VW agrees to buybacks, repairing some rigged cars

Source: riel Wittenberg, E&E reporter • Posted: Friday, April 22, 2016

Volkswagen has reached an agreement with U.S. EPA and the California Air Resources Board that requires the automaker to buy back some vehicles equipped with software meant to evade federal emissions tests, a U.S. district court judge in California announced today.

Under the agreement, owners of 2-liter-engine cars involved in the emission-cheating scandal would be able to choose whether Volkswagen should buy back or repair their vehicles, Senior U.S. District Judge Charles Breyer said in a hearing at the U.S. District Court for the Northern District of California.

Volkswagen has also agreed to additionally compensate drivers of vehicles carrying the emission-dodging software.

The agreement would affect some 480,000 vehicles, including versions of the Jetta sedan, the Golf compact and the Audi A3 sold since 2009. Consumers leasing affected vehicles will also have the option to cancel their contracts.

An agreement has yet to be reached on what to do about 80,000 diesel vehicles with 3-liter engines that were also found to be skirting federal pollution regulations.

Volkswagen has agreed to “fully address any excess emissions of [nitrogen oxides] and the environmental consequences of these emissions,” Breyer said.

The automaker agreed to establish a fund for “appropriate” remediation and will also be required to commit other funds “to promote green automotive technology,” Breyer said.

The consensus between parties — known as an “agreement in principle” — is usually a stepping stone for negotiating additional details of a settlement.

In this case, Volkswagen has yet to say how it intends to fix any of its emission-cheating vehicles. The parties also must negotiate how much the carmaker would compensate individual customers, as well as the size of environmental remediation and green transportation funds.

Volkswagen attorney Jeffrey Chase called the agreement “good for consumers, good for the environment and good for Volkswagen.”

“Volkswagen is committed to winning back the trust of its customers and regulars, and we think these agreements are an important step forward on the road to making this right,” he said at the hearing.

Justice Department spokesman Wyn Hornbuckle said in a statement that “this agreement in principle addresses one important aspect of the Department’s pending case against VW, namely what to do about the 2 liter diesel cars on the road and the environmental consequences resulting from their excess emissions.”

“The Department’s other investigations into VW’s conduct remain active and ongoing,” he said.

Deadlines ahead

All parties have until June 21 to agree on a final settlement, at which time a consent decree will be filed with the court. After the consent decree is filed, it will be opened to public comment.

Judge Breyer has also scheduled an additional status hearing on the agreement May 19. He said he wants to hear an update on a possible settlement for the larger 3-liter diesel engine vehicles.

During today’s hearing, Breyer urged all parties to keep the negotiations confidential, saying leaking details could mislead consumers.

“It is in the interest of everyone who is affected by this, and I think the general public is affected by this, to withhold public judgment about what is the appropriate settlement until there is a final settlement,” he said.

Breyer said that while confidentiality is important at this stage, the public will have ample ability to comment on a final settlement.

“I want to emphasize that the fact that there is confidentiality in the negotiated agreements is in no way to suggest that the public and interested parties will not have the opportunity to review and comment on any proposed agreement. That will take place,” he said. “Once there is a final settlement, I will encourage the public and interested parties to make their views known.”


Environmental groups and lawmakers Thursday had mixed reactions to the deal, which so-far incorporates some suggestions from the public to force VW to fund green transportation projects as penance for its Clean Air Act Violations.

U.S. Public Interest Research Group Transportation Director John Olivieri took a warily optimistic approach, saying “we’re glad to hear that there is a ‘framework’ for a settlement,” but that “the devil will be in the details.”

House Energy and Commerce Committee Chairman Fred Upton (R-MI) echoed the sentiment.

“VW betrayed the trust of American drivers and the U.S. government, and today’s news is an important step,” he said. “Of course the devil is in the details, and therefore it will be important to understand the details of this agreement once it is resolved.”

Other VW critics are not yet willing to give the automaker the benefit of the doubt.

Sierra Club California Chapter Director Kathryn Phillips noted that, so far, the agreement does not include any information about civil penalties against VW or the size of its environmental remediation and clean transportation funds.

“For this settlement, nothing short of public health, consumer rights, and the environment are at stake and currently, it does not go far enough,” she said in a statement.

“Without strict penalties, and without fixing or removing the polluting vehicles, people will continue to breathe dirtier air, consumers will lose faith in watchdog agencies, and manufacturers will believe they can endanger our health without feeling the full consequence.”

The settlement’s most outspoken critics thus far are Sens. Ed Markey (D-Mass.) and Richard Blumenthal (D-Conn.), who have been pressuring regulators to come out strong against the company since cheating allegations came to light this fall.

On Thursday, they renewed a call for federal authorities to pursue criminal charges against individual VW executives “who knowingly deceived regulators.”

While the deal currently on the table is “a welcome development,” the pair called the offer “too limited in scope and very late.”

The Senators also questioned why the buybacks and repairs offered to owners of 2-liter vehicles was not also on the table for owners of 3-liter vehicles.

“All affected owners deserve to be made whole for the damages and inconveniences caused by the company’s deceit,” they said.