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Volkswagen software scandal may not lead to criminal prosecution due to loophole in Clean Air Act

Wed 30 Sep 2015

Faced with a slew of crippling lawsuits and recalls over its software-based evasion of emissions standards, German car manufacturer Volkswagen has a ray of corporate light today – it transpires that a loop in the U.S. 1970 Clean Air Act could stop the company facing criminal charges over use of ‘defeat devices’ in its cars.

According to the Wall Street Journal [paywalled], the clause in the act indemnifies car manufacturers against criminal penalties and leaves the Justice Department in a jurisdictional quandary as far as bringing criminal charges against Volkswagen. Prosecutors are now reported to be considering alternative methods, including charges that Volkswagen lied to regulation authorities – a considerably reduced line of attack.

However Senator Richard Blumenthal told the WSJ that the revelation could initiate attempts to revise the legislation, saying: “The loophole should be closed so there is a specific penalty for auto manufacturers…We will be introducing legislation to close the loophole.”

Even if this were effected, Volkswagen’s case would arguably be strengthened by post facto modification of regulations in existence at the time of the infraction. U.S.-based penalties comprise a formidable bulk in the phalanx of lawsuits and demands for restitution that Volkswagen are now facing, only a short time after it resolved to improve its traction in the United States with a $7bn investment in its North America operations.

The New York Times contends that the ‘defeat devices’, the disclosure of which has rocked the car industry, represent part of a long-time culture of systematic deception and standards-rigging in the automotive industry. As former National Highway Traffic Safety Administration administrator Joan Claybrook notes, the empowering statutes of the agency contain “no specific criminal penalty for selling defective or noncompliant vehicles”. Claybrook continued: “I don’t see them changing this behavior unless criminal penalties are enacted into law that allow the prosecutor to put the executives in jail.”


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