Hyundai to Pay $47 Million to Settle Charges It Imported Non-Road Vehicles That Violated Clean Air Act

Hyundai has agreed to pay a $47 million penalty to settle charges it imported and sold heavy construction vehicles with diesel engines that violated the Clean Air Act, the Justice Department announced in a Sept. 19 press release. DOJ said Hyundai stockpiled engines that did not comply with emissions standards, and violated the terms of a transition program meant to help manufacturers comply with new emissions requirements.

According to court documents, Hyundai Construction Equipment Americas and its South Korea-based parent company Hyundai Heavy Industries began a “pre-buying” program in anticipation of new “Tier 4” emissions standards that took effect in 2014. Under the program, HHI allegedly bought a two-year supply of engines built before the new standards took effect so it could continue to put those engines in non-road vehicles and evade the more stringent standards.

Under EPA regulations, manufacturers can continue to use up normal inventories after new standards take effect, but they are “specifically prohibited from circumventing the certification requirement by stockpiling engines,” the original complaint said. The purpose of HHI’s program was exactly that, the complaint said.

Hyundai also sought to take advantage of the Transition Program for Equipment Manufacturers (TPEM) program, which allowed manufacturers to import limited numbers of engines that don’t comply with the new emissions standards. But Hyundai exceeded its allotment of non-conforming engines in several years, and began importing non-conforming equipment before submitting notice to EPA of its intent to participate in the program. The engines in the equipment were also not properly labeled as required by the TPEM regulations, the complaint said.

HCEA, the U.S.-based Hyundai subsidiary that actually imported the equipment, knew of the violations and continued to import it regardless, the complaint said. A consultant hired by HCEA told the company that the engines violated EPA’s TPEM rules in 2013, but this was disregarded. HCEA’s president authorized the importation of equipment after being informed it would violate the TPEM regulations, and its North American sales manager sent an email to HCEA and HHI employees suggesting a strategy to fraudulently avoid detection by EPA, the complaint said.

Under the settlement, HHI and HCEA did not admit liability for the alleged Clean Air Act violations. The $47 million penalty is the sixth-largest ever assessed for “mobile source” provisions of the Clean Air Act, according to court documents.