Transportation

Volkswagen’s $14.7 billion settlement includes perks for California drivers, air quality

A Volkswagen Touareg diesel is tested in the Environmental Protection Agency’s cold temperature test facility in Ann Arbor, Mich.
A Volkswagen Touareg diesel is tested in the Environmental Protection Agency’s cold temperature test facility in Ann Arbor, Mich. Associated Press file

Two years after a California agency first exposed Volkswagen’s scheme to cheat on vehicle emission tests, the state netted a large portion of the $14.7 billion settlement the automaker announced on Tuesday to resolve claims that it misled customers and lied to regulators for years.

Most of the money, about $10 billion, is earmarked for a program requiring VW to buy back or modify almost 500,000 diesel-fuel cars it sold after 2009. About 87,000 of them are believed to be in California, although only 71,000 are eligible for the buyback program announced Tuesday. The company suggested the buyback program could start in the fall.

Another $4.7 billion will go toward state and federal air quality programs, as well as efforts that would promote zero-emission vehicles. California stands to gain $1.18 billion of that money. Another $600 million settles separate claims from Puerto Rico and 44 states.

California Attorney General Kamala Harris said at a news conference Tuesday that the settlement – the automaker’s first related to the scandal – was a “landmark deal” that would deter other companies from trying to deceive environmental regulators. It far exceeds recent settlements Toyota and General Motors have reached with government agencies over safety-related lawsuits.

“It sends a very strong signal that cheating is not tolerated,” said Bonnie Holmes-Gen, a senior policy adviser for the American Lung Association in California.

Some customers and car dealers were still trying to figure out how the details of the settlement will affect them.

“Really, this has been a very general resolution to the problem, and the specifics as to what the fix is, we have no clue,” said Rick Niello, a prominent Sacramento VW dealer.

Really, this has been a very general resolution to the problem, and the specifics as to what the fix is, we have no clue.

Volkswagen dealer Rick Niello

He said he’s awaiting information about how VW plans to appraise recalled vehicles or fix vehicles that customers want to continue driving.

“They’re very popular cars. Customers love them,” Niello said. “Unfortunately, they’re not meeting the clean air requirements. It’s a real dilemma.”

The California Air Resources Board first identified irregularities in VW diesel-fuel emissions tests in 2014. The air board’s independent tests showed certain VW cars emitting pollutants at 40 times the level allowed by state and federal standards.

A complaint filed Tuesday in federal court by the state attorney general’s office said VW officials stalled and denied wrongdoing when the air board raised concerns with them in 2014 and 2015.

A subsequent investigation determined that VW had installed “defeat devices” that sensed when a vehicle was being tested for its compliance with emission standards. During the test, the vehicle would appear to meet emission standards. Afterward, it would continue releasing pollutants at a higher level.

In the meantime, VW marketed the cars as a fuel-efficient and “green” during a period of exceptionally high gasoline prices. Harris said customers who bought those diesel-fuel cars “were duped” by false advertising.

Dean Florez, a former state senator who’s on the Air Resources Board, said on Twitter that the agency “will make sure VW repays its dirty debt.”

VW has provided some details about the settlement at a website, vwcourtsettlement.com, letting people check whether their cars are eligible for the buyback program.

The settlement applies to vehicles with 2-liter engines that didn’t comply with government emissions standards. It doesn’t address another group of diesel-fuel vehicles with 3-liter engines that also were found to be out of compliance.

Recalled cars include recent diesel-fuel models of the VW Beetle, Jetta, Golf, Passat and Audi A3, which uses a VW-manufactured engine. Customers could receive up to $44,000 through the buyback program, depending on mileage, use, condition of the car and other factors.

“We know that we still have a great deal of work to do to earn back the trust of the American people. We are focused on resolving the outstanding issues and building a better company that can shape the future of integrated, sustainable mobility for our customers,” VW Chief Executive Matthias Muller said in a statement announcing the deal.

The settlement partially resolves charges submitted by the board as well as the California attorney’s general’s office, U.S. Justice Department and U.S. Environmental Protection Agency.

Still, the company acknowledges on the settlement website that it has not yet developed a repair to the cars that would satisfy the California Air Resources Board.

In January, the board rejected the company’s first proposal to recall diesel-fuel vehicles because VW didn’t specify how it would make the repairs or contact owners. Air Resources Board Chairwoman Mary Nichols said the agency will continue to scrutinize VW’s pending repair plans.

“As you can imagine with our history with this company, we’re not going to take anything on its face,” she said.

As you can imagine with our history with this company, we’re not going to take anything on its face.

California Air Resources Board Chairwoman Mary Nichols

Some VW officials and contractors may still face criminal charges, a Justice Department official said Tuesday.

“We are looking at multiple companies and multiple individuals,” Deputy Attorney General Sally Yates said.

Adam Ashton: 916-321-1063, @Adam_Ashton

Volkswagen buy-back

The following models may be eligible for Volkswagen’s buyback or repair program:

  • VW Beetle from 2013 to 2015
  • VW Golf from 2010 to 2015
  • VW Jetta from 2009 to 2015
  • VW Passat from 2012 to 2015
  • Audi A3 from 2010 to 2013 and 2015
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