Mobile Sources Face an Increased Risk of Agency Enforcement and Citizen Suits
On June 12, 2019, the US Environmental Protection Agency (US EPA) announced its seven enforcement and compliance assurance priority areas for fiscal years 2020-2023. One of the National Compliance Initiatives includes “Stopping Aftermarket Defeat Devices for Vehicles and Engines.” Specifically, the Agency expressed that it will have a focus on reducing aftermarket defeat device manufacture, sale, and installation across vehicle types.
Additionally, a recent case in the U.S. District Court for the District of Utah has the potential to broaden the reach of citizen suits under the Clean Air Act (CAA). The court permitted a group, the Utah Physicians for a Healthy Environment (UPHE), to bring a citizen suit against businesses and individuals engaged in the sale and repair of trucks for violations under 42 USC § 7522, including provisions regarding defeat devices. Section 7522 of the CAA, in part, prohibits any person manufacturing, selling, or offering to sell or install “any part or component intended for use with, or as part of, any motor vehicle or motor vehicle engine, where a principal effect of the part or component is to bypass, defeat, or render inoperative” emission-related devices or elements of design. Prior to this case, courts have restricted enforcement of violations under § 7522 to the federal government. By providing an avenue for enforcement through citizen suits, the district court’s approach expands the exposure manufacturers could face and may justify an additional layer of risk assessment for the industry.
The CAA’s citizen suit provision provides that citizens may commence a civil action for a “violation of (A) an emission standard or limitation under this chapter or (B) an order issued by the Administrator or a State with respect to such a standard or limitation.” Such an action may not proceed, however, “if the Administrator or State has already commenced and is diligently prosecuting a civil action in a court of the United States or a State to require compliance with the standard, limitation, or order. . . .” Historically, courts have interpreted the phrase “standard or limitation” to permit citizen suits only for air violations of stationary source emissions standards and certain other clear-cut violations. Violations under 42 USC § 7522 relating to the installation, sale, etc. of defeat devices, on the other hand, have traditionally been enforced only by government agencies because courts have interpreted the prohibitions in 42 USC § 7522 as not falling within “emission standards or limitations.”
Recently, however, in Utah Physicians for a Healthy Environment (UPHE) v. Diesel Power Gear LLC, et al., 2019 U.S. Dist. LEXIS 40545, the court considered a case where defendants allegedly violated 42 USC § 7522 of the CAA by tampering with emission control devices on diesel vehicles. Specifically, the petitioners claimed that the defendants “modified diesel trucks in violation of emissions limitations standards, sold parts designed to evade emissions standards, and sold illegally-modified trucks.” As a result, petitioners claimed these actions contributed to air pollution in the Wasatch Front and harm to members of UPHE. Chief Judge Shelby ultimately issued partial summary judgment to UPHE regarding its claims that the defendants violated the CAA and the Utah State Implementation Plan (SIP) regulations “relating to the installation, removal, operation, and sale of emission control devices on diesel vehicles.” In doing so, Judge Shelby potentially brought Section 7522 violations under the umbrella of CAA citizen suits.
A threshold question the court had to consider was whether or not UPHE had standing to bring such a suit. In context, even if other district courts permit such citizen suits in the future, plaintiffs will still have to establish standing. Judge Shelby analogized to Clean Water Act (CWA) cases in determining the standard to be used, and he stated that UPHE would have to show that “[d]efendants discharged a pollutant that causes or contributes to the kinds of injuries suffered by UPHE’s members in the Wasatch Front.” The petitioners met that burden, according to the court, by showing that defendants contributed NOx and particulate matter (PM) to air in the Wasatch Front. Judge Shelby noted that petitioners have standing to seek redress in the form of civil penalties, mitigation projects, and declaratory and injunctive relief, but not mandatory injunctive relief.
Other noteworthy aspects of the case include Judge Shelby’s analysis of corporate responsibility and passthrough sales. Judge Shelby distinguished the responsible corporate officer doctrine from the corporate veil and held that the “responsible corporate officer doctrine applies in CAA citizen enforcement suits.” In doing so, he referenced decisions in the Second and Eleventh Circuits that had applied the doctrine and held defendants personally liable under the CAA and the CWA. Regarding passthrough sales, the court declined defendants’ argument that selling vehicles already equipped with defeat devices did not rise to the level of selling such parts under Section 7522(a)(3)(B). Instead, Judge Shelby wrote that the “language plainly encompasses B&W Auto’s ‘as is’ sale of modified vehicles it knew or should have known to contain defeat emission parts.”
Although this case is not binding on other federal courts, the success of UPHE may encourage other citizen suits in the future for CAA violations under Section 7522. It also occurs at a time when agency enforcement in the context of aftermarket parts is on the rise. For example, in April 2019, US EPA settled with an automotive parts manufacturer and distributor for manufacturing and selling defeat devices on vehicles. Aftermarket parts companies, manufacturers, and other entities in the industry should assess their risk profile based on these recent developments.