81 FR 96046 - Notice of Lodging of Proposed Second Partial Consent Decree Under the Clean Air Act

DEPARTMENT OF JUSTICE

Federal Register Volume 81, Issue 250 (December 29, 2016)

Page Range		96046-96047
FR Document		2016-31527
Federal Register, Volume 81 Issue 250 (Thursday, December 29, 2016)
[Federal Register Volume 81, Number 250 (Thursday, December 29, 2016)]
[Notices]
[Pages 96046-96047]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-31527]


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DEPARTMENT OF JUSTICE


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

    On December 20, 2016, the Department of Justice lodged a proposed 
Second 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 AG and 
others, concerning certain noncompliant 3.0 liter diesel vehicles.
    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). An amended 
complaint was filed on October 7, 2016. The United States' complaint 
(initial and as amended) 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, 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.  43016, 43017, 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.
    On June 28, 2016, the United States lodged a Partial Consent 
Decree, Dkt. No. 1605-1 (``First Partial Consent Decree''), concerning 
the 2.0 Liter Subject Vehicles, which was entered into by the United 
States, California, and certain defendants (Volkswagen AG, Audi AG, 
Volkswagen Group of America, Inc., and Volkswagen Group of America 
Chattanooga Operations, LLC). The First Partial Consent Decree was 
entered by this Court on October 25, 2016, Dkt. No. 2103, and may be 
viewed here: http://www.cand.uscourts.gov/crb/vwmdl.
    This Second Partial Consent Decree (``Decree'') is entered into 
between the United States, California, and all defendants 
(collectively, ``Volkswagen''). The Decree partially resolves the 
governments' claims for injunctive relief with respect to the 3.0 Liter 
Subject Vehicles, by providing remedies for the cars on the road and 
the environmental harm from the violations. It does not address 
plaintiffs' claims, inter alia, for prospective injunctive relief to 
prevent future violations of the same type that are alleged in the 
complaints or claims for civil penalties.
    Under the Decree, Volkswagen must perform two vehicle recalls as 
follows (with all capitalized terms as defined in Appendix A of the 
Decree (Buyback, Lease Termination, Vehicle Modification, and Emissions 
Compliant Recall Program):
    First, for Generation 1.x 3.0 Liter Subject Vehicles, Volkswagen 
must offer all Eligible Owners and Lessees of these vehicles the 
Buyback or the Lease Termination under terms described in Appendix A. 
In addition, if approved by EPA/CARB, Volkswagen may, in accordance 
with the requirements specified in Appendix B of the Decree (Vehicle 
Recall and Emissions Modification Program for 3.0 Liter Subject 
Vehicles), offer for Eligible Vehicles the option of a modification to 
substantially reduce NOX emissions in accordance with 
standards established by EPA/CARB in the Decree.
    Second, for Generation 2.x 3.0 Liter Subject Vehicles, if proposed 
by Volkswagen and approved by EPA/CARB, Volkswagen must offer an 
Emissions Compliant Recall as set forth in Appendix A to bring these 
vehicles into compliance with their Certified Exhaust Emission 
Standards in accordance with the requirements specified in Appendix B. 
If Volkswagen is unable to effect a recall that meets Certified Exhaust 
Emission Standards for a particular Test Group or Groups of Generation 
2.x 3.0 Liter Subject Vehicles in accordance with the requirements 
specified in Appendix B, Volkswagen must offer all Eligible Owners and 
Lessees of such vehicles the Buyback or Lease Termination, under terms 
described in Appendix A, and may, if proposed by Volkswagen and 
approved by EPA/CARB, consistent with the provisions in Appendix B, 
offer to modify such vehicles to substantially reduce their 
NOX emissions in accordance with standards established by 
EPA/CARB in this Consent Decree. See Decree ]] 9-15; Appendices A and 
B.
    Volkswagen must achieve a recall rate (through the buyback, lease 
termination, scrapped vehicles, the Emissions Compliant Recall, and any 
other approved vehicle modification options) of 85% by November 30, 
2019 for the Generation 1.x 3.0 Liter Subject Vehicles, and by May 31, 
2020 for the Generation 2.x 3.0 Liter Subject Vehicles. If it fails to 
do so, Volkswagen must augment the mitigation trust fund discussed 
below by $5.5 million for each 1% that it falls short of the 85% rate 
for the Generation 1.x 3.0 Liter Subject Vehicles, and by $21 million 
for each 1% that it falls short of the 85% rate for the Generation 2.x 
3.0 Liter Subject Vehicles. Volkswagen must also achieve a separate 85% 
recall rate for vehicles in California, and must pay to

[[Page 96047]]

the mitigation trust (solely for mitigation projects in California) 
$900,000 for each 1% that it falls short of this target for the 
California Generation 1.x 3.0 Liter Subject Vehicles in and $5.5 
million for each 1% that it falls short of the 85% rate for the 
California Generation 2.x 3.0 Liter Subject Vehicles. See Decree ]] 10-
11,13; Appendix A ]] 10.1-10.3.
    In connection with the buyback, in accordance with Appendix A, 
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 November 2, 2015 (``Retail Replacement 
Value''). See Decree ] 12; Appendix A ]] 2.4, 2.23, 4.1, 7.1 and 
Appendix A-1. The buyback/lease termination program under the Decree 
remains open for two years after the Decree's Effective Date in the 
case of Generation 1.x vehicles and two years from the date offers 
first become available for the applicable vehicles in the case of 
Generation 2.x vehicles. See Decree Section IV.A and Appendix A ]] 4.3, 
7.3. If EPA and CARB approve an emissions modification or Emissions 
Compliant Recall, Volkswagen must offer it to consumers indefinitely. 
See Decree ] 94; Appendix A ]] 5.2, 6.2, 8.2.
    In addition, under the Decree, Volkswagen must make a payment of 
$225 million into the Mitigation Trust Fund that will be established 
under the First Partial Consent Decree. See Decree ] 17. Consistent 
with the use of the funds established by the First Partial Consent 
Decree, these funds will also be allocated to states, Puerto Rico, the 
District of Columbia, and Indian tribes who become Beneficiaries to 
perform specified NOX mitigation projects. This amount is 
expected to fund projects to fully mitigate the total, lifetime excess 
emissions from the 3.0 Liter Subject Vehicles. See Decree, p. 5, ] 6. 
The trust will be administered by a trustee to be selected in 
accordance with the First Partial Consent Decree.
    The publication of this notice opens a period for public comment on 
the Second Partial Consent Decree. Comments concerning the Decree 
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:

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         To submit comments:                     Send them to:
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By email............................  [email protected].
By mail.............................  Assistant Attorney General, U.S.
                                       DOJ--ENRD, P.O. Box 7611,
                                       Washington, DC 20044-7611.
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    The Second Partial Consent Decree may 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 Second Partial Consent Decree and its appendices, 
please enclose a check or money order for $40.25 (25 cents per page 
reproduction cost) payable to the United States Treasury. For a copy of 
certain portions of the Second Partial Consent Decree, please designate 
which portions are requested, and provide the appropriate amount of 
money. For the Second Partial Consent Decree without the exhibits and 
signature pages, the cost is $13.25 (with signature pages, $16.50). For 
Appendix A, the cost is $8.50. For Appendix B, the cost is $15.25. For 
the Mitigation Appendix, the cost is $.25.

Karen S. Dworkin,
Assistant Section Chief, Environmental Enforcement Section, Environment 
and Natural Resources Division.
[FR Doc. 2016-31527 Filed 12-28-16; 8:45 am]
 BILLING CODE 4410-15-P
Document Created: 2016-12-29 01:58:37
Document Modified: 2016-12-29 01:58:37
Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
FR Citation		81 FR 96046