Thursday February 18, 2021
Impending "Dieselgate" fines
VW also receives unexpected backing
The scandal surrounding the manipulated exhaust gas values of numerous diesel cars is still not leaving Volkswagen in peace. In the USA, the case was actually ticked off long ago, but then a door to new, high penalties opened. VW does not only get support from the auto industry.
Volkswagen receives important support in the explosive US legal dispute over possible further high "Dieselgate" fines. Large lobby groups in the auto industry as well as former representatives of the US environmental authorities and the Department of Justice have intervened on behalf of the company, according to court documents. A lot is at stake for VW – in the worst case, fines worth billions could be due again. The case is now preoccupying the US Supreme Court.
Volkswagen is threatened with further sensitive sanctions in the USA due to previous emissions manipulation. An appeals court ruled in June 2020 that despite settlements that had already been reached, additional penalties in two districts in the states of Florida and Utah were permissible. Although VW has already been held accountable for violations of the US Clean Air Act for diesel cars with hot exhaust technology, regional authorities may impose further penalties.
If it stays that way, this could again trigger an avalanche of legal costs for VW. The appellate judges had even stated that they were aware that their decision could lead to "breathtaking burdens". Based on the regional catalogs of fines in the Florida and Utah districts alone, fines could potentially amount to up to $ 11.2 billion per year. And the court ruling from June opens the door for further sanctions at the regional level – for example, a process is also underway in Ohio that could be extremely expensive for VW.
Together with the supplier Bosch, who was accused as an alleged accomplice in the "Dieselgate" scandal, Volkswagen appealed to the US Supreme Court in January to overturn the appeal decision and prevent additional penalties. It is not yet clear to what extent the Supreme Court will deal with the case. But the highest US court asked for statements from the two districts on Tuesday. They now have until March 18th to reply.
Regulatory chaos feared
Meanwhile, VW already received broad support in the process – not only from the auto industry. Through so-called Amicus briefs, with which bystanders can take sides in US proceedings, the group already received support from various lobby groups this week – from the world umbrella organization of car manufacturers OICA to the European industry representatives ACEA and CLEPA to the major US associations Alliance for Automotive Innovation and National Automobile Dealers Association.
It is hardly surprising that the car world is unanimously behind VW – the industry fears the high legal risks of a precedent. But four former officials from the US environmental agencies EPA and Carb, as well as the Justice Department, also joined the company. VW's US subsidiary Volkswagen Group of America – which is formally at the center of the legal dispute – once again pointed out in a statement that the appeal court's decision contradicts various other US case law.
Should all 50 US states and thousands of regional district governments be able to impose penalties beyond those already agreed at the federal level, then exactly the regulatory chaos that the US Congress wanted to avoid with the "Clean Air Act" threatens. The group has already booked costs of around 32 billion euros for the scandal – the majority of which was due to penalties and compensation in the USA.
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