	Introduction

The German automotive manufacturer Volkswagen Automotive Group (VW) has admitted to installing a software algorithm in several of its diesel-fueled vehicle engines that acts as a "defeat device": the software detects wh en the vehicle is undergoing official compliance testing and activates certain pollution control devices to reduce tailpipe emissions. During normal driving situations, however, the control devices are turned off, resulting in higher emissions of nitrogen oxides (NO x ) and other air pollutants than claimed by the company. Federal and California regulators examined the use of this software—reportedly installed in 11 million vehicles worldwide from model years (MY) 2009 to 2016—and announced a $14.7 billion partial settlement in June 2016. The European Union (EU) is also examining the use of the software. On September 18, 2015, the U.S. Environmental Protection Agency (EPA) issued a notice of violation (NOV) to VW, contending that Volkswagen and Audi vehicles with 2.0 liter diesel engines (MY2009-MY2015) include software that circumvents EPA emissions standards for nitrogen oxide (NO x ) emissions. EPA stated that when the emissions equipment is disabled, NO x emissions are up to 40 times greater than the standard. The California Air Resources Board (CARB) also initiated an investigation into VW's use of this "defeat device." On November 2, 2015, EPA issued a second NOV alleging that VW installed defeat devices in light-duty diesel vehicles equipped with 3.0 liter engines for MY2014-MY2016, resulting in NO x emissions nine times the EPA standard. The U.S. Department of Justice (DOJ) filed a civil complaint on behalf of EPA in federal court on January 4, 2016. DOJ alleged that nearly 600,000 diesel vehicles had illegal defeat devices installed, thereby impairing emissions controls and causing harmful air pollution in excess of EPA standards. EPA did not grant certificates of conformity for VW's MY2016 diesel vehicles, thus halting sales of these vehicles in the United States. The Clean Air Act and Vehicle Emissions

		What Federal Law or Regulation Has VW Allegedly Violated? Subsequently, VW reached a series of settlements that may resolve many of its liability issues related to the installation of defeat devices in 2.0L diesel vehicles. Potential issues include whether EPA has sufficient resources to monitor vehicle emissions, whether the current penalty structure is sufficient, why EPA failed to detect VW's defeat device when there have been similar cases in the past, and whether VW's response to the emissions problem and efforts to provide restitution to U.S. customers have been adequate.
The German automotive manufacturer Volkswagen Automotive Group (VW) has admitted to installing a software algorithm in several of its diesel-fueled vehicle engines that acts as a "defeat device": the software detects when the vehicle is undergoing compliance testing and activates certain pollution control devices to reduce tailpipe emissions. During normal driving situations, however, the control devices are turned off, resulting in higher emissions of nitrogen oxide (NOx) and other air pollutants than claimed by the company. Federal and California regulators and the European Union (EU) have examined the use of this software, which was reportedly installed in 11 million vehicles worldwide.
A summary of federal and state actions includes the following:
September 18, 2015: the U.S. Environmental Protection Agency (EPA) issued a notice of violation (NOV) of the Clean Air Act (CAA) to VW, contending that 2.0 liter Volkswagen and Audi diesel cars (model years 2009-2015) include software that circumvents EPA standards for NOx, allowing emissions up to 40 times the standard. November 2, 2015: EPA issued a second NOV alleging that VW installed defeat devices in light-duty diesel vehicles equipped with 3.0 liter engines for model years 2014-2016, resulting in NOx emissions increases nine times the EPA standard. January 4, 2016: the U.S Department of Justice (DOJ) filed a civil complaint against VW on behalf of EPA in federal court alleging that nearly 600,000 diesel vehicles had illegal defeat devices installed, thereby impairing emissions controls and causing harmful air pollution in excess of EPA standards. EPA stated that it will not grant a certificate of conformity for VW's model year 2016 diesel vehicles, thus halting sales of these vehicles in the United States. The California Air Resources Board initiated an investigation into VW's use of this "defeat device," and, on January 12, 2016, issued a NOV to VW, alleging that "approximately 75,688 California vehicles do not conform to State law." June 28, 2016: EPA, the state of California and the Federal Trade Commission (FTC) announced a settlement with VW with regard to its 2.0 liter vehicles, including a $10 billion buyback of affected cars from consumers, and $4.7 billion to mitigate pollution and support zero emission vehicle technology.
This report is organized as a series of frequently asked questions. It focuses on a description of modern diesel technologies, their market and emissions profiles, and some potential reasons that could underlie the use of defeat devices. It summarizes the specific allegations filed against VW under the CAA, the current status of federal and state investigations, and the civil and potential criminal penalties that may result. Further, the report introduces several outstanding issues currently under debate, including whether EPA has sufficient resources to monitor vehicle emissions, whether the current penalty structure is sufficient, why EPA failed to detect VW's defeat device when there have been similar cases in the past, and whether VW's response to the emissions problem and efforts to provide restitution to U.S. customers have been adequate.