Non-Conformist Korean Car Companies Quickly Settle Gov’t Greenwash Suit for $100 Million

A previous post discussed a host of class action lawsuits against Kia and/or Hyundai accusing the Korean automakers of making false or misleading fuel efficiency claims in their advertising and marketing materials.

Those suits allege that the automakers built advertising campaigns around representations that a number of their vehicles achieved gas mileage in the 40 mile per gallon range when the companies knew or should have known the actual mileage was significantly lower.  One major problem, it seemed, was flawed fuel economy testing by the car makers.

A recent lawsuit brought by the Environment and Natural Resources Division of the U.S. Department of Justice (DOJ) and the California Air Resources Board (CARB) provides more revelations about the automakers’ faulty testing (and led to a prompt settlement by Hyundai and Kia including a substantial monetary penalty).

Filed November 3, 2014 in federal court in Washington, DC, the complaint alleges that Hyundai and Kia sold over a million vehicles that did not meet the requirements of the Clean Air Act because the automakers used improper testing procedures and analysis and submitted faulty fuel economy data to the U.S. Environmental Protection Agency (EPA).

The subject vehicles include the 2012 and 2013 Hyundai Accent, Elantra, Veloster and Santa Fe and 2012 and 2013 Kia Rio and Soul.

Under the Clean Air Act, any new motor vehicle sold in the United States must be covered by a Certificate of Conformity issued by the EPA.  To obtain a Certificate of Conformity, a manufacturer must submit an application for motor vehicles it intends to sell in the United States.

One of the metrics a manufacturer must test and include in the application is a vehicle’s road load force, a measure of the internal and external forces that cause a vehicle to lose speed, such as driveline friction and wind resistance.  The road load force can be calculated by performing a “coastdown” test on the vehicle.

A vehicle’s fuel economy depends, in part, on its road load force.  The complaint explains the relationship between road load force and greenhouse gas emissions as follows:

A vehicle with a low road load force has relatively higher fuel economy and emits lower amounts of greenhouse gases because the vehicle efficiently maintains its momentum.  Conversely, a vehicle with a higher road load force has lower fuel economy and emits more greenhouse gases because it needs to burn more fuel to counteract that road load force and maintain speed.

According to the complaint, Hyundai and Kia, which worked together on testing of the subject vehicles for the Certificate of Conformity applications, used improper testing procedures and analysis, including cherry-picking results, leading to inaccurately low reported road load forces:

Defendants improperly selected results from test runs that were aided by a tailwind rather than correctly using the results of test runs in both directions, Defendants selected favorable results from test runs rather than average the results from the larger set of tests, Defendants restricted their testing times to periods when the temperature allowed vehicles to coast farther and faster, and Defendants specially prepared vehicle tires for optimized test results.

As a result, the EPA’s investigation and audit testing determined that the actual road load forces for the tested vehicles were about 14-54% higher than the automakers provided in their applications for Certificates of Conformity.

Hyundai and Kia quickly settled with the DOJ and CARB.  Under the settlement, the automakers did not have to admit the truth of the allegations but will have to pay about $100 million, about $93.6 million to the DOJ and about $6.4 million to the CARB.  This is the largest penalty ever imposed under the Clean Air Act.

The car companies will also forfeit 4.75 million greenhouse emission credits – earned for building vehicle emissions under the legal limit – which they had previously claimed and are estimated to be worth over $200 million.

Sometimes it’s better – for the environment and for the bottom line – to conform.

Eric Lane Avatar

Eric Lane

Eric Lane, the founder and principal of Green Patent Law, is an intellectual property lawyer and registered U.S. patent attorney in New York and is a member of the bar in New York and California. Eric has more than two decades of experience working with wind, solar PV, CSP, biofuels, and geothermal, energy storage technologies, carbon capture and sequestration, medical devices, data communications, mechanical, chemical, internet and software.