by Michael Ford
The recent news about EPA’s enforcement action against Volkswagen for alleged noncompliance with EPA’s emissions control requirements has shocked the vehicle industry and marks the beginning of an enforcement resolution process that has already severely impacted the company and its reputation, will take years to resolve, and could involve criminal prosecutions. The events are shocking because they involve a household name in the auto industry and a company that has been long-regulated by EPA’s mobile source emissions requirements. This high profile case will no doubt draw a great deal of attention to the relatively low profile regulatory world of mobile source emissions that relatively few business and attorneys are ever exposed to.
However, for the last decade or so, EPA has focused intense enforcement scrutiny on mobile sources, particularly those regulated engines and equipment imported from China. The bulk of these products have been off-road vehicles and equipment, such as ATVs, UTVs, off-road motorcycles, generators, and lawn and garden equipment. This initiative has caught numerous U.S. businesses off-guard, particularly in the retail sector, as EPA has often chosen to pursue U.S. retailers of these products, due to the difficulty often encountered in pursuing Chinese companies. It has come as an unpleasant surprise to unlucky U.S. retailers that their vehicle, equipment, or engine supplier has failed to meet EPA regulatory requirements, and an especially rude awakening when EPA seeks to hold the retailer or distributor, rather than the manufacturer, liable for what may be viewed as the failings of the foreign manufacturers. More than one U.S. company has been driven out of business due to EPA’s enforcement discretion for failures of the manufacturer and of a magnitude far less serious than the current allegations against Volkswagen. But such is the regulatory environment under the Clean Air Act for the mobile source emissions industry. Knowledgeable counsel, familiar with EPA’s enforcement initiative targeting imported engines and equipment, may be able to assist entities operating in or with questions about that regulatory space.