The Environmental Protection Agency’s (EPA) issuance of a notice of violation last week to Volkswagen AG, Audi AG, and Volkswagen Group of America, Inc. (collectively Volkswagen) appears to have further validated EPA’s and other federal agencies’ growing reliance on independent studies to pursue alleged violators of federal law.

In our experience, such studies normally form the basis for nongovernmental organizations to bring lawsuits against our clients, but businesses should be concerned that EPA’s apparent adoption of such research could have the effect of putting the agency’s stamp of approval on such work. This could be significant in the administrative law context, where the courts already are required to grant broad deference to the finding of the agency.

Volkswagen is alleged to have violated express provisions of the federal Clean Air Act and EPA regulations by installing “defeat devices” and selling vehicles whose design was not covered by a valid certificate of conformity. Volkswagen could face civil penalties up to $18 billion as a result of these alleged violations. In addition, the EPA has stated that it expects to compel Volkswagen to recall the affected vehicles to remedy the noncompliance.

According to EPA, the automaker violated Section 203(a)(3)(B) of the Clean Air Act by installing software in approximately 500,000 vehicles equipped with its popular 2.0-liter TDI clean diesel engine to help those vehicles circumvent EPA tailpipe emission control requirements. More specifically, EPA alleges that the vehicles’ software can detect when the vehicle is undergoing pre-production EPA emissions-compliance testing under prescribed laboratory-simulated road conditions, and then activate particular operating parameters designed to produce compliant emissions results. According to the notice, however, when operated under normal road conditions, that software employs “defeat devices” that reduce the effectiveness of the emissions-control devices and result in emissions of nitrogen dioxide between 10 and 40 times higher than permitted.

This is the second time in recent months that an automaker’s onboard computer systems have come under fire as a result of independent research. Like the recent hacking controversy sparked by the discovery of serious vulnerabilities in vehicle infotainment systems by automotive security researchers, the violations here were first discovered by independent researchers. The enforcement action against Volkswagen arose after the International Council on Clean Transportation, an independent nonprofit organization, commissioned a study by West Virginia University after if noticed discrepancies in European testing data in 2014.

According to the EPA, the study found “significantly higher in-use emissions from two light duty [Volkswagen] diesel vehicles.” As a result, the EPA and California Air Resources Board launched an investigation into the increased emissions from the Volkswagen vehicles, which culminated in last week’s notice of violation.

In the current climate of increased scrutiny on automakers, EPA and National Highway Traffic Safety Administration have demonstrated a receptiveness to the findings of independent researchers that is likely to lead to an increase of such studies by advocacy groups. This development adds an additional level of complexity to regulatory compliance for automakers.

Ballard Spahr’s Product Liability and Mass Tort Group and Environment and Natural Resources Group have significant shared experience concerning federal and state emissions regulations. Additionally, Ballard Spahr’s Product Liability and Mass Tort Group has substantial experience defending class action warranty and consumer fraud cases, including in the automobile context. Ballard Spahr’s Environment and Natural Resources Group has extensive experience preparing public comments on national rulemakings. The Group also advises on national and regional compliance, permitting, relevancy, development, business planning, and contamination matters arising in connection with environmental and natural resources laws and claims, and includes a particular focus on climate change and sustainability.

For more information, please contact Harry Weiss at 215.864.8129 or weiss@ballardspahr.com, Neal Walters at 856.761.3438 or waltersn@ballardspahr.com, or Casey G. Watkins at 856.761.3455 or watkinsc@ballardspahr.com.


Copyright © 2015 by Ballard Spahr LLP.
www.ballardspahr.com
(No claim to original U.S. government material.)

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, including electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the author and publisher.

This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.

Related Practices

Class Action Litigation
Environment and Natural Resources
Litigation
Product Liability and Mass Tort