Question Period Note: Volkswagen

Volkswagen

• Environment and Climate Change Canada (ECCC) continues to investigate the potential illegal importation into Canada of certain Volkswagen, Audi, and Porsche vehicle models equipped with a prohibited defeat device.

• ECCC’s investigation is proceeding in a comprehensive and methodical manner.

• This is a complex case involving both domestic and foreign organizations, and a number of alleged offences under the Canadian Environmental Protection Act, 1999 (CEPA).

• Cases of this magnitude and complexity take time to investigate.

• The Government of Canada continues to work hard to ensure that the stringent air quality and emission standards are respected, for the benefit of all Canadians.

• In 2015, the US EPA served Notices of Violation (NOV) under the Clean Air Act to Volkswagen AG, Audi AG, Porsche AG, Volkswagen Group of America Inc., and Porsche Cars North America Inc. (referred to as Volkswagen) alleging that certain 2.0-litre diesel engine vehicles were equipped with a defeat device. A defeat device is vehicle hardware, software, or design that enables vehicles to pass emissions testing and modulates or disables emissions control under real-world driving conditions.

• On September 22, 2015, ECCC’s Enforcement Branch (EB) launched an investigation against Volkswagen Group Canada Inc. (VGCA) for the alleged importation into Canada of approx.130,000 2.0-litre diesel engine vehicles equipped with a “defeat device” in violation of the Canadian Environmental Protection Act, 1999 (CEPA). EB subsequently expanded its investigation to include 3.0-litre diesel engine vehicles also imported under a US EPA Certificate of Conformity subject to the Regulations.

• Canadian emission standards for on-road vehicles were established under the On-Road Vehicle and Engine Emission Regulations (the Regulations), which were made under the authorities and framework of CEPA and are aligned with U.S. regulations. CEPA effectively prohibits companies from manufacturing or importing vehicles for the purpose of sale in Canada unless the vehicles conform to applicable emission standards.

• ECCC also launched a separate inquiry into the sale in Canada of 2015 Volkswagen models that have received an EPA-approved partial fix. This inquiry was initiated following the receipt of an application made pursuant to Section 17 of the CEPA. Under CEPA 1999, an individual who is at least 18 years of age and a resident of Canada can request that the Minister conduct an investigation of an alleged offence.

Other Canadian Penalties and Settlements
• In Canada, the Competition Bureau negotiated penalties for 2.0-litre and 3.0-litre engines totalling $17.5 million with VGCA and Audi Canada Inc., under consent agreements, to address the Bureau’s conclusions that false or misleading environmental marketing claims were used to promote certain vehicles.

• In April 2017 and January 2018, courts in Ontario and Quebec approved nationwide class action settlement agreements to resolve consumer claims in Canada regarding affected Volkswagen (2.0-litre and 3.0-litre), Audi (2.0-litre and 3.0-litre) and Porsche (3.0-litre) diesel vehicles. The settlement agreements, totalling $2.39 billion, include compensation options such as buybacks, emissions modifications and restitution payments

United States Settlement and Penalties
• In the United States, Volkswagen AG agreed to a settlement of up to $14.7 billion for cheating emissions tests and deceiving customers. This includes up to $10 billion to buy back or fix affected vehicles and to compensate owners of the vehicles. It also includes $4.7 billion to mitigate the excess pollution from these cars and invest in green vehicle technology.

• Also in the United States, Volkswagen AG pleaded guilty to charges of conspiracy to defraud the United States, to commit wire fraud, and to violate the Clean Air Act; obstruction of justice; and entry of goods by false statements. Volkswagen AG was ordered pay a $2.8 billion criminal penalty and $1.5 billion in civil penalties (i.e., $1.45 billion to resolve EPA’s civil penalty claim and $50 million in civil penalties to resolve alleged violations of the Financial Institutions Reform, Recovery and Enforcement Act). Seven former high-level executives were also indicted.

Question Period notes as provided by the Department to the Minister’s Office