The Volkswagen 'Dieselgate' Clean Air Act Settlement
| Author | John C. Cruden & Joshua H. Van Eaton |
| Pages | 271-313 |
Chapter 8: The Volkswagen
“Dieselgate” Clean Air
Act Settlement
John C. Cruden and Joshua H. Van Eaton*
I. Introduction
When Attorney General Loretta E. Lynch announced the na l settlement
with Volkswagen (VW) over what had become known as “Dieselgate,” she
stated that it was the largest of its type in the history of the federal gov-
ernment .1 e settlement was the product of a yearlong set of negotiations
culminating in t hree separately negotiated and approved federal consent
decrees2 and a criminal plea agreement that were comprehensive, innovative,
and environ mentally forward looking.3 In what has been described as a set-
tlement obtained in “breathtaking speed,”4 the case wa s resolved in approxi-
mately one year from complaint to settlement.
1. David Shepardson, U.S. Indicts Six as Volkswagen Agrees to $4.3 Billion Diesel Settlement, R,
Jan. 11, 2017, https://www.reuters.com/article/us-volkswagen-emissions-epa-idUSKBN14V1T0.
2. A consent decree is a court order based on an agreement signed by the parties to the proceeding
that allows the parties to resolve issues by avoiding a trial. Jean Murray, How a Consent Decree Works
and When It’s Used, T B S B., Mar. 10, 2019, https://www.thebalancesmb.com/
what-is-a-consent-decree-how-does-it-work-4580322.
3. See Loretta E. Lynch, Attorney General of the United States, Remarks at a Press Conference An-
nouncing Criminal and Civil Actions Against Volkswagen (Jan. 11, 2017), https://www.justice.gov/
opa/speech/attorney-general-loretta-e-lynch-delivers-remarks-press-conference-announcing-criminal;
Shepardson, supra note 1.
4. Hiroko Tabuchi, Volkswagen Faces Long Road Ahead, Even After a Civil Settlement, N.Y. T, June
26, 2016, https://www.nytimes.com/2016/06/27/business/volkswagen-faces-long-road-ahead-even-
after-a-civil-settlement.html (quoting David M. Uhlmann, a former head of DOJ’s Environmental
Crimes Section as saying: “[T]hey’ve negotiated this settlement with breathtaking speed.”).
* John C. Cruden was the Assistant Attorney General for the Environment and Natural Resources Division
of the U.S. Department of Justice (DOJ) from 2015 to 2017. Joshua H. Van Eaton was a DOJ Senior
Trial Attorney in the same Division. ey led the negotiation discussions on behalf of the United States,
which resulted in the settlement discussed in this chapter. ey previously published an article describing
the Volkswagen case with two other DOJ attorneys, Bethany Engel and Nigel Cooney, who were both
heavily involved in the litigation and settlement discussions. See John Cruden et al., Dieselgate: How the
Investigation, Prosecution, and Settlement of Volkswagen’s Emissions Cheating Scandal Illustrates the Need for
Robust Environmental Enforcement, 36 V. E. L.J. 118 (2018). e authors have borrowed from that
article in drafting this chapter and wish to recognize the writing contributions of Bethany and Nigel (used
with permission) as well as the entire DOJ team who worked tirelessly to prosecute this historic Clean Air
Act case. e authors also wish to thank Deepti Bansal Gage for her valuable contributions to this project.
Copyright © 2020 Environmental Law Institute®, Washington, DC.
272 Looking Back to Move Forward: Resolving Health & Environmental Crises
e former head of the Environmental Crimes Section at the U.S. Depart-
ment of Justice (DOJ), and now a professor at the University of Michigan
Law School, David Uhlmann ha s described it as “a remarkable deal for
consumers,” adding, “ere has never been a case quite like t his.”5 Profes-
sor Uhlmann later described the settlement as a “textbook case” of how the
agency should address “egregious wrongdoing by corporations.”6 e Profes-
sor continued, “Too often, justice comes up short in corporate crime prosecu-
tion but not in the VW case.”7
e VW emissions scandal involved fraudulent noncompliance with the
Clean Air Act (CA A) through the use of software designed to cheat U.S.
Environmental Protection Agency (EPA) emissions testing by the German
auto manufacturer. e violation involved the use of “defeat devices” that
allowed tested engines to reduce emissions while being tested and then emit
up to 40 times the lawful l imit while in use.8 After an investigation involving
both EPA and the California Air Resources Board (CAR B), EPA issued a
Notice of Violation (NOV) on September 18, 2015,9 and DOJ led a federal
complaint against V W in early Januar y 2016. e federal enforcement case
was ultimately consolidated with private actions in multidistrict litigation
(MDL) before Judge Charles R. Breyer in San Francisco. Judge Breyer soon
appointed former Federal Bureau of Investigation (FBI) Director Robert S.
Mueller III as Settlement Master to manage the settlement.10
Ultimately, Judge Breyer and Settlement Master Mueller would oversee
litigation activities and rounds of negotiation between t he United States and
other regulators and VW t hat would lead to the completion of the three con-
sent decrees to resolve civil claims and criminal complaints stemming from
VW’s fraudulent behavior. e court and Settlement Master also helped
resolve a class action lawsuit against VW brought by private consumers.
5. Jacob Bogage, U.S. Ocials Blast Volkswagen for Emissions Scandal, Impose Record Fine, W. P,
June 28, 2016, https://www.courant.com/business/hc-us-ocials-blast-volkswagen-20160628-story.
html.
6. Chris Roush, Coverage: U.S. Files Charges Against Six VW Executives, T B N, Jan. 12, 2017,
https://talkingbiznews.com/we-talk-biz-news/coverage-u-s-les-charges-against-six-vw-executives/.
7. Steven Overly, Six Volkswagen Executives Indicted in Emissions-Cheating Scandal, W. P, Jan.
11, 2017, https://www.washingtonpost.com/news/innovations/wp/2017/01/11/justice-department-
volkswagen-to-plead-guilty-to-three-criminal-counts-in-emissions-scandal/.
8. Letter from Phillip A. Brooks, Director, Air Enforcement Division, Environmental Protection Agency,
to Volkswagen AG, Audi AG, and Volkswagen Group of America, Inc. 4 (Sept. 18, 2015), https://
www.epa.gov/sites/production/les/2015-10/documents/vw-nov-caa-09-18-15.pdf [hereinafter 2.0
Liter NOV].
9. Id.
10. John Cruden et al., Dieselgate: How the Investigation, Prosecution, and Settlement of Volkswagen’s Emis-
sions Cheating Scandal Illustrates the Need for Robust Environmental Enforcement, 36 V. E. L.J.
118, 121 (2018).
Copyright © 2020 Environmental Law Institute®, Washington, DC.
The Volkswagen “Dieselgate” Clean Air Act Settlement 273
e value of the three DOJ-secured consent decrees exceeded $20 billion—
most of it obtained in the civil complaints the United States led against
the automaker (which are the focus of this chapter)—and collectively, the
settlements, are the largest in the history of U.S. CA A enforcement.11 On
the criminal side, V W pled guilty to three felonies, a nd six high-ranking
VW ocials were a lso indicted.12 e class action settlements also provided
billions of dollars in relief.
is chapter examines t he events leading to the settlements as well a s the
settlements themselves and then reects on practices that might guide the
resolution of other future mass environmental and health crise s. e sec-
ond section of this chapter provides background information on the CA A
vehicle-emissions regulations, V W’s development of the defeat devices it
employed to subvert EPA’s vehicle-emissions standards, and the discovery
of VW’s deceit. e third section exa mines the mechanics a nd process that
allowed for a swift set tlement of the civil, crimi nal, and private claims against
VW and the major provisions of the three consent decrees. e next section
looks at the consent decrees nearly four years out to assess what progress has
been made in implementing the terms of the settlement from the perspective
of the settlement’s objectives and what action remains to be taken to com-
plete implementation of the consent decrees. Lastly, the nal section reviews
critical lessons and takeaways from the story told in this chapter about tone
of the largest yet quickly rea lized environmental settlements in U.S. history
that involved cooperation between the court, federa l and state governments,
privately represented consumers, and the defendant, VW.
II. Settlement Context
A. The Problem
e VW Dieselgate scandal presented a problem of unprecedented scope.
e largest auto manufacturer in the world defrauded EPA through a years-
long eort to deceive nearly 600,000 of its customers in the United States
into purchasing what is one of the costliest consumer items— a car—t hat
11. Id. at 121–22.
12. Press Release, Dep’t of Justice, Volkswagen AG Agrees to Plead Guilty and Pay $4.3 Billion in Crimi-
nal and Civil Penalties; Six Volkswagen Executives and Employees are Indicted in Connection With
Conspiracy to Cheat U.S. Emissions Tests (Jan. 11, 2017), justice.gov/opa/pr/volkswagen-ag-agrees-
plead-guilty-and-pay-43-billion-criminal-and-civil-penalties-six. In April 2017, the U.S. District Court
for the Eastern District of Michigan, which heard the criminal complaint, accepted the terms of the
plea agreement. Volkswagen Diesel Engine Vehicle Matters, D’ J, https://www.justice.gov/
criminal-vns/case/volkswagen-diesel-engine-vehicle-matters/update (last visited May 25, 2020).
Copyright © 2020 Environmental Law Institute®, Washington, DC.
To continue reading
Request your trial