Volkswagen’s emissions-test trickery may not be illegal in Europe

By Danny Hakim and Claire Barthelemy, New York Times News Service

Thursday, Nov. 12, 2015 | 12:19 a.m.

LONDON — Four years ago, European auto regulators identified and debated a loophole in their pollution testing rules that could render vehicle emissions tests ineffectual, but it was ultimately left in place, internal documents show.

The loophole lets carmakers change the performance settings of their engines before a pollution test. “A manufacturer could specify a special setting that is not normally used for everyday driving,” British regulators warned, according to minutes of a 2011 meeting in Geneva of officials across the region.

The debate throws new light on Volkswagen’s costly emissions cheating — particularly the question of whether Volkswagen violated European testing rules.

In September, Volkswagen admitted to installing “defeat device” software in 11 million cars, programming them to detect when they were being tested for nitrogen oxide emissions. The result was a substantial reduction in emissions. Volkswagen made the admission, after deceiving regulators in the United States for several months, in the face of an inquiry.

But the same practice may be legal in Europe. While defeat devices are ostensibly banned in Europe as well as the United States, Paul Willis, a top Volkswagen official in Europe, said in a letter published this week that the company was still considering “whether the software in question officially constituted a defeat device” under European Union regulations.

And Lucia Caudet, a spokeswoman for the European Commission, the European Union’s executive branch, said in an email that the commission had “no formal view on whether” the vehicles sold in the United States were “equipped with a ‘defeat device’ in the EU legal sense or not.” She added that investigations of vehicles sold in Europe “are still ongoing, so we cannot provide an assessment on the nature of the devices used at this stage.”

The Volkswagen scandal has put Europe’s permissive testing practices in the spotlight, and has raised questions about the compatibility of American and European auto regulations. Trans-Atlantic trade talks are underway, and the objectives include fostering mutual recognition of auto regulations.

Regulations that apply in Europe say “the settings of the engine and of the vehicle’s controls shall be those prescribed by the manufacturer.”

If manufacturers have the discretion to determine their own engine settings during emissions tests in Europe, it remains unclear if using software to alter engine settings would violate European rules.

Most of the roughly 11 million vehicles that Volkswagen has said carry the software are in Europe. About 500,000 vehicles are in the United States, and others are scattered across the globe.

Billions of dollars could hinge on whether the company’s emissions software was technically a defeat device in Europe. Penalties for use of the devices are left to member states, though enforcement by auto regulators in Europe is rare.

The answer could also weigh on litigation. David Standard, a spokesman for Leigh Day, a product liability law firm based in London, said the firm had taken in more than 8,000 Volkswagen-related claims and Volkswagen “could be looking at the largest-ever consumer legal action in U.K. history.”

Volkswagen has committed itself to fixing the vehicles. In Britain, one of the company’s largest markets, Volkswagen says it will fix all of the affected vehicles by the end of 2016. Some may require modifications beyond rewriting software code.

Many regulators and public officials in Europe were hesitant to discuss how the system worked in Europe, and offered conflicting accounts of what happened after the British proposed to tighten the engine-settings regulations in 2011.

Different engine configurations can produce substantially different tailpipe emissions. A “sports” setting can emphasize more power and less fuel and pollution efficiency. An “eco” setting can do the opposite. Or a car can default to an in-between setting for everyday driving.

Britain’s proposal would have required that tests be performed on the default setting or the setting with the worst emissions. While it was supported by most of the national regulators, the proposal ultimately languished and was dropped from the agenda of regulators at their meetings by last year.

Britain’s transport ministry said its own certifications required automakers to test vehicles on the default or worst emissions setting. In a statement, the ministry said the proposal “was supported and agreed” to by other European regulators, “ensuring a consistent approach to the laboratory testing.”

Caudet was a bit less definitive, saying that “European legislation implies that a vehicle must use the same engine setting during the regulatory emission test and in real driving.”

And Sinead O’Donnell, a spokeswoman for Ireland’s auto testing agency, said her country had supported Britain’s position, but she added that “any change must await a decision of the legislative body” and current regulation “contains the same provision unchanged.”

The Volkswagen investigation continues to reveal divergences in U.S. and European regulations.

Last week, the Environmental Protection Agency, with regulators in California and Canada, said they had discovered that Volkswagen had used another defeat device in some larger cars and sport utility vehicles that had not previously been implicated.

Volkswagen, whose brands include Audi, Porsche and Lamborghini, has disputed that it intentionally sought to evade U.S. regulations in the latest finding. Willis, Volkswagen’s top official in Britain, wrote in a letter to the British parliament that German regulators had concluded that the software used in these larger vehicles did not constitute a violation in Europe.

In an email, Germany’s Federal Motor Transport Authority, known by its German initials KBA, said that for the larger vehicles implicated by the EPA last week, “the findings that are available so far, and which are not complete yet, show no indication that an illegal defeat device is used.”

The European system is known for its loopholes, for instance allowing automakers to test preproduction vehicles that will never be sold, letting them strip out the back seats to make cars lighter and tape the doors and grilles to make them more aerodynamic.

But allowing manufacturers to determine engine settings is more fundamental to testing for pollution emissions.

As the scandal unfolds, trade negotiators on both sides of the Atlantic have continued to work on the Transatlantic Trade and Investment Partnership, a sprawling trade agreement. Auto regulations have been considered a particularly fruitful target where the sides could agree to sync their rules. As the European Commission put it in a fact sheet early this year, there were no areas of controversy to hinder the discussions. “We’re not currently aware of any issues which are especially sensitive or where people have raised specific concerns,” the commission wrote.

The Volkswagen scandal has made clear how fundamentally different the systems are, at least related to emissions rules.

Car regulation in Europe lacks central oversight. Automakers are permitted to have their vehicle fleets’ emissions certified by regulators in any of the 28 member states, and then they must be recognized by all the others. Policymakers in Brussels are also undercut by powerful member states like Germany protecting domestic automakers, critics say.

While Europe plans to begin road testing of car pollution in 2017, those tests as now designed will have many of the same pitfalls as the lab tests. Among other things, manufacturers and their contractors will perform the tests with little regulatory oversight.

The road tests still are subject to approval in the European parliament, where frustration has been building. Volkswagen’s recent admission that it understated carbon dioxide emissions and overstated the fuel economy of 800,000 vehicles sold in Europe has added to that frustration.

“What we have developed is a phony system of testing where the member states are in competition with each other for who can make it the most easy for the car manufacturers to pass the test,” said Gerben-Jan Gerbrandy, a Dutch member of the European parliament, who lamented that European governments do not conduct random testing of their own, as the EPA does.