U.S. SETTLES GREENHOUSE GAS ENFORCEMENT CASE WITH HYUNDAI AND KIA

FROM:  U.S. JUSTICE DEPARTMENT 
Monday, November 3, 2014
United States Reaches Settlement with Hyundai And Kia in a Historic Greenhouse Gas Enforcement Case

The Department of Justice and the U.S. Environmental Protection Agency (EPA) announced a 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 and Kia will also forfeit 4.75 million greenhouse gas emission credits that the companies previously claimed, which are estimated to be worth over $200 million.  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.

“This unprecedented resolution with Hyundai and Kia underscores the Justice Department’s firm commitment to safeguarding American consumers, ensuring fairness in every  marketplace, protecting the environment, and relentlessly pursuing companies that make misrepresentations and violate the law,” said Attorney General Eric Holder.  “This type of conduct quite simply will not be tolerated.  And the Justice Department will never rest or waver in our determination to take action against any company that engages in such activities – whenever and wherever they are uncovered.”

“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 one to six miles per gallon, depending on the vehicle.  Similarly, they understated the emissions of greenhouse gases by their fleets by approximately 4.75 million metric tons over the estimated lifetime of the vehicles.

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.

In November 2012, Hyundai and Kia responded to the EPA’s findings by correcting the fuel economy ratings for many of their 2011, 2012 and 2013 model year vehicles and establishing a reimbursement program to compensate owners for increased fuel costs due to overstated fuel economy.

This case involves five different entities: Hyundai Motor Company, Hyundai Motor America, Kia Motors Corporation, Kia Motors America and Hyundai America Technical Center Inc.

The California Air Resources Board joined the United States as a co-plaintiff in this settlement, and will receive $6,343,400 of the $100 million civil penalty.