Tom Clyde: Criminal farfegnugen
September 25, 2015
The big news from the world of corporate malfeasance this week comes from Germany. Volkswagen has admitted that it has been installing software in its diesel cars that can tell when the car is connected to the equipment to test its emissions. While connected to the testing equipment, the software caused the car to run differently, and it passed the emissions tests. But once the testing equipment was disconnected, and the car put back on the road, the emissions system more or less turned off, and the cars are spewing 40 times as much nitrous oxide as they were supposed to.
The problem was uncovered by engineers at the University of West Virginia, who were researching emission control systems. Their testing equipment didn’t work through the cars’ computers. Instead, sort of West Virginia-style, they piled a bunch of instruments in the trunk, and went for a drive. Their results didn’t match the official EPA test results, and they tried to figure out why. That apparently led to a year or so of back and forth between EPA and VW, and the software issue was discovered.
This is different from most vehicle recalls, where a part has been carefully engineered, but had a manufacturing defect. The infamous GM ignition switches that wore out and suddenly turn the car off (and locked the steering wheel) at highway speed was a terrible mess. People died, and GM was very slow to admit that there was a problem or fix it. But nobody ever claimed that GM intentionally designed ignition switches that spontaneously shut off the engine at 60 mph.
The Volkswagen situation is entirely different. Their not-as-clean-as-advertised diesel engines wouldn’t pass the emissions regulations from EPA or California without some retrofits that were specific to the US market. That would have made the engine burn a little more fuel and reduce performance.
Somewhere at VW, they decided the solution was to cheat. I picture a couple of engineers, Fritz and Gunther, out for a bratwurst at lunch. Gunther says, "What if we designed the software to run the engine differently when connected to the emissions tester." And Fritz says, "Ya, that would be a good idea. And when it is disconnected from the testing equipment, it reverts to the normal Farfegnugen mode." And Gunther says, "Ya, we should do that." And they did. It’s not defective design. It’s a deliberate plan to defraud. There will likely be criminal charges (now that the statute of limitations has run on the bankers who killed the economy, and former A.G. Eric Holder is back working for a big Wall Street law firm, the Justice Department is willing to prosecute individuals for corporate crimes).
Worldwide, there are 11 million cars on the road that have this emissions test-cheating program built into them. The maximum fine EPA can impose is something like $18 billion. California can impose more fines under their laws. Other countries are looking at it. And all that is before they pay the cost of recalling the cars and actually fixing them. VW has set aside $6.5 billion already to deal with the mess.
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It turns out I’ve got one of those criminal VW’s parked in my garage. I’m not quite sure what to do about it. I bought the car after a fair amount of study and consideration. I spend a lot of time in the car, and it was very important that it be both energy efficient and fun to drive. Most hybrids didn’t have the range in electric mode to really accomplish much, and the Prius was the most boring car I’ve ever driven. The pure electrics don’t have enough range, and are really coal-fired cars. I can’t afford a Tesla anyway. The VW seemed to hit the perfect balance of 50 mpg and driving fun. But I didn’t know it was polluting like a bus. While people aren’t crashing and dying like the GM ignition switches, the air pollution isn’t benign.
I got a recall notice a couple of months ago that is related to this. They want me to bring it in for a "software update." I haven’t done it yet, mostly because it’s a wasted day at the dealership. But I’m worried that when they are through with it, the car won’t perform the way it does now. I bought it based on how it drove. If undoing Gunther’s handiwork turns it into a slug, it’s a different car. I might not have bought that car.
I assume I’m already a plaintiff in several class action lawsuits. Maybe VW will end up buying the car back, or paying the class action lawyers a ton of money (and a few cents will trickle down to the owners). But I’m not happy.
Tom Clyde practiced law in Park City for many years. He lives on a working ranch in Woodland and has been writing this column since 1986.