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Volkswagen Deal on Zero Emission Vehicles an End Run around Congress

In his 2011 State of the Union Address, President Obama promised to put 1 million electric vehicles on the road. To this end, the President sought from Congress $300 million to invest in zero emission vehicles (ZEV). Congress refused. In 2016, the President once more sought federal spending to support ZEVs, this time as part of an oil tax. Again, Congress refused.

Having been twice rebuffed by Congress, the President now seeks to advance his legislative proposals through settlement negotiations with Volkswagen in the wake of the company’s scandal for cheating on emissions tests. On June 28, VW reached a complex proposed partial settlement with car owners, the Federal Trade Commission, the Justice Department, and the Environmental Protection Agency. The agreement requires VW to buy back or fix all the cars on the road which the company had outfitted with “defeat devices” designed to cheat on emissions tests.

This is well and good. However, the agreement also requires VW to invest $1.2 billion to support ZEVs. Unlike the buyback or recall program, a nationwide investment in an unproven technology has nothing to do with the underlying violations. It is instead an exercise in industrial policy. Central economic planning is bad enough, but doing so through settlement negotiations pursuant to an enforcement action is beyond the pale. The ZEV component of the settlement also raises constitutional concerns. It’s a blatant violation of Congress’s lawmaking power for the President to achieve his failed legislative proposals by co-opting the judiciary’s injunctive and contempt powers.

On Friday, CEI submitted comments to the Justice Department in which we object to the settlement due to the foregoing issues. Read the comments here for the full arguments.