Jihad Adbul-Mumit v. Alexandria Hyundai, LLC
Filing
OPINION ATTACHMENT. [17-1582, 17-1587, 17-1611]
Hyundai and Kia Clean Air Act Settlement | Enforcement | US EPA
Appeal: 17-1582
Doc: 72
Filed: 07/13/2018
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Hyundai and Kia Clean Air Act
Settlement
(Washington, DC - November 3, 2014) – Automakers Hyundai and Kia will pay a $100
million civil penalty to resolve alleged Clean Air Act violations based on their sale of
more than 1 million vehicles that collectively will emit approximately 4.75 million metric
tons of greenhouse gases (GHG) in excess of what the automakers certified to the EPA.
The companies will forfeit GHG emission credits in order to put the companies in the
place they would have been had they accurately reported the GHG emissions from
these vehicles in the first place. The companies also will take measures to prevent
future violations. On November 3, 2014, the EPA and the U.S. Department of Justice
(DOJ) announced this settlement, and lodged a consent decree embodying the
settlement in the United States District Court for the District of Columbia. The California
Air Resources Board joined the United States as a co-plaintiff in this settlement.
Defendants
Clean Air Act Certification Requirements
Alleged Violations
Injunctive Relief
Health and Environmental Benefits
Civil Penalty
Comment Period
Contacts
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Settlement
Resources
Reference News
Release
Consent Decree
and Complaint
Defendants
Hyundai Motor Company is a light-duty motor vehicle manufacturer headquartered
in Seoul, South Korea. In 2012, the company manufactured over 4.4 million cars and
SUVs, and sold approximately 19 percent of them in North America. The company
owns a portion of Kia Motors Corporation, and each belong to Hyundai Motor Group,
which is one of the world’s largest automakers.
Hyundai Motor America is the American sales, marketing, and distribution
subsidiary of Hyundai Motor Company. This company is based in Fountain Valley,
California.
Kia Motors Corporation is a light-duty motor vehicle manufacturer headquartered in
Seoul, South Korea. In 2012, the company manufactured over 2.7 million cars and
trucks, and sold approximately 20 percent of them in North America. Again, Hyundai
Motor Company owns a portion of Kia Motors Corporation. Importantly for this
enforcement case, both companies utilize the same corporate group to perform
vehicle emission testing for EPA certification.
Kia Motors America is the American sales, marketing, and distribution subsidiary of
Kia Motors Corporation. The company is based in Irvine, California.
Hyundai America Technical Center, Inc. handles design and engineering matters
for North American Hyundai- and Kia-brand vehicles. This company is based in
Superior Township, Michigan.
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Clean Air Act Certifcation Requirements
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The Clean Air Act and its regulations aim to protect human health and the environment,
in part, by reducing harmful emissions from mobile sources of air pollution. The United
States’ allegations here concern motor vehicles, specifically light-duty vehicles like cars
and SUVs. Light-duty vehicles must satisfy tailpipe emission standards for certain air
pollutants. Beginning with the 2012 model year, greenhouse gases are among these air
pollutants. The terms “greenhouse gases” and “GHGs” refer to an aggregate group of
six gases: carbon dioxide, nitrous oxide, methane, hydrofluorocarbons,
perfluorocarbons, and sulfur hexafluoride.
The EPA administers a certification program to ensure that every vehicle introduced into
United States commerce satisfies applicable emission standards. Under this program,
manufacturers apply to the EPA for a certificate of conformity and must demonstrate in
their applications that representative test vehicles meet emission standards. The EPA
issues certificates of conformity (COCs) to vehicle manufacturers based on these
applications. A COC covers only those new motor vehicles that conform, in all material
respects, to the design specifications described in the manufacturer’s application for
that COC. Manufacturers are prohibited from selling any new motor vehicle unless that
vehicle is covered by an EPA-issued COC.
A vehicle’s road load force is one of the vehicle specifications manufacturers must
describe in a COC application. Road load force is the total force encountered by a
vehicle by reason of motion on a level, smooth surface. This includes the internal forces
(e.g., driveline friction) and external forces (e.g., wind resistance) that cause a vehicle to
lose speed. A vehicle’s road load force and its GHG emissions are closely correlated. A
vehicle with higher road load force needs to overcome greater resistance to move at a
given speed compared to a vehicle with lower road load force, and therefore consumes
more fuel and emits more GHGs.
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Road load force determines the laboratory settings for testing vehicle tailpipe emissions.
Test vehicles are mounted on a piece of equipment called a chassis dynamometer that
allows the test vehicle’s wheels to turn while the vehicle remains stationary. A vehicles’
road load force is used to program the chassis dynamometer to simulate real-world
driving conditions. If the accurate road load force is used, then the vehicle’s tailpipe
emissions during laboratory testing are the same as its emissions during real-world
driving conditions. If the dynamometer is programmed with an inaccurately low road
load force, however, the test vehicle consumes less fuel and emits less GHGs
compared to real-world driving conditions.
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Alleged Violations
The United States alleged that each Hyundai and Kia vehicle identified by the table
below has a higher road load force than was described in the application for the COC
for the vehicle. Accurate road load force is critical for obtaining accurate results in the
vehicle emission testing that determines GHG emissions and fuel economy. Therefore,
each production vehicle within the test groups identified by the table below does not
conform in a material respect, namely road load force, to the vehicle specifications
described in the corresponding COC application. As such, Hyundai and Kia allegedly
violated the Clean Air Act each time it sold one of the approximately 1,181,776 new
motor vehicles within these test groups.
The EPA discovered these violations in 2012 during audit testing. This involved running
tests to measure road load force, called coastdown tests, on various production vehicles
from many manufacturers. In a coastdown test, one drives a test vehicle on an outdoor
track, allows the vehicle to coast in neutral from a high speed, and measures how
quickly the vehicle loses speed. Coastdown testing of certain representative Hyundai
and Kia vehicles yielded road load forces that were higher, in some cases substantially
higher, than what Hyundai and Kia reported in the application for the COCs for those
vehicles.
The EPA subsequently investigated the coastdown test protocol Hyundai and Kia used
to measure the road load force of their vehicles. That protocol appears to have included
numerous elements that, once aggregated, generated inaccurately low road load forces.
For example, Hyundai and Kia restricted their testing to a temperature range where its
vehicles coasted farther and faster and prepared vehicle tires for optimized results. In
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processing test data, Hyundai and Kia chose favorable results rather than average
results from a large number of tests. In certain cases, Hyundai and Kia relied
predominantly on data gathered when test vehicles were aided by a tailwind.
In November 2012, Hyundai and Kia restated the fuel economy ratings for many of their
2011–2013 vehicles.
Model
Year
Manufacturer
Test Group
Model(s)
CHYXV01.6RW5
Accent
CHYXV01.8SW5
Elantra
CHYXV01.8SPC
Elantra PZEV
CHYXV01.6AW5
Veloster
CKMXV01.6BW5
Rio
CKMXV01.6AW5
Soul 1.6L, Soul Eco 1.6L
CKMXV02.0LW5
Soul 2.0L
Hyundai
2012
Kia
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DKMXV01.6DBE
Accent, Veloster
DKMXV02.0DCE
Elantra, Elantra Coupe, Elantra GT
DHYXV01.8BDP
Elantra PZEV, Elantra Coupe PZEV,
Elantra GT PZEV
DHYXV02.01TE
Sante Fe Sport 2.0L Turbo
DHYXV02.41UE
Sante Fe Sport 2.4L
DHYXV01.61CE
Veloster Turbo
DKMXV01.6DBE
Rio, Rio Eco, Soul 1.6L
DKMXV02.0DCE
Soul 2.0L, Soul Eco 2.0L
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Hyundai
2013
Kia
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Injunctive Relief
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The consent decree requires defendants to enact three types of injunctive relief:
Greenhouse Gas Emission Credit Forfeiture
This case concerns the EPA’s tailpipe GHG emission standards. Those standards took
effect in the 2012 model year and will become increasingly stringent with each
subsequent model year. The standards are expressed in terms of grams of GHGs
(calculated as an equivalent to carbon dioxide) per mile, or gpm, for the average across
an automaker’s whole fleet of vehicles.
One way automakers are allowed to comply with the standard is through “averaging,
banking and trading” of GHG emission credits. Credits represent surplus emission
reductions that manufacturers achieve beyond those required under the emission
standards. If the vehicles in an automaker’s fleet, on average, emit less gpm than the
standard for that model year, that automaker generates one GHG emission credit for
each metric ton of GHGs by which they beat the standard. If the vehicles in an
automaker’s fleet, on average, emit more gpm than the standard for that model year,
that automaker either (1) incurs a credit deficit equal to the number of metric tons of
GHGs by which it fell short of the standard, or (2) uses GHG emission credits—either
previously generated or purchased from another automaker—to make up the difference
and meet the standard. Therefore, one GHG emission credit is adequate to
demonstrate compliance, and equal to an actual vehicle improvement that reduces
lifetime emissions by one metric ton of GHGs. Automakers can carry a deficit for three
model years before they are considered to have violated the fleet-based GHG standard.
In this case, just as Hyundai and Kia over-stated fuel economy, they under-stated the
GHG emissions of their fleets by approximately 4,750,000 metric tons. To ensure that
Hyundai and Kia cannot take advantage of emission credits they did not rightfully earn,
Hyundai and Kia will forfeit 4,750,000 metric tons worth of GHG emission credits. The
forfeiture of 4,750,000 GHG emission credits corrects these automakers’ compliance
status, and puts them in the place they would be had they accurately reported their
GHG emissions in the first place.
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The forfeited credits are estimated to be worth in excess of $200 million. The value for
GHG emission credits is not set or controlled by EPA; it is determined by the market of
automakers that buy and sell these credits.
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Corrective Measures
Under the decree, Hyundai and Kia must take certain measures to prevent future
violations like those alleged here. These corrective measures must be completed before
defendants perform vehicle emission testing to certify their model year 2017 vehicles.
The defendants must reorganize their certification group, revise test protocols, improve
management of test data, and enhance employee training.
Audit Testing
Until the above-described corrective measures are fully implemented, defendants must
audit their fleets to ensure that vehicles sold to the public conform to the vehicles’
certification. These audits will involve performing coastdown testing in order to measure
the test vehicle’s road load force. The audit team will be in the United States, will be
independent from the group that performed the original certification work, and will not
have access to the original certification test data.
The corrective measures and audit testing will cost approximately $50 million.
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Health and Environmental Benefts
In 2009, the EPA found that current and projected concentrations of GHGs threaten the
public health and welfare of current and future generations. At the same time, EPA
found that GHG emissions from motor vehicles contribute to these threats, which
include: hotter, longer heat waves that threaten the health of the sick, poor or elderly;
increases in ground-level ozone pollution linked to asthma and other respiratory
illnesses; as well as other threats to the health and welfare of Americans.
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To address these threats of climate change, EPA set limits on GHG emissions for
passenger vehicles for model years 2012 through 2025. This enforcement effort against
Hyundai and Kia protects the integrity of the light-duty vehicle GHG standards by
ensuring that emissions reduction credits claimed by automakers are tied to actual
reductions of GHGs. Without this enforcement action, Hyundai and Kia would have
been credited for reducing emissions by roughly 4,750,000 in excess of what they
actually achieved. This is equal to the GHG emissions from each of the following:
1,000,000 passenger vehicles being driven for a year; energy use from over 433,000
homes for one year; over 11 million barrels of oil consumed; and over 14 months of
operation from an average coal-fired power plant in the U.S.
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Civil Penalty
The consent decree requires defendants to pay $100 million. This is the largest-ever
penalty under the Clean Air Act. Payment is due within 15 days from the date that the
court enters the decree. Defendants must pay $93,656,600 to the United States and
$6,343,400 to the California Air Resources Board.
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Comment Period
The proposed settlement, lodged in the United States District Court for the District of
Columbia, is subject to a 30-day public comment period and final court approval.
Information on submitting comment is available at the Department of Justice website.
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Contacts
Evan Belser, Attorney Adviser
Air Enforcement Division
Office of Civil Enforcement
Office of Enforcement and Compliance Assurance
United States Environmental Protection Agency
1200 Pennsylvania Avenue
Washington, D.C. 20460
(202) 564-6850
belser.evan@epa.gov
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Jennifer Colaizzi (for press inquiries only)
U.S. EPA Office of Media Relations
(202) 564-7776
colaizzi.jennifer@epa.gov
Top of Page
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Appeal: 17-1582
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