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VW agrees to pay $157M to 10 states over rigged diesels

Keith Laing
Detroit News Washington Bureau

Washington — Volkswagen AG has agreed to spend an additional $157 million to settle lawsuits that were filed by 10 states over its decision to rig hundreds of thousands of diesel cars to cheat U.S. emission standards.

The payments will be split among Connecticut, Delaware, Maine, Massachusetts, New York, Oregon, Pennsylvania, Rhode Island, Vermont and Washington, whose attorneys general all have agreed to drop pending litigation against the beleaguered German automaker. All of those states have adopted California’s stringent clean-air standards.

Michigan Attorney General Bill Schuette previously reached an agreement in which the state received $60 million from a pot of $570 million that was paid by VW to 43 states in 2016.

Volkswagen said Tuesday the new agreement with the state attorneys general “avoids further prolonged and costly litigation as Volkswagen continues to work to earn back the trust of its customers, regulators and the public.”

The payouts to the state join prior agreements in which Volkswagen agreed to pay a $14.7 billion settlement between Volkswagen and U.S. regulators to fix or buy back about 475,000 rigged 2-liter diesel vehicles and $1.2 billion to fix or buy back approximately 78,000 additional 3-liter diesels that were built to cheat U.S. emission standards. The scheme has cost Volkswagen more than $20 billion in fines and settlements.

The U.S. government has indicted six present and former Volkswagen executives and charged the company with three criminal felony counts for what regulators called a “10-year conspiracy” to rig hundreds of thousands of diesel cars to cheat U.S. emission standards. Volkswagen has been forced to plead guilty to charges of participating in a conspiracy to defraud the United States and violating the Clean Air Act and pay $2.8 billion in criminal fines and $1.5 billion in civil penalties related to the fraud.

Volkswagen has been under fire by U.S. regulators since the company was accused by the U.S. Environmental Protection Agency in September 2015 of selling diesels for years with software that activated required air pollution equipment only during emissions tests. They had been marketed as “clean diesels” for the company’s Volkswagen, Audi and Porsche brands between 2008 and 2015.

The automaker has admitted to programming its diesel cars to trick emissions testers into believing the engines released far less pollution into the air than they actually do, in violation of the federal Clean Air Act. Regulators have said that in normal driving they emitted up to 40 times more smog-causing nitrogen oxide than the legal limit. The scheme has cost Volkswagen more than $20 billion in fines and settlements.

Volkswagen has stopped selling diesel cars in the U.S. since it admitted to the scheme.

Volkswagen’s criminal and civil fines dwarf recent criminal penalties paid by General Motors Co. and Toyota Motor Corp. for safety violations. GM was forced to pay a $900 million fine over its handling of vehicles with a dangerous ignition switch defect that was ultimately linked to 124 deaths and hundreds of injuries. And it is far more than the $1.2 billion that Toyota Motor Corp. was penalized for issuing misleading statements about cars that experienced unintended acceleration in 2014.

The federal government has authority to levy heavier fines for environmental violations under the Clean Air Act than the National Highway Traffic Safety Administration does for safety infractions. Congress has capped the transportation department’s ability to fine automakers is capped at $105 million. The limit was increased from $35 million in a 2015 transportation funding bill.

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Twitter: @Keith_Laing