Good morning, and thank you all for being here. I am joined today by Administrator Gina McCarthy of the Environmental Protection Agency. We are here to announce a historic settlement under the Clean Air Act – a settlement that will send an unmistakable message to automakers around the world: that they must comply with U.S. law; that they must be forthcoming with the EPA about critical certification requirements; and that the U.S. Department of Justice will never rest in our determination to protect American consumers.
We are announcing today that the United States has filed a complaint in federal district court alleging that Hyundai Motor America, Kia Motors America, and related entities violated the Clean Air Act by selling roughly 1.2 million cars – throughout the United States – based on inaccurate representations of the vehicles’ performance and emissions.
For context, beginning in 2012, Hyundai and Kia, like all other light duty car makers, had to meet certain greenhouse gas emission limits. These emissions correlate with the fuel efficiency of a vehicle – because, in essence, the more fuel efficient your car happens to be, in miles per gallon, the less greenhouse gas it emits. The Clean Air Act requires car manufacturers to test representative vehicles in order to ensure that they meet emission standards. These manufacturers then must apply to the Environmental Protection Agency for what is called a Certificate of Conformity.
Through this process, car companies provide assurances to the EPA that any car like the test vehicle will also meet the necessary emission standards. In our complaint, we maintain that Hyundai and Kia misrepresented to the EPA a key vehicle characteristic – known as the “road load force” – of each of six car models when it applied for certificates for those vehicles.
Because they used inaccurately low numbers to demonstrate compliance with emissions standards – cherry-picking data and conducting tests in ways that did not reflect good engineering judgment – Hyundai and Kia calculated higher fuel economy and lower greenhouse gas emissions than these vehicles actually have. The companies then reported the lower greenhouse gas emission numbers to the EPA in their applications. They claimed more GHG emission credits than they were entitled to. And they touted these inaccurate fuel economy statistics to consumers.
Because of the misrepresentation of the road load force, we allege that the Hyundai and Kia vehicles in question are uncertified. And each uncertified vehicle that was sold constitutes a separate violation of the Clean Air Act – because this important law fundamentally depends on accurate testing and reporting by car makers. Any company that misrepresents the performance of their test vehicles risks harming human health and the environment, either by causing more pollution than the law allows, or, as happened in this case, by claiming greenhouse gas emission credits they did not earn – to the tune of roughly 4.75 million metric tons. Without this enforcement action, Hyundai and Kia could have used or sold those emission credits later.
Violations like this also compromise key safeguards that preserve fair and open competition in the marketplace by putting other car makers at a competitive disadvantage. Companies that comply with the law may spend more to achieve emission characteristics than those that misrepresent the performance of their vehicles. They may see their sales affected by the claims of other companies regarding, for example, better fuel economy. More importantly, all consumers have the right to know that the cars they buy actually have the characteristics that are represented to the EPA – a basic compact that Hyundai and Kia flagrantly violated in this case.
Under the historic settlement we announce today, Hyundai and Kia will remedy their conduct by doing three things. First, they will pay a civil penalty of $100 million – the largest civil penalty ever secured under the Clean Air Act. This will send a strong message that cheating is not profitable – and that any company that violates the law will be held to account. Second, Hyundai and Kia will forfeit the greenhouse gas credits that the companies wrongly claimed based on their inaccurate reporting. Our settlement will require them to relinquish 4.75 million metric tons’ worth of credits, which could be valued at hundreds of millions of dollars. And finally, Hyundai and Kia will be required to implement rigorous new procedures – including training and enhanced audit testing of their vehicles – to prevent this kind of violation from happening again.
This unprecedented resolution 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. We are pleased to be joined in this action by the California Air Resources Board. This announcement illustrates that this type of conduct quite simply will not be tolerated. And the Justice Department and our partners will never rest or waver in our determination to take action against anyone who engages in such activities – whenever and wherever they are uncovered.
I’d like to thank everyone who made this resolution possible – particularly Ben Fisherow, Karen Dworkin and Jason Barbeau, of the Environment and Natural Resources Division’s Environmental Enforcement Section. At this time, I’d like to introduce Gina McCarthy, who will provide additional details on today’s announcement.