The US government is suing Fiat Chrysler, alleging that some diesel pick-up trucks and Jeep SUVs cheat on emissions tests.

Fiat Chrysler said in a statement on Thursday that it is “disappointed” with the Environmental Protection Agency assertions.

Volkswagen has suffered a setback in its efforts to emerge from the 10-month-old emissions-cheating scandal as California regulators rejected a recall proposal for 85,000 diesel-powered vehicles, raising the prospect that the German carmaker will have to buy them back.

California air regulators approved the US’s first statewide carbon fee on utilities, oil refineries and other polluting industries.