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EPA ISSUES SECOND NOTICE OF VIOLATION TO VW FOR 2014-2016 VEHICLES, INCLUDING AUDI, PORSCHE

The saga involving Volkswagen’s alleged use of illegal “defeat devices” in a number of its vehicles continued on Monday November 2, 2015, with EPA issuing a second Notice of Violation (NOV) to several of Volkswagen’s American entities.  Notably, unlike a NOV issued in mid-September the Notice was issued to not just Volkswagen and Audi, but to five companies in the VW organization, including Porsche Cars North America, Inc.  The earlier notice referenced VW’s violations in model years 2009-2015 vehicles with certain 2.0 liter engines.  The second NOV now adds a number of other vehicles as potentially violating federal law, including light diesel vehicles with 3.0 liter engines in model years 2014-2016.  This second set of vehicles is also alleged to emit at least nine (9) times the amount of Nitrogen Oxide (NOx) permitted by EPA regulations.

Subchapter II of the Federal Clean Air Act, 42 U.S.C. § 7521 et seq., authorizes EPA to regulate pollution from mobile sources, including cars, trucks, airplanes, and off-road vehicles.  EPA uses its authority under this section to cap emissions of certain criteria pollutants from new vehicles and certain vehicle components.  EPA also imposes requirements for manufacturers wishing to introduce vehicles for sale in the United States, requiring that they first obtain a “Certificate of Conformity” for the vehicle from EPA.  The application process includes a requirement that the applicant submit a list of any Auxiliary Emission Control Devices (“AECDs”) installed on the vehicle.  AECDs are:

any element of design which senses temperature, vehicle speed, engine RPM, transmission gear, manifold vacuum, or any other parameter for the purpose of activating, modulating, delaying or deactivating the operation of any part of the emission control system.

See 40 C.F.R. § 86.1843-01.  The applicant must also explain why each of these is not a “defeat device,” or a device that reduces the effectiveness of the emissions control system under normal conditions of use, in a manner not approved by EPA.  See id.

EPA’s allegations against VW involve the company’s installation of sophisticated software to initiate emissions control during testing.  That same software would use disable aspects of the emissions control system during normal road use.  The vehicle may have been able to detect whether it was being tested based upon how long it ran, how the vehicle was being steered, and atmospheric pressure conditions.  The “road calibration” and “switch” features of the software are alleged by EPA to be AECDs that were never disclosed to the Agency during the COC application process.

While seemingly a sophisticated effort by VW, it appears that EPA’s allegations against the company mirrors similar prosecutions of manufacturers in the past.  Since 1972, EPA has notified manufacturers of the illegality of “defeat devices” designed to disable vehicle emission control systems.  A similar enforcement effort as that against VW was also been undertaken against General Motors, who was fined $11 million in 1995 for the use of defeat devices resulting in excess Carbon Monoxide (CO) emissions.  Civil penalties for the alleged violations at issue in the VW case range as high as $37,500 per violation, 42 U.S.C. § 7524, 40 C.F.R. § 19.4, in addition to possible criminal prosecution for knowing misrepresentations to EPA, and for tampering with certain emission control components.  See 42 U.S.C. § 7413.

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