Rhode Island, Vermont and Washington over their use of the defeat devices to hide the true levels of nitrogen oxides being emitted by purportedly “clean” diesel vehicles. The settlement also ends consumer protection claims by the states for injunctive relief or restitution concerning the companies’ affected cars that feature 3.0-liter diesel engines, claims that were not included in the $603 million settlement agreed to last year with 44 states, Washington, D.C., and Puerto Rico.
The settlement also requires Volkswagen to offer at least three new electric car models across its brands, including two electric SUVs, by 2020 – something it had previously committed to doing in California. The states included in the latest settlement have adopted California’s strict vehicle emissions standards pursuant to section 177 of the Clean Air Act. California has the unique authority to set its own emission standards, so long as they meet or exceed federal standards. Other states that cannot develop their own standards can adopt those laid out by California.
New York Attorney General Eric T. Schneiderman’s office, in a news release, said that this marks the first time that the states have won environmental penalties from an automaker under their state vehicle emission laws. The release said:
Historically, enforcing vehicle emission standards has been done primarily by the federal government. Setting this precedent is particularly vital now, when President Trump has vowed to defund federal environmental enforcement and undo federal environmental protections, which would leave states like New York and California as the first line of defense for the environment.
Volkswagen characterized the settlement in a news release as avoiding “further prolonged and costly litigation as Volkswagen continues to work to earn back the trust of its customers, regulators and the public.” Under the settlement, the money will be allocated as follows:
• Connecticut receives about $14.85 million,
• Delaware about $1.45 million,
• Massachusetts about $20 million,
• Maine about $5.16 million,
• New York about $32.53 million,
• Oregon about $16.22 million,
• Pennsylvania about $30.43 million,
• Rhode Island about $4.1 million,
• Vermont about $4.24 million and
• Washington about $28.42 million.
The 10 states’ claims against Volkswagen have been wrapped up in multidistrict litigation (MDL) over the emissions scandal and, under the settlement, many of their cases will be remanded back to state court for settlement purposes. The settlement is subject to court approval.
Volkswagen pled guilty in March in a Michigan federal court to conspiracy to defraud the U.S., wire fraud and Clean Air Act violations as part of a deal with the U.S. Department of Justice (DOJ). The settlement with the DOJ and U.S. Customs and Border Protection, initially reached in January, also contains measures to fortify the company’s compliance systems. The U.S. Environmental Protection Agency (EPA) and the California Air Resources Board (CARB) in September 2015 had accused Volkswagen of using the defeat devices to evade federal emissions tests for diesel vehicles.
As we have previously stated, Volkswagen has admitted fault and said that the software came preloaded in millions of its diesel vehicles around the world – nearly 600,000 of which were sold in the U.S. – allowing the vehicles to emit more toxins into the air after they left testing labs and were out on the roads. A number of Volkswagen executives have also become caught up in the debacle.
The MDL is In re: Volkswagen “Clean Diesel” Marketing, Sales Practices and Products Liability Litigation, (case number 3:15-md-02672) in the U.S. District Court for the Northern District of California.
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