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$775,000 Penalty, Company-Wide Compliance Program to Resolve Clean Air Act Violations

Monday, October 05, 2015
Sandler, Travis & Rosenberg Trade Report

The Environmental Protection Agency and the Department of Justice announced Sept. 30 a settlement resolving allegations that a national rural lifestyle retail supply chain imported and sold more than 28,000 all-terrain vehicles, off-highway motorcycles and engines that did not comply with federal Clean Air Act certification and emission information labeling requirements. Under this settlement, which is subject to a 30-day comment period and approval by federal court, the company will pay a $775,000 civil penalty; implement a rigorous corporate compliance plan that requires regular vehicle and engine inspections, emissions and catalyst testing, staff training and reporting for five years; and mitigate the potential adverse environmental effects of equipment already sold to consumers.

The CAA requires every vehicle and engine sold in the U.S. to be covered by a valid EPA-issued certificate of conformity, which manufacturers obtain by certifying that vehicles meet applicable federal emissions standards for various pollutants. The EPA and the DOJ alleged that over a three-year period the company at issue imported from China and sold in the U.S. more than 28,000 vehicles and engines that varied from the certificates of conformity submitted to the EPA. Among other things, the vehicles had adjustable carburetors that were not described in the applications for certification, were produced by different manufacturers than the ones specified in the applications, were manufactured prior to the dates of the certificates of conformity, had model names that were not identified on the certificates of conformity, or were significantly more powerful than described. In addition, some engines were incorrectly certified as non-road engines rather than as recreational vehicles and some were significantly more powerful than described in the allegedly applicable certificate of conformity. Further, the emission control information labels on certain vehicles did not comply with federal regulations.

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