Volkswagen’s Clean Air Act violations need a RESTORE Act solution

Volkswagen Automotive Group has admitted to installing software on several of its diesel vehicles to effectively defeat exhaust emission testing and deceive customers who thought they were purchasing “clean diesel” automobiles.

The company has agreed to settlements with the Department of Justice and the U.S. Federal Trade Commission. Volkswagen will pay $14.7 billion to settle emissions and marketing claims and provide $10.03 billion for customer buybacks and lease terminations. The automaker will also spend $4.7 billion on pollution mitigation and green vehicle technology.

{mosads}It’s a missed opportunity, and we have a model for a better solution.

In 2010, a far worse environmental disaster struck the Gulf Coast. The Deepwater Horizon oil rig suffered a catastrophic blowout pouring almost five million barrels of oil into the Gulf of Mexico.

Two years later, Congress enacted the RESTORE Act (“Resources and Ecosystem Sustainability, Tourist Opportunities, and Revived Economies of the Gulf Coast States”). Rather than sending all Clean Water Act fines and penalties to Washington, D.C., the RESTORE Act handed control of 80 percent of those funds to the impacted region.

The RESTORE Act structure should be instructive in cases like the Volkswagen settlement. While the harm isn’t nearly as localized as it was with the Deepwater Horizon spill, empowering state and local governments to develop common-sense solutions to mitigate economic and environmental harm is good policy.

Asking EPA bureaucrats to determine how to effectively spend billions of dollars around the country is too big of a lift for even the best intentioned and competent among them. We have a large country, and nobody knows the environmental issues quite like people who actually live in the areas outside of Washington, D.C..  

The RESTORE Act recognizes that reality. Federal officials are responsible for allocating some of the funds, but the Gulf Coast Ecosystem Restoration Council, which is made up of state governors and other officials, has discretion over a second pool of money, and the five Gulf states respectively have authority over a third.

The model doesn’t create unrestricted pots of money for local officials to dispense as they please. In exchange for allocating federal fines and penalties to more localized bodies, the RESTORE Act demands transparency and accountability. Selected projects must include clear expectations, publicly available progress metrics, and coordination with the U.S. Treasury’s inspector general to track dispersal of funds and project completion.

The EPA supposedly operates as a “cooperative federalism” regulatory regime. Increasingly that looks like EPA setting standards and telling states to implement them. For many states, that’s a peculiar understanding of the word, “cooperation.” The RESTORE Act model is cooperative federalism in its purest form. The EPA and Department of Justice enforces the law and works with states to ameliorate harms caused by the violation.

In the Volkswagen case we don’t need to invent a new policy solution to improve upon the EPA’s management of Clean Air Act fines and penalties. We simply need to RESTORE it.

Cameron Smith is state programs director and general counsel for the R Street Institute, a think tank in Washington, D.C.

The views expressed by authors are their own and not the views of The Hill.