Good morning and thank you for being here.
I’m pleased to be joined by Environmental Protection Agency (EPA) Administrator Gina McCarthy and Chairwoman Edith Ramirez of the Federal Trade Commission (FTC), as well as Assistant Attorney General John Cruden, head of our Environment and Natural Resources Division; Cynthia Giles, EPA’s Assistant Administrator for the Office of Enforcement and Compliance Assurance; and Jessica Rich, Director of FTC’s Consumer Protection Bureau.
We are here today to announce several developments in our ongoing investigation into Volkswagen’s efforts to evade emissions rules – one of the most flagrant violations of environmental and consumer laws in our country’s history.
For years, Americans have been buying cars manufactured by Volkswagen thinking that their vehicles complied with federal pollution standards. But as VW now acknowledges, hundreds of thousands of cars the company sold in this country were in fact pumping illegal levels of nitrogen oxides into our atmosphere – up to 40 times more than what federal law allows. And as Volkswagen now admits, these vehicles were equipped with software that masked the true amount of pollutants the cars released while on the road, ensuring that regulators failed to detect the problem during environmental testing.
By duping the regulators, Volkswagen turned nearly half a million American drivers into unwitting accomplices in an unprecedented assault on our environment.
Since learning of these violations, the Justice Department has been working closely with its federal, state and foreign partners to determine whether any laws were broken. This January, the department filed a civil complaint on behalf of EPA, alleging that Volkswagen used illegal software to defeat emissions tests. Today, we are announcing a partial settlement in that case, along with a related settlement in the case filed by the Federal Trade Commission. These two settlements, which were just filed with the U.S. District Court in San Francisco, are valued at up to $14.7 billion and address what Volkswagen must do to both compensate consumers and mitigate the environmental harms.
Under these settlements, Volkswagen must do three things: the company must pay consumers to get these cars off the road; the company must fund pollution-reduction projects to offset the damage it caused; and the company must invest in projects that will encourage Americans to expand their use of zero-emissions vehicles in the future. We can’t undo the damage VW caused to air quality, but we can offset that damage by reducing pollution from other sources.
More specifically, VW must offer to buy back any car covered by these agreements – the nearly 500,000 2.0-liter diesel vehicles from model years 2009 through 2015 that were equipped with “defeat device” software. As part of the buyback, VW is required to offer a fair price and terminate leases at no cost. Volkswagen may also apply for approval of an emissions modification on the affected vehicles, and if approved by environmental regulators, offer consumers the opportunity to have their vehicles modified at no cost and to receive additional compensation. The company will spend up to $10 billion on this process.
Second, Volkswagen will pay $2.7 billion to fund projects across the country that will reduce nitrogen oxide emissions where their vehicles were, are or will be operated. This marks the largest monetary mitigation obligation in the history of the Clean Air Act.
And finally, Volkswagen will direct $2 billion of investments to improve infrastructure, access and education to support and advance zero emission vehicles.
Taken together, these three components are valued at up to $14.7 billion, although the precise amount will depend on how many consumers choose to have their cars bought back and how many choose to have their cars modified.
This resolution illustrates the Justice Department’s commitment to protecting American consumers, safeguarding the environment and aggressively pursuing companies that make misrepresentations and violate the law. It marks a significant first step towards holding Volkswagen accountable for what was a breach of its legal duties and a breach of the public’s trust.
While this announcement is an important step forward in achieving justice for the American people, let me be clear, it is by no means the last.
The settlements do not resolve the government’s pending claims for civil penalties under the Clean Air Act, nor do they resolve pending claims concerning 3-liter diesel vehicles. In addition, the settlements do not address any potential criminal liability, although I can assure you that our criminal investigation remains active and ongoing. We will follow the facts wherever they go and we will determine whether to bring criminal charges against any companies or individual wrongdoers.
I am especially grateful today for the tremendous efforts of the Justice Department staff in the Environment and Natural Resources Division – many of whom are here with us this morning. Bruce Gelber, Karen Dworkin, Josh Van Eaton and Beth Engel.
I’d also like to thank our partners at the EPA, the state of California, and the FTC. These teams have worked continuously since this investigation began and their tireless efforts made this outcome possible today. In addition, I’d like to commend the special master for his efforts to guide the parties to a workable settlement. Thank you to everyone for your contributions to this important case. Now I’m going to turn over the podium to EPA Administrator McCarthy. Thank you again for coming.