Hyundai, Kia hit with record penalties by EPA

Korean auto manufacturers Kia and Hyundai were accused of certifying inflated miles per gallon estimates of more than 1.2 million of their cars, which on Monday resulted in a record $100 million civil penalty, the the U.S. Environmental Protection Agency and the U.S. Department of Justice said.

The fine is largest ever under the federal Clean Air Act. In addition, the companies will forfeit more than $200 million worth of greenhouse gas emissions credits that are given out when an automaker produces cars with emissions below what is required by law. Kia and Hyundai in 2012 were forced to produce new fuel economy estimates for vehicles in the 2011-2013 model years.

The affected vehicles include the Hyundai Accent, Elantra, Veloster, Sante Fe and the Kia Rio and Soul.

The settlement that resolved the complaint also requires the companies to spend about $50 million to change their testing procedures and have their findings audited.

"Violations like this also compromise key safeguards that preserve fair and open competition in the marketplace by putting other car makers at a competitive disadvantage," Attorney General Eric Holder said. "More importantly, all consumers have the right to know that the cars they buy actually have the characteristics that are represented to the EPA -- a basic compact that Hyundai and Kia flagrantly violated in this case."

Hyundai, which has to pay about $57 million in the settlement, said its cars remain fuel efficient and the company is ready to move on from this episode.

"Hyundai has acted transparently, reimbursed affected customers and fully cooperated with the EPA throughout the course of its investigation," David Zuchowski, president and CEO of Hyundai Motor America, said 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."

The Natural Resources Defense Council, an environmental activist group, applauded the action.

"This strong action by EPA and the Department of Justice should deter other automaker from cheating and will help ensure that consumers get the accurate information they need to make informed choices," said Luke Tonachel, the NRDC's senior vehicles analyst. "Consumers are demanding cleaner, more fuel-efficient vehicles, as shown by the record high mileage figures for new cars sold. Consumers deserve accurate information on emissions and fuel economy when they go to the showroom."

The EPA discovered the inflated fuel economy numbers and associated lower emissions estimates during audit testing in 2012. That same year the companies created a compensation program for car buyers to cover the difference in fuel costs based on the inflated numbers.

"Greenhouse gas emission laws protect the public from the dangers of climate change, and today's action reinforces EPA's commitment to see those laws through," EPA Administrator Gina McCarthy said in a statement. "Businesses that play by the rules shouldn't have to compete with those breaking the law. This settlement upholds the integrity of the nation's fuel economy and greenhouse gas programs and supports all Americans who want to save fuel costs and reduce their environmental impact."

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    Mitch Lipka is an award-winning consumer columnist. He was in charge of consumer news for AOL's personal finance site and was a senior editor at Consumer Reports. He was also a reporter for The Philadelphia Inquirer and the South Florida Sun-Sentinel, among other publications.