Volkswagen’s terrible, horrible, no good, very bad fall and winter got a lot worse on Monday. The federal government filed a civil lawsuit against the automaker for its admitted use of special software to conceal harmful levels of pollution in its diesel cars.
The Justice Department filed the lawsuit on behalf of the Environmental Protection Agency in Detroit federal court. Read it here. It accuses Volkswagen of installing “defeat devices” in almost 600,000 cars sold in the United States from model years 2009 to 2016. When these cars went in for emissions tests, the devices made them appear to spew far less nitrogen oxide than they actually did on the road–as much as 40 times the legal limit. Nitrogen oxide not only contributes to ozone and smog, but has been linked to respiratory problems. Volkswagen only admitted the fraud when the EPA threatened not to certify Volkswagen’s 2016 diesel models for sale in this country.
While this was only a fraction of the 11 million cars around the world that had these devices, this lawsuit has the potential to hit Volkswagen hard in the wallet. The lawsuit didn’t ask for specific damages. However, the Clean Air Act provides for fines of up to $32,500 for each two-liter car that had the “defeat device”–about 499,000 in all. For the 85,000 three-liter vehicles, the maximum fine is $37,000 per vehicle. Add it up, and Volkswagen could be staring down the barrel of up to $19 billion in fines.
Cynthia Giles, the EPA’s head of enforcement, said that the lawsuit was filed to ensure Volkswagen is held to account after recall talks failed to produce “an acceptable way forward.” To Carl Tobias, the Williams Chair of Law at the University of Richmond, this lawsuit is the Justice Department and EPA’s way of letting Volkswagen know that it’s not taking this scandal seriously. He thinks that the government could potentially “demand more money” than the maximum $19 billion Clean Air Act fines, and could even pursue criminal charges against the company and its staffers.
Indeed, Justice Department officials stressed that this lawsuit is merely a first step, and doesn’t close the door on criminal charges against the company or specific executives. Nonetheless, environmental advocates are already urging the government to pursue criminal proceedings.
For Volkswagen, this lawsuit is the latest in a series of body blows. The company has already yanked its 2016 “clean diesel” cars from dealerships, and its share price has taken a nosedive. CEO Martin Winkelkorn was forced to resign, along with several other senior executives. American boss Michael Horn has adopted the posture of a supplicant begging for mercy, saying that his company had “totally screwed up.” The company has set aside $7.3 billion–equal to a year’s profits–to pay the costs of the scandal. However, most experts think Volkswagen could potentially have to cough up as much as $84 billion–more than what BP had to pay for the Deepwater Horizon spill. Indeed, the potential Clean Air Act fines alone would dwarf the money set aside by Volkswagen.
Let’s hope that the Justice Department is true to its word, and that there are criminal charges on the way–and that individuals, not just companies, will get perp-walked for this outrageous fraud.
