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“Seven months after news of Volkswagen’s emission scandal broke, we're glad to hear that there is a 'framework' for a settlement in the cases related to VW's 567,000 fraudulently marketed, illegally polluting cars. This framework appears to include all of the elements that a deal should include, but the devil will be in the details.
Given the nature of VW's violations, a settlement needs to make consumers whole and compensate for the environmental damage while totaling a penalty large enough to discourage VW and others from this behavior in the future. In the meantime, it’s worth noting that further delay means that these polluting cars remain on the road -- emitting up to 40 times the allowable level of pollution -- for even longer.
For more details on what a strong settlement agreement ought to look like, please see the open letter.
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- Mitigate past, ongoing, and future emissions
- Affected cars that can be fixed to meet emission standards should be fixed.
- Affected cars that can only be partially fixed should receive the available repair if owners choose not to accept buybacks of their cars.
- Volkswagen should offset its past and ongoing emission violations. The future emission violations of cars that are not fixed or only partially fixed should also be calculated and offset.
- Develop a robust in-use testing protocol to ensure that if the vehicles are repaired, the vehicles remain in full compliance for the vehicles’ full useful life, in real world driving conditions.
- The emissions control system must not be allowed to degrade over time to exceed the standards, and EPA and CARB must assure the public that there is no further cheating by Volkswagen.
- Make consumers whole by offering to buy back their affected cars
- Simply fixing the cars still leaves customers less than whole. Whether a full or partial fix is available, the cars could get lower gas mileage and have weaker performance than promised and advertised, and the Kelley Blue Book values will likely diminish further.
- Full compensation is a buyback at full purchase price of the cars.
- However, VW should at least compensate owners 1.5 times the Kelley Bluebook value of the affected vehicles on the day before the scandal was discovered or publicized, as NHTSA has ordered manufacturers in some other recalls to do.
- Bought back cars that cannot be fully repaired to meet emission standards should be scrapped.
- Mitigate environmental harm caused by scrapping cars
- Environmental harm caused by scrapping cars should be assessed and offset
- Assess large civil penalties.
- The Clean Air Act sets a maximum penalty of $37, 500 per car or over $18 billion in total penalties. A large civil penalty will send a strong deterrent message to others not to violate the law.
- VW should not be allowed tax write-offs for any penalties.
- Set up Supplemental Environmental Projects (SEPs)
- In addition to offsetting the NOx emissions directly attributable to the defeat devices and offsetting environmental harms caused by scrapping cars, VW should set up Supplemental Environmental Projects (SEPs).
- Volkswagen would be motivated to work with the EPA to create a SEP, which could offset a portion of the civil penalties while achieving concrete pollution reductions. The SEP should direct a substantial amount of funds, perhaps calculated on a per-car basis, to create a fund for state and local governments, as well as private-sector entities, to implement projects to reduce pollution from on-road vehicles and increase deployment of zero-emission electric vehicles.
- Any SEP should be above and beyond other remedies so automakers don’t take the lesson that all they need to do to cure cheating is to pay money as a cost of doing business.
- Criminally charge responsible executives and hold the firm criminally accountable
- Full justice includes criminally charging individual executives who are responsible for the scandal.
- It also includes the full array of criminal monetary penalties and other criminal remedies available under the law against the firm, not only to punish it but also to deter similar misconduct by others.
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