US sues Volkswagen over emissions cheating scandal

The penalties sought would be in the billions of dollars, a senior US Justice Department official said.
The penalties sought would be in the billions of dollars, a senior US Justice Department official said.PHOTO: AGENCE FRANCE-PRESSE

WASHINGTON • The US Justice Department has sued Volkswagen for installing illegal devices to defeat emissions testing and laid out claims that could push penalties into the tens of billions of dollars - an opening salvo in a legal battle that could be far more costly for the German carmaker than expected.

The civil complaint filed on Monday accuses Volkswagen of four violations of the Clean Air Act and outlines penalties that could amount to as much as US$80 billion (S$114 billion) - about four times as much as the maximum some legal experts had estimated.

While the court is unlikely to come anywhere near that amount, according to a senior Justice Department official, the penalties sought would still be in the billions of dollars, another senior Justice Department official said.

Volkswagen already faces hundreds of private lawsuits in the United States for its actions, which have been consolidated in a San Francisco federal court. The Justice Department said it will ask for its suit to be transferred to that court as well.

Volkswagen is also facing lawsuits from state attorneys-general, while regulators in at least seven countries, including Germany, have launched investigations.

The US could also bring criminal charges against Volkswagen for lying to the Environmental Protection Agency (EPA) about the emissions cheating devices.

Volkswagen had been making some progress on the European side in addressing the pollution scandal, which cost the chief executive officer and several other senior employees their jobs.

The company won regulatory approval in Germany last month for low-cost fixes for 8.5 million diesel engines in Europe equipped with the cheating software, out of 11 million worldwide.

Volkswagen admitted last September that it had rigged some diesel engines so that emissions controls came on only during testing. Those controls shut off while the car was on the road, producing nitrogen oxide emissions well in excess of the US legal standard.

The Justice Department is seeking an order requiring Volkswagen to take "appropriate steps", including mitigating nitrogen oxide emissions. Such steps may include forcing Volkswagen to install equipment to reduce pollution or buy back vehicles from owners.

To obtain such an order, the government would have to spell out what it is seeking in a separate filing later. The company has suspended sales of its diesel vehicles in the US till the matter is resolved.

The complaint includes four alleged violations for each vehicle: Selling cars without EPA emissions certifications, selling cars with the defeat devices, tampering with the engines and failing to report the existence of the defeat devices.

Under the Clean Air Act, each of those violations could result in a penalty of up to US$32,500 or US$37,500, depending on when the violation occurred.

That means that each of the approximately 580,000 cars sold by Volkswagen in the US that had the so-called defeat devices could, in theory, be hit with four separate penalties, according to the Justice Department official.

In addition to Volkswagen, the lawsuit also names company units Audi, Porsche and Porsche Cars North America as defendants.

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A version of this article appeared in the print edition of The Straits Times on January 06, 2016, with the headline 'US sues Volkswagen over emissions cheating scandal'. Print Edition | Subscribe