Chapter 8: The Volkswagen “Dieselgate” Clean Air Act Settlement

In “Chapter 8: The Volkswagen ‘Dieselgate’ Clean Air Act Settlement,” John C. Cruden and Joshua H. Van Eaton of Beveridge & Diamond PC, explore the rapidly secured consent decrees between the federal government and Volkswagen (VW) for its “Dieselgate” emissions cheating scandal and the successful implementation of the settlement.

VW’s Clean Air Act (CAA) violation involved the use of “defeat devices” that allowed tested engines to reduce emissions while being tested and then emit up to 40 times the lawful limit while in use. After an investigation involving both the U.S. Environmental Protection Agency (EPA) and the California Air Resources Board, EPA issued a Notice of Violation on September 18, 2015, and the U.S. Department of Justice (DOJ) filed a federal complaint against VW in early January 2016. The federal enforcement case was ultimately consolidated with private actions in multidistrict litigation before Judge Charles R. Breyer in San Francisco. Judge Breyer soon appointed former Federal Bureau of Investigation Director Robert S. Mueller III as Settlement Master to manage the settlement.

Ultimately, Judge Breyer and Settlement Master Mueller would oversee litigation activities and rounds of negotiation between the United States and other regulators and VW that would lead to the completion of the three consent decrees to resolve civil claims and criminal complaints stemming from VW’s fraudulent behavior. The court and Settlement Master also helped resolve a class action lawsuit against VW brought by private consumers. The value of the three DOJ-secured consent decrees exceeded $20 billion—most of it obtained in the civil complaints the United States filed against the automaker (which are the focus of the chapter)—and collectively, the settlements, are the largest in the history of U.S. CAA enforcement. On the criminal side, VW pled guilty to three felonies, and six high-ranking VW officials were also indicted. The class action settlements also provided billions of dollars in relief.

This chapter examines the events leading to the settlements as well as the settlements themselves and then reflects on practices that might guide the resolution of other future mass environmental and health crises.

About the Authors

John C. Cruden is a principal at the environmental law firm Beveridge & Diamond PC. He was the Assistant Attorney General for the Environment and Natural Resources Division (ENRD) of DOJ from 2015 to 2017. Along with his co-author, Joshua H. Van Eaton, he led the negotiation discussions on behalf of the United States, which resulted in the series of consent decrees with VW that are discussed in the chapter. He participated in the panel discussion on the VW emissions settlement at the State Energy & Environmental Impact Center’s Health & Environmental Settlements Projects workshop in March 2019. He has a BS from the United States Military Academy; a JD from Santa Clara University, summa cum laude; and MA in Foreign Affairs from the University of Virginia.

Joshua H. Van Eaton is a principal at the environmental law firm Beveridge & Diamond PC. He was a Senior Trial Attorney in ENRD. Along with his co-author, John C. Cruden, he led the negotiation discussions on behalf of the United States, which resulted in the series of consent decrees with VW that are discussed in the chapter. He has a BA in Business Administration from Seattle Pacific University and a JD from Baylor University.