Monday, September 21, 2015

vvats up with VW

Fraud is up with VW. In a sentence, the company designed pollution emission-control software to defeat testing by only working properly during testing, and otherwise not work to the same extent:



The Notice of Violation is here. As the NOV states, defeat devices are expressly outlawed. The letter also says VW was required to list all the emission devices on the car, so failure to list this software appears to be a deliberate omission. Another fun fact from page 4 of the NOV - even after being caught by outside experts with excess emissions, VW refused to admit what it had done until it learned that Californian and the EPA were about to disallow sale of 2016 models. The reason for disallowing is that the agencies had no way of knowing the 2016 models wouldn't also fail, until VW then admitted what it had done with prior year models. Media reports that VW admitted its action after being caught are actually making the company look better than it was. I'm also curious about the delayed public response by the company, and wonder if there's more out there where they haven't yet been caught.

American environmental law allows for criminal penalties, usually limited to when someone intentionally committed the illegal act, and sometimes further limited to when someone intentionally committed the illegal act with the knowledge that it was illegal. Either way, multiple people should be in trouble at VW. A list of criminal provisions under the Clean Air Act are here:  false statements, tampering with a monitoring method, and knowing failure to report at a minimum seem applicable. The NOV, sadly, doesn't say anything about potential criminal penalties. Hopefully that's still to come, and not just symbolic criminal prosecution of the company but of the actual people involved.

Regardless, as the first link shows, there will be lawsuits by the public.

So, differences from Exxon's early knowledge of climate change? The scientific elite knew what Exxon knew in the 1970s and 80s, so that's different, but that doesn't matter a whole lot. Fraud is still fraud even if the defendant argues the victim should've been able to figure out the truth.

The more pertinent difference is that Exxon funded other organizations that said things Exxon knew were untrue, while VW has just been doing the untrue acts directly. Tying Exxon's responsibility to the denialist statements by organizations it funded would take a little more work. More on this later.

41 comments:

William Connolley said...

I'm very surprised by VW, since there will be, I expect, huge reputational damages as well as whatever legal costs get imposed. It looks like the company has realised this (http://www.bbc.com/news/business-34311819; http://www.theguardian.com/business/2015/sep/20/vw-software-scandal-chief-apologises-for-breaking-public-trust).

I don't find the link to Exxon convincing. I don't even understand your "Fraud is still fraud even if the defendant argues the victim should've been able to figure out the truth". Can you point to a clear example of fraud by Exxon?

Barton Paul Levenson said...

WC: Can you point to a clear example of fraud by Exxon?

BPL: Funding fraud amounts to complicity in fraud.

William Connolley said...

> BPL: Funding fraud amounts to complicity in fraud.

1. I take that as admission that you cannot point to any examples of clear fraud by Exxon itself. I'd be interested to know if Brian is in the same position, and if so if he feels any urge to update his words.

2. That would depend on the funding structure, and so on. But never mind.

3. OK, point to a clear example of Exxon funding clear fraud.

snarkrates said...

An observation: Usually, the biggest jerks on the road drive either VWs or BMWs. I doubt they'll give a fig that their carmaker committed fraud unless it inconveniences them. It's like expecting SUV drivers to care that their vehicles endanger other drivers.

Tom said...

BPL: Funding fraud amounts to complicity in fraud.

Of what are you accusing the Stanford University's Global Climate and Energy Project? What are they doing with $100 million of Exxon's money?



William Connolley said...

Incidentally, this isn't (yet) big news over here. It makes page 21 of the FT, which is the first page of the Companies+Markets section, but not the main paper.

8c7793aa-15b2-11e5-898a-67ca934bd1df said...

Of course William Connolley doesn't doesn't understand fraudulence.

William Connolley is a fossil fuel apologist.

Barton Paul Levenson said...

BPL: Funding fraud amounts to complicity in fraud.

WC: I take that as admission that you cannot point to any examples of clear fraud by Exxon itself.

BPL: Read it again.

Brian said...

Hi William, I'm referring to the same thing I've blogged earlier, fraud via a proxy.

I don't know offhand about a direct fraudulent statement by Exxon, although I recall the former CEO was pretty dismissive, so things he said in an official capacity should get very careful scrutiny.

This may be close to what's needed: "Lee Raymond, who became the Exxon C.E.O. in 1993—and was a senior executive throughout the decade that Exxon had studied climate science—gave a key speech to a group of Chinese leaders and oil industry executives in 1997, on the eve of treaty negotiations in Kyoto. He told them that the globe was cooling, and that government action to limit carbon emissions “defies common sense.” " http://www.newyorker.com/news/daily-comment/what-exxon-knew-about-climate-change

I expect it won't be hard to find things said by groups Exxon funded in the 90s and early 2000s that directly contradict what Exxon knew to be true.

As I said earlier, the harder step will be proving that Exxon funded the groups to spread disinformation as opposed to other reasons. What I think (versus what I know could be proven) is that Exxon funded these groups in part knowing what they said wasn't true, and that's enough for fraud.

The other point is that this is just what we know so far. Could be there's interesting material not yet discovered.

Barton Paul Levenson said...

WC: OK, point to a clear example of Exxon funding clear fraud.

BPL: They fund or funded the Heartland Institute, did they not? I've actually received Heartland climate papers in the mail, since I'm a climate scientist. Do you want me to go into how, line after line, page after page, they deliberately lie to deceive the public? I'll dig up their crap if you want me to, but I find it tedious to refute lies that have been refuted many, many times before.

Barton Paul Levenson said...

BPL: Funding fraud amounts to complicity in fraud.

Tom: Of what are you accusing the Stanford University's Global Climate and Energy Project? What are they doing with $100 million of Exxon's money?

BPL: I'm not. My argument is not "All things funded by Exxon are fraud." My argument is, "Some things funded by Exxon are fraud." I'm not very familiar with the SU GCE Project, so I don't know which category it falls into. I was thinking more of the Heartland Institute and such political front groups pretending to be academic institutes.

William Connolley said...

> BPL: Read it again.

I've read it again. I come to the same conclusion: you can see no examples of direct fraud by Exxon.

You believe there exist examples of indirect fraud, via funding of other groups, but you've ignored my direct question as to giving an example of such (#3) so I'm dubious you have any such examples.

Over to Brian, who is doing a lot better.

> As I said earlier, the harder step will be

Well, actually what you said earlier was "would take a little more work". I think its a hard step; if you're now saying the same, we differ much less.

Do you care to quote examples of clear fraud by groups clearly funded by Exxon? I did ask (#3) already. I'd expect you to have a clear example to hand rather than "read something unspecified that I wrote somewhere else".

> This may be close to what's needed

Dubious; quoting McK against Exxon isn't going to work well; you need to actually quote Exxon. And you probably need to quote Exxon-speaking-as-Exxon.

izenmeme said...

@-"What I think (versus what I know could be proven) is that Exxon funded these groups in part knowing what they said wasn't true, and that's enough for fraud."

As far as I know making untrue statements about climate science is not (yet) and unlawful act.

VW intentionally designed software to circumvent a legal requirement. That is fraud.
But stating that there is no evidence of global warming may be untrue, but it is not contravening any legal requirement on Exxon, Heartland or anyone else to only make accurate statements about the climate.

I doubt even the argument that misrepresenting climate change was an attempt to protect the company share price would even be considered fraudulent given the ... economy with the actuality that most companies show when boosting their future worth.

William Connolley said...

> BPL: They fund or funded the Heartland Institute

So did many others. Are all those people guilty of fraud?

Brian: what Izen said.

Blogger profile said...

"1. I take that as admission that you cannot point to any examples of clear fraud by Exxon itself."

Yeah, right. So lying their asses off and doing it for money isn't a "clear example of fraud".

Tell me, do you have to be told where your arse is before you believe you have one?

Blogger profile said...

"What are they doing with $100 million of Exxon's money? "

What did Exxon do with the rest of the money they gave away? Ask Heartland what they did with it.

Or do you believe that only the bits that they admit to were spent?

Blogger profile said...

"I don't know offhand about a direct fraudulent statement by Exxon,"

Well, apart from the statements given to Tom on the other Exxon thread.

Blogger profile said...

"As far as I know making untrue statements about climate science is not (yet) and unlawful act."

Ah, please show me where fraud lists the actions that you have to take that exclude making untrue statements for financial gain is only fraud WHEN IT'S ABOUT CLIMATE SCIENCE.

Because where I live, the activity being lied about isn't listed as the exhaustive limits of what constitutes fraud. They describe the actions, not the content.

Blogger profile said...

"I've read it again. I come to the same conclusion: you can see no examples of direct fraud by Exxon."

Apart from their production of a paper showing the problem then publicly denying there is a problem, then funding astroturf and lobby groups to lie for them.

I don't get off for murder by paying someone else to do it, and if you work under the payment of Exxon, your actions are the responsibility of Exxon.

Blogger profile said...

"Dubious; quoting McK against Exxon isn't going to work well; you need to actually quote Exxon"

Given it isn't alive, the corporation cannot be quoted. Only the people working for it can.

And they have lied about the problem for financial gain.

jrkrideau said...

If VW did this in the USA, one has to wonder what it did in other countries.

I wonder how many national, provincial/state, etc., regulatory agencies are licking their lips and loading up the testing gear and getting warrants.



Victor Venema said...

Maybe VW exaggerated, but I am looking forward to the newspaper stories finding very similar problems with all other manufacturers. The fuel efficiency in the tests is also never reached in the wild.

izenmeme said...

@-"Ah, please show me where fraud lists the actions that you have to take that exclude making untrue statements for financial gain is only fraud WHEN IT'S ABOUT CLIMATE SCIENCE."

Can you explain how making untrue statements about climate science is 'for financial gain' and therefore fraudulent? Heartland certainly made a financial gain from making those statements (paid by exxon etc) but it is unclear what direct, or even measurably detectable indirect, financial gain exxon et al may have recieved.

Barton Paul Levenson said...

WC: You believe there exist examples of indirect fraud, via funding of other groups, but you've ignored my direct question as to giving an example of such (#3) so I'm dubious you have any such examples.

BPL: What part of "Exxon funded Heartland and Heartland lied about climate science" do you not understand? You really DO come off like a fossil-fuel apologist. Do you deny that there has been a concerted effort in this country and others to obfuscate the issue of climate change with a view to stopping any restrictions of sales? I'd like a yes or no answer. Or just shut the hell up, because I'm getting sick of your whole snotty, superior attitude.

Barton Paul Levenson said...

i: Can you explain how making untrue statements about climate science is 'for financial gain' and therefore fraudulent? Heartland certainly made a financial gain from making those statements (paid by exxon etc) but it is unclear what direct, or even measurably detectable indirect, financial gain exxon et al may have recieved.

BPL: How stupid are you? The denial effort is aimed at making sure no government action is taken to restrict fossil fuel use or sales. Restricting fossil fuel use or sales hurts Exxon directly. Do you REALLY need to have this explained to you, or are you just trolling?

Let me put it this way. Exxon has blood on its hands. So do people who defend Exxon.

William Connolley said...

> I'm getting sick of your whole snotty, superior attitude.

Top tip: if you find yourself writing stuff like that, stop writing for a bit.

Like I said: "So did many others. Are all those people guilty of fraud?" Does everyone who funded Heartland have blood on their hands?

Heartland lied about GW. So have many others. If all that amounts to fraud, many people are guilty.

How you'll reconcile that with your constitutional right to free speech I don't know.

E. Swanson said...

VV said...

Maybe VW exaggerated, but I am looking forward to the newspaper stories finding very similar problems with all other manufacturers. The fuel efficiency in the tests is also never reached in the wild.


In the US, the first MPG data used emissions tests which were tailored to the 55mph speed limit, which was in effect at the time. As speed limits have since been increased, the tests were belatedly changed to increase the simulated driving speed somewhat. Given that the air drag increases with the square of the speed and drag becomes a larger fraction of the overall road load, even the latest tests give only marginally accurate results. There are other factors involved, such as the drag coefficient used to setup the dynometers for the emissions testing, the value of which is provided by the manufacturer. As the MPG labels on newer cars state, the numbers are only useful for comparison between various models, as the testing is performed under similar conditions of temperature, atmospheric pressure and humidity in an enclosed space with the vehicles not actually in motion. The testing does not consider changes in aerodynamic drag for cross wind conditions and the drag changes due to differences in body styles. I recall a recent case against Hyundai(?), in which the EPA claimed that their stated drag data was too low because they did not follow the proscribed procedure for the "coast down" test used to calculate the drag coefficient.

Of course, for quite some time, the average driver has tended to exceed the speed limits on freeways and those speed limits are already much above the speeds used during the emissions tests. I attended a conference about air quality several years ago, in which 5 governors from southern states bordering the Great Smoky National Park attended. After the conference closed, I button holed the Georgia governor, Roy Barnes, and pointed out that if he wanted to improve the air quality around Atlanta, he should send the State Patrol out to enforce the speed limit, because gasoline engines when operated at higher power levels, tend to emit more NOx. He didn't answer, but turned and walked away, as the State had just gone thru a big fight to increase the speed limits on the freeways outside the metro area. Is there a pattern here, or what?

EliRabett said...

WMC: It is front page in the German and US press. Share price went down 20% today, so the FT will notice (VW is the largest company in German)

VV: VW did not exaggerate, they swindled their customers and the regulators.

William Connolley said...

"Volkswagen shares plunge 18% on exhaust scandal" is now on the Beeb front page too. I wasn't denying this is a big deal; au contraire, I was somewhat surprised by the muted reaction here.

afeman said...

VW not the first one caught:

http://www.washingtonpost.com/news/energy-environment/wp/2015/09/18/epa-volkswagen-used-defeat-device-to-circumvent-air-pollution-controls/

Automakers have a long history of using defeat devices. In 1998, the EPA reached a $1 billion settlement with diesel-engine companies such as Caterpiller, Renault and Volvo for installing equipment that defeated emission controls. It was, at the time, the largest U.S. civil penalty for violating environmental law. The EPA said the firms installed the devices in an estimated 1.3 million engines in tractor trailers and large pick-ups.

That same year, Honda and Ford settled EPA cases also accusing them of using defeat devices. With Ford, the problem was found in 60,000 Econoline vans, allowing for excessive pollution at highway speeds. Honda was found to have disabled the misfire monitoring device on 1.6 million cars, depriving emission control inspectors of that information.

Blogger profile said...

"Can you explain how making untrue statements about climate science is 'for financial gain' "

If you're in the business of extracting fossil fuels with a reserve of trillions of dollars, then saying you'll have to leave almost all of it in the ground means your publicly traded company will go titsup faster than Katie Price after a bottle of vodka on an ice rink.

There's a huge reason there to lie.

And the reason is financial gain.

How much simpler do you need this done?

Blogger profile said...

"Top tip: if you find yourself writing stuff like that, stop writing for a bit."

Why, will you stop being snooty and ignorant, Bill, if given some more time?

Blogger profile said...

"I wasn't denying this is a big deal"

Then why did you post your message? If you weren't saying anything useful, then don't damn well say it.

That's a top tip for you.

Barton Paul Levenson said...

WC: How you'll reconcile that with your constitutional right to free speech I don't know.

BPL: Fraud isn't covered by free speech.

Kevin O'Neill said...

BPL - WC resides on the libertarian fringe. And any mention of the 'L' word is always an opportunity to repeat...

There are two novels that can change a bookish fourteen-year old’s life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs.

Brian said...

Izenmeme/WC - the analogy I'd see is tobacco companies using proxy orgs to lie about second-hand smoke to prevent policies reducing tobacco consumption.

Lying is just great, unless you're doing it to get a financial benefit - then it might start fitting the definition of fraud.

Tobacco does involve lying and then harming someone you're in a contractual relationship with, and that's a little different from climate change. So second-hand smoke is closer analogy.

WC assigned me some homework on the actual statements by denialists I haven't completed yet - sorry. I expect that homework is less difficult than proving the proxy statements can be ascribed to Exxon. Anyway I think something like "temps aren't warming up" and "CO2 increases won't increase temps" are more than enough. Denying undeniable evidence or even true statements in the 90s used in misleading context, e.g. "satellite temps show no warming THEREFORE no need to worry about global warming" could be enough.

Another problem for Exxon about using a proxy is it doesn't matter whether the proxy believes the nonsense it's pushing - if Exxon knows the nonsense is untrue and is using the proxy to push it out, then that's one of the elements of fraud.

I admit I don't have in front of me everything you need to say yep, it's a fraud, but I think a lot of it is out there. Maybe all of it.

Brian said...

Kevin and Barton: WC doesn't need me to defend him, but I find him very useful to read, especially when he disagrees with me.

Russell Seitz said...

Circa 1990 , the act of saying "satellite temps show no warming THEREFORE no need to worry about global warming" amounted to repeating what Science editorilized.

Hark ! Is that thudding the sound of RICO inquisitors pounding on the AAAS President's door?

Blogger profile said...

"Circa 1990 , the act of saying "satellite temps show no warming THEREFORE no ..."

The act of knowing that the claim was wrong and irrelevant, since we have THERMOMETERS today and they measure temperature directly, rather than requiring a model to turn volumetric radiance values into surface temperature guesses, the trend on the surface is showing the evidence of AGW.

Satellite trends show support of NO CLAIM about temperatures.

Talking about satellite trends show NO EVIDENCE that the surface temps are wrong.

Making a claim on the satellite trends in the 1990's is plain old lying.

Blogger profile said...

" Kevin and Barton: WC doesn't need me to defend him, but I find him very useful to read, especially when he disagrees with me."

Brian, he DOES need something other than pretend ignorance to have anything useful to read.

And when EVEN HE claims he never said something important, how the hell do you get that he has something "useful to read"???

"Hey, what's the fuss? There's nothing in the FT about it at all!"
"It's a big deal, that's why the fuss"
"Hey, I never denied it was a big deal!"

So care to explain why the post asking why all the fuss was relevant AT ALL if Bill here thought it WAS a big deal and why he didn't include this in his post?

He's being deliberately ignorant and hopes nobody else will notice.

Brian Dodge said...


"In 2010, by a 3 - 2 split by the vote of five SEC commissioners, the SEC issued guidance on SEC disclosure requirements for companies on the impact that “climate change may have on its business.” Based upon that SEC guidance, the following areas are examples of where climate change may trigger disclosure requirements:

Legislation and Regulation: When assessing potential disclosure obligations, a company should consider whether the impact of existing or pending laws and regulations regarding climate change is material.

International Accords: A company should consider, and disclose when material, the risks or effects on its business of international accords and treaties relating to climate change (e.g., COP 21 is only weeks away).

Indirect Consequences of Regulation or Business Trends: Legal, technological, political and scientific developments regarding climate change may create new opportunities or risks for companies. For instance, a company may face decreased demand for goods that produce significant greenhouse gas emissions or increased demand for goods that result in lower emissions than competing products. As such, a company should consider, for disclosure purposes, the actual or potential indirect consequences it may face due to climate change related regulatory or business trends.

Physical Impacts of Climate Change: Companies should also evaluate significant physical effects of climate change, such as effects on the severity of weather (for example, floods or hurricanes), sea level, the arability of farmland, and water availability and quality, etc.

Among the existing disclosure rules that may now advisedly trigger climate change disclosures, the SEC casts a broader, more subjective interpretation of its requirements for ‘management discussion and analysis’ disclosures, which practically require the company to disclose “currently known trends, events, and uncertainties that are reasonably expected to have material effects.”
http://www.greenbuildinglawupdate.com/2015/08/articles/sustainability-1/climate-change-disclosures-by-public-companies/ (yeah,I know it's an indirect source of what the SEC says, but I'm too lazy to trace back to the original SEC guidance - plus, their commentary is useful)

"As detailed below, ExxonMobil makes long-term investment decisions based in part on our rigorous, comprehensive annual analysis of the global outlook for energy, an analysis that has repeatedly proven to be consistent with the International Energy Agency World Energy Outlook, the U.S. Energy Information Administration Annual Energy Outlook, and other reputable, independent sources."
.http://cdn.exxonmobil.com/~/media/global/files/other/2014/report---energy-and-carbon---managing-the-risks.pdf

If one were to go through the entire Exxon "manage the risks" document, and compare their strategies to those of "reputable, independent sources", and find that Heartland, or NIPCC, or Willie Soon's deliverables not only parrotted, but were paid for by Exxon, then Exxon would have arguably broken the disclosure laws. And if one had slightly less deep pockets because of investment losses in Exxon, one might well pay lawyers to make these arguments in court.