1 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ) UNITED STATES OF AMERICA et al. , ) ) Plaintiff s , ) ) v. ) ) Civil Action No. 14

- cv - 1837 (TSC) ) HYUNDAI MOTOR COMPANY et al. , ) ) Defendant s . ) )
MEMORANDUM OPINION Before the Court is the United States ’ unopposed motion to enter a consent decree. Having reviewed the Complaint, proposed Consent Decree and the motion , the Court finds that the agreement is fair, adequate, reasonable, appropriate, and serves the public interest

. Therefore , the motion is granted and the Court will enter the consent decree.
I. BACKGROUND This case arises from alleged violations of the Clean Air Act ( “ CAA ” ) and related California Health and Safety Code violations by defendants Hyundai Motor C ompany, Hyundai Motor America, Kia Motors Corporation, Kia Motors America, and Hyundai America Technical
Center , Inc. (collectively, “ Defendants ” ). The United States, on behalf of the United States Environmental Protection Agency ( “ EPA ” ) and in conjunctio n with the California Air Resources Board ( “ CARB ” ), seek s monetary penalties and injunctive relief against Defendants for allegedly falsifying fuel economy and greenhouse gas emissions claims for over one million Hyundai and Kia vehicles with model years 2012 and 2013 (the “ Subject Vehicles ” )

.2 The alleged violations occurred as a result of a discrepancy between the applications Defendants submitted for Certificates of Conformity and the actual specifications of the Subject Vehicles. Certificates of Confor mity are required for new model vehicles pursuant to the CAA and include various specifications related to vehicle emissions

. I f a vehicle which is nominally covered by a given Certificate does not actually meet the spec ification s in that Certificate, the EPA deems that vehicle not covered by the Certificate at all, leaving it in violation of the CA A. In this case, Defendants submitted applications for Certificates which reported the Subject Vehicles ’ road load force. Road load force directly impacts the calculation of fuel economy rates and whether a vehicle meets air pollution emission standards. EPA determined that the road load force for the Subject Vehicles did not match the spec ification s in their Certificates due to Defendants ’ improper testing, a nalysis, and reporting. The Subject Vehicles had a higher road load force than Defendants ’ originally represented, meaning the vehicles had lower fuel economy and higher emissions compared to what Defendants stated in their applications. Because the act u al road load force did not match the road load force in the Certificates, the Subject Vehicles were allegedly in violation of the CAA. See 42 U.S.C. §§ 7522

- 24. CARB also seeks penalties for violations of California Health and Safety Code Section 43212 fo r the same improper testing and reporting as it related to CARB test procedures. Defendants sold more than 126,000 Subject Vehicles in the State of California. (Mot. 3).
II. LEGAL STANDARD

“ Approval of a settlement is a judicial act that is committed to the informe d discretion of the trial court. ” United States v. District of Columbia, 933 F. Supp. 42, 47 (D.D.C. 1996) (citation omitted)

. A court reviewing a consent decree must “ determine that the settlement is fair, adequate, reasonable and appropriate under the particular facts and that there has been valid3 consent by the concerned parties. ” Citizens for a Better Env ’ t v. Gorsuch , 718 F.2d 1117, 1126 (D.C. Cir. 1983) (citation omitted) ; Envtl. Def. v. Leavitt , 329 F. Supp. 2d 55, 70 (D.D.C. 2004); see also Massachusetts v. Microsoft , 373 F.3d 1199, 1206 n. 1 (D.C. Cir. 2004) (noting the general requirement that a consent decree must “ fairly and reasonably resolve the controversy in a manner consistent with the public interest ” ) (internal quotations and citation omitted). Settlement is highly favored, as “ [n] ot only the parties, but the general public as well, benefit from the saving of time and money that results from the volunta ry settlement of litigation. ” Gorsuch , 718 F.2d at 1126

. This is particularly true in cases involving the EPA, where courts accord “ broad deference . . . to EPA ’ s expertise in determining an appropriate settlement and to the voluntary agreement of the pa rties in proposing the settlement. ” District of Columbia, 933 F. Supp. at 47

. The CAA requires EPA to provide “ a reasonable opportunity by notice in the Federal Register to persons who are not named as parties or interven o rs to the action ” to submit comments on the decree before it is entered

. 42 U.S.C. § 7413(g).
III. DISCUSSION

a. Fairness Courts must consider both procedural and substantive fairness in their analysis of proposed consent decrees

. District of Columbia, 933 F. Supp. at 4 8. “ A review of th e fairness of a proposed consent decree requires an assessment of the good faith of the parties, the opinions of the counsel, and the possible risks involved in litigation if the settlement is not approved. A consent decree is substan tively fair if it inc orporates concepts of correcti ve justice and accountability[.] ” Envtl. Def. , 329 F. Supp. 2d at 70 (internal quotations and citations omitted).4 The consent decree proposed in this litigation is fair. All the parties involved

— the United States, CARB, and the Defendants

— support entry of the decree. (Mot. 1). There is no suggestion of impropriety in the negotiation of the agreement, and all the parties were represented and advised by competen t technical and legal staff. (Mot. 7

- 8). The parties have reached an agreement that remedies the alleged violations and hold s Defendants accountable for emissions tes ting and reporting going forwar d

. In addition, t he United States complied with the

not ice

- and

- comment procedures required by the CAA and received s ix comments, all of which received due consideration. b. Adequacy, Reasonableness, and Appropriateness When assessing whether the consent decree is adequate, reasonable, and appropriate , courts “ foc us on the extent to which the decree is confined to the dispute between the parties and whether the decree adequately accomplishes its purported goal. ” Envtl. Def., 329 F. Supp. 2d at
71. This does not mean a court may “ impose its own judgments . . . [but] [r]ather, the court must determine whether the proposed consent decree is reasonable from an objective point of view. ” Id. ( internal quotation s and cita tion omitted). The parties agree that the scope and purpose of the consent decree is to end this civil action and address “ alleged Clean Air Act and related California Health and Safety Code violations based on Defendants ’ sale of more than one million vehicles that will emit more than four million metric tons of greenhouse gases in excess of what the autom akers certified to EPA. ” (Mot. 1). The penalties are threefold: (1) a $100 million fine ($93,656,600 to the United States and $6,343,400 to CARB); (2) forfeit of 4.75 million greenhouse gas credits from Defendants CAA Averaging, Banking, and Trading regi st ries; and (3) injunctive relief which requires Defendants to reorganize their emissions certification group, revise test protocols, improve5 management of test data and enhance employee training before they conduct emissions testing to certify model year 2017 vehicles, and audit model year 2015 and 2016 vehicles to ensure conformance with CAA requirements. 1 (Mot. 3

- 4). The fine is the largest in the history of the C lean Air Act , (Mot. 7) , and is both adequate and appropriate given the underlying conduct o f the Defendants and as a deterrent to future CAA violations. In addition, t he forfeiture of greenhouse gas credits corresponds to the amount of greenhouse gas emissions that were underreported as a result of Defendants ’ allegedly false reporting to EPA. This is a reasonable punishment which addresses the underlying violation and puts Defendants in the position they would have been absent their allegedly unlawful conduct. The forfeiture also ensures the integrity of the CAA emiss ions trading system by preventing improper credits from artificially inflating the market. The injunctive relief is also reasonable and appropriate as it ensures that Defendants will take steps to prevent future violations and address any institutional pr oblems that cannot be addressed by a monetary (or quasi

- monetary) penalty alone. In light of these factors, the Court finds that the consent decree adequately, reasonably, and appropriately addresses the conduct of the Defendants and promotes the
purposes of the CAA.

c. Public Interest The consent decree furthers the public interest by protecting the reliability of fuel economy and greenhouse ga s emissions claims, which are increasingly important factor s for consumers purchasing vehicles. The decree also fur thers the goals of the CAA by taking steps to ensure clean er air for the public. The public comments submitted in response to the EPA ’ s Federal Register notice generally supported the proposed decree.

1 In assessing the penalties imposed, the Court gave due consideration to the factors identified in 42 U.S.C. § 7524(b).6 Five of the comments (three by state environmental dep artments and/or attorneys general and two by environmental NGOs) supported the agreement generally but requested that the settlement be renegotiated to include specific support for the promotion of electric vehicle programs, including a proposed $25 millio n in Supplemental Environmental Projects ( “ SEPs ” ) to be given to certain states. SEPs are programs which may be included in CAA settlements and provide for specific projects to be underta ken as part of the settlement. 63 Fed. Reg. 24 , 796 ( May 5, 1998). The United States considered the SEP proposals identified in the comments but determined that they “ did not warrant withdrawing consent to the Consent Decree in order to reopen negotiations with the parties in an attempt to craft a different and more compl ex settlement arrangement that would include SEPs for electric vehicle programs in certain states . . . [t]he public interest would not be served by the United States ’ rejection of the Decree and the

concom itant delay in compliance and expenditure of resou rces for renegotiation of the settlement or, alternatively, further litigation. ” (Mot. 9). The Court agrees. As stated above, the “ general public benefit [s] from the saving of time and money that results from the voluntary settlement of litigation. ” Go rsuch , 718 F.2d at 1126 . While an SEP to promote electric vehicles is a laudable goal, the parties in this case negotiated a fair and reasonable settlement which addresses the public interest in promoting the purposes of the CAA and protecting consumers and the public at large

. It would not benefit the public to jeopardize this agreement and potentially mire the government and Defendants in lengthy litigation with un predictable results , while simultaneously delaying the implementation of corrective meas ures .7 IV. CONCLUSION For the foregoing reasons, the Court finds that the consent decree is fair, adequate, reasonable, appropriate, and in the public interest. The motion to enter the consent decree is therefore GRANTED

. A n appropriate Order accompanies t his Memorandum O pinion.

Date: January 9, 2015


## Tanya S. Chutkan TANYA S. CHUTKAN United States District Judge