The Pep Boys Manny, Moe & Jack and Baja, Inc. Settlement

(WASHINGTON, DC - May 10, 2010) The Pep Boys - Manny, Moe & Jack - have agreed to take corrective measures and pay $5 million in civil penalties to settle claims that it violated the Clean Air Act by importing and selling motorcycles, recreational vehicles and generators manufactured in China that do not comply with environmental requirements, the U.S. Environmental Protection Agency (EPA) and the U.S. Justice Department announced today. Baja, Inc., which supplied the non-compliant vehicles to Pep Boys, is also settling with the U.S.

On this page:

• Overview
• Violations
• Injunctive Relief
• Pollutant Impacts
• Health Effects and Environmental Benefits
• Civil Penalty
• Comment Period

Overview of Company

Pep Boys is a national automotive aftermarket and service chain with annual sales of $1.9 billion. The vehicles and engines at issue in this case were sold at Pep Boys at over 580 stores nationwide. The company operates stores in 35 states and Puerto Rico.

Baja, Inc., based in Phoenix, contracts with manufacturers in the People's Republic of China to supply all-terrain vehicles (ATVs) and motorcycles to Pep Boys and others. Baja also handles all after-sale functions, such as warranty claims and replacement parts.

Violations

Pep Boys and Baja violated Title II of the Clean Air Act (CAA) and 40 CFR Parts 86, 90, 1051 and 1068, as follows:

• Between November 2004 and February 2009, Pep Boys and Baja imported and sold almost 250,000 Chinese-made highway motorcycles, recreational vehicles, and generators that do not comply with pollutant emission requirements of the Clean Air Act (CAA).

• Over 45 vehicle and generator models imported and sold by Pep Boys and Baja were not certified to meet federal emission standards.

• The companies also imported and sold many vehicles and engines without the proper emission-control compliance labels, and failed to provide purchasers with the full emission-system warranty required by the CAA.

Injunctive Relief

The settlement requires Pep Boys and Baja to:

• Offer an extended emissions warranty on about 40 different vehicle and engine models;

• Implement corporate compliance plans, which include regular inspections of any vehicles and engines imported in the future, and establishment of a compliance hotline and staff training program;

• Remediate or export over 15,000 noncompliant vehicles and generators; and

• Mitigate the effects of excess emissions from their non-conforming vehicles and engines through a combination of offset projects and permanent retirement of emission credits.

Pep Boys and Baja will spend at least $5 million to implement the injunctive relief required by the consent decree.

Pollutant Impacts

EPA estimates that the illegal vehicles and engines already sold by Pep Boys and Baja have contributed to excess emissions of more than 620 tons of hydrocarbons and nitrogen oxides, and more than 6,520 tons of carbon monoxide.

Health Effects and Environmental Benefits

ATVs, motorcycles and small gasoline engines emit carbon monoxide and particulate matter, as well as volatile organic compounds and nitrogen oxides that contribute to the formation of ground-level ozone.

• Nitrogen Oxides - Nitrogen oxides can cause or contribute to a variety of health problems and adverse environmental impacts, such as ground-level ozone, acid rain, global warming, water quality deterioration, and visual impairment. Affected populations include children and people with lung diseases such as asthma. Exposure to these conditions can cause damage to lung tissue for people who work or exercise outside.

• Ground-level ozone - Ground-level ozone is formed by reactions involving HC and NO_x in the presence of sunlight. Breathing ozone can trigger a variety of health problems, including chest pain, coughing, throat irritation, and congestion. It also can worsen bronchitis, emphysema, and asthma. Ground-level ozone damages vegetation and ecosystems as well. In the United States, ozone is responsible for an estimated $500 million in reduced crop production each year.

• Particulate Matter - Particulate matter, especially fine particles, contains microscopic solids or liquid droplets that are so small that they can get deep into the lungs and cause serious health problems. Particulate matter is linked to a variety of problems, including increased respiratory symptoms such as irritation of the airways, coughing, or difficulty breathing, decreased lung function, aggravated asthma, and premature death in people with heart or lung disease.

• Carbon Monoxide - Carbon monoxide is a colorless, odorless gas that is formed when carbon in fuel is not burned completely. It is a component of motor vehicle exhaust, which contributes about 56 percent of all carbon monoxide emissions nationwide. Carbon monoxide can cause harmful health effects by reducing oxygen delivery to the body's organs (like the heart and brain) and tissues.

Civil Penalty

Pep Boys will pay a $5 million penalty. Baja will pay a penalty of $25,000, and amount that was reduced substantially in light of Baja's current financial condition.

Comment Period

The proposed settlement, lodged in the U.S. District Court for the District of Columbia, is subject to a 30-day public comment period and final court approval. Information on submitting comment is available at the Department of Justice website.

For more information, contact:

Christopher A. Thompson
Air Enforcement Division
U. S. Environmental Protection Agency
1200 Pennsylvania Ave, NW (MC 2242A)
Washington, DC 20460
(202) 564-3313
[email protected]