Introduction one of the most eye-catching scandals in recent years stems from the systematic and long-term efforts made by Volkswagen to cover up the highly dangerous and even deadly pollutants emitted by its fleet of diesel Volkswagen, audi and Porsche cars are used on ordinary roads.
Between 2009 and 2015, Volkswagen sold about 580,000 such cars in the United States, about 10.
Before the September 2015 scandal, there were 5 million cars elsewhere.
The complex and comprehensive plan for the masses to avoid legal obligations has been documented in Jack Ewing's exhaustive study, faster, higher, and further: the mass scandal, in a shorter exposure such as the Fortune magazine article Hoaxwagen, written in March 2016 by Jeffrey Smith and Roger palov.
Diesel engines that are more popular in Europe than in the United States tend to be hotter than conventional internal combustion engines.
As a result, they produce lower carbon dioxide emissions, but higher nitrogen oxide NOx emissions.
These NOx are key components of smoke and they can lead to a variety of foods including chest pain, cough, throat irritation and congestion.
In addition, NOx can aggravate asthma, bronchitis, swelling, and various cancer and heart problems.
Understanding this public health issue, automakers must ensure that their NOx emission control systems meet the necessary compliance standards in order to sell their cars in the EU (EU)and the US.
The capsule version of the Volkswagen scandal is that Volkswagen decided to insert "faulty equipment" in all its diesel engines sold in the Volkswagen and Audi series in the EU and the United States ".
These devices are consciously programmed to allow their vehicles to perform tests under carefully prescribed laboratory conditions set by EPA inspectors as if they met the emission standards (EPA)
California Aviation Resources Commission (CARB).
However, when these same cars are on the road, the failed devices are pre-programmed to be turned off, allowing the high level peaks of the lethal NOx gas released into the atmosphere to be unrestricted, this is a blatant violation of US and EU laws.
The Volkswagen scandal questioned the various emission control systems currently used by other car logo companies to meet environmental controls in the US market and in other countries.
Although the technology to check NOx from diesel has become very advanced, these different emission systems are not perfect because they cannot and cannot prevent the discharge of all NOx gases, under all possible driving conditions.
However, in these cases, the best should not be good enemies, so these emission control systems that can be used alone or in combination are designed to reduce emissions, in the service life of the car engine, the degree of NOx omission reaches the best level, always above zero under the available technology.
Understand the relationship between these control systems, often referred to as an auxiliary engine control device (AECDs)
, NOx emissions are detailed in the briefing of the international clean transport commission on March 2016 (ICCT)
These details are essential to understand the many compliance issues that arise under modern environmental law.
In addition, as the VW case has shown, disclosure of alleged or actual environmental violations has a second dimension, as it exposes automakers to possible liability under US securities laws.
In this article, written as a consultant to a law firm, I will look at issues related to environmental law to advise automakers.
In a subsequent article, I will talk about the impact of actual or alleged violations of environmental law on securities litigation.
The important task of emission regulation emission control does not allow any purely market solutions.
Nor can this problem be solved by a series of private actions purchased by thousands of individuals who have suffered all or part of the damage caused by the release of these pollutants.
The number of tail pipes that emit pollution is too large, and the number of victims is too large, so that individual lawsuits play a role in preventing harmful emissions from vehicle tail pipes.
Regulation is therefore necessary, but again, it is essential to take the right regulatory programme and align that regulation with other forms of private action.
The task of society is to find the right regulatory system.
The problem begins with making reasonable environmental policies to deal with pollution.
The first part of this task is to set the overall allowable levels for hazardous emissions of various types of pollutants, which can then be used to determine the allowable levels of pollution for each type of vehicle.
The second general issue deals with other forms, fines and bans, and other public sanctions that initially violate the environment, dealing with the loss of consumers who purchase these defective vehicles and the loss of investors, these investors have gained their interest in these car companies based on their statements, and they have all complied with all the regulations that apply when they develop the "clean diesel" program.
It is well known that government regulation cannot require the level of pollution to be reduced to zero, as the decree will end all forms of vehicle transport.
The right level of regulation necessarily depends on the decisions of the society, at least taking into account the expected harm of any discharge level to individuals and society, and the costs required, including lost social and business activities.
There is obviously a lot of room for disagreement about the best level.
However, this decision is properly regarded as a collective social decision implemented through a sound administrative system.
Even if there is no political consensus on the best form of pollution regulation, there should be a strong unshakable belief that, no car company should be allowed to unilaterally evade the public emission inspection system by secret means to negate environmental standards, which are used to ensure that all cars sold in the United States meet the specified standards of the country or the EU.
As revealed by the mass scandal, as companies have a strong incentive to gain a competitive advantage in the market by deceiving expensive emissions control systems, the implementation of these emissions controls presents severe administrative challenges.
Insert these "faulty devices" into a motor vehicle that uses complex software to complete two functions.
The failure device, in its most blatant form, first ensures the low emission levels during the test cycle, so that the car meets the appropriate government standards.
Second, when the vehicle is used on the road, the unit turns off these devices so that higher fuel efficiency can be achieved by discharging higher levels of pollution.
The lesson learned from the public scandal is that the public has gone out of their way to undermine legitimate government regulation.
This escape is effective because both EPA and CARB have announced their standards ahead of time in order to obtain accurate emission measurements by keeping the temperature constant and keeping the roller simulated road conditions steady.
But this information, in turn, allows Volkswagen to design the necessary engine software programs to switch to a Low Emission Strategy only if these standard test conditions are detected by the vehicle.
It's no surprise that the mass scandal was only revealed off the court.
Road tests conducted by a team of scientists led by Professor Dan Kard, a Center for Alternative Fuels, Engines and Emissions at the University of West Virginia, indicate that the emission levels in standard use far exceed the allowable limits.
Recently, In Re: Volkswagen's "clean diesel, Marketing, Sales Practices and product liability litigation, the severe sanctions against the illegal activities of the public are summarized as follows: since then, volkswagen has settled claims related to faulty equipment plans brought about by the US categoryS.
Claims filed by consumers, franchisees and dealers, as well as EPA, CARB and FTC.
In March 10, 2017, Volkswagen also admitted three criminal felony charges, including conspiracy to defraud American and American employees of the company. S.
In violation of the Clean Air Act, lied about whether its "clean diesel" vehicles met the requirements of the United StatesS.
Combined with civil and criminal penalties and civil settlements, the public is expected to spend about $20 billion.
Of course, the public shareholders of the public have also suffered huge losses. They almost do not know the illegal behavior of the public.
However, this result is properly incorporated into the company law, because even if huge fines and other sanctions are imposed, including dismissal and imprisonment of key executives engaged in illegal acts, economic losses must be borne by someone. In a second-
The best world, it is better to impose these on corporate shareholders than to impose on various trading partners of the general public or the general public, they have nothing to do with losses.
Public shareholders can usually protect themselves from these risks by holding a diversified portfolio of shares, usually through mutual funds, so that the losses suffered by a company's shares are offset by the gains of other companies.
This diversity strategy applies to funds that hold shares of the public and their competitors.
There is no lesson in the mass scandal that needs to deviate from these good-
Established rules for corporate responsibility.
The main problem in this area is to what extent other automakers may be found to violate the same environmental regulations that trap the masses.
On this issue, it is important to highlight the significant differences between the mass intentional and large-scale violations and the strategies adopted by other companies.
Pollution control technology is expensive and complex.
They spend money putting the necessary equipment into the vehicle, and their use reduces overall fuel efficiency.
In addition, effective implementation requires the owner to cooperate to operate with maximum efficiency during the service life of the car engine, often defined for these purposes as standard road use of 120,000 miles under variable conditions.
Three different emission control devices, each with its own problems, are used to combat emissions.
The first of these systems is the only one used by the public, which is called a lean NOx trap, which typically uses a chemical hydrogen oxide to capture NOx particles.
Over time, these devices will be blocked and therefore have to be recycled by spraying fuel, which in turn reduces the overall level of fuel efficiency, a big selling point for the mass fleet, german rivals BMW and Daimler, which sell less than Volkswagen (Mercedes Benz).
Used separately, the lean NOx trap is not sufficient to meet the US emission standards.
It is at this point that Volkswagen has decided to launch a faulty device that completely shuts down the NOx trap during road driving-meaning that the device is only "tested" in a test facility or a vehicle.
In addition, in addition to the lean nitrogen oxide trap, two other devices have been deployed by other automakers to control these nitrogen oxide emissions.
Daimler's first "BlueTec" solution was introduced by using "Selective Catalytic Reduction "(SCR)
NOx is decomposed into harmless oxygen and nitrogen molecules using urea-based compounds and then released into systems in the atmosphere.
But these BlueTec solutions have their own limitations.
They are expensive to install and can run up to $350 per unit.
Serious maintenance issues rise as the BlucTec solution runs out and it has to be replenished by the user, who may choose to continue operating the car when the tank is empty.
To solve this problem, other companies, such as BMW, have installed all three emission control devices on their cars.
Volkswagen declined to follow suit, in part because the additional costs of these other systems account for a large part of the sales price of Volkswagen's small cars.
This failed device allows the public to falsely promote its environmental commitment to drivers promised by the Ecology: The advertisement shows that the "Green Police" allows Volkswagen to pass the checkpoint, while stopping pollution from other cars.
But the opposite is true on the ground.
The BMW car tested by the West Virginia team did not show a systematic rise in NOx levels as its car contained all three pollution control devices.
EPA did not hesitate to condemn the violations that have been completed by the public in its September 18, 2015 notice of violation, as after the WVU study was made public, all the evidence needed to prove the violation became undisputed.
The first violation was, "EPA has identified that Volkswagen manufactured and installed faulty equipment on a model from 2009 to 2015 --
Light vehicles with 2 units. 0 liter engine.
Subsequently, it further noted that the public also violated the provisions of the Clean Air Act, "selling, selling" vehicles so equipped.
The next issue is that other automakers may be subject to similar charges.
At this point, the faulty device is an "auxiliary emission control device", in accordance with EPA regulations "(AECD)
This reduces the effectiveness of the emission control system in situations that may be encountered in normal vehicle operation and use, unless: the logic behind the system is as follows: the standard EPA test for defeat equipment is carried out under static conditions, which makes the measurement of engine performance and emissions more accurate.
But road conditions introduce a high degree of variability, so in some cases it is necessary to narrow down the faulty device to allow the engine to work under pressure conditions, including climbing, start the car using a wide range of air conditioners, heaters or other systems. Both EPA (and CARB)
It is well understood that the entire control system will collapse without incorporating the three key qualifications into the regulations.
In terms of procedures, EPA regulations require automakers to notify each car installed in their cars of the reasons for its use, the "list of parameters they feel and control, "and the reasons why these devices should be the exception for failed devices.
Of course, the public did not follow these procedures.
But there is no public information indicating that no other automaker has provided this information to EPA or CARB.
There is always a problem with whether all of these disclosures are complete and accurate, and there may be disagreement about that.
But the regulations specifically provide that EPA is able to request additional information to fill any gaps in the record.
As such, both regulators should be able to assess well whether these vehicles meet CAA or California air control standards and the standards that make them suitable for sale.
Once these statements are provided, potential liability exposure to EPA or any private party will be significantly reduced, at least in the absence of any deliberate attempt to hide unauthorized failed devices in the disclosure, given the potential risks, this is a dangerous strategy, especially after the public scandal.
In substance, the aecs allows any regulated vehicle to maintain an acceptable performance rate under pressure conditions.
The use of the word "normal vehicle operation and use" does not have unparalleled clarity, as the intensity of use varies greatly.
In fact, AECDs is needed precisely because of "normal. e.
It is common practice for all vehicles that are commonly used to encounter situations where a solid emission control system is needed to protect the engine, and it is difficult to accurately determine in the abstract what these parameters may be, taking into account the interaction of multiple factors.
Therefore, ICCT reported that the tests conducted at the University of burdock in Switzerland found that some BMW models exceeded the standard, and BMW's response was that in the process of transitioning to stable operating conditions, including at temperatures below 10 degrees Celsius or 50 degrees Fahrenheit, errors may occur, at which point NOx emissions may increase "temporarily" until the engine is heated to normal operating conditions.
It also reported that TNO, a private testing company in the Netherlands, had a similar conversation with a French organization called UTAC and Renault on Mercedes cars.
None of these exchanges involve business dealings with official government agencies.
The ICCT briefing criticized the statements made by BMW, Daimler and Renault, claiming that ambient air temperature could not control the operating temperature of the engine normally set at 90 °c.
The ICCT report also states that ambient air temperatures are usually at or below 10 °c, so the vehicle should be able to control its system at these temperatures.
They also noted that the use of seat covers and air conditioners cannot be ruled out in the definition of normal use.
Unfortunately, this criticism is misleading because it ignores the key differences between phase change emission control and steady state emission control.
When the car is traveling on a flat ground at normal temperature, it is not difficult for any vehicle to maintain a high level of NOx protection, even if the air conditioner is on.
However, the initial motion of this stable state usually puts additional pressure on the system.
It takes longer for the engine to warm up to the best speed if the vehicle is cold, especially in the seat-
Heaters and defrost are being used.
Similarly, if the temperature is hot, many drivers may turn on the air conditioner in order to make the temperature drop rapidly.
Definition is important at this point.
These common events are "normal" because they have a high degree of regularity, but in the context of this regulation, the correct definition of normal driving conditions can only refer to driving when conditions are in steady state.
Considering that different drivers will follow different vehicle usage patterns, we should expect that AECD devices will be launched frequently on almost every trip.
It should be noted that when the vehicle is not under pressure, the improper use of faulty devices will produce a high level of NOx emissions.
To be sure, these parameters are not accurate.
However, given the high degree of difference in usage patterns, the single study referred to by ICCT did not demonstrate a violation of the failed device, rather than a legitimate aecs use.
In fact, the opposite conclusion is likely to be correct.
The key issue is the total amount of emissions that occur from the time BlueTec equipment is installed and replaced.
On this issue, the behavior of individual drivers becomes crucial, and the logo of the success system is a sign of measuring life --Cycle Emissions.
The purpose of the system is to minimize the total expected emissions between BlueTEC refills.
This goal is best achieved by reducing the number of BlueTEC solutions used by vehicles when operating under pressure conditions.
There is no best way to achieve this, which is why these systems are so difficult to design and evaluate.
In fact, in these cases, any additional efficiency in the operation of the three interrelated pollution control devices should be able to be gradually improved by reducing the taper required for various transition states.
At this point, it is important to take into account another feature of the sound diagnostic system, which involves the role of recall in order to install an improved AECD device on the car.
This was made clear because Daimler recalled about 247,000 cars in Europe in April 22, 2016 to optimize the aecs.
The FCA has announced a similar recall of about 100,000 diesel vehicles.
Allegations of trying to stop the cars from using illegal faulty devices.
In general, no one should interpret these notices as evidence of a breach of fundamental legal obligations.
In general, the Federal Rules of Evidence provide the following: these comments make more sense outside of litigation.
EPA and CARB do not look at the evidence of the recall to determine whether the various AECDs include illegal equipment.
Nor should anyone be free to draw this conclusion based on the wide range of AECDs's legitimate use in normal driving in response to pressure conditions in the second sense.
Recalls can easily lead to changes that further reduce total emissions, and if these decisions provide net income, it is most unwise to exclude any liability to the party making these decisions.
As noted by the Federal Rules of Evidence, "more impressive [
Compared with the relevant statement]
The rationale for exclusion is based on a social policy that encourages people to take or at least not prevent them from taking steps to promote additional security.
"These considerations are equally valid for all purposes.
No outsider can be sure how these AECDs should be treated, even if there is no doubt that any dispute with other automakers depends on design technical issues that are not raised in the Volkswagen case.
In dealing with these issues, it must finally be stated why the use of AECDs brings such a difficult law enforcement issue.
Generally speaking, there are two regulatory approaches when dealing with environmental issues.
First, the legal system focuses only on the level of emissions from any particular source and leaves to private parties how best to decide how to meet that compliance standard.
If this type of plan can be implemented, implementation is only a matter of monitoring the amount of pollution from any particular source.
This works well in designing legal systems to regulate chimneys in major factories, but does not work in measuring vehicle emissions in tail tubes.
In the former, some precise measuring devices can work.
The huge technical and measurement problems brought about by the latter are too sharp.
Because the output cannot be measured, it is necessary to focus the control on the input, because the input is at best an imperfect proxy for the output.
When dealing with motor vehicles, it is difficult to implement the system beforehand, because the proper use and maintenance responsibility of all AECDs is at least distributed between the car manufacturer and the owner, contributions that may be made by third-party drivers, dealers and other parties.
In these cases, it is difficult to be precise, which is why these compliance disputes are difficult to resolve.
In these cases, it is important to be aware of the urgency to make judgments in determining compliance issues.
Many different permutations must be considered before any conclusion can be reached.
The public may be a simple case, but other cases are challenging.
I have pointed out why it seems that the ICCT prosecution in this matter is too hasty.
In my next post, I will explain why the difficulties associated with the direct execution of EPA and CARB are related to the independent responsible person who may be targeting securities manufacturers.