The Pep Boys -- Manny, Moe & Jack -- may not be quite as cheerful today after their company reached a final agreement to pay $5 million to settle Justice Department claims they illegally imported 241,000 motorcycles, ATVs and generators from China that didn't comply with U.S. pollution control rules.
It could make some consumers who need lawnmowers happy. Pep Boy agreed as part of the settlement to offer a program to trade old polluting gas lawn mowers for newer mowers, both push mowers and ones with engines that meet tougher pollution standards.
The fine is the largest ever for the U.S. both in terms of number of illegal vehicles imported and dollar amount. Pep Boys had announced its decision to settle the case for $5 million earlier, but the exact details of the settlement were announced today.
"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 S. Moreno, assistant attorney general for the Environment and Natural Resources Division in a statement.
The vehicles were imported from 2004 to 2009. The Department of Justice in a statement said 45 models of various sizes didn't meet EPA requirement. As part of the settlement, Pep Boys must destroy or ship overseas 1,300 unsold vehicles and engines. Federal rules require vehicles imported to meet emission standards not just when the vehicles are initially sold, but during a warranty period that can be up to 5 years. The government alleged that Pep Boys also didn't provide the warranty.
Pep Boys could have faced a much larger fine. Federal laws permit fines of $25,000 to $32,500 per vehicle per day for violations.
For Pep Boys customers who bought the vehicles, the settlement offers some benefit.
Besides paying $5 million, Pep Boys agreed to provide extended care for the products for pollution issues.
Pep Boys also agreed to help offshoot the impact of the estimated 620 tons of excess hydrocarbon and nitrogen oxide emissions, and more than 6,520 tons of excess carbon monoxide emissions the products dumped into the atmosphere by setting up a lawnmower replacement program.
Baja Inc., which sold Pep Boys the products, also agreed to a settlement and a $25,000 fine.
Pep Boys General Counsel Brian Zuckerman in a statement www.businesswire.com/news/home/20100510006629/en/Pep-Boys-Signs-Settlement-Agreement-EPA blamed Baja for the problems.
"Pep Boys strives to be a good corporate citizen," he said. "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."
"While the vast majority of the allegations in the EPA's complaint relate to deficiencies in paperwork, we do acknowledge the possibility that some of the merchandise that we sold may have generated excess emissions."
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