The following guest post on the Volkswagen scandal is by Karinne Marcolini, an associate at Goren, Goren & Harris. Karinne is a recent graduate of Wayne Law, where she was president of the Environmental Law Society. While in law school, Karinne worked for the US EPA’s Gasoline Engine Compliance Center in Ann Arbor. She served in the compliance division, applying the Clean Air Act’s mobile-source regulations for vehicles, and thus has significant experience and expertise with the issues surrounding the Volkswagen emissions scandal. (Of course, this guest post is entirely her own work and does not represent the US EPA or her current firm).
The recent developments between the EPA and Volkswagen exemplify the powerful ways in which environmental law and policy impact our daily lives. EPA released Notices of Violation in September and November stating that Volkswagen circumvented the regulations associated with the Clean Air Act (CAA), allowing vehicles they sold in the U.S. market to create excess levels of harmful pollutants. The regulations and the measures they put in place can be confusing even to attorneys due to their intensely technical nature but the laws impact our lives in a very real manner. This situation also highlights the unique relationship between legislation and regulations; between the executive and the legislative branches of our federal government.
In order to truly grasp the recent developments with Volkswagen, it must be understood that the source of the EPA’s authority lies in the CAA. Congress enacted the CAA in 1970. This statutory provision identifies certain pollutants which must be limited to promote public health. The CAA tackles the issue of air pollution in a number of ways including limiting output from stationary and mobile sources and by requiring the use of certain technology. Specifically, the CAA sets emission standards for vehicles and engines. Mobile source output is controlled by regulating the chemical makeup of fuel as well as engine performance and equipment. The CAA also enables the EPA to construct a more detailed regulatory framework in order to achieve the standards it sets including specific technical and chemical requirements.
Though the legal structure of the CAA and its associated regulations is complex, it impacts individuals’ lives in a very simple way: these regulations ensure that every car, boat, plane, train, motorcycle or ATV you drive or ride on and every lawnmower or generator you use is not producing an unsafe level of the pollutants controlled by the CAA. In order for these machines to be sold in the United States, the manufacturers must submit data or undergo testing to demonstrate that they are in compliance with the emission standards and then obtain a certificate.
It is easy to imagine how difficult it is to control all the machinery subject to the CAA. The EPA does this in a number of ways including dynamometer testing of models off the assembly line or models that have already entered the market and been in use. These tests are often what trigger investigation into manufacturer compliance. However, it is evident that there are a multitude of methods that manufacturers may employ to circumvent these measures; some less-easily detected than others. In the case of Volkswagen, the violation was only discovered when a NGO, the International Council on Clean Transportation, conducted research in 2013 and 2014 and determined that two Volkswagen models did not perform as well as a BMW, as the Volkswagens were emitting an unusual amount of nitrogen oxides (NOx). The NGO publicized its findings and this information piqued the interest of the EPA and the California Air Resources Board (CARB).
The EPA and CARB conducted an investigation and discovered that the poor performance of Volkswagen’s diesel models could be attributed to a “defeat device.” A “defeat device” is defined as an auxiliary emission control device (AECD) that reduces the effectiveness of the emission control system under conditions which may reasonably be expected to be encountered in normal vehicle operation and use. 40 C.F.R. § 86.094-2. In this case, the defeat device was software programmed into the engines. This software activated emission control technology during testing, thus ensuring low pollutant output, but shut the technology off during normal consumer use. Shockingly, Volkswagen was employing this defeat device for years; the vehicles involved range from 2009 models through 2016 models. It is estimated that this defeat device may have been used in over 480,000 vehicles. A list of the vehicles affected and information for owners can be found at the EPA’s website. Some of the vehicles were outputting up to nine times the amount permitted by the regulations.
Naturally the use of this defeat device violates the Clean Air Act. The next steps for the EPA and CARB will be to determine exactly how many vehicles were affected and then determine an appropriate civil penalty. Volkswagen could be fined by the EPA for employing a defeat device up to $2,750 per vehicle for violations through 2009 and up to $3,750 for violations occurring thereafter under the CAA and its regulations. 69 F.R. 7121 (2004); 73 F.R. 75340 (2008). This means Volkswagen could face up as much as $1.8 billion in fines although it is likely that the automaker will settle the matter with the EPA for a lesser amount.
Volkswagen not only faces fines but also delayed sales as the company withdrew its certification requests for 2016 diesel models. This prevents it from selling these models in the U.S. for the time being. The market for Volkswagen vehicles may also shrink as environmentally-concerned consumers may choose to buy from other manufacturers.
The direct and indirect economic repercussions may sound harsh but it should be noted that the environmental damage that is caused by manufacturers such as Volkswagen when they employ defeat devices or other methods to circumvent the CAA provisions cannot necessarily be retroactively remedied. Short-term NOx exposure has been connected with negative respiratory effects. For example, exposure to NOx has been linked to the aggravation of asthma symptoms. NOx itself can be found in high concentrations not only around roadways but also within the actual vehicles. This means that drivers and riders in vehicles that generate dangerous levels of NOx could be at risk for negative health effects. EPA has not reported that owners of the Volkswagen models presently involved should be concerned. EPA has stated that the levels emitted by these models were not necessarily dangerous but this is an important opportunity to hold a violator responsible for potentially harmful actions.
The EPA and Volkswagen may conduct negotiations in furtherance of a settlement and it is possible they could reach an agreement similar to that achieved in the Hyundai/Kia matter during the fall of 2014. Hyundai/Kia agreed to pay $100 million after they sold more than 1 million vehicles that will emit GHGs in excess of what it certified to the EPA. A Volkswagen/EPA negotiation could also include settlement terms which dictate that Volkswagen must meet particularly stringent emissions standards in the future to attempt to counteract the excessive levels of pollutants that have already been released.
Environmentalists may hope that this situation will deter other manufacturers from circumventing the CAA but the scale of recent violations may signal that it is time to evaluate the EPA’s resources in order to increase its monitoring abilities. This could ensure that this type of situation is more rapidly detected in the future and that more imminently dangerous violations do not occur in the future.
For additional insights on the Volkswagen scandal, see my colleague Peter Henning’s columns for The New York Times DealB%k- The Potential Criminal Consequences for Volkswagen; Taking measure of Volkswagen's Cooperation; and The challenges for Volkswagen's internal investigation. If you are a Volkswagen owner and would like more information, it is available here.