VW Scandal Prompts EU Push for More Centralized Approval Regime

  • Plan to overhaul regulatory system foresees possible EU fines
  • European Commission's plan may face opposition by governments

European Union regulators are risking a clash with EU governments by seeking greater authority over the approval of car models in response to Volkswagen AG’s emissions-test deception.

The European Commission, the EU’s regulatory arm, plans to propose more centralized market oversight and greater independence of vehicle-testing organizations, according to a person familiar with the draft legislation. The proposal would empower the commission to fine carmakers for breaches of environmental or safety standards, according to the person, who spoke on condition of anonymity because the draft law has yet to be presented.

Along with a separate plan to gauge cars’ smog-causing pollution on roads rather than only in laboratories, the initiative due on Wednesday in Brussels marks the most far-reaching EU regulatory reaction to Volkswagen’s admission in September that it fitted diesel engines with software to cheat U.S. checks on nitrogen-oxide discharges. The proposal on authorizing vehicle models will need the approval of EU governmentsand the European Parliament, a process that can take at least a year.

“It boils down to giving away national sovereignty to Brussels,” Bas Eickhout, a Dutch member of the 28-nation EU Parliament, said on Tuesday about the commission’s goal. He predicted resistance by national governments and broad support in the 751-seat Parliament -- a situation that could prolong the whole decision-making process.

Testing System

While the fate of Wednesday’s proposal will be determined during months or even years of negotiations among EU lawmakers, it may influence an imminent EU verdict on the plan for real-driving-emission tests. The EU Parliament is set for an up-or-down vote next week on the planned testing system, which was approved by member states on Oct. 28 and would begin in September 2017.

Because the testing regime would let real-world NOx emissions exceed permissible discharges by as much as 110 percent until January 2020 and then allow a 50 percent permanent overshoot of the actual EU limit, the Parliament’s environment committee is recommending that the full assembly reject the plan as too lax. The commission’s push to strengthen the EU system for approving vehicle models could provide political cover to backers in the Parliament of the governmental accord on real-driving-emission tests.

While the initiative due on Wednesday stops short of seeking a European authority for approving vehicle models, it seeks to address weaknesses in the current system that’s based on the mutual recognition across the EU of decisions by individual member states. The new legislation would replace rules enshrined in a 2007 EU law.

Beyond fines, the proposal would allow the commission to order post-approval testing of cars and recalls; prohibit auto producers from paying for lab tests directly by requiring industry contributions to funding pools that national authorities would use to finance testing; and -- in a direct attempt to uncover cheating technologies of the kind used by Germany-based VW -- oblige vehicle manufacturers to disclose software protocols, according to the person.

In addition, the draft law would allow individual EU countries to recall vehicles approved elsewhere in the bloc should environmental or safety concerns arise, said the person.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE