Hyundai, Kia settle Clean Air Act suit for $100 million

Hyundai, Kia settle Clean Air Act suit for $100 million

Another $200 million in lost greenhouse gas credits also lost.

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November 5, 2014

Washington, D.C. – The U.S. Environmental Protection Agency (EPA) and the U.S. Department of Justice today announced an historic settlement with the automakers Hyundai and Kia that will resolve alleged Clean Air Act violations based on their sale of close to 1.2 million vehicles that will emit approximately 4.75 million metric tons of greenhouse gases in excess of what the automakers certified to EPA.

The automakers will pay a $100 million civil penalty, the largest in Clean Air Act history, to resolve violations concerning the testing and certification of vehicles sold in America and spend approximately $50 million on measures to prevent any future violations. Hyundai announced Monday that its portion of the settlement would cost $56.8 million, putting Kia’s tab at about $43.2 million.

Hyundai and Kia will also forfeit 4.75 million greenhouse gas emission credits that the companies previously claimes. Automakers earn greenhouse gas emissions credits for building vehicles with lower emissions than required by law. These credits can be used to offset emissions from less fuel-efficient vehicle models or sold or traded to other automakers for the same purpose. The greenhouse gas emissions that the forfeited credits would have allowed are equal to the emissions from powering more than 433,000 homes for a year. The EPA estimates the value of those credits at $200 million, but there isn’t a clear market for such sales, so that estimate could be significantly off.

“Greenhouse gas emission laws protect the public from the dangers of climate change, and today’s action reinforces EPA’s commitment to see those laws through,” said EPA Administrator Gina McCarthy. “Businesses that play by the rules shouldn’t have to compete with those breaking the law. This settlement upholds the integrity of the nation’s fuel economy and greenhouse gas programs and supports all Americans who want to save fuel costs and reduce their environmental impact.”

The complaint was filed today jointly by the United States and the California Air Resources Board in the U.S. District Court for the District of Columbia. It alleges that the car companies sold close to 1.2 million cars and SUVs from model years 2012 and 2013 whose design specifications did not conform to the specifications the companies certified to EPA, which led to the misstatements of greenhouse gas emissions. These allegations concern the Hyundai Accent, Elantra, Veloster, and Santa Fe vehicles and the Kia Rio and Soul vehicles.

Additionally Hyundai and Kia gave consumers inaccurate information about the real-world fuel economy performance of many of these vehicles. Hyundai and Kia overstated the fuel economy by 1mpg to 6mpg, depending on the vehicle.

In order to reduce the likelihood of future vehicle greenhouse gas emission miscalculations, Hyundai and Kia have agreed to reorganize their emissions certification group, revise test protocols, improve management of test data and enhance employee training before they conduct emissions testing to certify their model year 2017 vehicles. In the meantime, Hyundai and Kia must audit their fleets for model years 2015 and 2016 to ensure that vehicles sold to the public conform to the description and data provided to EPA.

EPA discovered these violations in 2012 during audit testing. Subsequent investigation revealed that Hyundai’s and Kia’s testing protocol included numerous elements that led to inaccurately higher fuel economy ratings. In processing test data, Hyundai and Kia allegedly chose favorable results rather than average results from a large number of tests.

The California Air Resources Board will receive $6,343,400 of the $100 million civil penalty. The proposed consent decree is subject to a 30-day public comment period and court review and approval.

Source: EPA