Agreement is based on California’s Unfair Competition law.

Volkswagen will pay an extra $86 million fine, on top of fines already assessed, to the State of California over its diesel engines that produced excessive emissions. The state’s attorney general, Kamala D. Harris, said the fine is intended to discourage other automakers from using “defeat” devices.

“This additional settlement sends an unequivocal message to Volkswagen and any other automaker that California will aggressively enforce our robust consumer and environmental protection laws,” Harris said in a statement.

The agreement requires $10 million of the settlement be invested in government agencies or academic institutions to further study and monitor the use of “defeat” devices that, like Volkswagen’s, can conceal an engine’s true emissions levels during official testing. The Attorney General’s Office says that about 86,000 Volkswagen 2.0- and 3.0-liter diesels with incorrect emissions controls were sold in California from 2009 through 2015.

At the end of June, Volkswagen came to an agreement with the U.S. Department of Justice to buy back or repair about 475,000 U.S.-market cars with affected 2.0-liter turbodiesel engines, as part of a $14.7 billion settlement. That figure includes spending $2.7 billion on projects to reduce harmful NOx emissions and $2 billion to invest in zero-emissions car infrastructure.

Sources: California Attorney General’s Office, Reuters

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Attorney General Kamala D. Harris today announced that, in addition to the historic $14.7 billion settlement with Volkswagen announced last week, the company will also pay California an additional $86 million in civil penalties as part of a second partial settlement over the company’s use of “defeat devices” to evade emissions testing in its diesel vehicles. 

The agreement, which is subject to court approval, represents the largest amount of money recovered by the state of California from an automaker and resolves certain aspects of the California Attorney General’s claims against Volkswagen under California’s Unfair Competition Law as well as the Dodd-Frank Consumer Financial Protection Act of 2010.  Volkswagen will also agree to significant injunctive terms to deter future misconduct, including a new requirement that Volkswagen contractors and employees report to the California Attorney General’s office any request for or use of “defeat devices.”  

Of the $86 million in penalties, the Attorney General will direct $10 million in grants to local government agencies or academic institutions to research and develop technology to detect “defeat devices” and better assess on-road emissions, as well as to monitor, model, and mitigate the environmental and public health impacts of vehicle emissions, especially on children and other vulnerable populations.

“We must conserve and protect our environment for future generations and deliver swift and certain consequences to those who break the law and pollute our air.  Volkswagen tricked consumers seeking to purchase an eco-friendly car by misleading the public about the level of harmful pollutants their so-called ‘clean diesel’ vehicles were emitting,” said Attorney General Harris.  “This additional settlement sends an unequivocal message to Volkswagen and any other automaker that California will aggressively enforce our robust consumer and environmental protection laws.” 

Today’s announcement follows last Tuesday’s joint announcement by California Attorney General Kamala Harris and California Air Resources Board Chair Mary Nichols that California, alongside the U.S. Environmental Protection Agency and U.S. Department of Justice, had negotiated a landmark $14.7 billion settlement with Volkswagen over the software it installed in its diesel cars to trick emissions testing while actually emitting up to 40 times the level of harmful nitrogen oxides allowed under state and federal law. 

As part of that $14.7 billion agreement, Volkswagen agreed to spend an estimated $10 billion to compensate consumers and buy back or modify hundreds of thousands of its polluting cars, pay $2.7 billion into a trust fund for environmental mitigation projects, and spend $2 billion over 10 years on zero-emission technology.  Of the $4.7 billion in mitigation funding and investments, $1.18 billion will come to California ($800 million in zero-emissions technology investments and $380 million for environmental mitigation projects in the state).

The partial settlement announced today relates to Volkswagen’s 2.0 and 3.0 liter vehicles that deployed “defeat devices” to deceive regulators and consumers about levels of harmful emissions.  An estimated 86,000 2.0 and 3.0 liter vehicles were sold or leased in California between 2009 and 2015.  Today’s settlement preserves California’s potential criminal claims and claims for additional civil penalties and injunctive relief under state environmental laws, as well as the Attorney General’s claims for consumer relief and environmental mitigation related to the 3.0 liter vehicles.

In addition to the $86 million in civil penalties, Volkswagen agrees to strict injunctive terms as part of the settlement, including:

  • Prohibitions on false and deceptive advertising
  • Affirmatively disclosing defeat devices in certification applications and other submissions to the California Air Resources Board (CARB)
  • Notifying the California Attorney General’s office and CARB of whistleblower and other complaints
  • Requiring Volkswagen contractors and employees who are designing engine control units or engine control software to report to the California Attorney General’s office and to CARB any request for or use of defeat devices, and to keep accurate records of software features and changes that could be used as defeat devices
  • Provide the California Attorney General’s office with reports of any violations, along with periodic reports regarding its efforts to implement the injunction and effectiveness of those efforts