EU seeks more powers over national car regulations after Volkswagen scandal

By Alissa de Carbonnel

BRUSSELS (Reuters) - The European Union sought sweeping powers over national car regulations on Wednesday, aiming to prevent a repeat of Volkswagen's emissions test cheating scandal and sparking a tough debate as governments and industry resist change.

Under the proposed new rules, Brussels would be able to demand spot checks on vehicles, order recalls and impose penalties on carmakers of up to 30,000 euros ($32,600) per vehicle for failure to comply with environmental laws if no fine is being imposed by the member state.

The new plans would also authorise individual EU member states to recall cars in violation of regulations but approved by other members of the bloc, encouraging peer review.

The planned legislation is the strongest EU response yet to German carmaker Volkswagen's admission in September that it used software to cheat U.S. diesel admissions tests - a scandal that has shone a light on the EU's lax vehicle regulations.

"We have to make sure that it never happens again," European Commission Vice-President Jyrki Katainen said.

Under existing rules on vehicle or "type" approval, Germany's KBA authority alone has the power to both approve new Volkswagen cars and to revoke those licences, though the vehicles can be sold across the EU single market.

So far, no EU national authority has imposed a penalty on Volkswagen, even though it has said that about 8.5 million of the 11 million vehicles fitted with banned software are in the region.

Critics view this as a sign of collusion between governments and the auto industry, a major source of jobs and exports in the bloc's biggest economies of Germany and France.

If the new legislation is approved by EU states and the European Parliament, future breaches would result in possible multi-billion-euro costs for manufacturers.

"It will be attacked heavily by the member states because it boils down to giving away sovereignty to Brussels," Green member of parliament Bas Eickhout said.

COSY TIES?

The reform seeks to introduce a funding pool from which testing agencies are paid, with the aim of breaking any cosy relationships between carmakers and the laboratories they hire to test new vehicles.

Under the new plan, the EU executive would be able to fine or suspend the licences of testing bodies it deemed too lax.

Brussels is also trying to close a loophole whereby testing for toxic nitrogen oxide (NOx) pollutants is held in artificial rather than real road conditions. But that legislation faces opposition in the European Parliament because the current proposal would still allow emissions that are more than twice the level of official limits.

Critics say the plans were watered down after some of the EU's 28 member states sought to protect their car industries.

The new reforms will likely meet resistance from nations such as Britain, which generally opposes taking powers away from national authorities, and Germany, with its large car industry.

"By launching a power grab with a new army of EU clipboard inspectors, the European Commission is undermining its own objective," said Daniel Dalton, a British conservative member of the European Parliament.

The proposals stop short of creating an independent EU-wide regulator along the lines of the U.S. Environmental Protection Agency, which uncovered Volkswagen's wrongdoing.

In a direct attempt to guard against a repeat, however, they mandate automakers to provide access to software protocols.

Acknowledging the need for some changes to the current system, German Transport Minister Alexander Dobrindt told the Handelsblatt newspaper: "We need optimised type approval rules to be applied the same way in Europe."

"We do not need a new European authority," he added.

Dobrindt said his ministry had plans to boost the independence of technical testing services from automakers.

So-called "defeat device" software to manipulate emissions tests has been illegal in the EU since 2007. Nevertheless, the European Commission's own research showed that NOx pollution by vehicles on the road was four times higher than in tests.

In the push for transparency, the proposals call for each new vehicle to come with a certificate citing levels of toxic NOx emissions.

"For years consumers have been unable to rely on carmakers' official fuel consumption figures," said Monique Goyens, head of the European Consumer Organisation. "The Commission plans are a big step in the right direction."

Altering carbon dioxide emissions in cars can also be achieved through a variety of engineering tricks to cut fuel usage, such as switching off air conditioning and improving aerodynamics by removing wing mirrors and taping up doors.

($1 = 0.9200 euros)

(Reporting by Mark Potter)