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From Products Liability Law Daily, May 24, 2017

DOJ sues Fiat Chrysler for alleged Clean Air Act violations

By Susan Engstrom

The Department of Justice, on behalf of the Environmental Protection Agency (EPA), has filed a civil complaint against Fiat Chrysler Automobiles alleging that the motor vehicle manufacturer violated the Clean Air Act by installing undeclared "defeat devices" in its diesel vehicles. According to the complaint, nearly 104,000 light-duty diesel vehicles sold by Fiat between 2013 and 2016 were equipped with the illegal devices, which cause a vehicle’s emission control system to perform less effectively during normal driving conditions than during federal emission tests, resulting in increased emissions of nitrogen oxides (NOx). The complaint further alleges that Fiat, FCA US LLC, V.M. Motori S.P.A., and V.M. North America, Inc. (collectively, Fiat) failed to disclose these devices in their EPA certification applications (U.S. v. FCA US LLC, May 23, 2017).

Clean Air Act. According to an EPA press release, the Clean Air Act requires vehicle manufacturers to obtain a certificate of conformity before introducing a vehicle into commerce, by demonstrating to the EPA that the vehicle will meet applicable federal emission standards to control air pollution. Manufacturers must disclose in their certification applications all auxiliary emission control devices (e.g., computer software that affects the performance of emission controls based upon operating parameters of the vehicle), justify the presence of any such devices, and explain why those that reduce the effectiveness of emission controls are not "defeat devices." Motor vehicles equipped with defeat devices cannot be certified.

Complaint particulars. The complaint alleges that Fiat equipped nearly 104,000 Ram 1500 and Jeep Grand Cherokee vehicles (model years 2014-2016) sold in the United States with at least eight software-based features that were not disclosed in Fiat’s applications for certificates of conformity and that affect the vehicles’ emission control systems. The undisclosed software features lessen the effectiveness of the vehicles’ emissions control systems during certain normal driving situations. This results in cars that meet emission standards in the laboratory and during standard EPA testing, but that exceed the allowable NOx emissions during normal driving conditions. The complaint alleges that each of these vehicles differs materially from the specifications provided to the EPA in the certification applications and, thus, the cars are uncertified in violation of the Clean Air Act. These allegations are consistent with those set forth in a notice of violation (NOV) that the EPA issued to Fiat in January 2017 [see Products Liability Law Daily’s January 12, 2017 analysis].

Following the issuance of the NOV, the EPA continued its investigation into the operation of the undisclosed software-based features. Based upon this investigation, the complaint alleges that one or more of these undisclosed software features, alone or in combination with the others, renders inoperative, bypasses, and/or defeats the vehicles’ emission control systems, which were installed to make the vehicles comply with Clean Air Act emission standards. In short, the complaint now alleges that the vehicles contain defeat devices.

NOx pollution. The EPA press release explained that NOx pollution contributes to the formation of harmful smog and soot, exposure to which is linked to a number of respiratory- and cardiovascular-related health effects as well as premature death. Children, older adults, people who are active outdoors (including outdoor workers), and people with heart or lung disease are particularly at risk for health effects related to smog or soot exposure. Nitrogen dioxide formed by NOx emissions can aggravate respiratory diseases, particularly asthma, and also may contribute to asthma development in children.

Relief sought. The complaint seeks injunctive relief and the assessment of civil penalties. Civil penalties include the following amounts: (1) for violations of Section 203(a)(3)(A) of the Clean Air Act: up to $37,500 per subject vehicle for each violation occurring between January 12, 2009, and November 2, 2015, and up to $45,268 per subject vehicle for each violation occurring after November 2, 2015; and (2) for violations of Section 203(a)(3)(B) of the Act: up to $3,750 per subject vehicle for each violation occurring between January 12, 2009, and November 2, 2015, and up to $4,527 per subject vehicle for each violation occurring after November 2, 2015.

The press release noted that the United States also filed a notice that it will request to transfer its case and fully participate in the pretrial proceedings now initiated in the related multi-district litigation in the Northern District of California. The EPA and the California Air Resources Board are continuing in their discussions with Fiat to bring the subject vehicles into compliance with the Clean Air Act and California law.

The case is No. 2:17-cv-11633-JCO-EAS.

Attorneys: Leigh P. Rendé, U.S. Department of Justice, for the United States. Darrell S. Cafasso (Sullivan & Cromwell LLP) and Joseph A. Eisert (King & Spalding LLP) for FCA US LLC, Fiat Chrysler Automobiles N.V. and VM Motori S.P.A.

Companies: FCA US LLC; Fiat Chrysler Automobiles N.V.; VM Motori S.P.A.; V.M. North America, Inc.

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