81 FR 44051 - Notice of Lodging of Proposed Partial Consent Decree Under the Clean Air Act

DEPARTMENT OF JUSTICE

Federal Register Volume 81, Issue 129 (July 6, 2016)

[Federal Register Volume 81, Number 129 (Wednesday, July 6, 2016)]
[Notices]
[Pages 44051-44052]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-15858]


-----------------------------------------------------------------------

DEPARTMENT OF JUSTICE


Notice of Lodging of Proposed Partial Consent Decree Under the 
Clean Air Act

    On June 28, 2016, the Department of Justice lodged a proposed 
Partial Consent Decree with the United States District Court for the 
Northern District of California in the lawsuit entitled In re: 
Volkswagen ``Clean Diesel'' Marketing, Sales Practices, and Products 
Liability Litigation, Case No: MDL No. 2672 CRB (JSC), partially 
resolving Clean Air Act and various California claims (including under 
the California Health and Safety Code) against Volkswagen Group of 
America, Inc., and others, concerning certain noncompliant 2.0 liter 
diesel vehicles. In addition, the Federal Trade Commission (``FTC'') 
filed a related proposed Partial Stipulated Order for Permanent 
Injunction and Monetary Judgment with Volkswagen (``FTC Order''), and 
the private Plaintiffs' Steering Committee (``PSC'') filed a proposed 
Consumer Class Action Settlement Agreement and Release (``Class Action 
Settlement'') with Volkswagen with respect to the 2.0 liter diesel 
vehicles on the same date. The three settlements resolve separate 
claims but offer coordinated relief.
    On January 4, 2016, the United States, on behalf of the 
Environmental Protection Agency (``EPA'') filed a complaint against 
Volkswagen AG, Volkswagen Group of America, Inc., Volkswagen Group of 
America Chattanooga Operations, LLC, Audi AG, Dr. Ing. h.c. F. Porsche 
AG, and Porsche Cars North America, Inc. alleging that the defendants 
violated Sections 203(a)(1), (2), (3)(A), and (3)(B) of the Clean Air 
Act (``Act''), 42 U.S.C. 7522(a)(1), (2), (3)(A), and (3)(B), with 
regard to approximately 500,000 model year 2009 to 2015 motor vehicles 
containing 2.0 liter diesel engines (2.0 Liter Subject Vehicles) and 
approximately 80,000 model year 2009 to 2016 motor vehicles containing 
3.0 liter diesel engines (3.0 Liter Subject Vehicles). The United 
States' complaint alleges that each 2.0 and 3.0 Liter Subject Vehicle 
contains computer algorithms that are prohibited defeat devices that 
cause the emissions control system of those vehicles to perform 
differently during normal vehicle operation and use than during 
emissions testing. The complaint alleges that the defeat devices cause 
the vehicles, during normal vehicle operation and use, to emit levels 
of oxides of nitrogen (``NOX'') significantly in excess of 
EPA-compliant levels. The complaint seeks, among other things, 
injunctive relief to remedy the violations, including mitigation of 
excess NOX emissions, and civil penalties.
    On June 27, 2016, the People of the State of California 
(``California''), by and through the California Air Resources Board 
(``CARB'') and the California Attorney General filed a complaint 
against defendants alleging that defendants violated Cal. Health & 
Safety Code Sec. Sec.  43106, 43107, 43151, 43152, 43153, 43205, 43211, 
and 43212; Cal. Code Regs. tit. 13, Sec. Sec.  1903, 1961, 1961.2, 
1965, 1968.2, and 2037, and 40 CFR Sections incorporated by reference 
in those California regulations; Cal. Bus. & Prof. Code Sec. Sec.  
17200 et seq., 17500 et seq., and 17580.5; Cal. Civ. Code Sec.  3494; 
and 12 U.S.C. 5531 et seq., with regard to approximately 71,000 model 
year 2009 to 2015 motor vehicles containing 2.0 liter diesel engines 
and approximately 16,000 model year 2009 to 2016 motor vehicles 
containing 3.0 liter diesel engines, for a total of approximately 
87,000 motor vehicles. The California complaint alleges, in relevant 
part, that the motor vehicles contain prohibited defeat devices and 
have resulted in, and continue to result in, increased NOX 
emissions from each such vehicle significantly in excess of CARB 
requirements, that these vehicles have resulted in the creation of a 
public nuisance, and that defendants engaged in related conduct that 
violated unfair competition, false advertising, and consumer protection 
laws.
    This Partial Consent Decree (``Decree'') is entered into between 
the United States, California, and certain of the defendants, namely, 
Volkswagen AG, Volkswagen Group of America, Inc., Volkswagen Group of 
America Chattanooga Operations, LLC, and Audi AG (collectively, 
``Volkswagen''). The Decree partially resolves the governments' claims 
for injunctive relief with respect to the 2.0 Liter Subject Vehicles, 
by providing remedies for the cars on the road and the environmental 
harm from the violations. It does not address the governments' claims, 
inter alia, for prospective injunctive relief to prevent future 
violations of the same type that are alleged in the complaints, claims 
for civil penalties, or claims regarding the 3.0 liter Subject 
Vehicles. Because the Decree only addresses 2.0 Liter Subject Vehicles, 
and the Porsche defendants only manufacture 3.0 liter diesel vehicles 
for the United States market, no claims against the Porsche defendants 
are settled under this Decree.
    Under the Decree, Volkswagen must offer all Eligible Owners and 
Lessees of Eligible Vehicles (all as defined in Appendix A to the 
Decree) the option to have Volkswagen buy back their cars or to 
terminate their leases at no cost. In addition, the Decree permits 
Volkswagen to submit for EPA and CARB review and approval, a proposal 
for modifying the 2.0 Liter Subject Vehicles to reduce emissions. If 
EPA and CARB approve an emissions modification for any category of the 
2.0 Liter Subject Vehicles, Volkswagen must also offer all Eligible 
Owners and Lessees of an Eligible Vehicle the additional option of 
receiving an emissions modification in lieu of a buyback. Volkswagen 
must achieve a recall rate (through the buyback, lease termination, 
scrapped vehicles, and the emissions modification option, if approved) 
of 85% by June 30, 2019. If it fails to do so, Volkswagen must augment 
the mitigation trust fund discussed below by $85 million for each 1% 
that it falls short of the 85% rate. Volkswagen must also achieve a 
separate 85% recall rate for vehicles in California, and must pay $13.5 
million to the mitigation trust (solely for mitigation projects in 
California) for each 1% that it falls short of this target. See Decree 
Section IV.D and Appendices A and B.
    In connection with the buyback, Volkswagen must pay Eligible Owners 
no less than the cost of the retail purchase of a comparable 
replacement vehicle of similar value, condition and mileage as of 
September 17, 2015, the day before the existence of the defeat devices 
was made known to the public (``retail replacement value''). The Decree

[[Page 44052]]

acknowledges that Volkswagen may satisfy this obligation through 
offering the payments required by the FTC Order and the Class Action 
Settlement, which are at least equal to the retail replacement value. 
The buyback/lease termination program under the Decree remains open for 
two years after the Decree is entered by the Court. See Decree Section 
IV.A and Appendix A. If EPA and CARB approve an emissions modification, 
Volkswagen must offer it to consumers indefinitely. See Decree Section 
IV.B and Appendices A and B.
    Volkswagen has set aside a defined funding pool for consumer 
payments associated with the buyback, lease termination, and emissions 
modification compensation programs pursuant to the requirements of this 
Decree and the related FTC Order and Class Action Settlement, and may 
fund consumer payments in connection with buyback, lease termination, 
and emissions modifications up to $10,033,000,000.
    In addition, under the Decree, Volkswagen must fund a trust over 
three years in the total amount of $2.7 billion, which states, Puerto 
Rico, the District of Columbia, and Indian tribes can use to perform 
specified NOx mitigation projects. This amount is expected to fund 
projects to fully mitigate the total, lifetime excess emissions from 
the 2.0 Liter Subject Vehicles. See Decree Section IV.D and Appendix D. 
The trust will be administered by a trustee to be selected after the 
Decree is entered.
    Finally, Volkswagen must invest $2 billion over a 10-year period to 
support the increased use of zero emission vehicle (``ZEV'') technology 
in the United States, including the development and maintenance of ZEV 
charging stations and infrastructure. See Consent Decree Section IV.C 
and Appendix C.
    The publication of this notice opens a period for public comment on 
the Partial Consent Decree. Comments concerning the Partial Consent 
Decree (but not concerning the FTC Order or Class Action Settlement) 
should be addressed to the Assistant Attorney General, Environment and 
Natural Resources Division and should refer to In re: Volkswagen 
``Clean Diesel'' Marketing, Sales Practices, and Products Liability 
Litigation, Case No: MDL No. 2672 CRB (JSC), and D.J. Ref. No. 90-5-2-
1-11386.
    All comments must be submitted no later than thirty (30) days after 
the publication date of this notice. Comments may be submitted either 
by email or by mail:

------------------------------------------------------------------------
         To submit comments:                     Send them to:
------------------------------------------------------------------------
By email............................  [email protected].
By mail.............................  Assistant Attorney General,
                                      U.S. DOJ--ENRD, P.O. Box 7611,
                                       Washington, D.C. 20044-7611.
------------------------------------------------------------------------

    The Partial Consent Decree, the FTC Order, and the Class Action 
Settlement may all be viewed and downloaded from http://www.cand.uscourts.gov/crb/vwmdl. During the public comment period, the 
Partial Consent Decree may also be examined and downloaded at this 
Justice Department Web site: https://www.justice.gov/enrd/consent-decrees. We will provide a paper copy of the Partial Consent Decree 
upon written request and payment of reproduction costs. Please mail 
your request and payment to: Consent Decree Library, U.S. DOJ--ENRD, 
P.O. Box 7611, Washington, DC 20044-7611.
    For the entire Partial Consent Decree and its appendices, please 
enclose a check or money order for $55.25 (25 cents per page 
reproduction cost) payable to the United States Treasury. For a copy of 
certain portions of the Partial Consent Decree, please designate which 
portions are requested, and provide the appropriate amount of money. 
For the Partial Consent Decree without the exhibits and signature 
pages, the cost is $13.50. For Appendix A, the cost is $3.25. For 
Appendix B, the cost is $17.25. For Appendix C, the cost is $8.50. For 
Appendix D, the cost is $10.75.

Karen S. Dworkin,
Assistant Section Chief, Environmental Enforcement Section, Environment 
and Natural Resources Division.
[FR Doc. 2016-15858 Filed 7-5-16; 8:45 am]
 BILLING CODE 4410-15-P