Vehicle and Engine Importers to Pay Civil Penalty to Resolve Clean Air Act Violations

The Department of Justice and the U.S. Environmental Protection Agency (EPA) today announced a settlement with two former importers of highway motorcycles, recreational vehicles and small spark ignition engines. The defendants, Yuan Cheng International Group Inc. (YCIG) and NST Inc. (NST), located in Montclair, Calif., allegedly imported and sold vehicles and engines from China in violation of Clean Air Act requirements.

The settlement resolves allegations that, between 2006 and 2011, the companies imported and introduced into commerce 17,521 recreational vehicles, highway motorcycles and nonroad spark ignition engines without proper EPA certifications required under the Clean Air Act to prevent excess emissions of pollutants. Vehicles and engines that are not certified may be operating without proper emissions controls and can emit excess carbon monoxide and nitrogen oxides and cause respiratory illnesses, aggravate asthma and contribute to the formation of ground level ozone or smog. The settlement also resolves claims for failure to adequately respond to EPA’s requests for information and labeling violations under the Clean Air Act.

The settlement requires the companies and John Cheng and Jenny Yu, senior company executives, to pay a combined civil penalty of $50,000. This amount is based on the United States’ determination that the parties have a limited ability to pay a civil penalty in this matter. Both companies have ceased importing vehicles and engines and are now dissolved. In the fall of 2010, NST agreed to pay $250,000 to the state of California to resolve similar violations concerning the illegal sale of uncertified vehicles.

“We will continue to vigorously enforce the law to ensure that imported vehicles and engines comply with U.S. laws so that American consumers get environmentally sound products and violators do not gain an unfair economic advantage,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice. “By holding individuals personally accountable under the consent decree, this settlement shows not only that we will pursue companies who violate the law, but where appropriate, will take additional measures to ensure that individual executives who act on behalf of companies cannot repeat the same conduct under a new corporate identity.”

In addition, Mr. Cheng and Ms. Yu must enter into a compliance plan with EPA prior to any future importation, distribution, selling, or offering for sale of any products covered by the Clean Air Act. They must also provide EPA with notice prior to forming any U.S. business entity that engages in the importation, distribution, selling or offering for sale of any products covered by the Clean Air Act, or before individually engaging in such activities. Mr. Cheng and Ms. Yu may be liable for any additional penalties for any violations of the settlement agreement, including $25,000 per vehicle or engine imported, sold or distributed that is not in accordance with an EPA-approved compliance plan, and up to $5,000 per day for each failure to provide notice to EPA as mentioned above.

John Cheng (also known as Yuan Cheng) was the sole shareholder, director, president, secretary, chief financial officer and treasurer of the YCIG. NST was the corporate successor to YCIG after YCIG dissolved. Cheng’s wife, Jenny Yu, was the president, secretary, chief financial officer, one of two directors and a 50 percent shareholder of NST. Mr. Cheng was the other 50 percent shareholder of NST. Both Cheng and Yu are individually bound by the terms of the settlement and are personally jointly and severally liable for the liabilities and obligations arising from the consent decree.

The Clean Air Act prohibits any vehicle or engine from being imported and sold in the United States unless it is covered by a valid, EPA-issued certificate of conformity indicating that the vehicle or engine meets applicable federal emission standards. The certificate of conformity is the primary way EPA ensures that imported vehicles and engines meet emission standards. This settlement is part of an ongoing effort by EPA to ensure that all imported vehicles and engines comply with the Clean Air Act’s requirements.

The consent decree is subject to a 30-day public comment period and approval by the federal court. Once it is published in the Federal Register, a copy of the consent decree will be available on the Justice Department website at www.usdoj.gov/enrd/Consent_Decrees.html .