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VW Agrees to $4.3 Billion Settlement of Diesel Emission Claims


By Allison Torrence


On January 11, 2017, the U.S. Department of Justice announced that Volkswagen AG (VW) has agreed to plead guilty to three criminal felony counts and pay a $2.8 billion criminal penalty for selling approximately 590,000 diesel vehicles in the U.S. that had installed defeat devices to cheat on emissions tests mandated by the Environmental Protection Agency (EPA). VW will be on probation for three years and under an independent corporate compliance monitor who will oversee the company for at least three years. VW has also agreed to pay $1.5 billion to settle separate civil violations under the Clean Air Act (CAA) as well as other customs and financial claims.

We previously reported on EPA’s CAA lawsuit on this blog, which was filed on January 4, 2016, and alleged multiple CAA violations stemming from allegations that VW installed defeat devices in the subject diesel vehicles designed to cheat EPA emissions tests. EPA sought civil penalties and injunctive relief. In October, VW settled EPA’s injunctive relief claims along with consumer class action claims in a settlement valued at approximately $15.3 billion.

In addition, a federal grand jury in the Eastern District of Michigan returned an indictment on January 11, 2017, charging six VW executives and employees with criminal conspiracy to defraud the United States, defraud VW’s U.S. customers and violate the CAA. One of these VW employees, Oliver Schmidt, was arrested on January 7, 2017, in Miami during a visit to the United States and appeared in federal court there on Monday. The other defendants are believed to presently reside in Germany.

The settlement announcement was made by Attorney General Loretta E. Lynch, who was joined by EPA Administrator Gina McCarthy. Attorney General Lynch stated that:

Today’s actions reflect the Justice Department’s steadfast commitment to defending consumers, protecting our environment and our financial system and holding individuals and companies accountable for corporate wrongdoing. In the days ahead, we will continue to examine Volkswagen’s attempts to mislead consumers and deceive the government. And we will continue to pursue the individuals responsible for orchestrating this damaging conspiracy.

The Department of Justice statement on the VW settlement is available here.