Judge OKs Hyundai-Kia settlement
Washington — A federal judge approved the Justice Department’s record-breaking $360 million settlement with Korean automakers Hyundai Motor Co. and Kia Motors Corp. for overstating fuel economy ratings, and in doing so, rejected a request to set aside a chunk of that settlement for electric vehicles.
U.S. District Judge Tanya Chutkan approved the settlement for violations of the Clean Air Act, rejecting a request from the state attorneys general of New York, Connecticut, Maryland, Massachusetts, New Mexico, Oregon, Rhode Island, and Vermont to use at least $25 million of that for electric vehicle programs, according to a Jan. 9 court order posted on the court’s website. New Jersey’s Environmental Protection agency wrote a separate request seeking at least $25 million for electric vehicle support for states, as did some environmental groups.
“Failing to include environmental mitigation measures aimed at reducing greenhouse gas emissions from passenger vehicles the very purpose of the program Hyundai and Kia violated sets a bad precedent for future settlements involving this federal program,” the state attorneys general wrote. “We urge the United States to revise the settlement to provide that at least $25 million of the approximately $94 million currently slated to be paid into the U.S. Treasury instead be used on geographically diverse projects to accelerate the adoption of state programs outside of California for electric vehicles, including battery electric, fuel cell electric, or plug-in hybrid electric vehicles.”
The Justice Department didn’t support the request, saying wasn’t a good idea to reopen negotiations in an attempt to craft a different and more complex settlement arrangement.
Chutkan said in her ruling that the program to promote electric vehicles was a laudable goal, but it would not benefit the public to jeopardize the agreement and potentially mire the government and the automakers in lengthy litigation. (
The agreement ends the Environmental Protection Agency’s two-year investigation into the automakers’ overstatement of mileage ratings for 1.2 million 2011-2013 U.S. vehicles.
The settlement was announced in November by EPA Administrator Gina McCarthy and Attorney General Eric Holder. It is the largest of its kind and includes a $100 million civil penalty, forfeiting $210 million in greenhouse gas emission credits and spending $50 million to ensure independent auditing of its current and future vehicles and “measures to prevent any future violations,” the EPA said.
After an investigation by the EPA, Hyundai and Kia in November 2012 agreed to restate expected gas mileage for 1.1 million vehicles in North America, including 900,000 in the United States. The penalty covers 300,000 vehicles that had improper window stickers approved by the agency but were corrected before sold. The settlement impacts about 600,000 of Hyundai’s 2011-13 models and about 300,000 of Kia’s 2011-13 models in the U.S.
The 2012 restatement reduced Hyundai-Kia’s fleetwide average fuel economy from 27 to 26 mpg for the 2012 model year.
Individual ratings, depending on the car, fell from 1 mpg to 6 mpg. Most saw combined city-highway efficiency drop by 1 or 2 mpg. Vehicles included the Hyundai Accent, Elantra, Veloster and Santa Fe; and Kia Rio and Soul.
Hyundai was forced to abandon claims that four models in 2012 had gotten 40 mpg.
In total, the restatement has cost the Korean automakers more than $750 million, including the $395 million settlement to owners of vehicles. Still, it is a fraction of Hyundai’s $8.4 billion in worldwide profits in 2013. It recently spent $10 billion to acquire land in Seoul for a new headquarters.
Hyundai and Kia have agreed to reorganize their emissions certification group, revise testing, better manage test data and enhance employee training before certifying its 2017 vehicles. In the meantime, Hyundai and Kia must audit fleets for model years 2015 and 2016.
“Hyundai has acted transparently, reimbursed affected customers and fully cooperated with the EPA throughout the course of its investigation,” said David Zuchowski, president and CEO of Hyundai Motor America, in a statement. “We are pleased to put this behind us, and gratified that even with our adjusted fuel economy ratings, Hyundai continues to lead the automotive industry in fuel efficiency and environmental performance.”