Begun

Brian Begun
CST 373 Ethics in Communication and Technology
Kevin Cahill
4/10/2017
VWs Ethical Challenges with Software Cheating Emissions Testing

My name is Brian Begun, and I am a student in CST 373 ethics in communication and

technology, a computer science online major and member of the California State University

Monterey Bay community. Additionally, I have gained years of insight into modern technology

through extensive reading and research as well as personal investments into building advanced

networking capabilities in my own home. I have been a digital artist for almost 20 years, and

have built a career on creativity and insightfulness. Within this paper I will explore the history

and ethical issues as it relates to pollution caused by the automobile and the ongoing battle that

has been waged between the government and major car manufacturers. Specifically, I will focus

on the recent scandal involving Volkswagen and their diesel fueled vehicles. This scandal raises

several issues related to government regulation and how the car manufacturers view them.

There is a deep-rooted conflict between the societal desire to rein in pollution due to the

strong dependency that still remains on fossil fuel based transportation and the need to transition

to a clean energy economy. Car manufacturers leverage this conflict of ideas as a driving factor

and motivation to push back against rules and regulations put in place by governments that will

add costs to their products. As a result, this creates a head on battle between the two largest

stakeholders: the car companies and the government. I am interested in researching this issue as

it affects all of us more profoundly than any one person could really understand.
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Climate change has been proven time and time again by valid scientific data, that if we

provide the foundation for a long and prosperous future, it has to start now. We must be able to

hold car companies to a high standard that can and will be enforced by governmental regulations.

To better understand the battle over emission regulations, we must take a brief look at the

history of pollution in the industrialized world and why regulating emissions from cars and other

manufacturing has become necessary.

In the beginning, before the Industrial Revolution between the 18th and 19th centuries,

most societies in Europe at the time were primarily agrarian (agricultural). Manufacturing at this

time was primarily done on a relatively small scale and in peoples private homes using small,

limited quantity equipment and tools.

The Industrial Revolution transitioned limited scale production to large factories and

mass production, more types of products could be built and in larger volumes. Therefore,

consumers benefited from the greater availability of these products and greater production

quantities often meant lower prices (History.com, 2009).

As time moved on and the revolution grew, it hit a second phase known as the Second

Industrial Revolution from 1870-1914. Most of the expansion during this period went beyond

Europe, and focused greatly within the United States. The U.S. had ended its civil war, ended

reconstruction during this time and the discovery of gold in California created a huge demand for

huge expansion in industries to support the gold rush; this growth allowed for goods to travel

directly from one side of the country to the other for the first time (Engleman, 2015). As the

second revolution matured so did the popularity of the automobile. Thanks to Henry Fords

pioneering work in the mass production of cars, transportation by automobile became more

affordable and accessible to the masses. By the 1920s through 1940s cars had unprecedented
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amount of growth and quickly became a ubiquitous part of the American culture

(Reference.com, n.d.).

While governments started to control traditional sources of pollution, the numbers of

vehicles on the road soared after World War II, the type of pollution changed. Photochemical

air pollution replaced sulfurous smog as the primary air pollutant. Urban centers in North

America and Europe were faced with this pollution as a result of the rapid growth of

industrialization primarily caused by automobile emissions. Governments started to recognize

the environmental risks caused by this type of pollution, which resulted in implementation of air

quality standards (Parrish, D., and W. Stockwell, 2015).

During the 1950s and 1960s Los Angeles was faced with extreme air pollution. Advances in

technology, and societal changes led to dramatic improvements in the quality of the citys air.

The most important and critical part of this effort was the control of motor vehicle emissions.

Since then, Los Angeles and California as a whole have taken the lead in regulating vehicle

emissions. Their success is measured in the incredibly drastic improvement of air quality from

the 1960s to the 21st century (Melosi, V. Martin, 2004-2010).

The first federal air pollution legislation was known as the Air Pollution Control Act of

1955. This legislations primary purpose was to provide research and technical assistance

relating to air pollution control (Environmental Protection Agency, n.d.).

The first significant Federal Government pollution legislation to regulate air quality

standards and create a comprehensive set of rules related to enforcement and controls of motor

vehicle emissions was known as the Clear Air Act of 1970. This legislation also ushered in the

establishment of the Environmental Protection Agency (EPA). Several amendments to the Clean

Air Act were added in 1977 and 1990, which expanded enforcement authority, and established
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multiple programs that went beyond ambient air quality, including the phasing out of chemicals

that depleted the ozone layer, and control over 189 toxic pollutants (Environmental Protection

Agency, n.d.).

The United States has made significant progress for the past several decades in the fight

to control pollution. In spite of this progress there are still millions of deaths each year

associated with two major types of air pollution, as reported in the Washington Post by a group

of American and Canadian researchers. Approximately 7.6 percent of all deaths in 2015 were

the result of pollution (The Washington Post Editorial Board, 2017, March 5). Unfortunately,

the future does not look and it may be in danger, since the current President reportedly is

planning to cut the EPAs staff by a fifth and has recently rolled back pollution and

environmental policies put in place by the previous administration.

Incidentally, about half of all air pollution deaths were located in China and India. Like

the United States, Europe has been regulating air quality for the last 30 years and has continually

amended its rules as the years have gone by. The two biggest world polluters China and India

have become victims of their own success due to globalization and the need to reduce labor

costs, they have become a hotbed of industrialization, and now producing a sizable percentage of

all manufacturing globally. Because of the rapid growth and lack of pollution regulation, these

two countries now face the same problems the United States and Europe faced during the first

and second Industrial Revolution (The Washington Post Editorial Board, 2017, March 5).

Ever since governments have imposed emissions regulations and pollutions tests,

carmakers have been continually trying to cheat on them. Since the beginning of government

legislation dating back to the 1970s, car manufacturers have been caught various times trying to

skirt the rules using technology known as defeat devices. These devices are designed to
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program the on-board computer to improve fuel efficiency or run-time performance by

sacrificing air quality from its emissions. One of the most often asked questions are why do car

companies cheat? Critics blame a federal regulatory system that largely relies on manufacturers

to self-certify that their vehicles meet required fuel economy and emissions standards. The

EPA spot-checks only a low percentage of the vehicles made in the U.S. or imported to test the

accuracy of the data reported by manufacturers (Biesecker, M, 2015). Additionally as reported

by the Associated Press, U.S. News, and an interview with Denver chemistry professor Donald

Stedman, a specialist in testing real-world emissions from cars and trucks said the economics of

the auto industry can make it profitable to cheat. Complying with clean air regulations can add

thousands of dollars to a vehicle's sticker price while diminishing the driving performance that

customers demand. (Biesecker, M, 2015)

Beyond the direct financial incentive, it is relatively easy to pass emissions tests in legal

ways without resorting to cheat devices as Volkswagen had done. The European Union is well

known for allowing manufacturers to optimize results by removing parts of their cars before

testing. They have gone as far as removing entire components to gain better test results such as

air conditioning. The ability to almost fabricate the numbers that they want by controlling test

results have contributed to a widening gap between reported results for diesels and the pollution

that really comes out of their tailpipes as suggested by Lucia Caudet, spokesperson for the

regulatory arm of the European Union. (Kresge, N. & Parkin, B. & Stearns, J., 2015). Gaining

an advantage in tests has been also possible in the United States, since most tests are done in a

lab under predictable conditions; those conditions have led us to the how of the Volkswagen

scandal.
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Before we dive deeper into how Volkswagen perpetrated the greatest automotive scandal

in over 100+ years, let us explore a little more into the why Volkswagen cheated. As stated

earlier, financial incentives to cheat are certainly a factor in the VW scandal, but for

Volkswagen, it was not just passing emissions standards that would add costs to cars, Executives

at the company consciously and deliberately calculated what the cost would be if they were

caught. They estimated using the previous record for fines imposed on car manufacturers

(Hyundai/Kia) that the cost would amount to barely $91 per vehicle, as written by the Clive

Irving at the Daily Beast. He goes on to say that VW Executives predicted, fines in this amount

are not even remotely capable of influencing the share price of a globally operative company

such as Volkswagen (Irving, C. 2016).

The financial incentives only paint part of the picture. To understand more fully the

motivations behind the conscious decisions made to break the law, we must examine the social

frameworks relevant to Volkswagen, the company as a whole, and the individuals who were in

charge. The first framework to explore is Capitalism. Capitalism is defined as an economic

system where private entities own the factors of production. The four factors are

entrepreneurship, capital goods, natural resources, and labor. The owners of capital goods,

natural resources, and entrepreneurship exercise control through companies. The individual

owns his or her labor (Amadeo, K., 2017).

Capitalism generally has positive effects for a countrys economy. Capitalism ensures

that an economy will produce the most desired products at an acceptable price. Thats because

consumers will pay more for what they want most (Amadeo, K., 2017).

Capitalism also can drive innovation. When the public shows a demand for a product,

companies respond by innovating and creating more things that the public will purchase resulting
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in more motivation for innovation and so on. In the context of the VW scandal, Volkswagen

created a demand for their products on the basis that they were green, eco-friendly cars. In

todays business climate, manufacturing products that enable consumers to feel like they are

benefiting the environment at best or creating minor problems for the environment at the

minimum are very popular and in demand. Volkswagen set overly ambitious, unattainable goals

that they could create cars using diesel fuel that could match their public claims. Another factor

of Capitalism as it relates to the emissions scandal is it ignores external costs, such as

pollution. It is often the case that in order to be profitable in a Capitalist system, companies

must reduce production and labor costs as much as possible while attempting to maintain the

quality of their products (not always). To reduce these costs, companies often shift production to

countries who have less restrictions when it comes to labor costs or pollution controls. The irony

in Volkswagens green diesel car claims go beyond how much (or little) pollution their cars

produce, but the fact of how much pollution is created simply from the manufacturing of their

cars to begin with. The carbon footprint of producing a car can range from 6 to 35 tons of

carbon dioxide emissions. This is before a car is driven off the assembly line (Berners-Lee, M.

& Clark, D. 2010).

The third and final aspect of Capitalism that directly relates to this scandal is in a

capitalistic system, the general view is that government should ensure a level playing field and

participants should play according to the rules (Rossouw, J., 2015).

In VWs case, they created software to detect whether a vehicle was being tested or was

being used under normal road conditions creating an advantage for Volkswagens cars; this begs

the question if other car companies are perpetrating similar crimes. The automotive industry is

extremely competitive, and it could be reasonable to assume that other companies might be
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cheating to level the playing field. Only continued investigations by government or

independent organizations might uncover the ultimate truth.

The second framework to consider is Egoism or Self Interest Perspective. Sometimes

referred to as Psychological Egoism, it claims that each person has but one ultimate aim: his or

her own welfare. This allows for action that fails to maximize perceived self-interest, but rules

out the sort of behavior psychological egoists like to target such as altruistic behavior or

motivation by thoughts of duty alone. It allows for weakness of will, since in weakness of will

cases I am still aiming at my own welfare; I am weak in that I do not act as I aim. And it allows

for aiming at things other than one's welfare, such as helping others, where these things are a

means to one's welfare (Shaver, Robert, 2015).

Volkswagens roots are from Germany. German companies generally believe that family

businesses are the backbone of its success (Weidenfeld, U., 2015).

Germans believe that innovation has built success as a result because family businesses

invest for the long term (Weidenfeld, U., 2015). When we say long term (Weidenfeld, U.,

2015) it does not mean in the next few years, or even decades. Managers will work towards the

goal of building fortunes to enhance a legacy for their descendants (Weidenfeld, U., 2015).

Unfortunately, there is a price to be paid for this type of success and loyalty (Weidenfeld, U.,

2015). Family run companies are often led by patriarchs (Weidenfeld, U., 2015) who control

everything from big investment decisions to the brand of organic potato served in the canteen

(kitchen) (Weidenfeld, U., 2015). These types of leaders are better described as Rulers rather

than managers (Weidenfeld, U., 2015). Their hubris (pride) often prevents them from accepting

mistakes and failure (Weidenfeld, U., 2015). Instead of using failure as a tool learn from and

improve on, it is considered unacceptable and must be avoided at all costs.

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Former executives at VW revealed insight into how life at VW was molded by their now

former CEO Martin WinterKorn. Although not a patriarch himself, Winterkorn behaved like a

patriarch (Glaser B., 2016), and almost fitting the framework definition exactly, he worked

extremely long hours and required control over every aspect of his business. He is considered

by many to be a demanding boss who abhorred failure (Glaser B., 2016) as, described by Bob

Glazer at Entrepreneur magazine. His management style was considered authoritarian (Glaser

B., 2016) and created an environment of fear. He also set unrealistic goals for company growth.

The inherent flaw with an authoritarian rule is that people tend to not speak up or provide healthy

checks and balances (Glaser B., 2016) which would have prevented unethical or illegal

behavior.

The third and final framework we will explore is Cultural Relativism. Cultural

Relativism is defined as the view that moral or ethical systems, which vary from culture to

culture, are all equally valid and no one system is really better than any other. This is based on

the idea that there is no ultimate standard of good or evil, so every judgment about right and

wrong is a product of society. Therefore, any opinion on morality or ethics is subject to the

cultural perspective of each person. Ultimately, this means that no moral or ethical system can be

considered the best, or worst, and no particular moral or ethical position can actually be

considered right or wrong. (Cultural Relativism, 2002)

As Cultural Relativism relates to the VW scandal, it is possible that Winterkorn and other

executives believed that based on current rules and laws in place it was still reasonable to take

the risk to cheat the system knowing that the consequences of their actions would be a reasonable

risk to take. Had the precedents of punishment been set much higher (a requirement set by

governments and the voting people of their respective countries) then perhaps this would have
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sent a much better and profound message to Volkswagen and other car makers that it is never

okay to break emissions laws, and perhaps they never would have done so as a result.

So, how did they cheat? VW has had experience cheating before. The irony may be that

they were one of the first to try to use a defeat device in their cars to cheat on emissions tests.

Not more than a few years after the EPA and the Clean Air Act were created, VW was accused

and subsequently admitted to installing devices that would remove pollution controls when the

car was running at low temperatures. The current scandal was more of a software-based solution

rather than a piece of physical hardware. It was designed to detect when a car was being tested,

which was rather easy to do by simply checking to see if the steering wheel was moving. When

it was not, VW engineers knew that the car was in a lab setting and the emission controls would

be active. When the car was in real-world conditions these controls would then be deactivated.

The manner in which Volkswagen was caught was almost as surprising as what they did and to

what extent they cheated. Ironically enough, the scandal was not exposed by a government

organization, or world body, but by a small group of scientists at West Virginia University. The

International Council on Clean Transportation is a nonprofit organization that tries to provide

independent science to government agencies that regulate the environment (Glinton, S., 24 Sept,

2015). They hired the researchers at West Virginia University to do some standard (Glinton,

S., 24 Sept, 2015) emissions tests on diesel cars in the United States. Since Volkswagen had

the boldest claims and the highest sales (Glinton, S., 24 Sept, 2015) VW cars became the

perfect test subjects. Because the researchers did all of their tests on the road and not in a lab,

their results never matched the claims made by VW that diesel emissions were low and within

legal limits. The researchers were unknowingly testing the vehicles more accurately because

their real world (Glinton, S., 24 Sept, 2015) tests were not triggering the defeat device
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(Glinton, S., 24 Sept, 2015) so the emissions were not artificially disguised unlike government

lab tests, which were easily defeated.

Although the cheating was primarily engineered by programmers who developed the

code to do so, according to John German, with the International Council on clean Transportation,

the programmer is not the only one to perpetrate the deception. Other people are required to do

validation (Glinton, S., 24 Sept, 2015). German goes on to say someone had to take these

vehicles out, test them on the standard test cycle, make sure that the emission controls are

supposed to be working when theyre supposed to be working (Glinton, S., 24 Sept, 2015). The

resulting work of the research group and German was then passed onto the EPA and the

California Air Resources Board.

Up until the historic VW scandal, most car manufacturers were generally punished with

financial damages that in the short term seemed to satisfy the government and the public.

However, as it has become more and more apparent, automakers continue to try to cheat the

system. Financial penalties only seem to encourage these companies to create more and more

sophisticated ways to bypass federal and state emission regulations. The VW scandal appears to

be changing the narrative on how automakers are held accountable. As of January 2017, Federal

prosecutors had filed criminal charges against six Volkswagen executives for their roles in the

companys emissions-cheating scandal (Tabuchi, H. & Ewing, J. & Apuzzo, M., 2017). VW

will also have to pay $4.3 Billion in penalties both civil and criminal as a result of the federal

investigation. Adding the cost of civil suits by car owners the total liability to Volkswagen

comes to roughly $20 billion. It is now considered the costliest corporate scandals in history

(Tabuchi, H. & Ewing, J. & Apuzzo, M., 2017).

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News reporting on this issue have been wide spread, but for the most part cookie cut with

information on how the scandal unfolded and how the government and consumer stakeholders

are reacting to it. Because of the magnitude of the scandal more focus has been given to the

incident than otherwise might have been given. At the break of the story, most news agencies

reported on the information in official press releases from VW. Here is an excerpt from an early

New York Times article on the subject: A limited number of gasoline-powered cars are

affected, said Eric Felber, a company spokesman, expanding the focus of Volkswagens crisis

beyond its diesel engines. It is the latest in a series of emissions revelations shaking the

company, raising questions about the quality of its internal corporate controls and its reputation

for engineering prowess, and undermining a carefully crafted image as a maker of efficient and

environmentally friendly cars. The latest problem will force the company to incur an estimated 2

billion euros, or about $2.2 billion, in possible financial penalties, a spokesman said, because of

tax breaks granted in Europe on cars with low carbon dioxide emissions (Ewing, J. & Bowley

G., 2015). In essence VW claimed that they just made a mistake on their reporting of the

emission numbers, and that there were engineering issues with their cars, avoiding any potential

culpability or revelation that this was deliberate. If it was not for the researchers who reported

the testing discrepancies to the California Air Resources Board and the EPA, the reporting most

likely would have not gone much farther than what was released by VW public relations.

One notable exception to the stories produced by a majority of news organizations was an

article written by Leonid Bershidsky who often writes columns for Bloomberg news. He seems

to believe that the scandal was overblown and for some odd reason his reported numbers of cars

affected and severity of the cheating are inconsequential and apparently not severe at all. When

the world is consistently states that millions of cars were affected, and the process needed to
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correct these cars is a major issue, some how he comes up with only 36,000 cars, which are

actually involved, and the problem can magically be solved by some very simple and

inexpensive means. He does not cite his sources, so it is unclear where he is getting his

information (Bershidsky, L., Dec 10, 2015).

When comparing this revelation to the one when Volkswagen was held accountable for

cheating emissions test back in 1973, news coverage of the incident was scant at best. Buried

deep in the New York Times July 24th 1973 edition was an article no more than five paragraphs

long covering the complaint filed by the EPA with the Justice Department. Here is an excerpt

from that article:

Volkswagen came under attack today on two issues, one involving pollution control

devices on its 1973 cars and the other involving the safety of its new vehicle called The Thing.

The Environmental Protection Agency announced it has forwarded to the Justice

Department for possible legal action the agency's finding that 25,000 1973 Volkswagens were

sold with unauthorized devices that bypassed emission control equipment under certain

conditions (The New York Times, July 24, 1973).

The results amounted to a small slap on the wrist. Essentially, other than the fact that

there are more sources of news, and the pace of news release has grown exponentially due to the

Internet and social media, the actual reporting of the scandal really has not changed that much in

the past 40 years.

Unless governments and the public set the bar for ethical standards high enough, car

companies and others will continue to break the law, knowing they can simply weather the

financial consequences and then keep doing what they are doing. This will require several things

to change. Testing standards must become more rigorous, difficult or impossible to predict and
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have better, independent oversight. Consequences must also contain two elements: Financial and

Legal. One of the aspects of scandals perpetrated by corporations that are repeated, is that there

are little to no legal consequences to those responsible within these companies. There is usually

a financial penalty, which often needs to be more severe to create a better level of deterrence, but

there must also be direct legal liability. Unless these changes are implemented, we will continue

to see these kinds of abuses of corporate power again and again and again. Because of the

unprecedented nature of the scandal that engulfed VW, several things are speculated to happen

that may change the course of how carmakers deal with government regulations regarding car

emissions according to Cosmin Laslau at luxresearchinc.com. First, Regulators will try to

smarten up, but will need better equipment (Laslau, C., Oct 2, 2015). As stated in this paper

earlier, governments must no longer rely on lab testing conditions to test car emissions. Any

predictable testing can and will be relatively easy to cheat on. Testing must be done to test real-

world performance when the vehicles are in motion in real traffic, rather than on a stationary

dynamometer. With the miniaturization of sensors and better analytical software, making this

change is easier than ever before (Laslau, C., Oct 2, 2015).

Second, VW will reconsider its clean vehicle portfolio strategy (Laslau, C., Oct 2,

2015). Many believe that this scandal may prove to be the final nail in the coffin for diesel as a

clean form of energy for cars. As a result, VW is now shifting its focus towards plug-in

hybrids and electric vehicles. Third, Automotive software will come under pressure to open

up (Laslau, C., Oct 2, 2015) Currently in the U.S. it is illegal to prevent independent repair

shops from fixing cars (Laslau, C., Oct 2, 2015). However, OEMs successfully lobbied

regulators to use the Digital Millennium Copyright Act (DMCA) to keep their software locked

up and proprietary (Laslau, C., Oct 2, 2015). Ironically, this allowed VW and other automakers
 Begun 15

to hide their cheating through this legal protection. Cosmin argues that the DMCA exception

for automotive software should be struck down, and replaced with a policy in line with right to

repair (Laslau, C., Oct 2, 2015). Finally, Diesel passenger sales in the U.S. will drop

drastically (Laslau, C., Oct 2, 2015). Although diesel passenger vehicles make up only 1% of

passenger vehicles and only 3% of all vehicles on the road (Laslau, C., Oct 2, 2015) with

increasingly stringent emission requirements and the failure of manufacturers like VW to

produce cars that can successfully follow these requirements, as well as the bad publicity and

fallout from the scandal, it is likely that consumers will make other buying choices moving

forward.

The VW emissions scandal has become a symbol of what is wrong with our system and

society. Corporate corruption has become so commonplace that it is easy to become complacent

and accepting that these things happen with no real drive to push for change. It is nearly

impossible to prevent every wrongdoing. However, if the right oversight and independence is

implemented and people within these companies are consistently held legally culpable then we

may have a better chance of reducing these problems. Like many, the first thing I thought to

myself when hearing about the emissions scandal and at the beginning of this paper was one of

here we go again, and where and when will the next one be. But after further review and

research I believe that the government is partly to blame and should also be held accountable.

One question we should be asking ourselves, does corporate America have too much

influence over government? I say absolutely. In some ways we should all bear some personal

responsibility when we do not vote in an election, when we do not take a few minutes to send our

local congressperson or senator a note pushing for more oversight on companies. How many

scandals will it take before consumers say enough is enough? I have seen a few positive signs
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towards this very thing as of late. There have been reports that criminal charges will be filed

against some of the executives at VW. Wells Fargo was recently caught in a scandal of their

own with employees creating fake accounts for customers without their approval. This led to

firings, huge financial penalties and retribution to the employee who was fired as a

whistleblower related to this matter. Let us hope that these are a few small steps in the right

direction. Let us hope that if we as consumers care just a little bit more about those who govern

and those who must follow the rules do so, we all benefit in the end.
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