Volkswagen could spend $14.7 billion for cheating emissions tests

In two related settlements—one with the United States and the State of California, and one with the Federal Trade Commission—German automaker Volkswagen and related entities have agreed to spend up to $14.7 billion to settle allegations of cheating emissions tests and deceiving customers, the Department of Justice said.

Volkswagen will offer consumers a buyback and lease termination for nearly 500,000 model year 2009-2015 2.0 liter diesel vehicles sold or leased in the United States, and spend up to $10 billion to compensate consumers under the program. In addition, the companies will spend $4.7 billion to mitigate the pollution from these cars and invest in green vehicle technology.

The settlements partially resolve allegations by the Environmental Protection Agency and the California Attorney General’s Office and the California Air Resources Board (CARB) under the Clean Air Act, California Health and Safety Code, and California’s Unfair Competition Laws, relating to the vehicles’ use of “defeat devices” to cheat emissions tests. The settlements also resolve claims by the FTC that Volkswagen violated the FTC Act through the deceptive and unfair advertising and sale of its “clean diesel” vehicles.

The settlements do not resolve pending claims for civil penalties or any claims concerning 3.0 liter diesel vehicles. Nor do they address any potential criminal liability.

“While this announcement is an important step forward, let me be clear, it is by no means the last,” Deputy Attorney General Sally Yates said in a statement. “We will continue to follow the facts wherever they go.”

Civil complaint

In March 2016, the FTC filed a lawsuit against Volkswagen, charging that the company deceived consumers with the advertising campaign it used to promote its supposedly “clean diesel” VWs and Audis, which falsely claimed that the cars were low-emission, environmentally friendly, met emissions standards and would maintain a high resale value.

The settlements use the authorities of both the EPA and the FTC as part of a coordinated plan that gets the high-polluting VW diesels off the road, makes the environment whole, and compensates consumers, the Justice Department said. Volkswagen must set aside and could spend up to $10 billion to pay consumers in connection with the buy back, lease termination, and emissions modification compensation program.

The provisions of the U.S. and California settlement are contained in a proposed consent decree filed in the U.S. District Court for the Northern District of California, as part of the ongoing multi-district litigation, and will be subject to public comment period of 30 days, which will be announced in the Federal Register in the coming days. The provisions of the FTC settlement are contained in a proposed Stipulated Final Federal Court Order filed in the same court.