POAHY Porsche Automobile Holding SE (PK)

By Aruna Viswanatha 

The U.S. Department of Justice sued Volkswagen AG on Monday in federal court seeking billions of dollars in penalties over its alleged cheating on emissions tests, deepening woes for the embattled German auto maker.

The new civil lawsuit largely repeats allegations environmental regulators made against Volkswagen last year through administrative filings, including that the car maker installed illegal devices that circumvented emissions tests in 580,000 diesel-engine vehicles sold in the U.S. But the lawsuit ramps up pressure on the company as it puts the case before a federal judge and formally seeks court-ordered penalties and other relief.

The lawsuit specifically seeks more than $32,000 in penalties per vehicle, potentially adding up to more than $18 billion.

Volkswagen has held discussions with the Environmental Protection Agency over how to fix the cars, but officials said those talks haven't resulted in a deal, paving the way for the new lawsuit. "Recall discussions with the company have not produced an acceptable way forward, " EPA enforcement official Cynthia Giles said.

"With today's filing, we take an important step to protect public health by seeking to hold Volkswagen accountable for any unlawful air pollution, setting us on a path to resolution," Ms. Giles said.

Ms. Giles and Volkswagen said discussions would continue. "Volkswagen will continue to work cooperatively with the EPA on developing remedies to bring the...vehicles into full compliance with regulations as soon as possible," the company said in a statement.

The complaint, filed by the Justice Department on behalf of the EPA, alleges that Volkswagen violated the Clean Air Act by making and selling vehicles that were designed differently from what Volkswagen had stated in applications for certification to the EPA and another regulator, the California Air Resources Board.

The new lawsuit covers vehicles with 2-liter engines, which were the subject of the EPA's original September allegations, and separate charges the agency levied in November covering additional 3-liter engines, including some Audi and Porsche diesel-powered models.

The complaint accuses VW of obstructing the investigation into the 3-liter engines.

"The United States' efforts to learn the truth about the emission exceedances and other irregularities related to the 3.0L Subject Vehicles, including whether VW had committed the violations of federal law alleged herein, were impeded and obstructed by material omissions and misleading information provided by VW entities including at least Volkswagen AG and Audi AG," the lawsuit says.

Criminal prosecutors are also investigating Volkswagen in connection with the emissions scandal. The U.S. Attorney in Detroit, Barbara McQuade, whose office is involved in the investigation, said the complaint marks only the "first stage" of the government's efforts.

Write to Aruna Viswanatha at Aruna.Viswanatha@wsj.com

(END) Dow Jones Newswires

January 04, 2016 16:10 ET (21:10 GMT)

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