The previous evening, Brooks, a veteran of the Justice Department’s Environmental Enforcement Section, sent Volkswagen an ominous follow-up to ensure its general counsel would be on the call: “Please note that this is a call that Mr. [David] Geanacopolus would probably want to make a priority.”. Since then, several other states have enacted statutory targets, with Colorado and New York being two of the most recent. To that end, in 2008 Volkswagen rolled out a new technology that it claimed would achieve high fuel economy and performance while meeting the strict new emissions standards—a technology that seemed to require “magical thinking,” at least in engineering circles (Dune Lawrence et al., “How Could Volkswagen’s Top Engineers Not Have Known?” Bloomberg Businessweek, Oct. 26, 2015, https://bloom.bg/2F298zk). But they posed a dilemma for Volkswagen if it was to achieve its ambition of becoming the leading automobile manufacturer in the world. This website uses cookies to analyze traffic and for other purposes. In 1990, Congress enacted new emissions laws known as Tier 1 standards and required the EPA to review whether further reductions were necessary and technologically feasible to help states meet the NAAQS. AdButler.ads.push({handler: function(opt){ AdButler.register(165519, 459496, [300,600], 'placement_459496_'+opt.place, opt); }, opt: { place: plc459496++, keywords: abkw, domain: 'servedbyadbutler.com', click:'CLICK_MACRO_PLACEHOLDER' }}); For example, Connecticut uses a 1990 emissions baseline for its 2020 targets, but a 2001 emissions baseline for its 2030 and 2050 targets. GENERAL PROVISIONS ... Acts 2019, 86th Leg., R.S., Ch. Furthermore, auditors must gain an understanding of the company’s “relevant industry, regulatory, and other external factors,” “its operations,” and “its ownership and governance structures” (para. As a publicly traded company, Volkswagen’s annual financial statements are subject to independent audit. In 2017, California enacted AB 398, which extended the program’s cap to 2031. The use of the term Shell’s “Net Carbon Footprint” is for convenience only and not intended to suggest these emissions are those of Shell or its subsidiaries. ISAE 3000 allows for “moderate” or “limited” assurance [ISAE 3000 (Revised), 2013, para. document.write('<'+'div id="placement_456219_'+plc456219+'">'); This framework was followed by a draft Memorandum of Understanding (MOU) released in mid-December that would, in addition to committing participating jurisdictions to implementing the cap-and-invest program, require participants to jointly develop a model rule that achieves the following: establishes and implements a regional cap on CO2 emissions from motor vehicles fueled by gasoline and on-road diesel; develops an emissions allowance auction process; requires regulated fuel suppliers to report emissions and hold allowances; and provides for regualtory flexibilities. State percentage reduction requirements range from 10% by 2020 up to 90% by midcentury. The damage will be felt for some time to come. We cover air pollution history, evaluation of visible emissions, analysis of industrial processes, theory and application of emission controls, waste stream, reduction, and more. The seventh meeting of the Intersessional Working Group on Reduction of GHG Emissions from Ships took place remotely (19-23 October 2020), ahead of the next Committee session, MEPC 75. Some states, including Delaware, New Hampshire and New Mexico, administer an inventory program without an explicit statutory directive. As in earlier corporate debacles where the role of the company’s lawyers has come into question (such as the Enron accounting scandal and the General Motors ignition switch case), observers might ask: what duty, if any, did Volkswagen’s lawyers have to report the fraud if they knew of it? A key part of that strategy was to vastly expand diesel vehicle sales in the United States (Jack Ewing, Faster, Higher, Farther: The Volkswagen Scandal, W.W. Norton & Company, 2017). The lawyer may not assist the client in such conduct and must withdraw at that stage (Comment 10 to Model Rule 1.2). var plc282686 = window.plc282686 || 0; 8, 2015, http://bit.ly/2I6KD6k. Several standards of the International Auditing and Assurance Standards Board (IAASB) may be particularly relevant as to whether any of the annual audits conducted during the period of the fraud could have detected potential warning signs (2016-17 Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements,http://bit.ly/2wO1rIM). Connecticut and Washington also implement a shifting baseline depending on the target year. AdButler.ads.push({handler: function(opt){ AdButler.register(165519, 461033, [300,600], 'placement_461033_'+opt.place, opt); }, opt: { place: plc461033++, keywords: abkw, domain: 'servedbyadbutler.com', click:'CLICK_MACRO_PLACEHOLDER' }}); California’s cap-and-trade regulation has been updated several times over the course of the program. The duties of lawyers are discussed in the canons of ethics that generally govern the legal profession (each jurisdiction is different), which were revised after the passage of the Sarbanes-Oxley Act of 2002 (Cramton et al., Legal and Ethical Duties of Lawyers After Sarbanes-Oxley, 49 Villanova Law Review, January 2004, http://bit.ly/2WDcHqw). Should the auditors have exercised additional scrutiny under the circumstances—which included a history of poor ethical corporate culture, weak corporate governance, an aggressive new sales strategy, and bold claims of technological advances? Md. The violations spanned the course of six consecutive model years (2009–15). div.id = "placement_461033_"+plc461033; From 2008 to 2013, Volkswagen’s sustainability reports, prepared by the same firm that performed the financial audits, contained independent assurance reports that were conducted under both AA1000AS and ISAE 3000, whereas for 2014 and 2015, they were conducted only under ISAE 3000. The lawyer learned about the illegal or fraudulent conduct midstream: must withdraw and report internally, and may report externally if sufficiently serious. This program is primarily funded through an allocation from the Diesel Emission Reduction Act (DERA) disbursed by the U.S. Environmental Protection Agency. Note that Pennsylvania Governor Tom Wolf (D), issued an executive order on Oct. 3, 2019, directing the state Department of Environmental Protection to initiate a rulemaking no later than July 31, 2020, to establish a carbon budget consistent with and to facilitate participation in the RGGI program. Environment, § 2-1204.1, Climate Leadership and Community Protection Act, U.S. State Greenhouse Gas Emissions Targets. Conversely, several states with statutory GHG reduction requirements also have a statutory mandate to compile an emissions inventory. *Note that on Dec. 18, Governor Chris Sununu (R) announced via twitter that New Hampshire would no longer be participating in TCI. Under the MAW method, mass emissions are calculated for subsets of a complete data set, called windows. Edited by CPAs for CPAs, it aims to provide accounting and other financial professionals with the information and analysis they need to succeed in today’s business environment. Washington, D.C. 20001 Of the 15 states that have enacted GHG reduction targets, seven did so from 2007 through 2009. var div = divs[divs.length-1]; directing the state Air Quality Control Commission (AQCC) to promulgate implementing regulations aimed at achieving statewide emissions reductions below 2005 levels of at least 26% by 2025, 50% by 2030 and 90% by 2050. AdButler.ads.push({handler: function(opt){ AdButler.register(165519, 282686, [300,250], 'placement_282686_'+opt.place, opt); }, opt: { place: plc282686++, keywords: abkw, domain: 'servedbyadbutler.com', click:'CLICK_MACRO_PLACEHOLDER' }}); if (!window.AdButler){(function(){var s = document.createElement("script"); s.async = true; s.type = "text/javascript";s.src = 'https://servedbyadbutler.com/app.js';var n = document.getElementsByTagName("script")[0]; n.parentNode.insertBefore(s, n);}());} var AdButler = AdButler || {}; AdButler.ads = AdButler.ads || []; var div = divs[divs.length-1]; diesel particulate filters. Enforcement is critical to protecting human health, especially in major metropolitan areas such as Los Angeles, which sits in the most heavily polluted air basin in the country (American Lung Association, State of the Air 2018, http://bit.ly/2I6gtQp). In 2018, TCI members committed to designing a regional cap-and-invest policy to reduce carbon emissions from the transportation sector. var abkw = window.abkw || ''; From 2006 to 2010, ULSD was phased in for onroad diesel. We are the nation's most respected bipartisan organization providing states support, ideas, connections and a strong voice on Capitol Hill. At least 15 states and Puerto Rico have enacted legislation establishing GHG emissions reduction requirements, with more requiring state agencies to report or inventory GHG emissions. Another high mileage mark is now in the Guinness World Records book … an impressive 81.17 mpg. Statutory Reduction and Reporting Requirements + Pending Market-based Policy. Diesel. By Volkswagen’s estimation, complying with the rules meant increased costs and lower fuel economy and road performance, which would potentially detract from sales. Did any of them miss opportunities to help prevent it? AdButler.ads.push({handler: function(opt){ AdButler.register(165519, 456219, [300,600], 'placement_456219_'+opt.place, opt); }, opt: { place: plc456219++, keywords: abkw, domain: 'servedbyadbutler.com', click:'CLICK_MACRO_PLACEHOLDER' }}); var AdButler = AdButler || {}; AdButler.ads = AdButler.ads || []; Did any of them miss opportunities to help prevent it? When on the road, the systems were disabled. 6], while AA1000AS allows for “high” or “moderate” assurance (AA1000AS, 2008, p. 10). The regulators wanted to know why real-time emissions monitoring conducted on Volkswagen diesel vehicles on the open road had revealed up to 35 times the amount of pollution recorded when the same cars were monitored in a government testing facility. There is evidence to the contrary. By the measure of the six capitals of integrated reporting—financial, manufactured, intellectual, human, social and relationship, and natural—that have gained favor in recent years, Volkswagen also suffered dearly (Jane Gleeson-White, Six Capitals, or Can Accountants Save the Planet? The commission laid out a split-level approach, putting forth legislation in two steps. In 2018, the IPCC said that global emissions must be reduced by 45% by 2030, and to net zero by 2050 to have 50% chance of limiting temperature rises to … The two most common assurance frameworks used for sustainability reports are ISAE 3000 and AA1000AS (Sunita Rao, “Current State of Assurance on Sustainability Reports, The CPA Journal, June 2017, https://bit.ly/2m4Eewu). The initial rule established an annual emissions allowance budget from 2013 to 2020 and phased-in requirements for regulated entities during three compliance periods. In 2007, with a new CEO at the helm, Volkswagen launched “Strategy 2018,” an aggressive new initiative with goals such as doubling annual vehicle sales (Stefan Schmid and Phillip Grosche, “Managing the International Value Chain in the Automotive Industry,” Bertelsmann Stiftung, 2008, https://bit.ly/2It0RHW). Several states—California, Connecticut, Maine, Massachusetts, New York, Oregon, Rhode Island, Vermont and Washington—use a 1990 baseline to measure emissions reductions, while the emissions baseline for Colorado, Minnesota and Nevada is 2005 and Maryland and New Jersey is 2006. Published research spearheaded by MIT scientists predicts that the excess particulate matter (PM) and nitrogen oxide (NOx) emissions produced by the fake clean diesel vehicles will lead to some 60 premature deaths in the United States and 1,200 in Europe (Steven Barrett et al., “Impact of the Volkswagen Emissions Control Defeat Device on U.S. Public Health,” Environmental Research Letters, Oct. 29, 2015, http://bit.ly/2WyLLIP; Guillaume P. Chossière et al., “Public Health Impacts of Excess NOx Emissions from Volkswagen Diesel Passenger Vehicles in Germany,” Environmental Research Letters, Mar. Some states, such as Iowa and Pennsylvania, are statutorily required to compile an emissions inventory but do not have a statutory mandate to reduce statewide emissions. Read the Fuel Quality Standards (Biodiesel) Determination 2019; Autogas On the way to its findings, the investigation looked into accounts of tampering of emissions controls in Class 2b (medium duty) and Class 3 (heavy duty) diesel pickup trucks from 2010 through 2019. Many states have multiple policies in place, as shown in the map below. var plc456219 = window.plc456219 || 0; })(); var AdButler = AdButler || {}; AdButler.ads = AdButler.ads || []; Generally, states have set targets as a future percentage reduction compared to a specific year’s emissions levels or baseline, but the overall stringency of state programs can vary depending on the percentage reduction required and baseline used to measure such reductions. Awareness of a toxic corporate culture and poor ownership and corporate governance structures might prompt the auditor to consider how those factors could affect business practices and controls, and potentially lead to fraud. 1134 (H.B. It is possible that what Volks-wagen’s lawyers knew and when they knew it has been addressed by Jones Day, the powerhouse law firm VW hired after the fact to conduct an internal investigation of the fraud. Several states have also implemented carbon pricing policies either independently or through regional agreements. Many of these same states also participate in the Transportation and Climate Initiative (TCI), which is committed to developing a cap-and-invest program aimed and reducing transportation sector emissions. In addition to participating in the RGGI program described below, Massachusetts also implements a separate cap-and-trade program limiting GHG emissions from 21 fossil fuel-fired power plants in the state. To evaluate compliance, the emissions are averaged using the moving averaging window (MAW) method. The reductant source is usually automotive-grade urea, otherwise known as Diesel Exhaust Fluid (DEF). This content contains forward-looking statements (within the meaning of the U.S. Additional revisions to the cap are expected to be made in 2021 through 2025. Collectively, diesel standards reduce harmful emissions from both onroad and nonroad diesel sources by more than 90%. })(); The CPA Journal is a publication of the New York State Society of CPAs, and is internationally recognized as an outstanding, technical-refereed publication for accounting practitioners, educators, and other financial professionals all over the globe. The window size is defined by the work, or CO 2 emissions, over the window, which must be equal to those of the WHTC. Volkswagen should have seen it coming days, months, or even years before. CLEAN AIR ACT. Our course catalog includes a comprehensive list of courses, from introductory material for the entry-level professional to complex technical and regulatory courses for the more experienced specialist. (function(){ Read the Fuel Quality Standards (Automotive Diesel) Determination 2019; Biodiesel. These costs were incurred because Volkswagen engaged in an elaborate fraud that included the installation of software in diesel vehicles to fool government emissions tests, false certification to government authorities that the vehicles were compliant, deceptive marketing of the vehicles to consumers as “clean diesel,” and a brazen cover-up. We do not assume any responsibility towards third parties.” In the 2017 report, the sentence “Our responsibility lies only with the Company” was added to the report between the two sentences above. Several states have also implemented market-based policies aimed at limiting GHG emissions from major sectors. California is employing a multi-sector GHG cap-and-trade program, and several Northeast and Middle Atlantic states are participating in the Regional Greenhouse Gas Initiative (RGGI), the first binding cap-and-trade program aimed at reducing GHG emissions from the power sector. var divs = document.querySelectorAll(".plc461032:not([id])"); Indeed, in a landmark unanimous opinion written by Justice Antonin Scalia, the Supreme Court construed the CAA as mandating the EPA to solely consider human health and welfare—and barring it from considering industry implementation costs—in promulgating national ambient air quality standards (NAAQS) for pollutants such as PM and NOx[Whitman v. American Trucking Associations, 531 U.S. 457, 473 (2001)]. Auditing standards also require auditors to consider a company’s legal and regulatory environment (ISA 250, Consideration of Laws and Regulations in an Audit of Financial Statements), including “undertaking specified audit procedures to help identify noncompliance with those laws and regulations that may have a material effect on the financial statements” (para. On September 18, 2015, the EPA issued a Notice of Violation to Volkswagen after determining that the company had manufactured and installed software (known as “defeat devices”) that substantially reduced the effectiveness of the emissions control system of the diesel vehicles when on the open road. More limited over time for the purposes of this section, we highlight those carbon pricing regional.... Replace an existing, multi-layered legal framework in Europe with one overarching regulation reductant source is usually automotive-grade urea otherwise. 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