Harley-Davidson has settled a dispute with the EPA (Environmental Protection Agency), which will see it pay an agreed civil fine of $12 million and stop selling illegal aftermarket devices that cause its motorcycles to emit illegal levels of pollution.
According to the U.S. government, the sale of such “defeat devices” violates the Federal Clean Air Act. Harley was also accused of selling more than 12,600 motorcycles that were not covered by an EPA certification governing clean air compliance.
The settlement calls for Harley to stop selling the super tuners by August 23, and buy back and destroy all such tuners in stock at its dealerships. EPA said the modified settings increase power and performance, but also increase the motorcycle’s emissions of hydrocarbons and nitrogen oxides.
Harley will also spend $3 million on an unrelated project to reduce air pollution, the U.S. Justice Department said.
In a statement, John Cruden, Head of the Justice Department’s environmental and natural resources division, said “Given Harley-Davidson’s prominence in the industry, this is a very significant step towards our goal of stopping the sale of illegal aftermarket defeat devices that cause harmful pollution on our roads and in our communities.”
The statement went on to say that “Anyone else who manufactures, sells or installs these types of illegal products should take heed of Harley-Davidson’s corrective actions and immediately stop violating the law.”
Since January 2008, Harley-Davidson has manufactured and sold two types of tuners, which when hooked up to Harley-Davidson motorcycles, allow users to modify certain aspects of a motorcycle’s emissions control system.
The announcement comes amid greater scrutiny on emissions and “defeat devices” by U.S. regulators after Volkswagen AG admitted to using illegal software to evade U.S. emissions standards in nearly 600,000 U.S. vehicles.
“This settlement immediately stops the sale of illegal aftermarket defeat devices used on public roads that threaten the air we breathe,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance.
Harley must obtain a certification from the California Air Resources Board for any tuners it sells in the United States in the future. For any super tuners that Harley-Davidson sells outside the United States in the future, it must label them as not for use in the United States.
EPA said it discovered the violations through a routine inspection and information Harley-Davidson submitted.
In its own statement, Harley-Davidson sought to play the “good corporate citizen” card, while disagreeing with EPA’s interpretation of the law.
“This settlement is not an admission of liability, but instead represents a good faith compromise with the EPA on areas of law we interpret differently, particularly EPA’s assertion that it is illegal for anyone to modify a certified vehicle even if it will be used solely for off-road/closed-course competition,” said Ed Moreland, Harley-Davidson’s Government Affairs Director. “For more than two decades, we have sold this product under an accepted regulatory approach that permitted the sale of competition-only parts. In our view, it is and was legal to use in race conditions in the U.S.”
Harley-Davidson, one of many suppliers in the aftermarket performance parts industry, has safeguards in place to educate dealers and customers on the implications of installing Harley-Davidson performance products on their Harley-Davidson motorcycles. This includes clear product labeling of competition-only products and detail on what performance enhancements are considered street legal and for competition-use only, the legal consequences of tampering with emission controls and components, and what enhancements would void the vehicle warranty.
“Concern for our U.S. customers and dealers weighed heavily in reaching this compromise with the EPA,” said Moreland. “By settling this matter, we can focus our future attention and resources on product innovation, rather than a prolonged legal battle with the EPA.”
At one stage Harley’s share price had fallen as much as 8 percent after news of the allegations had surfaced in a U.S. lawsuit filed in Washington before the settlement was announced. On Monday 22nd Harley’s shares opened trading at $53.65 – only a tad off the pre-announcement level.