Volkswagen says it didn't lie about its emission systems, but U.S. regulators don't buy it.

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Volkswagen says it didn't lie about its emission systems, but U.S. regulators don't buy it.

— The California Air Resources Board (CARB) and the Environmental Protection Agency (EPA) have rejected Volkswagen's plan to fix over 500,000 cars that contain illegal emissions "defeat devices."

While VW has been moving forward with approved plans to recall millions of vehicles outside the U.S., the automaker knew U.S. vehicles would be a difficult challenge. The cars are equipped with illegal software that activates during emissions tests, then once back on the road the cars emit up to 40 times the legal standard of nitrogen oxide emissions.

In rejecting VW's plans, the automaker finds itself under the gun to find a way to repair the cars, all while facing hundreds of lawsuits in a California courtroom.

Volkswagen CEO Matthias Mueller probably didn't do his company any favors the day before the U.S. rejection when he flatly said Volkswagen had not lied about its cars.

After his speech at the North American International Auto Show in Detroit, Mr. Meuller spoke with National Public Radio (NPR) and when asked if VW had lied about the cars, Meuller said, "we didn't lie." He went on to blame the scandal on technical problems and a misunderstanding of American laws.

When challenged with questions about ethical decisions by Volkswagen, Mr. Meuller said he couldn't understand why people thought it was an ethical problem.

Saying the goal is to rebuild trust in the U.S., the CEO clearly was in "public relations" mode during his speech and that mode fell away during his interview with NPR. Mr. Meuller's words to NPR got the attention of his public relations staff at Volkswagen because the next day Meuller was again talking to NPR to clarify his previous comments.

He blamed his answers on the stress of the day and went on to say Volkswagen will take responsibility for its actions.

CARB wasn't impressed by Mr. Meuller's denials and responded with harsh words by saying the ordeal is the fault of the automaker because it chose to cheat on emissions tests and then covered it up for seven years. The agency also issued to VW a notice of 13 violations.

“They [Volkswagen] continued and compounded the lie and when they were caught they tried to deny it. The result is thousands of tons of nitrogen oxide that have harmed the health of Californians. They need to make it right. Today's action is a step in the direction of assuring that will happen." - CARB

A statement from the EPA said it fully agreed with CARB's stance and still awaits the day Volkswagen will bring the vehicles to compliance.

"EPA agrees with CARB that Volkswagen has not submitted an approvable recall plan to bring the vehicles into compliance and reduce pollution. EPA has conveyed this to the company previously."

The EPA and CARB said investigations continue as to how best to fix the cars and what penalties to assess.

CARB notes its rejection involves 2-liter VW cars only, as the recall plan for 3-liter cars hasn't been submitted by Volkswagen. The deadline for that submission is February 2, 2016.

Volkswagen 3-Liter Goodwill Package Offer

In the midst of rejections in the U.S., Volkswagen has agreed to extend its "goodwill package" offer to U.S. owners of 3-liter diesel cars, the same package previously offered to 2-liter owners.

Owners of 3-liter diesel vehicles can receive a $500 Volkswagen prepaid Visa card, $500 Volkswagen dealership card and free 24-hour roadside assistance for three years.

VW says accepting the offer will not waive the right to sue the automaker. For more information, visit www.vwdieselinfo.com/goodwill_package.

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