Volkswagen reaches $14.7B settlement for emissions cheating

by TheHill.com - 06/28/16 9:35 AM ET

Volkswagen Group agreed Tuesday to spend up to $14.7 billion in civil penalties and consumer compensation to settle numerous lawsuits for cheating on diesel emissions tests.

The proposed settlement would partially, but not completely, cover claims from the Justice Department, Environmental Protection Agency (EPA) and Federal Trade Commission, along with a class-action lawsuit from consumers who bought the vehicles, officials said.

{mosads}Up to $10.03 billion of the total will go toward repairing or buying back Volkswagen and Audi branded cars with 2-liter diesel engines, a number of roughly 475,000 cars in the United States from model year 2009 to 2015. Each owner would also get up to $10,000 to settle their claims.

Another $2.7 billion will go to environmental mitigation for the nitrogen oxides and other pollutants that the diesel engines emitted above legal limits, while $2 billion will go toward research on zero-emissions technology for vehicles.

“We cannot undo the damage that Volkswagen caused to our air quality, you can’t suck the [nitrogen oxides] out of the air,” Sally Yates, deputy attorney general at the Justice Department, told reporters. “But what we can do is offset that damage by reducing pollution from future sources.”

Yates said the settlement “marks a significant first step toward holding Volkswagen accountable both for its breach of legal duties and for its breach of the public’s trust.”

EPA head Gina McCarthy said the settlement should reassure Americans that the agency has their backs.

“When companies break rules designed to protect your health, when cheaters stack the deck against businesses that follow the law and when violators try to pull wool over your eyes, EPA stands up for you and we claim the protections that are rightfully yours under law,” she said.

It is the biggest car-related settlement in United States history and one of the biggest consumer class-action settlements.

A California federal judge must approve the settlement.

The deal does not completely settle the civil and criminal claims by the federal government against VW, and Yates assured reporters that those investigations are “active and ongoing.” The company still could face billions of dollars of fines under the Clean Air Act for its pollution.

It also does not include 3-liter vehicles that had similar emissions cheating, nor does it settle cases in state courts, cases outside the United States, lawsuits from dealers or lawsuits from local governments, among others.

Volkswagen in April told investors it took an $18.2 billion charge in anticipation of the costs related to the diesel emissions scandal.

The emissions scandal started last year, when the EPA revealed that Volkswagen had programmed diesel cars to emit fewer pollutants during emissions tests than during regular operations.

It quickly ballooned into a worldwide problem for the German automaker, which admitted to building millions of cars in a way meant to fool air regulators globally over seven years.

This story was updated at 10:11 a.m.