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Related Practices
Related Practices

EPA Settles With Pep Boys in Largest Engine Importation Case in Clean Air Act History

Beveridge & Diamond, P.C., May 11, 2010

On May 10, 2010, the United States Environmental Protection Agency (“EPA”) announced a settlement with Pep Boys – Manny, Moe & Jack (“Pep Boys”) and Baja, Inc. (“Baja”), resolving  violations by both companies under Title II of the Clean Air Act, which establishes emissions standards for mobile sources.  In the settlement, Pep Boys agreed to a $5 million penalty and an estimated $5 million in injunctive relief for its role in the sale of vehicles and engines that failed to comply with U.S. emissions standards.  Baja agreed to pay $25,000 for its role in importing the noncompliant engines that were ultimately sold in Pep Boys’ 580 U.S. stores.  EPA describes the settlement as the largest vehicle and engine importation case brought to date under the Clean Air Act, both in terms of the number of vehicles and engines imported and the penalty paid. 

At issue in the case were 250,000 highway motorcycles, recreational vehicles, and generators manufactured in China and which failed to meet the emissions standards of Title II of the CAA and 40 C.F.R. Parts 86, 90, 1051, and 1068.  The vehicles and engines were imported and sold between 2004 and 2009 from some 35 Chinese manufacturers and, according to EPA, led to excess emissions of more than 620 tons of hydrocarbons and nitrogen oxides, and more than 6,520 tons of carbon monoxide.  

A complete copy of the consent decree is available here.  Under the decree, Pep Boys has agreed to:

  • Implement EPA mandated corporate compliance plans;
  • Adhere to reporting and inspection requirements;
  • Extend emissions-related warranties for certain vehicle and generator models;
  • Establish a customer hotline and employee training program;
  • Export or destroy over 1,300 noncompliant vehicles and generators; and
  • Purchase emission credits and develop offset projects (including a program for consumers to exchange gas-powered lawn mowers for electric-powered mowers) to mitigate the emissions caused by their violations.

Imported vehicles and engines have become a top enforcement priority at EPA in recent years, as the Agency seeks to enforce the more stringent emissions standards that now apply to a wide variety of on-road and off-road vehicles and engines that are commonly sold in auto parts, home improvement, and discount warehouse stores across the country.  (See EPA’s September 2006 Enforcement Alert, available here; see also EPA’s 2007 Vehicle and Engine Imports Clean Air Act Information Sheet, available here.)  The Agency’s enforcement efforts used to focus primarily on the importers and distributors involved, but, as demonstrated by the Pep Boys settlement, that focus has shifted to retailers, who now bear the responsibility of ensuring that products on their shelves meet all Clean Air Act standards.

For a printable PDF of this article, please click here.

For more information, please contact Amy M. Lincoln at (415) 262-4029, alincoln@bdlaw.com, or Daniel M. Brian at (415) 262-4016, dbrian@bdlaw.com.