Citizen Suits in the Auto Sector for Alleged Defeat Devices? UPHE v. Diesel Power Gear

The decision also held that sellers of vehicles that already contain such illegal defeat devices (so-called “pass-through sales”) are also liable under the CAA’s defeat device provisions. Application of this decision might lead to an increase in the number of civil suits seeking monetary penalties and injunctive relief brought by environmental nonprofit organizations, citizen groups and others against companies operating in the aftermarket sector. Time will tell whether citizen litigants will seek to leverage this decision to pursue other companies in the auto sector, although countervailing appellate precedent not binding on this district court suggests the impact of the Utah decision may be limited.

The case is Utah Physicians for a Healthy Environment v. Diesel Power Gear LLC, et al, case number 2:17-cv-32. The plaintiff citizen group is a Utah-based nonprofit composed of members alleging adverse health effects from air pollution in the Wasatch Front region of Utah. Defendants include three businesses and four individuals that allegedly “modified diesel trucks in violation of emissions limitation standards, sold parts designed to evade emissions standards, and sold illegally-modified trucks.”

As a threshold matter, Judge Robert Shelby concluded that the CAA’s citizen suit provision authorizes suits for violations of “an emission standard or limitation,” which includes standards established under a State Implementation Plan (“SIP”). See 42 U.S.C. § 7604(a), (f). This is a potentially novel, and expansive, application of the CAA’s citizen suit provision. However, the opinion does not directly elaborate on the link between violations of an “emission standard or limitation” and the alleged violations of the Utah SIP. 

This decision comes at a time when citizen groups and environmental nonprofit organizations are primed to continue what they see as a “gap-filling” role in environmental enforcement in the face of what is perceived as President Donald Trump’s deregulatory agenda. Notwithstanding this view, federal mobile source enforcement and defeat device cases against vehicle manufacturers have led to recent high-profile settlements, and the Environmental Protection Agency (EPA) has indicated in its 2018-22 Strategic Plan that mobile source enforcement remains a top priority. Altogether, an expanded view of the citizen suit power as applied to mobile source defeat devices has the potential to produce even more litigation in what has already been a very active area in recent years.

Another important element of this decision is the Court’s ruling on “pass-through” vehicle sales. The Court rejected the defendants’ argument that a pass-through seller of vehicles that have already been modified with an illegal defeat device cannot be held liable for violating the CAA. The CAA makes it a violation “for any person to manufacture or sell, or offer 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 any device or element of design installed on or in a motor vehicle or motor vehicle engine….” 42 U.S.C. § 7522(a)(3)(B). Defendants argued that this section of the CAA should only be read only to prohibit the “sale or installation of parts or components meant to defeat emissions,” meaning that when vehicles are sold “as is,” the seller cannot be held liable for selling a defeat device. Slip op. at 18 (internal citations omitted). Crucially, Judge Shelby rejected this reading of the CAA as “untenable” and found that the plain language of the statute prohibits “the sale of an emissions defeat part ‘as part of’ a vehicle where the seller knows or should know the part is being ‘put to such use.’ ” 

Cutting against the recent Utah decision, however, is a 2018 U.S. Court of Appeals for the Ninth Circuit decision involving ongoing Volkswagen diesel emissions litigation. See In re Volkswagen “Clean Diesel” Marketing, Sales Practices, and Products Liability Litigation, 894 F.3d 1030 (9th Cir. 2018). There, the Ninth Circuit was deciding whether an individual could intervene in the litigation after EPA had initiated an enforcement action. To address this question, the panel analyzed whether the CAA’s prohibition on equipping vehicles with defeat devices, among other mobile source prohibitions, is the type of “emission standard or limitation” contemplated in the CAA’s citizen suit provision. The panel found these mobile source prohibitions are not. 894 F.3d at 1041 (“Neither the § 7602(k) definition [of “emission limitation” and “emission standard”] nor the § 7604(f) list of categories of ‘emission standard[s]’ and ‘emission limitation[s]’ encompasses the generic statutory prohibitions in § 7522”). This conclusion could be read to undermine one statutory basis for future citizen suits alleging installation of defeat devices in automobiles. However, elsewhere in the Ninth Circuit decision the panel recognizes a citizen’s right to sue for violation of a SIP — Judge Shelby explicitly found that the citizen suit was permissible in the Utah case because the plaintiffs alleged violations of the state SIP. 894 F.3d at 1042-43.

Despite this nonbinding and potentially countervailing case law from the Ninth Circuit, Judge Shelby’s decision in Utah — cutting against decades of the “prevailing view” that citizen suits apply only to stationary sources — will require further analysis of potential risks and mitigation strategies.