Volkswagen faces billions in penalties as US sues for environment violations

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Volkswagen's Emissions Scandal

WASHINGTON (Reuters) - The U.S. Justice Department on Monday filed a civil lawsuit against Volkswagen AG for allegedly violating the Clean Air Act by installing illegal devices to impair emission control systems in nearly 600,000 vehicles.

The allegations against Volkswagen, along with its Audi and Porsche units, carry penalties that could cost the automaker billions of dollars, a senior Justice Department official said. VW could face fines in theory exceeding $90 billion – or as much as $37,500 per vehicle per violation of the law, based on the complaint. In September, government regulators initially said VW could face fines in excess of $18 billion.

"The United States will pursue all appropriate remedies against Volkswagen to redress the violations of our nation's clean air laws," said Assistant Attorney General John Cruden, head of the departments environment and natural resources division.

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Volkswagen faces billions in penalties as US sues for environment violations
The Oct. 5, 2015 photo shows a man sitting on a bench in front of the Volkswagen factories in Wolfsburg, northern Germany. For Volkswagen, the cost of its cheating on emissions tests in the U.S. is likely to run into the tens of billions of dollars and prematurely end its long-sought status as the world's biggest carmaker. (Julian Stratenschulte/dpa via AP)
FILE - In this Sept. 21, 2015 file photo President and CEO of Volkswagen Group of America, Inc. Michael Horn at the Brooklyn Navy Yard in New York. Volkswagen's top U.S.-based executive is expected to testify before Congress Thursday that he first learned in 2014 of emissions problems with the German automaker's diesel cars. But in prepared remarks, Volkswagen Group of America CEO Michael Horn doesn't directly address when he was first told his company had developed on-board computer software designed to deceive emissions tests. (AP Photo/Kevin Hagen, File)
Hans Dieter Poetsch, new chairman of the board of directors of the Volkswagen stock company, arrives for a press statement at the company headquarter in Wolfsburg, Germany, Wednesday, Oct. 7, 2015. He fills a position vacated when longtime chairman Ferdinand Piech resigned in April. (AP Photo/Michael Sohn)
This photo taken on Sept. 29, 2015 shows the power plant of the Volkswagen factory in the city Wolfsburg, Germany. Thanks to Volkswagen, Wolfsburg boomed in West Germanyâs postwar rebirth and today the town and the company are inseparable. (AP Photo/Markus Schreiber)
This photo taken on Sept. 29, 2015 shows the power plant of the Volkswagen factory and the Science Center, right, in the city Wolfsburg, Germany. Thanks to Volkswagen, Wolfsburg boomed in West Germanyâs postwar rebirth and today the town and the company are inseparable. (AP Photo/Markus Schreiber)
In this Sept. 30, 2015, photo, John Swanton, spokesman with the California Air Resources Board explains how a 2013 Volkswagen Passat with a diesel engine is evaluated at the emissions test lab in El Monte, Calif. Three years after Volkswagen opened a pollution testing center in Oxnard, Calif., VW admitted that it manipulated emissions results in 482,000 U.S. diesel vehicles to make them appear to run cleaner, raising questions around Volkswagenâs only test center in North America. (AP Photo/Nick Ut)
New cars of the German car manufacturer Volkswagen are ready to be shipped at the Volkswagen factory in Emden, Germany, Sept. 30, 2015. (Ingo Wagner, dpa via AP)
This Sept. 28, 2015 photo shows Volkswagenâs only test center in North America in Oxnard, Calif. Three years after Volkswagen opened the pollution testing center, VW admitted that it manipulated emissions results in 482,000 U.S. diesel vehicles to make them appear to run cleaner, raising questions around Volkswagenâs only test center in North America. (AP Photo/Gillian Flaccus)
Newly appointed Volkswagen CEO Matthias Mueller smiles during a press statement after a meeting of Volkswagen's supervisory board in Wolfsburg, Germany, Friday, Sept. 25, 2015, after CEO Martin Winterkorn resigned on Wednesday amid an emissions scandal. (AP Photo/Michael Sohn)
RETRANSMITS graphic that moved Oct. 3; graphic shows vehicles affected by Volkswagen's emissions violations and estimated deaths in the U.S. from the excess pollution; 3c x 5 inches; 146 mm x 127 mm;
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The Justice Department lawsuit, filed on behalf of the Environmental Protection Agency, accuses Volkswagen of four counts of violating the U.S. Clean Air Act, including tampering with the emissions control system and failing to report violations.

The lawsuit is being filed in the Eastern District of Michigan and then transferred to Northern California, where class-action lawsuits against Volkswagen are pending.

"We're alleging that they knew what they were doing, they intentionally violated the law and that the consequences were significant to health," the senior Justice Department official said.

The Justice Department has also been investigating criminal fraud allegations against Volkswagen for misleading U.S. consumers and regulators. Criminal charges would require a higher burden of proof than the civil lawsuit.

The civil lawsuit reflects the expanding number of allegations against Volkswagen since the company first admitted in September to installing cheat devices in several of its 2.0 liter diesel vehicle models. The U.S. lawsuit also alleges that Volkswagen gamed emissions controls in many of its 3.0 liter diesel models, including the Audi Q7, and the Porsche Cayenne.

Even after Volkswagen first admitted to using defeat devices in certain models, the automaker "failed to come forward and reveal" that other vehicles contained such devices, the government said.

To cheat the emissions controls, Volkswagen installed software that allowed the vehicles to detect when they were being tested on a flatbed. When the vehicles detected they were actually on the road, the software caused the emissions control systems to underperform or shutdown, the government said, allowing the cars to emit dangerous levels of air pollution.

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The civil lawsuit does not preclude the Justice Department from pursuing criminal charges against Volkswagen, said the Justice Department official.

"Volkswagen will continue to work cooperatively with the EPA on developing remedies to bring the TDI vehicles into full compliance with regulations as soon as possible. In addition, we are working with Kenneth Feinberg to develop an independent, fair and swift process for resolving private consumer claims relating to these issues," Volkswagen said in a statement.

"We will continue to cooperate with all government agencies investigating these matters."

U.S.-listed shares of Volkswagen were down 3.3 percent at$29.95.

(Additional reporting by David Shepardson,; Editing by Susan Heavey, Bernard Orr)

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