Punch It Performance Clean Air Act Settlement

(WASHINGTON, D.C.) - On January 10, 2020, the United States Department of Justice and the United States Environmental Protection Agency (EPA) announced a settlement with defendants Punch It Performance and Tuning, Michael Paul Schimmack, and other companies and individuals close to Schimmack. The United States filed a Complaint against these Defendants on June 14, 2019, in the United States District Court for the Middle District of Florida, alleging violations of the Clean Air Act associated with the manufacture and sale of aftermarket defeat devices. The Complaint also alleged that certain defendants fraudulently transferred assets under the Federal Debt Collection Procedures Act. 

Prior to reaching settlement, Defendants stopped manufacturing and selling all products the government alleges violate the Clean Air Act. Defendants will pay a civil penalty of $850,000 due to their limited financial ability to pay a higher penalty. In order to pay this penalty, Defendants have represented that they will sell residential real estate properties that they purchased with profits made from the manufacture and sale of defeat devices.

This case resolution comes at the outset of a new National Compliance Initiative for the EPA, entitled Stopping Aftermarket Defeat Devices for Vehicles and Engines. EPA is vigorously pursuing enforcement against those who violate the defeat device and tampering prohibitions of the Clean Air Act, including recovering ill-gained profits when violators attempt to avoid paying a civil penalty for such violations. For examples of other similar civil judicial settlements, see the EPA’s recent settlements with Performance Diesel Inc. and Derive Systems. To report a violation, send an email to [email protected] or submit the information through the EPA’s website.

On this page:

• Overview of Defendants
• Violations
• Injunctive Relief
• Pollutant Impacts
• Health Effects and Environmental Benefits
• Civil Penalty
• Comment Period
• Contact

Overview of Defendants

Defendants are the following parties: Punch It Performance and Tuning LLC, D N S Enterprises of Florida, Inc., and REI Research Group, Inc. (collectively, the “Punch It Entities”); Michael Paul Schimmack, Vanessa Schimmack, and Lori Brown. Schimmack was the President of, a principal of, and sole director of Punch It Performance and Tuning and D N S Enterprises. The Punch It Entities and Schimmack manufactured and sold aftermarket products designed for use with certified motor vehicles and motor vehicle engines – primarily, diesel pickup trucks.

After the EPA inspected one of these companies and notified Schimmack of potential violation of the Clean Air Act for the manufacture and sale of defeat devices, Schimmack administratively dissolved the company and led the EPA to believe that he was no longer manufacturing and selling defeat devices. Yet, Schimmack continued to manufacture and sell the same or similar products under the name of REI Research Group.

Violations

The Complaint alleges five separate claims for relief. The first three claims seek civil penalties and injunctive relief for numerous violations of the defeat device prohibition in Section 203 of the Clean Air Act, 42 U.S.C. § 7524, related to the Punch It Entities’ and Schimmack’s manufacture and sale of aftermarket defeat devices.

The Punch It Entities and Schimmack manufactured and sold more than 20,000 aftermarket defeat devices. These products were designed to bypass, defeat, or render inoperative elements of design that were installed on motor vehicles and motor vehicle engines by original equipment manufacturers (i.e., “car manufacturers”) in order to comply with Clean Air Act emission standards. The aftermarket products at issue include hardware components, such as straight pipes, and electronic tuning software (i.e., “tunes”) that enables the removal of filters, catalysts and other critical emissions controls. These tuning products also reprogrammed the engine’s fueling strategy to increase power, fuel economy, or both, but at the expense of higher emissions of regulated air pollutants. Defendants’ aftermarket products were designed for use with numerous models of vehicles, including vehicles manufactured by Ford, General Motors, and Fiat Chrysler. Accordingly, the EPA alleges that each act of manufacturing and each sale constitutes a violation of Section 203(a)(3)(B) of the Clean Air Act, 42 U.S.C. § 7524(a)(3)(B).

The fourth and fifth claims alleged in the Complaint seek recovery, under the Federal Debt Collection Procedures Act, 38 U.S.C. § 3301 et seq., of the value of assets fraudulently transferred to Schimmack, his wife, and his sister. The Complaint asserts that after the EPA provided notice in 2016 of its intent to take enforcement action, the corporate defendants transferred real estate and large sums of money to one or more of the individual defendants in their personal capacities. The United States alleges these were fraudulent transfers under the Federal Debt Collection Procedures Act.

Injunctive Relief

Defendants have represented to the United States that, as of March 10, 2017, they have stopped manufacturing and selling any part or component, including but not limited to tunes, software, or programming (and devices on which such tunes, software or other programming are loaded), a principal effect of which is to bypass, defeat, or render inoperative a motor vehicle emission control device of emission-related element of design.

Under the Consent Decree, Defendants will also do the following:

• Surrender all intellectual property to the EPA, including programming, files, software, source code, design, instructions, or other information that could be used to manufacture tunes (CD ¶ 20);
• Certify that no violative products have been manufactured or sold since March 2017 (CD ¶ 21);
• Certify that no intellectual property has been transferred to any party other than the EPA (CD ¶ 21); and,
• Refuse to provide technical support or honor warranty claims for products subject to the Consent Decree (CD ¶ 18).

Pollutant Impacts

Today’s vehicles emit far less pollution than vehicles of the past. This is made possible by careful engine calibrations, and the use of filters and catalysts in the exhaust system. Aftermarket defeat devices undo this progress, and pollute the air we breathe. The severity of the emissions impact of these devices depends on the original vehicle design, and the extent of the vehicle modifications. EPA testing has shown that a truck’s emissions increase drastically (tens or hundreds of times, depending on the pollutant) when its emissions controls are removed. Even when the filters and catalysts remain on the truck, EPA testing has shown that simply using a tuner to recalibrate the engine (for the purpose of improving fuel economy) can triple emissions of NO_x.

Here, Defendants’ defeat devices increased air pollution formed in the engine during combustion. They also enabled the removal of the filters, catalysts, and other emissions control systems that are necessary to treat air pollution formed in the engine before it is emitted into the ambient air.

Health and Environmental Benefits

The Clean Air Act aims to reduce emissions from mobile sources of air pollution, including NO_x. Mobile sources of air pollution contribute approximately 58% of the nation’s oxides of nitrogen emissions. EPA testing demonstrates that installing aftermarket parts can result in increased NO_x emissions from mobile sources.

NO_x emissions pose significant health and environmental concerns. Oxides of nitrogen form when fuel burns at high temperatures. Oxides of nitrogen can travel long distances, causing a variety of health and environmental problems in locations far from their emissions source, including ozone and smog. Oxides of nitrogen also contribute to the formation of particulate matter (PM) through chemical reactions in the atmosphere, and particulate matter can cause asthma, difficult or painful breathing, and chronic bronchitis, especially in children and the elderly. In addition to these health effects, particulate matter generally causes damage to, and soiling of, commonly used building materials and culturally important items such as statues and works of art. It is also a major cause of substantial visibility impairment in many parts of the United States.

The key health effects categories associated with ambient particulate matter include premature mortality, aggravation of respiratory and cardiovascular disease, aggravated asthma and acute respiratory symptoms including aggravated coughing and difficult or painful breathing, chronic bronchitis and decreased lung function that can be experienced as shortness of breath. Symptoms of immunological effects such as wheezing and increased allergenicity have also been observed. Diesel exhaust particulate matter is of special concern. The EPA’s Clean Air Scientific Advisory Committee has concluded that diesel exhaust is likely carcinogenic to humans.

Civil Penalty

PIP will pay a civil penalty of $850,000, as the company has a limited financial ability to pay a higher penalty. In order to pay this penalty, Defendants have represented that they will sell residential real estate properties that they purchased with profits made from the manufacture and sale of defeat devices.

Comment Period

The proposed settlement, lodged in the U.S. District Court for the Middle District of Florida, is subject to a 30-day public comment period and final court approval. During the public comment period, the consent decree may be examined and downloaded at Department of Justice website. 

For more information, contact:

Lauren Tozzi, Attorney-Advisor
U.S. Environmental Protection Agency (2242A)
1200 Pennsylvania Ave., N.W.
Washington, DC 20460
(202) 564-4904
[email protected]