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California Air Resources Board Urges Self-Disclosure Of Non-Compliant Software And Regulatory Violations By December 31, 2020 – Environment – United States

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California Air Resources Board Urges Self-Disclosure Of Non-Compliant Software And Regulatory Violations By December 31, 2020

16 October 2020

Gibson, Dunn & Crutcher

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On October 14, 2020, the California Air Resources Board (CARB)
issued a letter to light-, medium-, and
heavy-duty vehicle and engine manufacturers encouraging industry to
report any hardware or software changes made to their vehicles or
engines if such changes (i) affect emissions and (ii) were not
previously or properly disclosed to CARB. The letter indicates that
the agency is in the process of selecting new targets for
investigation and is implementing new enhanced testing to identify
potential violations. In connection with this forthcoming
enforcement initiative, CARB urges industry to proactively and
voluntarily disclose any violations under California mobile source
regulations before the end of this year. Companies that do so could
secure a reduction in penalties ranging from 25% to 75%, depending
on the relevant facts and circumstances of the case.

Background. California law,
like the federal Clean Air Act, requires manufacturers to disclose
all auxiliary emission control devices (“AECDs”) at the
time a particular vehicle or engine is submitted for certification.
California and federal law also prohibit the installation of any
AECD that reduces the effectiveness of the emission control system
under conditions which may reasonably be expected to be encountered
in normal vehicle operation and use, unless certain exceptions
apply. Such functions are referred to as defeat devices. These
requirements, or other reporting requirements, apply to a number of
mobile source categories including light-duty vehicles, heavy-duty
on-road engines and vehicles, highway motorcycles, off-road
compression ignition engines, off-road small and large
spark-ignition engines, off-highway recreational vehicles,
spark-ignition marine engines, and evaporative systems for off-road
small and large equipment and marine watercraft.

CARB’s October 14 letter builds upon, and incorporates by
reference, a September 25, 2015 letter sent by CARB to light-,
medium-, and heavy-duty vehicle and engine manufactures in the wake
of the Volkswagen diesel emissions scandal related to its
installation of defeat devices in its 2.0L and 3.0L diesel vehicles
and reporting issues related thereto. That letter reiterated
manufacturers’ obligations to disclose all AECDs at the time of
certification, and informed industry of CARB’s intent to begin
implementing a robust testing program in support of CARB’s
enforcement efforts designed to screen for undisclosed AECDs and
defeat devices.

CARB’s letter explains that through this expanded testing
program, since 2015, it has achieved multiple settlements with
vehicle and engine manufacturers. It further notes that certain
manufacturers have “stepped forward” to disclose
potential violations, and it encourages others to make voluntary
disclosures of any potential violations with respect to the
applicable regulatory requirements.

Finally, the letter states that CARB currently is identifying
new targets for investigation and plans to open a new,
state-of-the-art testing laboratory in 2021, which will better
enable it to identify violations related to vehicles and engines
sold in California.

Potential Violations Highlighted in the
Letter.
The letter lists the specific violation types
CARB is presently investigating and for which it encourages
manufacturers to make proactive reports:

  • Undisclosed AECDs
  • Defeat Devices
  • Unreported Running Changes and Field Fixes
  • Failure to Report or Address Warranty Claims
  • Manufacturer In-Use Compliance Testing and Manufacturer’s
    Self-Testing
  • Failure to Report Corrective Actions that Should be Under a
    CARB Approved Recall
  • Submission of False Data or Non-Compliance with Regulatory Test
    Requirements
  • Failure to Meet OBD Requirements
  • Failure to Disclose Adjustable Parameters that May Affect
    Emissions

CARB’s Request for
Self-Disclosure.
The letter concludes by urging
manufacturers to voluntarily disclose any potential violations in
the above-listed categories by the end of 2020, and reiterates
CARB’s authority to enforce California’s emissions laws
against noncompliant manufacturers, including through the
assessment of maximum penalties of $37,500 per mobile source or
engine, per identified violation. CARB states that voluntary
disclosure “will trigger a reduction in penalties,”
whereas failure to make a voluntary disclosure could result in
future enforcement actions or influence ongoing investigations by
CARB.

CARB’s letter states that this initiative reflects
California’s ongoing efforts to meet existing and future air
quality targets and to protect affected communities in the state
from the effects of exposure to air pollution.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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