VW Reaches $1 Billion Deal in Ongoing Emissions Scandal


by | Dec 21, 2016

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VWVolkswagen has reached a $1 billion deal with environmental regulators to resolve the dieselgate scandal, in which VW equipped more than half a million US cars with defeat devices designed to cheat emissions tests, which has plagued the automaker for more than a year.

Under a settlement announced yesterday with the EPA, the US Justice Department and the state of California, VW has agreed to recall the remaining 83,000 model year 2009 through 2016 3.0 liter diesel vehicles sold or leased in the US allegedly equipped with defeat devices.

For the older vehicles, Volkswagen agreed to buy back the vehicles or terminate leases. If VW can make the newer vehicles compliant with the emission standards, it will have to fix the vehicles and will not be required to buy them back.

US District Judge Charles Breyer didn’t disclose how much the owners will be paid.

Volkswagen is also required to spend $225 million to fund projects that will reduce nitrogen oxide emissions.

In a separate agreement with the state of California related to defeat devices in 3-liter diesel cars, the company must pay $225 million into a national mitigation fund.

California will receive about $41 million of that money for mitigation programs in the state designed to mitigate emissions released by the vehicles.

This is in addition to $1.2 billion VW is already paying California for mitigation and zero-emission vehicle infrastructure.

“The agreement announced by the court today between Volkswagen and US environmental regulators is another important step forward in our efforts to make things right for our customers, and we support the efforts of the Court to bring about a fair and reasonable resolution of remaining 3.0L TDI V6 claims as quickly as possible,” said Hinrich J. Woebcken, president and CEO of Volkswagen Group of America, in a statement. “We are committed to earning back the trust of all our stakeholders and thank our customers and dealers in the United States for their patience as the process moves forward.”

This latest settlement does not resolve any pending claims for civil penalties, nor does it address any potential criminal liability, the agencies said. It also does not resolve any consumer claims, claims by the Federal Trade Commission, or claims by individual owners or lessees who may have asserted claims in the ongoing multidistrict litigation.

Yesterday’s settlements are the latest chapter in legal wranglings that may see the automaker in court for years.

In a 2015 settlement, VW to spend up to $14.7 billion on projects to reduce air pollution, remedy environmental damage and buy back 2.0 liter diesel vehicles to settle allegations of using illegal software to cheat emissions tests and deceive customers.

The automaker reached a separate $1.2-billion deal with its US dealers. It is also facing hundreds of millions of dollars in penalties from other state’s lawsuits — the company is being sued by New York, Massachusetts and Maryland for installing defeat devices in vehicles and then trying to cover up the scam — and the US Justice Department earlier this year launched a civil investigation.

Following VW’s admission that it used defeat devices in US and UK diesel vehicles, former CEO Dr. Martin Winterkorn resigned from his post, which he had held since 2007. Winerkorn is now facing a criminal investigation in Germany.

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