Dieselgate is a series of accusations, criminal charges, and civil lawsuits against the German automobile company Volkswagen for supposedly cheating on emissions tests by programming its diesel cars to perform differently while tested. Supposedly the software disabled emission controls (called the “defeat device”) during normal driving in order to obtain better fuel mileage and performance, while activating the emissions controls only while being tested. This 7-year ongoing saga has pushed (and even required in some of the settlements) the once-richest company in the world to shift to electric vehicles.
The scandal began with reports in September 2015, and through March 2021 had cause the manufacturer an estimated €32.2 billion (roughly $37 billion) in fines, recalls, compensation and legal expenses.
|“||As part of that $14.7 billion agreement, Volkswagen agreed to spend an estimated $10 billion to compensate consumers and buy back or modify hundreds of thousands of its polluting cars, pay $2.7 billion into a trust fund for environmental mitigation projects, and spend $2 billion over 10 years on zero-emission technology. Of the $4.7 billion in mitigation funding and investments, $1.18 billion will come to California ($800 million in zero-emissions technology investments and $380 million for environmental mitigation projects in the state).||”|
Volkswagen's car market share in the United States is approximately 5%.
In lawsuits filed by counties against Volkswagen concerning this matter, the Ninth Circuit ruled that Volkswagen could be further liable for post-sale changes, but not pre-sales modifications:
|“|| Volkswagen, a car manufacturer, installed defeat devices in new cars for the purpose of evading compliance with federally mandated emission standards, and subsequently updated the software in those cars so the defeat devices would do a better job of avoiding and preventing compliance. Volkswagen settled EPA's criminal and civil actions for over $20 billion dollars—but failed to obtain a release of liability from state and local governments at the same time. When two counties sought to impose additional penalties for violation of their laws prohibiting tampering with emission control systems, Volkswagen persuaded the district court that these claims were preempted by the Clean Air Act.
We agree with the district court only in part. We agree that the Clean Air Act expressly preempts state and local government efforts to apply anti-tampering laws to pre-sale vehicles. But we disagree with the district court's ruling that the Clean Air Act impliedly preempts state authority to enforce anti-tampering laws against post-sale vehicles. In other words, the Clean Air Act does not prevent the two counties here from enforcing their regulations against Volkswagen for tampering with post-sale vehicles.
We base this conclusion on Supreme Court precedent. A "high threshold must be met if a state law is to be preempted for conflicting with the purposes of a federal Act." Chamber of Commerce of U.S. v. Whiting, 563 U.S. 582, 607, 131 S. Ct. 1968, 179 L. Ed. 2d 1031 (2011) (citation omitted). Volkswagen has not met that high threshold here. HN3 The text and structure of the Clean Air Act do not indicate any congressional intent to prohibit states from enforcing anti-tampering laws in this context. Moreover, the regulation of air pollution for health and welfare purposes "falls within the exercise of even the most traditional concept of what is compendiously known as the police power," Huron Portland Cement Co. v. Detroit, 362 U.S. 440, 442, 80 S. Ct. 813, 4 L. Ed. 2d 852 (1960), so we must "assume that 'the historic police powers of the States' are not superseded 'unless that was the clear and manifest purpose of Congress,'" Arizona v. United States, 567 U.S. 387, 400, 132 S. Ct. 2492, 183 L. Ed. 2d 351 (2012) (citation omitted). No such purpose exists here.
We acknowledge that our conclusion—that the Clean Air Act does not prevent the two counties from enforcing their regulations against Volkswagen for tampering with post-sale vehicles—may result in the imposition of unexpected (and enormous) liability on Volkswagen. But that result is caused by the unusual and perhaps unprecedented situation before us. In drafting the Clean Air Act, Congress apparently did not contemplate that a manufacturer would intentionally tamper with the emission control systems of its vehicles after sale in order to improve the functioning of a device intended to deceive the regulators. In other words, Volkswagen faces liability due to the straightforward application of the Clean Air Act and the preemption doctrine to its unexpected and aberrant conduct. We may not strain to give Volkswagen the equivalent of a release from state and local liability (which it did not secure for itself) by engaging in a "freewheeling judicial inquiry into whether a state statute is in tension with federal objectives; such an endeavor would undercut the principle that it is Congress rather than the courts that pre-empts state law." Whiting, 563 U.S. at 607 (internal quotation marks and citation omitted)
Salt Lake Cty. v. Volkswagen Grp. of Am., Inc. (In re Volkswagen "Clean Diesel" Mktg., Sales Practices, & Prods. Liab. Litig.), 959 F.3d 1201, 1205-06 (9th Cir. 2020)).