Volkswagen Scandal Humiliates Regulators

Volkswagen Scandal Humiliates Regulators
Photo courtesy of Volkswagen.

On Friday, Sept. 18, the EPA publicly accused the Volkswagen Group of deliberately cheating emissions tests on over 482,000 of its TDI® Clean Diesel vehicles, sending the world’s largest automobile company into a nosedive.

By the following Tuesday share prices plummeted from $162.40 to $106.00 and by Sept. 29, the stock hit its lowest value in six years at $95.20. Former CEO Martin Winterkorn resigned on Sept. 23 after issuing a public admission of guilt on behalf of the company while maintaining that he was not personally aware of the defeat device that successfully allowed Volkswagen and Audi vehicles to pass emissions tests.

Winterkorn is under investigation and Volkswagen now must work with the EPA to reach a solution for the “cheat” vehicles currently on the road. Recalls are an inevitability and the company stands to face stiff fines that will likely exceed the $7.3 billion put aside by Volkswagen in the immediate wake of the crisis to cover initial losses.

The scale of deception is daunting and cannot be overstated, perhaps removing attention from the colossal failure of the Environmental Protection Agency to enforce the Clean Air Act. With the degree of dishonesty on the part of the world’s largest carmaker understood, we can focus on the eye-opening incompetence of the EPA in failing to catch Volkswagen in the act over the course of the six years they were “at large.”

“We are upping our game,” Chris Grundler, head of transportation and air quality at the Environmental Protection Agency, told reporters in a recent press conference. Grundler, who has been with the EPA for 35 years, works towards the stated mission of “protecting public health and the environment by reducing air pollution from transportation vehicles, engines, and the fuels used to operate them.” As nearly half a million vehicles from the world’s largest car manufacturer continue to emit up to forty times the legal limit of nitrogen oxide while Volkswagen works with the EPA to reach a solution, we’re left wondering how Grundler is still employed.

Recent concerns regarding the hacking of cars point to the complexity of the computational systems of newer vehicles. Volkswagen successfully inserted code in their software that turns on the fuel-efficient mode during a test by the EPA. The special sequence would be triggered by a specific order of actions that the EPA repeated each time they tested a vehicle. The 1998 Digital Millennium Copyright Act prohibits anyone (including the owner) of a vehicle from meddling with or altering the software. If the EPA had the ability to analyze the code, Volkswagen’s emission-cheating would likely have been detected far sooner, and the enormous corporate fallout and negative environmental impact could have been mitigated. In spite of several appeals, the law still prohibits any regulatory body from interacting with car software. 

Since the Digital Millennium Act prohibits the EPA from investigating car software, the law may be viewed as a compelling defense of the regulatory agency in the Volkswagen crisis. On the contrary, the EPA opposes a potential exception to the law that would have allowed a full review of Volkswagen’s code.  In a letter sent to the copyright office on July 17, the EPA argued that such an exemption for cars “would allow users to modify that software for purposes other than those the proponents envision” in a way that “could slow or reverse gains made under the Clean Air Act.” Irony notwithstanding, the EPA’s statement raises serious concerns about its efficacy in enforcing environmental regulations: if the EPA was aware that such software could alter emissions, they should have instituted measures beyond the status quo of simple, predictable factory testing. Conducting randomized road tests at variable lengths and speeds would have detected the illegally high emissions.

The U.S. Justice Department opened their investigation soon after the EPA publicly revealed the scandal. However, the EPA itself never actually discovered the defeat device that allowed Volkswagen to successfully cheat—the International Council on Clean Transportation (an NGO) worked with researchers at West Virginia University in discovering the plot. EPA officials’ promises to make improvements to their emissions testing process after the fact should not be sufficient to acquit the government agency of ineptitude in the court of public opinion.

 Volkswagen undoubtedly deserves our scorn for sidestepping the law for profit. Yet as the media attention focuses on the company’s deceit and the fallout for stockholders, we must not overlook the deplorable failures of the regulatory agency which failed to perform its job to a basic level of competence.

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