US Justice Department to Fine VW Tens of Billions in Environmental Violations

The US Justice Department have signaled their intent to sue German automotive manufacturing giants Volkswagen (VW) up to $48 billion in environmental violation damages. Though such settlements usually end up at a greatly reduced figure than the maximum quoted, the size of this law suit may mean that VW will be subject to pay more than they had originally anticipated.

An Apt Reminder

The news comes almost four months after the VW diesel scandal initially broke, when it emerged that the manufacturer had been manipulating the emission control software in its vehicles. By assessing whether or not a car was being subjected to test conditions based upon handling, acceleration and speed, the car would either diminish its control system or shut it off completely, allowing the vehicle to emit levels of carbon far higher than either those shown on its test results or those allowed by regulations. For further information on the details of the scandal, see the article The VW Scandal - What You Need to Know.

Stricter legislation in the US means that VW is susceptible to higher fines than in Europe, and faces a bigger job in rectifying the problem. The company’s reputation had shown signs of recovering in December, at least in Europe, where it was announced that 8.5 million vehicles affected by the scandal could be rectified by a simple software adjustment.

Despite this small upturn in the company’s fortunes, the VW trajectory has been largely a downhill one in recent months. This latest announcement will no doubt affect them even further, with stocks falling by almost a quarter of their original value prior to the emergence of the scandal last year.

Making an Example of VW

Though VW are unlikely to be forced to pay the entire $48 billion being cited, the figure is still far in excess of the $18 billion originally quoted by US regulators in September. However, VW’s deliberate manipulation of the test systems and their refusal to admit the existence of similar devices in other models at the outset mean that they could be made an example of.

This is especially apt given that 196 nations around the world recently came together in Paris to agree a plan to fight climate change. Key amongst the challenges facing the world’s nations is the need to improve air quality and reduce transport-related pollution, especially in the form of carbon, and VW’s flagrant disregard for environmental safety is particularly galling.

A recent Reuters review of the Justice Department’s claim concluded that each of the 600,000 vehicles in the US which were implicated in the scandal could cost the company $37,500 for each infringement of the US Clean Air Act (potentially four infringements in total), $3,750 for the installation of each device and a further $37,500 for every day that the illicit car has been on the road. Clearly, such debts could soon rack up to become monumental.

“Volkswagen will continue to work cooperatively with the EPA on developing remedies,” said VW in a statement. “We will continue to cooperate with all government agencies investigating these matters.”