Hyundai Motor Co (KRX:005380 ) and Kia Motors Corporation (KRX:000270) agreed to pay a combined penalty of $100 million to the U.S. Environmental Protection Agency (EPA) to settle its violation related to the Clean Air Act.

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Hyundai and Kia overstated fuel economy estimates

According to EPA, the penalty imposed to the South Korean automakers is the largest in the history of the Clean Air Act. Hyundai Motor Co (KRX:005380 ) and Kia Motors Corporation (KRX:000270) each overstated its fuel economy estimates for many of its vehicles.

The South Korean automakers previously agreed to pay consumers for additional fuel costs associated with the mileage difference. The EPA discovered the discrepancy in the fuel economy estimates of Hyundai Motor Co (KRX:005380 ) and Kia Motors Corporation (KRX:000270) in 2012.

Hyundai, Kia forfeits 4.75 million GHG emission credits

The South Korean automakers sold more than 1 million vehicles, which are estimated to emit approximately 5 million metric tons of greenhouse gases (GHGs), more than what they are certified for by the EPA.

In addition to the financial penalty, Hyundai Motor Co (KRX:005380 ) and Kia Motors Corporation (KRX:000270) will forfeit 4.75 million GHG emission credits, which can’t be used to comply with the law or sold to other automakers.

According to EPA, the 4.74 million forfeited metric tons of GHGs is equivalent to the emissions that will come from powering more than 433,000 homes for one year.

Furthermore, Hyundai Motor Co (KRX:005380 ) and Kia Motors Corporation (KRX:000270) will also spend millions of dollars to implements several steps such as improving vehicle testing protocols to prevent future violations of the Clean Air Act.

“Today’s action shows that the system works. Our audit process caught these violations, and we’re following through by holding companies that violated rules accountable. We developed standards for GHG emissions from light duty cars and trucks that took effect with model year 2012, according to EPA.

EPA Administrator Gina McCarthy previously stated, “Our environmental protection enterprise, and our system of commerce, only works if you can trust the fuel economy sticker on your car, so to speak. I take this charge seriously…”