Background

The emission of pollution - including carbon monoxide, oxides of nitrogen, and hydrocarbons - from cars, trucks and engines that go into other types of equipment (e.g., lawnmowers, generators and construction equipment) is regulated under Title II of the Clean Air Act, often referred to as the “mobile source” title because the sources of air pollution covered by this title are mobile. Air pollution from mobile sources accounts for more than half of the air pollution in the United States today.

The Environmental Protection Agency (EPA) sets emission limits for different classes of motor vehicles and engines. In order for a manufacturer to lawfully import or introduce into commerce in the United States vehicles or engines, the vehicles or engines must be covered by a Certificate of Conformity (like a license) issued for each model year demonstrating that the vehicle or engine will meet the applicable emission limits throughout its useful life. This is done by pre-certification emissions testing of one or more representative vehicles or engines.

Enforcement Actions

The Environmental Enforcement Section, on behalf of EPA has brought numerous actions against manufacturers that fail to comply with Title II requirements.

The Clean Air Act and the regulations adopted by EPA to implement Title II make it unlawful to import or introduce into commerce vehicles or engines that are not covered by a Certificate of Conformity. This includes situations:

• where a manufacturer does not apply for a Certificate at all;
• and situations where the vehicle or engine which a manufacturer claims is covered by a Certificate of Conformity does not in fact conform in all material respects to the design specifications in the certificate.

Absent a valid certificate there is no way for EPA to be assured that the particular vehicle or engine in fact will meet the emission limits.

Manufacturers also must properly label their engines, offer specified emission system warranties, and timely report emission-related defects to EPA so that EPA can determine if a recall is needed.

One recent action involving uncertified engines involved chainsaws imported from Taiwan. The U.S. alleged that the engines did not conform to the certificates and were therefore not certified.

Outcome: In addition to paying a $2 million civil penalty and implementing new procedures to make sure imported engines are properly tested and certified, defendants were required to perform projects that EPA estimated would more than offset the lifetime excess emissions expected from these chainsaws.

Another recent case involved a company that imported and sold almost 80,000 nonroad engines and equipment from China.  The U.S. alleged that the engines and equipment were not covered by the required emissions related certificates.

Outcome: In addition to agreeing to take actions to prevent future non-compliance and paying a $2 million civil penalty, the defendant agreed to implement projects to offset the pollution from the non-compliant engines.

In the largest vehicle and engine importation case brought by the U.S. both in number of vehicles and engines imported and penalty paid, the government alleged that defendants had imported and sold at least 241,000 illegal vehicles and engines.

Outcome: The defendants paid more than $5 million in civil penalties, and agreed to implement rigorous corporate compliance plans, to insure their future imports and sales meet Clean Air Act standards. One defendant also agreed to undertake projects to offset excess emissions.

Another recent action involved more than 590,000 highway and non-road engines that were shipped without the correct emissions controls. The U.S. also alleged the defendant failed to comply with emissions control reporting and engine-labeling requirements.

Outcome: The defendant recalled its non-compliant engines to install the correct emissions controls, paid a $2.55 million civil penalty, agreed to improve its reporting of emissions-related defects, and agreed to mitigate the effects of the excess emissions through permanent retirement of banked emission credits.

In 2005 and 2006 the United States brought actions against Volkswagen of America, Chrysler, and Mercedes-Benz USA for failing to report emissions-related defects involving thousands of vehicles.

Outcome: Each company paid in excess of $1 million in civil penalties and agreed to other relief to address the violations.

Under the Clean Air Act it is generally also unlawful for a manufacturer to equip its vehicles or engines with a “defeat device” which reduces the effectiveness of the emission control system. A defeat device often results in the vehicle or engine emitting more pollution than indicated in the pre-certification testing.

The largest action brought by the Department of Justice on behalf of EPA relating to this defeat device prohibition was the 1998 action against seven manufacturers of heavy duty diesel engines, representing 95 percent of the U.S. heavy duty diesel engine market. However, other significant defeat device cases include a 1995 action again General Motors involving hundreds of thousands of vehicles and a 1998 action against American Honda involving over one and a half million cars.

In each of these cases, the allegation was that the manufacturer equipped the vehicle or engine with a part or a computer code that was not activated when the engines were put through the pre-certification testing to ensure that they met emission limits. The allegation was thus that while the engines passed the pre-certification emissions testing, in actual use the vehicles emitted excess pollution.

Outcome: In the Honda case, Honda paid $12.6 million in civil penalties and was required to spend $4.5 million to implement projects to reduce pollution, and was required to perform additional work to reduce emissions from the affected vehicle population. In the GM matter, GM was required to pay an $11 million civil penalty, recall and retrofit the affected vehicles and spend up to $8.15 million on projects to offset the excess emissions.

More recently, the Section brought a very different kind of defeat device claim against Casper’s Electronics, the manufacturer and internet marketer of a vehicle aftermarket component known as an “oxygen sensor simulator.” We alleged that the device was designed to trick the car’s onboard diagnostic system into sensing that the car’s emission system was properly functioning (and therefore not trigger the dashboard check engine light) even if the car’s catalytic converter had been removed. Use of such a device would allow a vehicle owner to remove the car’s catalytic converter to increase performance without having that fact detected during emissions testing.

Outcome: In the settlement, in addition to paying a civil penalty, the settlement required the manufacturer to cease selling the devices and to recall and destroy the devices it had already sold to consumers.