The Big Diesel Lie Grows While The Trump Administration Rolls Coal

Photo: AP
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Who can forget Dieselgate, the headline-grabbing, reputation-destroying pollution scandal of 2015? In which Volkswagen AG, one of the planet’s largest carmakers, was exposed for installing defeat devices on up to 11 million of its diesels to trick regulators around the world into thinking these cars complied with emissions standards when in fact they didn’t come close, exceeding U.S. limits, for example, by 40 times or more.

Who can forget? Certainly not Volkswagen. Settlements in the U.S., along with follow-on prosecutions around the world, saw the German company hit with over $34 billion in fines, payouts and provisions, the largest penalties levied against any carmaker, anywhere, ever. Sending a shudder down many a multinational’s corporate spine, a few VW executives were even sent to prison.

In Germany, former CEO Martin Winterkorn was charged earlier this year with fraud, unfair competitive practices and breach of trust related to the diesel fakery; the 10 years he faces in der grosser haus is 10 years more than any automobile industry executive would ever have expected, exalted as they are in the Fatherland, no matter the infraction.

And just before August began, Munich prosecutors charged former Audi CEO Rupert Stadler with fraud and some additional offenses. The one-time whiz kid—who’d already been held in confinement for witness tampering last year—was charged with continuing to sell cars with the diesel cheat device even after the scam went public in 2015. Other investigations are pending, too, with prosecutors exploring whether Volkswagen CEO Herbert Diess, Chairman Hans Dieter Poetsch and Winterkorn failed to inform markets about the diesel imbroglio’s scope, gravity and downside risk, fast enough.

Turns out, however, Volkswagen and Friends were not alone in their soot-covered perfidy. As many industry insiders privately opined at the time, VW was merely the tip of the iceberg, even allowing for its diesel-stained subsidiaries, Audi and Porsche.

Kind Of Blue

Indeed, the U.S. government under President Barack Obama suspected as much, with EPA, DOJ, FTC, and the SEC opening criminal investigations into other well-known purveyors of diesel cars. Automakers like Volkswagen, Mercedes, BMW, Fiat Chrysler, General Motors and Ford also marketed cars that combusted the extra-stinky fuel by touting environmental benefits they knew to be specious.

As global concern over climate change began to mount earlier this century, the Germans came together to announce a new era of “clean” de-sulphured fuel and new turbo-diesel engines which they called “blue” or variations thereon—BlueTec was Mercedes’ tag, BlueMotion for VW and BluePerformance for BMW.

“AdBlue” is the generic name for the clear liquid used to lower oxides of nitrogen (NOx) concentration in diesel exhaust. That was big new thing about “new” diesel—was a good, fresh-sounding name for diesel technology, and represented a contrasting honest impulse for the companies. Because there was nothing “green” about them. Tellingly, diesel smoke is kind of blue.

Like Clean Coal, so-called Clean Diesel was an oxymoron, a brazen lie, even, but, oh yes, they went there, in a decade-plus green-washing campaign aimed directly at socially conscious buyers. People who claimed to care about the environment, just the sort of people Volkswagen wanted to cozy up to with their Jetta TDI wagons. Think thoughtful media types and college professors, just the sort of outward facing folk they probably shouldn’t have pissed off by telling them something that was actually very bad for the environment was very good for it. Off they’d go, feeling ripped off, to their jobs as the day editors at NPR’s Morning Edition or deputies on the Washington Post editorial page.

So of course VW got what it deserved and deserved what it got. The cost to the public of the fake news they peddled about diesel was high and foreseeable. A study published in the scientific journal Nature concluded that 38,000 additional people will die prematurely each year from diesels’ emissions of vehicles known to be out of compliance, added to 70,000 people that would likely die each year from diesel exhaust even if the vehicles met the letter of the law.

While it is true, as advertised, that compared to gasoline engines, diesels emit less of the greenhouse gas CO2 and offer better fuel economy while also producing greater torque than gas engines of similar size, it’s also the case that they emit even more harmful pollutants, which everyone forgot to mention. The particulate matter in diesel exhaust plus higher emissions of NOx wreak havoc, potentially fatal, upon respiratory and cardio-vascular systems. They are linked to heart disease, stroke, asthma, emphysema, and various cancers.

But with the ascension of the Trump administration and the virtual suspension of media scrutiny of carmakers following VW’s very public whipping, few know today that the diesel scandal was far more pervasive and more consequential for the environment than was initially reported, and even more cynical.

Or that the Trump administration has slow-walked the government’s cases against the diesel polluters, seemingly content to let these likely prosecutions wither and die. As The Los Angeles Times reported in July:

Three years after the Environmental Protection Agency began investigating alleged diesel emission cheating in Mercedes-Benz cars, vehicle owners and environmentalists say the Trump administration appears to be allowing the inquiry to stall.

[...] “Three years seems unusual,” said John German, a former official at the EPA and a senior fellow at the International Council on Clean Transportation, the environmental advocacy group that commissioned the study that uncovered Volkswagen’s cheating. From start to finish, the government’s investigation into VW took about a year and a half, German said.

The manufacturers—who have no particular reason to trust the Trump organization, er government, other than its apparently boundless enthusiasm for pollution in all its forms—presumably hope it stays this slow.

But that’s just one part of this equation. Aside from busy beaver German prosecutors, among the many further proofs demonstrating conclusively that Volkswagen was not alone are those found in the legal papers of civil lawsuits filed in American courts. Not just against VW, but German makers Mercedes and BMW, America’s own General Motors and Ford and, lastly, against FCA, an Italo-American company with headquarters in London, organized for legal purposes in the Netherlands. All stand accused of lying about diesel.

Uniting all these competitors has been their association with the German maker of electrical components, including the offending computer-based engine management systems, Robert Bosch GmbH. No car company could have done what it did without Bosch’s software and knowledge, and Bosch couldn’t have done what it did without the companies’ consent.

Designed to adjust engine controls when the vehicle’s computers told the car it was being tested by regulators, the devious software trick worked for a while. But unable to reconcile projected European pollution figures meant to reflect a new era of “clean diesel” and its predicted emissions impact with unexpectedly high on-the-ground high levels of diesel pollutants, an NGO with more than a few EPA alumni, the International Council on Clean Transportation realized something was wrong and set out to determine what it was.

West Virginia University researchers were hired to test actual emissions on the road, versus those delivered by vehicles in government labs or by manufacturer’s self-certification statements. When they came back, the researchers had startling news. Out in traffic and on the open highway, the cars were wildly out of compliance. Researchers came to suspect that by electronic sleight of hand the Bosch engine management systems were disguising the fact that these cars were polluting extraordinarily. The cars’ software had been programmed to cheat while they were being tested.

ICCT passed these findings on to the California Air Resources Board, before the federal Environmental Protection Agency arrived to investigate, too, with the Justice Department’s criminal division tagging along. Because the evidence was so strong and incontrovertible, Volkswagen, which had tried lying to CARB for a good, long while, was forced to admit wrongdoing; massive penalties ensued. But strangely the clucking and head scratching that might have been expected from competitors who also made diesel cars was not forthcoming. Now we know why.

They were all out of compliance and they were likely all in it together.

Certain Mercedes Benz diesels, for example, have now been shown by researchers to spew 91 times more pollutants than legally permissible, or more than twice what Volkswagen got in so much trouble for. In Germany, the government in 2018 ordered Mercedes to recall 238,000 out-of-compliance machines, while charging that overall more than three-quarters of a million Mercedes diesels that had been sold for use in the EU were super polluters. The company also recently blamed European diesel investigations, related recalls and U.S. civil suits, in part for a $1.3 billion second quarter loss. The German government is also known to have launched criminal investigations into the company, along with Porsche and Robert Bosch for fraud in connection with the diesel cheat.

Meanwhile, Swiss authorities, which early on banned certain Volkswagens, last year moved to ban several Mercedes and Porsche diesel models for failing emissions standards. And just lately, the European Union has accused VW, BMW and Mercedes of colluding to delay the implementation of anti-pollution technologies.

Investigators have focused on correspondence indicating that the German firms jointly agreed, for reasons primarily to do with cost, packaging and market impact, to limit the size of the on-board canisters. These contained a substance they hopefully called AdBlue—urea mixed with water—sprayed into diesel exhaust to tone down its severity.

The manufacturers’ main concern was that too much AdBlue would need to be stored on board if buyers were not to be troubled by the frequent need to fill its reservoir with a disagreeable liquid. But a canister large enough to allow acceptably long intervals between replenishments would also take up too much of the cars’ real estate. “That would be a disaster for the entire clean diesel strategy in North America,” one VW employee suggested in a 2008 email. Better they just pollute more.

So, the German companies’ engineers installed software that directed injection of AdBlue to cut emissions only during laboratory testing, such as the government might attempt, reducing or stopping the injection of the additive during actual customer use, and thereby catapulting poisonous emissions well above both legal and advertised levels. As one Audi employee wrote in January 2008, when confronted with their diesel cars’ failure to meet standards in their own testing, “We won’t make it without a few dirty tricks.”

As an additional measure of their culpability, in America, the German carmakers have now withdrawn most of their diesel models from sale for the unspoken reason that they can’t pass regulatory muster. But that hasn’t been the end of it.

Despite the carmakers best efforts, lawsuits proceed against them in federal courts, in New Jersey (Mercedes and BMW) and Michigan (Ford, for its Super Duty pickups, and GM, which is defending two different suits, one for its pickup trucks and another over the Cruze diesel economy sedan.) Charges include conspiracy, fraud, RICO violations and more.

Where’s The Enforcement Now?

Surprising no one, the Trump administration has all but entirely abdicated the federal government’s responsibility by failing to move these cases forward with an EPA Notice of Violation, such as brought VW so much bad press. It is perhaps for this reason that these latest lawsuits have elicited a considerably less contrite, more confrontational response from the diesel peddlers, and yet also why they have been so little reported.

Far from folding their tents up and falling in line, like VW did, the companies have fought these suits vigorously, generating as much paper as humanly possible with the goal of avoiding or delaying their days in court. It is surely telling that their well-funded motions to dismiss have been uniformly tossed out by judges, who’ve cited the wealth of credible evidence against them, and in support of plaintiffs’ claims.

Perhaps this is why FCA is the exception currently, having recently settled an owners’ suit brought in California for $400 million, with an additional $300 million coming from Bosch. No wrongdoing was admitted, though there is little doubt that wrongdoing occurred.

Though FCA sold many fewer diesels in America than VW, installing those engines only in trucks, its settlement payout still looks small. Lack of government interest, as noted, surely depressed the case’s value. Then again, VW also took the most prominent role here in crafting the deceptive industry advertising that presented diesel’s lower CO2 emissions as a shining response to climate concerns, all but calling the purchase of a diesel automobile an act of supreme greenness and planet love.

So perhaps it is fitting that VW’s punishment will have cost it more than other diesel cheats. The fact that they keep getting caught—Audi was found to be selling out of compliance diesels with active cheat devices installed in Germany as late as 2017—doesn’t suggest the thorough recalibration of their moral compass that was needed.

Meanwhile, a recent working paper released by the University of Michigan and the University of Notre Dame and published by the National Bureau of Economic Research, finds not only that Americans bought fewer VWs thanks to L’Affaire Diesel, but they also bought fewer BMWs, Mercedes-Benzes and Smarts, as well. In total, the researchers estimate, the emissions scandal cost German carmakers besides VW a full $5.2 billion in lost U.S. sales.

So there’s that.

My mother always told me, if it smells bad, if it looks bad and if it tastes bad, it’s probably bad for you, better not put it in your mouth. Diesel passes these tests every time. And the move away from combusting fossil fuels has to begin somewhere. If this starts with the end of diesel cars, so be it.

But in this context, a great irony remains: as part of the restitution it will pay, and the grand acts it must perform to rehabilitate its tarnished name, Volkswagen has committed billions to the electrification of its fleet and the landscape, paying to install thousands of charging stations around the world. Whatever it does for its reputation, this focused investment may well give it a head start versus other carmakers in the coming electric car wars. Proof, then, that regulations work and should be enforced.

Call it rehabilitative justice for the corporate set. We should try it more often.

Jamie Kitman, a lawyer, is New York Bureau Chief for Automobile Magazine.