Tribes to Get Portion of Volkswagen Emissions Scandal Settlement Funds

Tanya H. Lee

About $50 million of the $15.3 billion settlement that Volkswagen has agreed to pay for rigging its emissions software has been earmarked for tribes, with another $1 million set aside for administrative fees.

The settlement is part of a consent decree whose public comment period ends on August 6. It stems from the now notorious finding that for nearly a decade, Volkswagen cheated customers by manufacturing diesel-fueled vehicles that spewed massive amounts of nitrous oxide (NOx) into the air and then rigging software for emissions tests to hide that fact.

Now it’s time for the company to pay up, and tribes—as well as some individual American Indian and Alaska Native car owners—are among those eligible for compensation.

In the settlement reached in June and given preliminary approval in federal court on July 26, VW agreed to pay $14.7 billion to settle claims brought by the U.S. Environmental Protection Agency (EPA), U.S. Department of Justice, Federal Trade Commission and the State of California. A separate settlement with 44 states, the District of Columbia and Puerto Rico will cost VW another $600,000, bringing the total settlement—so far—to $15.3 billion.

Of that amount, $2.7 billion is earmarked for a mitigation trust fund to compensate for the environmental damage that has or will be done by 475,000 2.0-liter diesel Jettas, Passats, Golfs, Beetles, Jetta Sportswagens and Audi A3s that VW sold in model years 2009–2015. The tribal share is 1.84 percent of the mitigation trust fund. Besides giving recompense, this was a watershed move in acknowledging tribal entities, said the National Congress of American Indians (NCAI).

“The Volkswagen settlement agreement marks the first time tribal governments have been specifically included in a major public settlement and is an important recognition of our status as sovereign nations,” said NCAI President Brian Cladoosby in a statement. “This will hopefully set a precedent for tribes to be considered in our rightful place among the family of governments in future settlements.”

VW has admitted to installing software that detected when a vehicle was hooked up for an emissions test. That would kick the pollution control system into action and give readings that met EPA standards. But when the cars were driven on the road, the emissions controls did not operate fully. In daily operation, the rigged vehicles emitted up to 40 times as much NOx as the EPA allows. Partially disabling the pollution controls increased the number of miles the vehicle traveled on a gallon of fuel. So purchasers thought they were getting cars with both low emissions and good mileage.

What they got instead was NOx, which pollutes the air and can cause emphysema, bronchitis and other respiratory ailments. According to the EPA, even short-term exposure, from 30 minutes to 24 hours, can be damaging. Asthmatics, children and the elderly are particularly vulnerable.

Mitigation trust funds may be used for a variety of purposes, including repowering certain school buses, shuttle buses, transit buses and freight trucks with new diesel or alternative fuel engines, or replacing those vehicles. Supply equipment (such as charging stations) for some light-duty, zero-emission vehicles and hydrogen fuel cell vehicles are also among projects eligible for mitigation funds.

The largest portion of the settlement—$10.03 billion—will go to the buyback, vehicle modification and lease termination program, and this is where individuals may benefit. VW must offer every eligible owner or lessee of the vehicles included in the settlement the option of selling their car back to the manufacturer at a pre-disclosure price, or modifying their vehicle’s emissions system to bring it into compliance (assuming EPA approves VW’s proposed modifications), or terminating their lease. The buyback option would compensate owners for the value of their cars, expected to be between $5,000 and $10,000, and give them an additional cash payment.

In addition, VW has agreed to invest $2 million to support increased use of technology for non-polluting cars, called zero emission vehicles.

VW could still face more repercussions. The company has admitted that it equipped 11 million vehicles worldwide with the fraudulent software. Most of the cars were sold in Europe, and some of those countries may sue. Owners of the affected cars in the U.S. are not bound by the settlement and may choose to sue on their own in the hope of getting a better deal. In addition, the U.S. settlement does not include 80,000 vehicles with 3.0-liter diesel engines that were sold here. In addition, the Department of Justice may file criminal charges.

Information about the settlement is available at a website set up by the U.S. District Court for the Northern District of California. U.S. District Judge Charles R. Breyer’s preliminary approval of the partial settlement on July 26 opens the way for vehicle owners to go to the website and enter their Vehicle Identification Number and mileage to get an idea of how much compensation they can expect if they go with the buyback option.

The judge could give final approval for the settlement as soon as October. In the meantime, the court is accepting public comments, which could change the terms of the consent decree. Send comments to [email protected], or Assistant Attorney General, U.S. DOJ—ENRD, P.O. Box 7611, Washington, D.C. 20044-7611. Comments are due by August 6. 

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