Volkswagen Settles Emissions Case for $14.7B

      WASHINGTON (CN) — Still facing criminal liability, Volkswagen reached a nearly $15 billion deal Tuesday with the United States to settle charges that it cheated emissions tests and deceived customers.
     During a press conference this morning at the Department of Justice, Deputy Attorney General Sally Q. Yates called the actions of Volkswagen “one of the most flagrant violations of the consumer and environmental laws in country’s history.”
     “By duping the regulators, Volkswagen turned over half a million Americans into unwitting accomplices in an unprecedented assault on our country’s environment,” Yates said.
     In addition to the monetary obligation — the largest ever settlement under the Clean Air Act — the German automaker will offer consumers a buyback and lease termination for affected models.
           There are nearly 500,000 vehicles at issue: 2.0 liter diesel vehicles, model year 2009-2015, sold or leased in the United States.
     The monetary obligation includes $10.03 billion to compensate consumers and $4.7 billion to mitigate the pollution these cars caused and to invest in green-vehicle technology.
     Volkswagen reached one settlement with the United States and the state of California. Its other settlement today is with the U.S. Federal Trade Commission.
     The settlements come nine months after the U.S Environmental Agency forced a recall of cars that it found had been outfitted with “defeat-device” software that had been hoodwinking emissions inspectors for years.
     Using a sophisticated algorithm, the software kicks into full emissions-control mode only when it detects the vehicle is undergoing inspections.
     While the cars meet standards under laboratory settings, they spew nitrogen oxides at up to 40 times that limit on the road, the EPA said.
     Nitrogen oxide pollution has been linked to increased asthma attacks and deadly respiratory and cardiovascular illnesses.
     The scandal led to the resignation of CEO Martin Winterkorn, hundreds of federal class actions recently consolidated in San Francisco, plus multiple investigations and congressional hearings.
     Two months after the Justice Department sued Volkswagen under the Clean Air Act, the FTC sued as well.
     Volkswagen’s buyback will offer $10 billion to plaintiffs who currently own a vehicle. Dependent upon the value of the vehicle, Volkswagen will also pay $5,000 to $10,000 in direct compensation for the cars.
     Though the agreement also includes the possibility of owners having their cars repaired, it has been noted that such restorations causes degradation of both the engine and gas mileage.
      Individuals who previously owned and then sold their Volkswagen diesel cars after the scandal emerged last year will have an opportunity to receive compensation ranging from $2,500 to $5,000.
     During the press conference, Environmental Protection Agency Administrator Gina McCarthy said the civil complaint was one that she knew “should happen but whether it could have, [I] was a little bit skeptical.”
     “It’s worth repeating that every action the EPA takes is all about protecting public health … and [Volkswagen will] take millions of tons of pollution out of our air and protect people all across the U.S. and beyond from the health effects like aggravated asthma, respiratory problems and even premature death,” McCarthy said.
     Yates outlined three points that Volkswagen has agreed to meet as a part of the lawsuit: paying consumers to get their Volkswagen vehicles off the road, funding pollution-reduction projects to offset environmental damages and investing in projects that encourage Americans to expand their use of zero-emission vehicles.
           The settlement terms also included a $2 billion investment to support infrastructure and education which will support the advancement of zero-emission vehicles.
     “It is a significant first step toward holding Volkswagen accountable both in breach of its legal duties and the public’s trust and it is by no means the last step,” Yates said.
     A criminal investigation is ongoing but the government officials would not offer any details about the status of that case.
     FTC chairwoman Edith Ramirez participated in this morning’s press conference in Washington.
     This afternoon in San Francisco, California Attorney General Kamala Harris’s office and the California Air Resources Board will hold a conference of their own about Volkswagen.
     New York’s attorney general noted that the settlement enables more than 21,500 car owners there to sell their cars back to companies at fair-market value, before the scandal upended the market.
     Drivers are also entitled to a cash payment of at least $5,100, Attorney General Eric Schneiderman added.
     On the environmental side, the settlements provide New York with more than $115 million for projects to improve air quality.
     New York state will also recover another $30 million.

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