Gaming out the VW affair from the Oval Office

If you were President, what could you do today about the VW scandal?

Imagine you were the President of the United States. (Sure, that’s daunting, but remember you’re more qualified for the job than about 90% of the people now running for it.)

You just found out that all the Volkswagen diesels sold in the U.S. over the past six years are in massive violation of pollution-control standards, and that the resulting excess emissions have caused, and will continued to cause, deaths and injuries. Apparently, in order to get those models past emissions certification without sacrificing mileage or performance, VW installed an elaborate software patch on the computer that runs the engine.

The program cleverly detects whether the car is being emissions-tested (apparently a testing machine isn’t much like an actual driver) and, if it is, turns on the emission controls. Once the test is done, the program notices that, too, and turns them back off. So the car-on-the-test-treadmill looks legal, but the car-on-the-road is grossly illegal.

GM, Ford, and Honda have all been caught before playing similar tricks; so had VW. There’s even a term of art for them: “defeat devices,” because they’re designed to defeat emissions tests. And Bosch – which supplied the code to VW, supposedly to be used only in testing rather than actual operations – also supplies several other automakers, so there may be other recent-model cars with the same problem.

Even after the cheating had been detected by some very clever engineers at West Virginia University, VW officials kept denying that there was anything amiss until the EPA threatened not to certify its 2016 models. Then the company changed its tune. (Note that if the people making those denials knew them to be false, they may have serious personal criminal liability; 18 U.S.C. 1001 (a) provides, in relevant part:

[W]hoever, in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, knowingly and willfully (1) falsifies, conceals, or covers up by any trick, scheme, or device a material fact; (2) makes any materially false, fictitious, or fraudulent statement or representation; or (3) makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry shall be fined under this title, imprisoned not more than 5 years …or both.

In that situation, Mr. (or Madam) President,what should you be trying to accomplish, and how should you go about it?

I submit that your goals should be:

1. Getting the cars off the road – or fixed, if that turns out to be possible – sooner rather than later. The death rate is unknown, but a month’s delay will, more likely than not, kill at least one person.
2. Identifying whether there are similarly gimmicked non-VW cars on the road, and deal with them as well. Again, time is of the essence.
3. Ensure that justice is done with respect to VW as an enterprise and the VW officials who engaged in this conspiracy. Of course legal guilt or innocence remains to be determined in each case, but there’s no doubt there was a conspiracy to cheat the testing process; VW has now admitted what was done, though of course the company is trying to blame a “small group” of engineers. Doing justice is not merely a matter of revenge; this is your best opportunity in years to establish the principle that deliberately planned regulatory violations that cost lives can have drastic consequences for firms and individuals.
4. The decision whether VW stays in business is now up to you and people who work for you. There’s a case for corporate capital punishment. But there’s also a case for using the leverage this case gives the government to force VW to spend company money on environmental improvement. That needn’t involve VW’s own operations. To choose an example not quite at random: pollution from new cars – even faux clean diesels – is trivial compared to pollution from old cars. The problem with a systematic “cash for clunkers” program is that it encourages people to keep their clunkers rolling until a buyback comes alone. It’s also hard to get Congress to come up with the money. But a buyback paid for by VW as part of a settlement of the criminal and civil cases against it would – precisely because it was unpredictable and unlikely to be repeated – pose no such problem. Buying and scrapping a million old cars at $1000 a copy might be an excellent way of spending $1 billion that the Congress never has to appropriate, and it would almost certainly turn the whole event into a net plus from the perspective of morbidity and mortality, even given the inevitable fact that some of those cars would have been headed for the scrapheap anyway.

All of those purposes are served by promptly gathering information about who did what at VW and elsewhere. No doubt folks at EPA and at various universities are feverishly inventing tests to detect defeat devices, so it’s likely we’ll eventually learn about most of the schemes that have been put into practice recently at any substantial scale. That still leaves the problem of detecting older or smaller schemes, and the further problem of determining which individuals at the offending firms were responsible.

You could speed that process enormously by instructing the Justice Department to open a criminal investigation into conspiracies to install defeat devices.  Again, you’d need to be careful to make it clear that you weren’t imputing criminal liability to any specific individual or firm, but it would be well within your legitimate function to say, or have your Attorney General say, something like this:

On the facts as reported, it seems more than likely that criminal laws have been violated, and at least possible that they have been violated by more than one manufacturer, with regard to “defeat devices” designed to evade pollution controls. People have gotten sick and died, and others are getting sick and dying right now, because of the excess pollution that was deliberately and illegally emitted. These are not “regulatory violations” in the sense that someone forgot to file the right paperwork; this was a deliberate scheme to put toxins into the air we breathe and to conceal that fact.

Starting this week, Federal agents will be asking automobile manufacturers and their employees for information about defeat devices and other attempts to cheat the emissions-testing process. For now, those requests for information will be voluntary; no one is obliged to answer. But everyone involved should also know that making a false statement to a federal official in such a situation is a felony.

It also seems very likely that eventually one or more grand juries will be empaneled and subpoenas issued. Again of course, everyone involved has the right to assert the Constitutional privilege against self-incrimination and refuse to answer questions that might lead to his own prosecution. As in any such investigation, those who come forward early and make a clean breast of things are likely to wind up facing less serious consequences than those who wait to be called.

To facilitate the process, we have established a hotline, 1-800-DEFEAT-D. People who call that number have the option of giving their own names or remaining anonymous. Of course, those who think they may be facing personal criminal liability should consult an attorney first.

We need to find any other cars that have similar gimmicks and get them fixed, or off the road, as soon as possible. Every mile driven by any of those cars makes this country just that much less healthy to live in.

The truth is going to come out eventually. I appeal to anyone who can help it come out faster to call that hotline.

Footnote

So far as I can tell, of the eleventeen people currently running for President, only Hillary Clinton has made a statement on the issue; hers was forceful but brief. There’s no sign of any legislative action.  The contrast with the phony Planned Parenthood scandal couldn’t be stronger.

 

Author: Mark Kleiman

Professor of Public Policy at the NYU Marron Institute for Urban Management and editor of the Journal of Drug Policy Analysis. Teaches about the methods of policy analysis about drug abuse control and crime control policy, working out the implications of two principles: that swift and certain sanctions don't have to be severe to be effective, and that well-designed threats usually don't have to be carried out. Books: Drugs and Drug Policy: What Everyone Needs to Know (with Jonathan Caulkins and Angela Hawken) When Brute Force Fails: How to Have Less Crime and Less Punishment (Princeton, 2009; named one of the "books of the year" by The Economist Against Excess: Drug Policy for Results (Basic, 1993) Marijuana: Costs of Abuse, Costs of Control (Greenwood, 1989) UCLA Homepage Curriculum Vitae Contact: Markarkleiman-at-gmail.com

6 thoughts on “Gaming out the VW affair from the Oval Office”

  1. One of the problems is with the VW autos currently on the road. Assume that I own one of these cars. Currently, it is costing me $X per mile in diesel fuel to operate it. Assume further that VW offers to fix the emissions problem for free and even to give me a loaner car while my car is in the shop. That is insufficient. The problem is that I still have an incentive not to take the car to have the emissions problem corrected because thereafter my fuel costs per mile will be higher, apparently significantly higher, than $X per mile.

    One of the things that VW has to do is offer to (i) remedy the problem for free, (ii) give me a loaner car while my car is in the shop, and (iii) give me a check for the additional costs that I will incur for fuel going forward. This last item could involve a big number. This site estimates that the life expectancy of a VW diesel is 400-500,000 miles. http://bit.ly/1YJb6rB Try to do a present value computation on a vehicle with 100,000 miles assuming a 20% increase in fuel cost over the remaining approximately 350,000 miles. I think that you can see that the owners will incur a large loss if the emissions problem is remedied and they have to be given sufficient incentive to address the problem.

    1. It's not just the increase in fuel costs, it's the reduction in resale value (which may be rather more than that based on increased fuel costs). But owners do have an incentive to bring the car in for servicing, namely the fact that the car is not road-legal until serviced. That could mean no passing its next inspection in states that have inspection, no registration when the current registration runs out, no payment of insurance claims, and the possibility of whopping fines from any jurisdiction that decides to use this debacle as a revenue source.

      As an aside, modern software engineering for embedded systems is pretty rigorous, and the testing, validation and update process for the software in question extends long enough that there will be a huge record of which parts of the company knew about this.

  2. The statement has to include something about the international side: the probable deaths all over the world; an offer of cooperation to the German government, who are carrying out their own investigation, and the EU Commission; and an expectation of reciprocity. Extradition is always tricky – IANAL but the idea is that the offence has to be roughly the same in the extraditing country.

    “The decision whether VW stays in business is now up to you and people who work for you.” Only the US subsidiary. The United States cannot force the bankruptcy of the parent corporation without the active help of the German government, which won’t be forthcoming. It might well cooperate on the lesser “very big hit” project.

    One commenter at I think CleanTechnica came up with the suggestion that VW should be made to give a large voucher (say $10,000) to each of its defrauded customers, redeemable for the purchase of an electric vehicle or hybrid from any manufacturer. I suggest that the vouchers be tradeable.

    Minor correction: "the cheating had been detected by some very clever engineers at West Virginia University." It was detected by very clever engineers, and they did it at West Virginia University. But the engineers didn't work there, they essentially borrowed a lab. They were Peter Mock, who is German, and John German, who is American, and they work for a small vehicle policy think tank called the International Council on Clean Transportation. Update: more detailed account here.

  3. It sounds as if this chicanery was not limited to VW. So, one question I have is whether or not the decrease in mileage with a diesel engine that is emissions compliant is sufficiently large to challenge the assumption that a good diesel engine is more carbon friendly than a gasoline engine.

  4. One factor that I think is being missed is that unless you are in one of the (few) US jurisdictions that tests for NOx, it's both common and (probably) legal to modify engine software on diesels. Go to any bookstore with a magazine selection, get a copy of a diesel magazine (Diesel Power is a common one)–you will see dozens of ads for chips to modify engine performance.

    One reason the NOx isn't widely tested is that it's not nearly as harmful in most cases as it is in areas that are prone to smog–so it is a real concern in LA, but a fairly minimal one in Montana.

  5. Or, among other disciplinary measures, VW could fund ways to retrofit older cars. $1000 won't buy a decent new (used) car (at least I don't think so… though I could be wrong). I doubt there are that many people out there who are salivating for a new cash-for-clunkers program. They are just too broke to buy a better car. I have this issue with a lot of economic theories — they seem to misperceive the actual behavior of broke-ish people. They aren't Machiavellian schemers, they just don't have any cash! And as we know, or should know… in lots of places, you can't just switch to "transit."

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