Is there a Punishment That Will Fit Volkswagen’s Crime?

October 8, 2015

We’ve all heard it before, “Clean Diesel.” It’s been heavily advertised and marketed to appeal to American buyers. Luxury brands such as Audi have been spreading this concept by placing attention grabbing decals across their vehicles and constantly focusing on it in their commercials. Volkswagen has been at the forefront of spreading this idea amongst buyers. They aspired to be the go-to manufacturer for affordable, fuel efficient, and enjoyable diesel vehicles. Volkswagen’s strategy proved successful for they once dominated the clean diesel passenger car market with 70% of all clean diesel sales.
The concept of clean diesel has always seemed like a hyperbole to American buyers. Historically, U.S. buyers have associated diesel engines with the heavy-duty trucks and industrial vehicles of the past. Volkswagen worked hard to fight this misconception. Outside of the U.S., diesels engines have been the engines of choice for smaller vehicles. This explains why Volkswagen focused on the advantages of owning a “clean diesel” engine when advertising and showing off their diesel vehicles.
Not all diesel engines are unclean. Diesel engines require urea-injunction systems that are fluid tanks that neutralize NOx emissions. Urea injection systems allow diesel vehicles to pass emissions tests. The urea injunction system is costly and it also adds weight to the vehicle, which hampers performance. Volkswagen hoodwinked US buyers and the EPA into believing that they could meet emissions standards without one. Computer software within their engines detected when emissions testing occurred and ran the vehicle below normal performance in order to pass emissions tests. Popular Mechanics considers Volkswagen’s environmental violations to be “outright cynical deceit.”

Luring in buyers under the guise of clean diesel and dominating the market with excessively polluting vehicles was Volkswagen’s strategy all along.

Volkswagen faces a maximum fine of $37,500 for each of the 482,000 offending vehicles that cheated testing. That amounts to $18 billion dollars in fines for emitting as much as 40 times the legal standard of nitrogen oxide emissions allowed by the EPA. EPA will most likely not demand this maximum penalty. Michael Steel, an environmental lawyer at Morrison Foerster, argues that the “maximum is almost never reached” and instead the “EPA will determine an appropriate amount that makes violating the regulation no longer financially worthwhile.” For example, in a recent Clean Air Act violation dispute, Hyundai and Kia were fined a record $300 million for overstating the fuel-economy standards on 1.2 million cars ($250 fine per vehicle).
Based on previous penalty amounts, it may seem as if the EPA is more focused on hindering future cheating then it is on punishing cheaters that have already lied and excessively polluted their way into the US marketplace. However, in special cases such as these, the penalty may be incredibly higher than any previous amount because the federal government also considers the egregiousness of the offense, the economic benefit to the company, the amount of harm done, and how cooperative the offending party has been.
The discrepancy on how to calculate the amount of harm done may work in Volkswagen’s favor, especially when considering the penalties dealt to other automotive companies whose defective parts led to actual, apparent casualties. General Motors was ordered to pay a $900 million fine for hiding a fatal ignition-switch defect that led to at least 174 deaths. The Department of Justice ordered Toyota to pay a criminal penalty of $1.2 billion for lying about an unintended acceleration defect in their most popular models. The National Highway Traffic Safety Administration estimated that 89 casualties resulted from sudden acceleration of Toyota’s vehicles. In contrast, Volkswagen’s EPA violations have not directly led to any deaths. Nitrogen oxide is a nasty pollutant that can aggravate individuals with dozens of health problem and can kill plants and animals in the form of acid rain. The extra pollution that resulted from Volkswagen’s violations is not very harmful on a local scale because of the small percentage of diesel engine drivers in the US and is very insignificant on a global scale due to the billions of metric tons of greenhouse gases already in the atmosphere.
Fortunately, Volkswagen will also be a target in civil litigation such as Austin v. Volkswagen Group of America, Inc. for false advertising, deceptive business practices, fraud and fraudulent inducement, break of contract, and break of the implied warranties of merchantability and fitness for an intended purpose.
The federal government must therefore focus heavily on the egregiousness of Volkswagen’s offenses and the economic benefit they gained in order to impose a penalty heavy enough to deter automobile and other manufactures from selling products that more harmful to the environment than advertised. The fine must be especially heavily in cases like these where the manufacture’s advertising point of being environmentally sound was one of the main points in selling their products.