New York, NY - June 18, 2016 - Attorney General Eric T. Schneiderman today announced New York State’s participation in an interrelated series of partial settlements with Volkswagen AG and its Audi and Porsche affiliates arising from Volkswagen’s violations of emissions standards and state consumer protection laws.
As part of the settlements, some of which are still subject to court approval, all owners of 2.0 liter, 4-cylinder engine VW and Audi diesel cars in New York will be entitled to be paid full, pre-scandal fair market value for their vehicle, in addition to a cash payment of at least $5,100. Under the deal, car owners may also choose to keep their vehicle and wait to see if VW and Audi develop acceptable emissions fixes; car owners who exercise this option will also receive a cash payment of at least $5,100.
The settlements will also direct to New York over $115 million for environmental projects to improve New York’s air quality, as well as over $30 million in additional monetary recoveries for the state’s general fund.
New York State will continue its investigation into the scope of Volkswagen, Audi and Porsche’s illegal conduct and their liability for environmental penalties.
“The evidence reviewed so far concerning Volkswagen, Audi and Porsche points to a culture of corporate arrogance and conscious disregard for the rule of law and the rights of consumers,” Attorney General Schneiderman said. “These partial settlements announced today exact a stiff price from Volkswagen for its deception of consumers and the environmental damage it has caused in New York and across the country. But make no mistake: we will continue to investigate and pursue Volkswagen for its violation of our environmental laws, and we will seek the imposition of additional penalties in amounts sufficient to ensure that Volkswagen and any other car manufacturer complies with the standards required of them.”
“These partial settlements are a positive step towards addressing Volkswagen’s deliberate so-called ‘clean diesel’ fraud of consumers, and state and federal regulators,” said Department of Environmental Conservation Commissioner Basil Seggos. “New York will continue to hold Volkswagen accountable for its violations of our state’s environmentally protective vehicle emissions regulations.”
Today’s sweeping agreements are unprecedented. The principal components of the settlements include:
- Volkswagen is required to repurchase or modify all of the more than 487,000 2.0 liter engine diesel vehicles that Volkswagen and Audi falsely marketed in the United States as compliant with federal and state emissions standards, when in fact they emitted harmful NOx pollutants at rates many times higher than the law permitted. As part of the settlement, a VW and Audi 2.0 liter engine diesel car owner can sell the car back to VW at the pre-scandal fair market value, or wait to see if VW and Audi develop acceptable emissions fixes; whether cars are sold back to Volkswagen or fixed, the car owner will also receive a cash payment of at least $5,100 over and above the market value of the car. Under this agreement, which is subject to the approval of the federal court presiding over the class action litigation and the FTC and EPA’s lawsuits, Volkswagen is to set aside up to $10 billion to address car owner claims. The current settlement does not address the relief to be received by owners of the 6-cylinder, 3.0 liter engine diesel SUVs and luxury sedans sold in the U.S. by VW, Audi and Porsche; the resolution of those claims awaits further engineering studies and negotiations with Volkswagen.
- Volkswagen will pay about $1,100 per car directly to the states for the companies’ repeated violations of the states’ and other jurisdictions’ laws prohibiting unfair and deceptive marketing and trade practices. This agreement, which Attorney General Schneiderman’s office secured together with the attorneys general of five other states on behalf of a coalition in which over 40 states participated, will generate over $500 million in nationwide payments by Volkswagen, including over $30 million in penalties going to the State of New York.
- Volkswagen will fund of a $2.7 billion Mitigation Fund. This Fund, which also is subject to court approval, is to be used by all states, the District of Columbia and Puerto Rico to address the harm caused to the environment by Volkswagen’s unlawful diesel vehicles. States will be able to spend money from the Mitigation Fund to pay for diesel engine replacement and retrofit projects and other measures that will reduce NOx and other harmful emissions from numerous different sources. Approximately $117 million of these monies will be administered by New York’s Department of Environmental Conservation for air quality improvement programs in New York.
- Volkswagen’s commitment to invest $2 billion in the United States over the next 10 years for the development of Zero Emission Vehicles (ZEV, that is, electric) and supporting infrastructure. $800 million of these monies are to be spent in California and the balance, or $1.2 billion, for ZEVs and ZEV infrastructure in the rest of the country.
- Volkswagen also will pay $20 million to the states for their costs in investigating this matter and to establish a fund that state attorneys general can draw from in future consumer fraud investigations, including of possible violations by automobile manufacturers.
Significantly, this broad settlement does not waive or limit the ability of state and federal authorities to seek additional penalties from Volkswagen for its violations of environmental laws and regulations.
The settlements are embodied in separate agreements, some of which are subject to court approval, among Volkswagen, the United States Environmental Protection Agency (EPA) and Department of Justice (DOJ), the Federal Trade Commission (FTC), car owners in private class action suits, and over 40 states who have joined together in a coalition headed by six state Attorneys General, in which Attorney General Schneiderman’s office played a leading role.
The New York Attorney General’s office is continuing its investigation and, working with the Department of Environmental Conservation and its partners in other states and the federal government, intends to hold Volkswagen and its affiliated companies to account for those violations and ensure that willful violations of New York’s environmental laws are appropriately punished.
This investigation is being handled by Senior Enforcement Counsel David Nachman; Assistant Attorney General Noah Popp of the Consumer Protection Bureau; Deputy Bureau Chief Lisa Burianek, Affirmative Litigation Section Chief Michael Myers and Assistant Attorneys General John Turrettini, and Brian Lusignan of the Environmental Protection Bureau; and Senior Trial Counsel David Ellenhorn, with the assistance of Laura Sarli of the Attorney General’s Investor Protection Bureau. The Consumer Protection Bureau is led by Bureau Chief Jane Azia and the Environmental Protection Bureau is led by Bureau Chief Lemuel Srolovic. Manisha Sheth heads the Attorney General’s Division of Economic Justice and Alvin Bragg the Division of Social Justice.
For additional information on the settlement, please visit www.VWCourtSettlement.com.