Obama administration dings Hyundai, Kia for $300 million in Clean Air Act settlement

The Obama administration on Monday announced a settlement agreement under which it will fine two South Korean auto companies a combined $100 million for overstating the gas mileage on 1.2 million cars they've sold in the United States in 2012 and 2013.

The fine against Hyundai Motor Group and Kia Motors is the largest ever assessed under the Clean Air Act. The companies will also spend about $50 million to improve their internal procedures for assessing fuel efficiency.

Attorney General Eric Holder on Monday announced a $300 million settlement over violations of the Clean Air Act. (AP Photo/Pablo Martinez Monsivais, File)

Officials said that while the 1.2 million cars in question don't violate current emissions standards, the companies overstated their fuel efficiency, which led to an overstated reduction in greenhouse gas emissions. That let them claim more in emission credits that can be used to offset sales of vehicles that don't meet U.S. emissions standards.

As part of the settlement, Hyundai and Kia have agreed to give up more than $200 million worth of these credits. Giving up those credits will make it harder for the companies to sell cars in the United States that don't meet environmental standards.

"Hyundai and Kia overstated the fuel economy by one to six miles per gallon, depending on the vehicle," EPA said in a media release. "Similarly, they understated the emissions of greenhouse gases by their fleets by approximately 4.75 million metric tons over the estimated lifetime of the vehicles."

Attorney General Eric Holder and Environmental Protection Agency Administrator Gina McCarthy announced the settlement on MOnday. Holder said it will ensure other companies don't try to misrepresent the fuel efficiency of their vehicles.

"This will send a strong message that cheating is not profitable, and that any company that violates the law will be held to account," he said.

"Businesses that play by the rules shouldn't have to compete with those breaking the law," McCarthy added. "This settlement upholds the integrity of the nation's fuel economy and greenhouse gas programs and supports all Americans who want to save fuel costs and reduce their environmental impact."