The U.S. Justice Department on Monday filed a civil lawsuit against Volkswagen AG (VOWG_p.DE)
for allegedly violating the Clean Air Act by installing illegal devices
to impair emission control systems in nearly 600,000 vehicles.
The
allegations against Volkswagen, along with its Audi and Porsche units,
carry penalties that could cost the automaker billions of dollars, a
senior Justice Department official said. VW could face fines in theory
exceeding $90 billion – or as much as $37,500 per vehicle per violation
of the law, based on the complaint. In September, government regulators
initially said VW could face fines in excess of $18 billion.
"The
United States will pursue all appropriate remedies against Volkswagen
to redress the violations of our nation's clean air laws," said
Assistant Attorney General John Cruden, head of the departments
environment and natural resources division.
The
Justice Department lawsuit, filed on behalf of the Environmental
Protection Agency, accuses Volkswagen of four counts of violating the
U.S. Clean Air Act, including tampering with the emissions control
system and failing to report violations.
The
lawsuit is being filed in the Eastern District of Michigan and then
transferred to Northern California, where class-action lawsuits against
Volkswagen are pending.
"We're
alleging that they knew what they were doing, they intentionally
violated the law and that the consequences were significant to health,"
the senior Justice Department official said.
The Justice
Department has also been investigating criminal fraud allegations
against Volkswagen for misleading U.S. consumers and regulators.
Criminal charges would require a higher burden of proof than the civil
lawsuit.
The civil lawsuit
reflects the expanding number of allegations against Volkswagen since
the company first admitted in September to installing cheat devices in
several of its 2.0 liter diesel vehicle models. The U.S. lawsuit also
alleges that Volkswagen gamed emissions controls in many of its 3.0
liter diesel models, including the Audi Q7, and the Porsche Cayenne.
Volkswagen’s
earlier admissions eliminate almost any possibility that the automaker
could defend itself in court, Daniel Riesel of Sive, Paget & Riesel
P.C, who defends companies accused of environmental crimes, said.
To
win the civil case, the government does not need to prove the degree of
intentional deception at Volkswagen – just that the cheating occurred,
Riesel said. “I don’t think there is any defense in a civil suit,” he
said.
Instead, the
automaker will seek to negotiate a lower penalty by arguing that the
maximum would be “crippling to the company and lead to massive layoffs,”
Riesel said.
Even after
Volkswagen first admitted to using defeat devices in certain models, the
automaker “failed to come forward and reveal” that other vehicles
contained such devices, the government said.
To
cheat the emissions controls, Volkswagen installed software that
allowed the vehicles to detect when they were being tested on a flatbed.
When the vehicles detected they were actually on the road, the software
caused the emissions control systems to underperform or shutdown, the
government said, allowing the cars to emit dangerous levels of air
pollution.
The civil lawsuit
does not preclude the Justice Department from pursuing criminal charges
against Volkswagen, said the Justice Department official.
"Volkswagen
will continue to work cooperatively with the EPA on developing remedies
to bring the TDI vehicles into full compliance with regulations as soon
as possible. In addition, we are working with Kenneth Feinberg to
develop an independent, fair and swift process for resolving private
consumer claims relating to these issues," Volkswagen said in a
statement.
"We will continue to cooperate with all government agencies investigating these matters."
U.S.-listed shares of Volkswagen were down 3.3 percent at$29.95.
(Additional reporting by David Shepardson,; Editing by Susan Heavey, Bernard Orr)
Volkswagen faces billions in penalties as U.S. sues for environment violations
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