California to Receive $153M in Final Settlement with Volkswagen

California to Receive $153M in Final Settlement with Volkswagen

Payment includes penalties and cost recovery

SACRAMENTO — The California Air Resources Board (CARB) today
announced that it filed a consent decree for its final settlement
with the Volkswagen Group of America (VW). The company will be
required to pay an additional $153.8 million to California over
the company’s use of illegal “defeat devices” in 2009-2016, 2.0
and 3.0 liter diesel passenger cars. Before today, VW had paid
$533 million to California, of which $422 million will flow to
the state through a mitigation trust. Today’s additional consent
decree was negotiated by attorneys and technical experts from
CARB and the California Attorney General's Office, and is subject
to court approval.  The overall VW settlement is the largest ever
for violations of vehicle air quality rules.

“This payment to the State of California closes another chapter
in the so-called ‘dieselgate’ case against Volkswagen, but it is
not the end of the story,” said CARB Chair Mary Nichols. “There
are still consumers waiting to find out the future of their cars.
CARB is working with U.S. EPA to determine if the remaining
vehicles can be modified.”

“What Volkswagen did was categorically unacceptable,” said
Attorney General Xavier Becerra. “At the California Department of
Justice, we’ve been holding Volkswagen accountable since we
learned of their inexcusable actions. One thing should be crystal
clear: wrongdoers who believe they can run and hide are sorely
mistaken.”

The $153.8 million dollars represents penalties for air quality
violations and the costs of CARB’s investigation. This Consent
Decree is in addition to:
1) More than $422 million dollars VW must pay into a national
trust to mitigate environmental harm in California
2) $800 million dollars in Zero Emission Vehicle (ZEV) related
investments that VW must perform in California pursuant to an
investment plan approved by CARB
3) $25 million dollars VW has paid to CARB to support ZEV
investment programs, including vehicle replacement programs, for
low-income residents
4) Consumer relief, including restitution and modification or buy
back of the affected vehicles
5) $86 million dollars it has paid to the California Attorney
General’s office for civil penalties and costs
6) Any additional mitigation payments VW is required to make if
it fails to modify or buy back at least 85% of the subject
vehicles in California.

The Consent Decree also includes an injunction requiring the
company to implement a corporate compliance program, conduct
enhanced vehicle testing, and undertake a series of audit and
reporting obligations to ensure future compliance with U.S. and
California laws and regulations.

Background

The case began when VW made the decision to use illegal “defeat
device” software to bypass emissions control equipment in order
to create the appearance that its cars met California and U.S.
health-based air quality standards. This started with its 2009
model year diesel vehicles. As a result, the vehicles spewed
excess nitrogen oxide emissions (NOx) in amounts up to 40 times
the legal standards. More than 500,000 of these vehicles were
sold in the U.S., of which approximately 85,000 were sold in
California.

As CARB technicians pushed the company to explain the excess
emissions, it became clear that the company was not providing the
full story. At that point CARB technicians began running
specially designed test cycles independent of VW. When confronted
with the results of those tests, the company was unable to
explain what was happening and finally admitted it was cheating.

In California, VW’s cheating was particularly harmful because
California’s air quality is worse than anywhere else in the
nation. Ten million Californians live within the nation’s only
severe nonattainment areas for ozone pollution, and 12 million
live in areas with nation-leading levels of fine particle
pollution. These pollutants cause lung disease, heart disease,
and premature death, especially among our most vulnerable
populations. To put California on track to ensure healthy air for
all, California has adopted the most stringent air quality
regulatory and enforcement program in the United States.

After VW admitted to the presence of defeat devices in the
affected vehicles, CARB, the U.S. Environmental Protection
Agency, the California Department of Justice, and the U.S.
Department of Justice took legal action against the company,
resulting in billions of dollars in court judgements, and civil
and criminal penalties.