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DOJ Catch of the Week – Hyundai and Kia

Posted  November 7, 2014

By the C|C Whistleblower Lawyer Team

This week’s Department of Justice “catch of the week” goes to South Korea’s top two automakers Hyundai Motor Company and Kia Motors Corporation.  On Monday, the two companies agreed to pay a $100 million civil penalty to settle charges they violated the Clean Air Act by selling more than one million vehicles that will emit roughly 4.75 million metric tons of greenhouse gases in excess of what they certified to the Environmental Protection Agency (EPA).  It is the largest civil penalty in Clean Air Act history.  See DOJ Press Release.

According to the government, Hyundai and Kia sold close to 1.2 million cars and SUVs from model years 2012 and 2013 with design specifications relating to greenhouse gas emissions that did not conform to the specifications the companies certified to the EPA.  In addition, Hyundai and Kia allegedly gave consumers inaccurate information about the real-world fuel economy performance of many of these vehicles, overstating the fuel economy by one to six miles per gallon, depending on the vehicle.  Finally, the government charged the companies with understating the emissions of greenhouse gases by their fleets by approximately 4.75 million metric tons over the estimated lifetime of the vehicles.  The government’s allegations concern the Hyundai Accent, Elantra, Veloster and Santa Fe vehicles and the Kia Rio and Soul vehicles.

The EPA discovered these alleged violations in 2012 during audit testing with subsequent investigation revealing Hyundai’s and Kia’s flawed testing protocol led to inaccurately higher fuel economy ratings.  In addition to the monetary penalty, Hyundai and Kia will spend roughly $50 million on measures to prevent any future violations.  This will include reorganizing their emissions certification groups, revising test protocols, improving management of test data and enhancing employee training.  The companies will also forfeit 4.75 million greenhouse gas emission credits worth more than $200 million.  These are credits that can be used to offset emissions from less fuel efficient vehicle models or sold or traded to other automakers for the same purpose.

In announcing the settlement, EPA Administrator Gina McCarthy emphasized her agency’s renewed commitment to enforcing the agency’s greenhouse emissions regulations:  “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.  . . .  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.”

Tagged in: Catch of the Week, Environmental Fraud,