Loophole in 1970 Clean Air Act may prevent criminal prosecution of VW

Ever since the VW scandal broke two weeks ago, there’ve been ongoing questions as to the types of penalties VW might face. Not only did the company deliberately include so-called “defeat devices,” designed to allow their diesel vehicles to spew up to 40x more pollutants than allowed under US law, they lied to investigators and misrepresented the nature of the problem, all while continuing to market these vehicles as “clean diesel” and a practical alternative to hybrids or electric cars. Given that VW has admitted that it lied and defrauded more than 11 million customers (closer to 15 million if you include vehicles from Audi and Skoda), it may not be possible to bring criminal charges against the company.
According to the Wall Street Journal, the section of the Clean Air Act of 1970 specifies criminal penalties for fixed sources of emissions (power plants), but only specifies civil penalties for automakers and other moving sources of air pollution. Our own cursory investigation of the Clean Air Act confirms this — while an omission of this sort does not automatically mean the government cannot bring a criminal charges against a company, the law does not explicitly carve out criminal penalties.

Emissions measured on US vehicles. The left two are made by VW

The WSJ reports that the government is looking to bring charges on different counts, including lying to federal officials, but the government may choose to pursue civil, rather than criminal charges in any case. Civil charges would allow VW’s staff to avoid jail time, but could still carry staggering fines that could bankrupt the company. Pressure on VW has been growing from all sides; the company recently declared that it had a plan in place to bring all vehicles into proper compliance with both European and US law. The only way for VW to have developed that plan so quickly is if it simply intends to update vehicle software to turn the “test” mode feature on full-time. While likely to work, it’s also likely to anger many VW drivers, who will see engine performance, fuel economy, or maintenance costs increase as a result of the changes. The first class action lawsuits against VW, needless to say, are already rolling forward.
At Slate, David Auerbach makes the argument that the man almost certainly responsible for the VW scandal has, thus far, escaped notice. According to Auerbach, Ferdinand Piech, the grandson of Ferdinand Porsche and chairman of VW’s board until this past spring, hand-selected the executives that ran the affected businesses and presided over the culture that allowed to him to be installed. VW, unlike most ostensibly public companies, holds the vast majority of its voting power in private hands and operates with a rigid, top-down, hierarchical and dynastic power structure. We don’t know yet which executives knew about the defeat devices or who ordered them installed, but given that problems are now cropping up across VW’s various product families, it seems obvious that this problem went deeper than just the CEO.