California Air Resources Board

Volvo Powertrain Corporation Case Settles for $14,409,599

This case concerns Volvo Powertrain Corporation’s (Volvo) Motion for Judicial Review of stipulated penalties demanded by the Air Resources Board (ARB) and by the United States Environmental Protection Agency (U.S EPA) pursuant to the terms of a 1998 Settlement and Consent Decree. ARB and U.S. EPA alleged that a Volvo subsidiary manufactured and distributed 8,364 model year 2005 non-road diesel engines that were certified for sale in California and the United States respectively, but did not meet the more stringent pull-ahead standards. In 2008, ARB and U.S.EPA jointly demanded $72 million in stipulated penalties available under the Agreement and Decree. After failing to resolve the matter through dispute resolution, in January 2009, Volvo filed a Motion for Judicial Review in the District Court. 

In April, 2012, the District Court issued a Decision that agreed with the governments’ interpretation of the pull-ahead requirements and stipulated penalty provision. The April 2012 opinion awarded the $72 million penalty to the United States under the Consent Decree. Volvo, U.S. EPA, and ARB agreed that the Judgment will be divided 80% to the United States and 20% to ARB ($14 million). The District Court entered Judgment, and Volvo appealed. 

The U.S. Court of Appeals, D.C. Circuit affirmed the District Court’s judgment in July, 2014, and denied Volvo’s Petitions for Rehearing and Rehearing En Banc in September, 2014. On December 22, 2014, Volvo petitioned the United States Supreme Court for a Writ of Certiorari. The Supreme Court denied certiorari on June 15, 2015, leaving the District Court’s judgment intact.

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