Volkswagen Environmental Lawsuit Filed By U.S. Over Diesel Emissions Cheat Software

The federal government has filed an environmental lawsuit against Volkswagen, seeking up to $90 billion for violations of the Clean Air Act when the German auto maker equipped nearly 600,000 of it’s diesel vehicles with software designed to cheat on EPA emissions tests.

The U.S. Justice Department announced that a civil complaint (PDF) was filed against Volkswagen, Audi and Porsche on Monday, alleging that TDI “Clean Diesel” engine vehicles had illegal software installed for the express purpose of deceiving inspectors and violating U.S. emissions standards. The software is believed to have been installed in nearly 11 million vehicles worldwide.

The Volkswagen and Audi vehicles with 2.0L and 3.0L TDI diesel vehicles were sold as environmentally friendly, when they actually release illegally high levels of pollution.

In addition to the federal lawsuit filed by the U.S. government, the company also faces thousands Volkswagen diesel emissions lawsuits filed by owners of the vehicles, who allege that they were defrauded and paid premiums for the vehicles.

“Car manufacturers that fail to properly certify their cars and that defeat emissions control systems breach the public trust, endanger public health and disadvantage competitors,” Assistant Attorney General John C. Cruden, of the Justice Department’s Environment and Natural Resources Division, said in a press release. “The United States will pursue all appropriate remedies against Volkswagen to redress the violations of our nation’s clean air laws alleged in the complaint.”

The Volkswagen emissions scandal began on September 18, when the U.S. Environmental Protection Agency (EPA) issued a notice of violation of the Clean Air Act against Volkswagen and Audi, after it was discovered that smaller Volkswagen and Audi “Clean Diesel” vehicles sold in recent years had emissions-cheating software installed. This resulted in a recall for VW Beetle, VW Golf, VW Jetta, VW Passat and Audi A3 vehicles sold in various model years between 2009 and 2015. .

A little more than a month later, the list of affected TDI diesel vehicles was expanded to include the 2014 VW Touareg, the 2015 Porsche Cayenne, and the 2016 Audi A6 Quatro, A8, A8L, and Q5. However, VW has denied the EPA’s claims that those vehicles are affected. The recalls affected nearly 500,000 vehicles sold in the United States.

Volkswagen marketed the vehicles as “clean diesel”, which were promoted as being better for the environment and providing better gas mileage. However, the statements appear to be part of a major fraud on consumers who were trying to be more environmentally friendly.

Volkswagen Defeat Device Fines Could Top $90 Billion

The Volkswagen environmental lawsuit filed by the Justice Department was brought on behalf of the EPA, seeking injunctive relief and the assessment of civil penalties. The case does not preclude additional criminal charges.

The claim involves 499,000 2.0 liter diesel vehicles and 85,000 3.0 diesel vehicles sold in the U.S. since the 2009 model year. The company could be fined as much as $37,500 per vehicle for four violations of law each, meaning the company could face charges of $90 billion.

The Justice Department says it intends to have the lawsuit included in a Volkswagen emissions multidistrict litigation (MDL) that was consolidated in December 2015 before U.S. District Judge Charles R. Breyer in the Northern District of California and plans to fully participate in the MDL.

Justice Department officials have said the lawsuit comes, in part, because of failing recall discussions with Volkswagen.

“With today’s filing, we take an important step to protect public health by seeking to hold Volkswagen accountable for any unlawful air pollution, setting us on a path to resolution,” Assistant Administrator Cynthia Giles, of the EPA’s Office of Enforcement and Compliance Assurance, said in the press release. “So far, recall discussions with the company have not produced an acceptable way forward. These discussions will continue in parallel with the federal court action.”

In addition to fines and penalties that may be owed to the federal government, the German auto maker faces substantial liability in claims brought by vehicle owners, many of whom argue that Volkswagen should be forced to buy back the TDI Diesel vehicles.

Late last month, Volkswagen announced it has hired attorney Kenneth Feinberg to design an independent settlement program for diesel vehicle owners.

Feinberg has worked on a number of high profile settlements in recent years for corporations that found themselves facing massive legal costs from lawsuits, including both the General Motors ignition recall settlement fund as well as settlements by BP Deep Horizon oil spill settlement program.

It is not yet clear what form the settlement program will take. Some analysts are speculating that it may involve Volkswagen offering to buy back vehicles with the emissions test cheating software, which could cost the company in excess of $9 billion.