NEW YORK (TheStreet) -- Volkswagen (VLKAY) stock closed down by 4.52% to $36.31 on heavy trading volume on Friday, after the U.S. Environmental Protection Agency issued a notice of violation of the Clean Air Act to the company for allegedly allowing its vehicles to have software that evades emission standards.

The EPA and the State of California said the company has been using a software that does not meet emission standards for certain air pollutants in four-cylinder diesel models of Volkswagen and Audi since 2009.

The regulator found that the vehicles emitted nitrogen oxides at up to 40 times the approved level when they were not being tested officially.

Volkswagen is liable for up to $18 billion in penalties for about 482,000 diesel models of Jetta, Beetle, Audi A3, Golf and Passat sold since 2008, Reuters reports.

"Put simply, these cars contained software that turns off emissions controls when driving normally and turns them on when the car is undergoing an emissions test," Cynthia Giles, assistant administrator for the EPA's Office of Enforcement and Compliance Assurance, said, Reuters added.

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