VW scandal unlikely to embolden regulators

Mitchell Hartman Oct 9, 2015
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VW scandal unlikely to embolden regulators

Mitchell Hartman Oct 9, 2015
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Volkswagen’s top executive U.S. executive, Michael Horn, appeared before the House Committee on Energy and Commerce’s Subcommittee on Oversight and Investigations on October 8. Horn faced withering bipartisan criticism and skepticism from lawmakers, who want to know who in the company (in the U.S. and Germany) knew about and authorized VW’s installation of so-called ‘defeat devices’ in 480,000 diesel vehicles sold in the U.S. from 2009 to 2015.

Lawmakers also pressed Horn about the timeliness and accuracy of information provided by the company earlier this year, as EPA and the state of California investigated emissions data on VW diesel vehicles provided by independent researchers from West Virginia University and the International Council on Clean Transportation. That data indicated that the vehicles’ emissions software was turning on emission controls when the cars were being  tested, and turning off emission controls when the cars hit the road.

EPA alleges that the defeat devices allowed the vehicles to release as much as 40 times the level of nitrous oxides (NOx) permitted under the Clean Air Act. 

Volkswagen is likely to face more hearings in Congress, plus federal investigations, lawsuits (civil, criminal and class-action), as well as recall and repair costs in the wake of the scandal. The ultimate cost to the company — monetary and reputational — could be astronomical.

But it is not clear that the scandal will lead to more extensive, aggressive, or effective monitoring and enforcement by federal regulatory agencies, such as EPA and NHTSA (the National Highway Traffic Safety Administration).

22-year-old Robert O’Neill of Portland, Oregon, drives a 2004 Saturn Ion — “unfortunately,” he said, because the GM-made car has been subject to multiple recalls over the years. As for VW’s installation of defeat devices and evasion of EPA regulations, O’Neill said: “I’m not surprised that they’ve done it. Do I personally condone it? Not really. But I don’t think it’s that important of an issue. It’s not like starters busting, it’s emissions testing.”

And what is his opinion of automakers in general? “I do trust them more than most other industries,” he said.

This sentiment matches national consumer polls. According to Gallup, Americans rank the auto industry very positively, near the top of all industries. Consumers view automakers less positively than the technology industry, restaurants and farming, but much more positively than banking, the legal field, healthcare providers, education, the media, and the oil and gas industry. What’s more, automakers’ reputation hasn’t suffered much in recent years, in spite of scandals involving multiple U.S. and foreign automakers, including General Motors, Hyundai, and Toyota.

 

Chart by Gallup

 

Consumer advocates would be encouraged if recent scandals with ignition switches and fuel-economy and emissions made Americans less favorably inclined toward the automakers. Then perhaps constituents would press their members of Congress to provide more funding to regulatory agencies to beef up safety- and pollution-testing of new vehicles, said Jack Gillis, director of public affairs at the Consumer Federation and author of The Car Book.

“Because they are underfunded,” Gillis said, “they depend tremendously on the carmakers themselves for information. So it becomes very difficult to be the tough sheriff. What I think is ironic is that the carmakers are always complaining about overzealous government regulations. And yet, when they do these types of things, it requires the government to be overzealous.”

Gillis said vehicle models are more abundant, and are more technologically complex, than ever before. He argues that EPA and NHTSA don’t have nearly enough funding, staff, or facilities, to adequately test and validate automakers’ pollution and safety claims. “All of this complexity requires an increasingly complex oversight,” said Gillis. “And right now, Congress is not authorizing the funds necessary for the government to keep up with this new technology.”

Recent congressional hearings into GM’s ignition switches featured fierce criticism of NHTSA’s leadership and effectiveness, but led to no additional resources being allocated for the agency’s work, said auto analyst Paul Eisenstein, publisher of TheDetroitBureau.com. Eisenstein doesn’t think the VW scandal will move Congress to increase support for regulatory agencies, either. He said Volkswagen’s cheating on emissions “didn’t kill anybody, and it’s going to be very interesting to see if the public’s outrage gets intense enough to drive Congress to provide more cash—which it didn’t in the case of the GM ignition-switch crisis, which actually did lead to more than one hundred deaths.”

University of Michigan law professor David Uhlmann believes that what is most likely to lead to less evasion and dissembling by automakers in pollution and safety compliance, is the example of Volkswagen itself. Uhlmann formerly headed the Justice Department’s environmental crimes division.

“Nobody—and I mean nobody—in the auto industry, wants what is happening to Volkswagen to happen to them,” said Uhlmann. “So I expect that this case will scare straight anyone who has been violating the law.”

Uhlmann added that state and federal regulators need to improve their game, in the wake of VW’s manipulation of emissions data. “We measure emissions based on what happens in a testing facility,” said Uhlmann. “What we need to do going forward is focus more on what is happening on the open road, and when cars are idling in traffic.”

EPA and NHTSA have indicated in press releases and speeches by top officials that they are now monitoring automakers more aggressively for cheating. Meanwhile, independent researchers—like those who uncovered the VW defeat devices, and others who have hacked vehicle navigational systems to show how vulnerable they can be—have been emboldened by the scandal to do more vehicle testing on their own.

In the absence of significantly more funding for federal agencies, Jack Gillis said he thinks regular consumers can play an important roll in monitoring automakers, and testing their claims for vehicle safety, fuel-efficiency and tailpipe emissions.

“As things like crowdsourcing, use of the internet, and consumer vigilantes continue to grow, there’s a tremendous potential to build safer cars and better performing cars, using information from consumers—if only the agencies can be set up to collect and evaluate it,” Gillis said.

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