San Francisco, California - Attorney General Kamala D. Harris and the California Air Resources Board (CARB) today announced a landmark $14.7 billion national settlement with Volkswagen over allegations that the company violated environmental and consumer protection laws by installing “defeat device” software to bypass emissions controls in its 2.0 liter diesel vehicles.
As part of the national agreement, which is subject to approval by the court, Volkswagen will spend approximately $10 billion to buy back or modify these vehicles, as well as pay $2.7 billion into a trust to support environmental programs and reduce emissions and an additional $2 billion on investments and promotion of zero emissions vehicles. The agreement preserves the Attorney General’s and CARB’s claims for civil penalties and prospective injunctive relief, as well as their claims related to 3.0 liter diesel vehicles.
In addition to providing consumer relief funding, California will receive $1.18 billion, representing more than one-quarter of the funding VW must provide for environmental projects in states injured by the company's conduct and investments it must make in zero emission technology.
“Our state and national environmental protection laws exist to protect public health and to preserve our planet for future generations. Volkswagen undermined these objectives by deceiving California consumers and flagrantly violating California environmental and consumer protection laws by manipulating its diesel vehicles to produce false results when undergoing emissions testing,” said Attorney General Kamala Harris. “This landmark agreement not only ensures that consumers who were deceived are fairly compensated, but also requires Volkswagen to make unprecedented investments in protecting our environment and advancing zero emission technology.”
As part of the agreement, VW will offer compensation to those who own or lease a VW or Audi 2.0 liter vehicle as of September 18, 2015. Owners have the option of having Volkswagen buy back their vehicle or, if approved by CARB and EPA, having VW modify their vehicle to reduce its emissions. Owners who opt for a buyback or modification will also receive an additional cash payment of at least $5,100. Some owners may receive as much as $10,000.
In addition to consumer relief and getting polluting cars off the road via the buyback and modification program, which is anticipated to cost Volkswagen over $10 billion, Volkswagen is also required to pay $2.7 billion into a trust to support environmental programs throughout the country to reduce emissions. CARB will receive and direct 14.12%, $380 million, of these trust funds to fund environmental mitigation projects in California. Volkswagen is also required to buy back, modify, or scrap at least 85% of the subject vehicles nationally and in California, and it is required to pay for additional mitigation projects if it falls short of that requirement.
Volkswagen must also spend $2 billion over a 10-year period to promote zero emissions vehicles through educational information, research and development, and infrastructure development (such as building charging stations), to further mitigate emissions and help right the market that was manipulated by the false emissions results in Volkswagen diesel vehicles. Forty percent, or $800 million, of these investments will be made in California, pursuant to investment plans that will be subject to approval by CARB.
“This is a good deal for California’s environment and for California consumers. It will bring over a billion dollars of projects to California to supercharge our expanding zero-emission vehicle market, and fully mitigate the environmental harm to our air as a result of VW’s cheating,” said CARB Chair Mary D. Nichols. “The Consent Decree also recognizes the crucial contribution the dogged engineers in CARB’s testing lab played in exposing the illegal device in the first place – and the exceptionally costly and difficult challenges we face in our fight for cleaner air in a state where tens of millions breathe the most heavily polluted air in the nation.”
Volkswagen programmed software in its diesel cars to achieve lower emissions while undergoing testing, but in normal driving conditions, their cars were emitting up to 40 times more harmful nitrogen oxides than allowed by state and federal law.
The parties settling claims against Volkswagen in this major agreement include the California Attorney General’s Office, CARB, the U.S. Department of Justice, and the U.S. Environmental Protection Agency (EPA).
California is uniquely affected, not only because of our robust environmental protection laws and CARB’s unique enforcement and regulatory role, but also because our state has the largest number of affected consumers.
In conjunction with the consent decree, the California Attorney General’s office filed a joint complaint with CARB in the Northern District of California this morning. The complaint is attached to the online version of this news release at www.oag.ca.gov/news.
The agreement is subject to approval by the court following a public comment period.
The agreement is specific to 2.0 liter vehicles and does not include Volkswagen and Audi 3.0 liter vehicles that are alleged to have similar defeat devices installed. It also preserves the ability of the Attorney General, CARB, and the EPA to seek civil penalties and further injunctive relief.