WASHINGTON — Pep Boys has agreed to pay $5 million in civil penalties and take corrective measures to settle claims that it violated the Clean Air Act by importing and selling motorcycles, recreational vehicles and generators manufactured in China that do not comply with environmental requirements, the U.S. Environmental Protection Agency (EPA) and the U.S. Justice Department announced.
Baja Inc., which supplied the non-compliant vehicles to Pep Boys, is also settling with the U.S.
The complaint alleges that at least 45 vehicle and generator models imported and sold by Pep Boys and Baja were not certified to meet federal emission standards. The complaint also alleges that Pep Boys failed to provide purchasers with the full emission-system warranty required by the Clean Air Act, and that the company imported and sold vehicles and engines without the proper emission control information labels.
The vehicles and engines were built by more than 35 different manufacturers in China. EPA and U.S. Customs & Border Protection discovered the violations through inspections conducted at Pep Boys stores, at U.S. ports and through a review of importation documents provided to EPA by the company.
"Importers of foreign made vehicles and engines must comply with the same Clean Air Act requirements that apply to those selling domestic products, and this settlement demonstrates that we will take strong action to ensure that importers comply with their obligations," said Ignacia Moreno, assistant attorney general for the Environment and Natural Resources Division. "Under this settlement, Pep Boys and Baja will not only pay a civil penalty, but will offset the excess emissions from the vehicles and engines already sold and take steps that go beyond what the law requires to ensure that their future imports and sales meet Clean Air Act standards."
According to the U.S. Justice Department, this is the largest vehicle and engine importation case brought by the United States to date under the Clean Air Act, both in number of vehicles and engines imported and penalty paid. The complaint, filed simultaneously with the settlement in federal court in the District of Columbia, alleges that Pep Boys and Baja imported and sold at least 241,000 illegal vehicles and engines from 2004 through 2009.
The agreement requires Pep Boys to export or destroy more than 1,300 non-compliant vehicles and engines, and to mitigate the adverse environmental effects of equipment already sold to consumers, estimated at 620 tons of excess hydrocarbon and nitrogen oxide emissions and more than 6,520 tons of excess carbon monoxide emissions. Under the settlement, Pep Boys will implement projects to offset the excess emissions including offering discounted push or electric lawn mowers in exchange for older, more polluting gas-powered mowers.
The settlement also requires Pep Boys and Baja to offer a free extended emission warranty on certain vehicle and engine models, to reimburse consumers for emission-related repair expenses and to implement rigorous corporate compliance plans. Baja also agreed to pay a penalty of $25,000, an amount that was reduced substantially in light of Baja’s current financial condition.
The settlement is part of an ongoing effort by EPA to ensure that all imported vehicles and engines comply with Clean Air Act requirements.
Pep Boys has implemented a formal compliance program designed to ensure that all small-engine merchandise purchased by the company for resale complies with the Clean Air Act, and says it has been voluntarily following this program since the beginning of 2009. In addition to the $5 million civil penalty, Pep Boys said it will implement a lawn mower exchange program designed to reduce emissions in the communities where its stores are located.
“Pep Boys strives to be a good corporate citizen,” said General Counsel Brian Zuckerman. “Unfortunately, in this circumstance, we relied upon our vendors to ensure that their products were compliant. We now take it upon ourselves to ensure that all of our small-engine merchandise fully complies with the Clean Air Act.”