Kohler paying nearly $26 million to settle small engine emissions issues

Last updated on January 31st, 2020 at 01:35 pm

Kohler Co. has agreed to pay a $20 million federal civil penalty to settle claims the company made and sold millions of small spark-ignition engines that did not conform to emissions standards.

Additional state penalties and mitigation and compliance actions will bring the company’s costs from the deal to around $25.7 million

The engines were sold from 2010 to 2015 and are used in lawn mowers, ride-on mowers, commercial landscaping equipment and generators.

The company also sold 144,000 engines that were designed to cheat emissions standards, according to announcements from the U.S. Environmental Protection Agency and U.S. Department of Justice.

Kohler issued a statement on the agreement Thursday that highlighted all engines sold since 2016 are in compliance with applicable regulations and that “Kohler Engines is committed to designing and manufacturing quality, compliant products.”

A spokesperson noted the company settled the case without admitting liability.

“It was always the company’s intent to comply with relevant regulations, and we took steps to swiftly correct the issues,” the spokesperson said. “Since voluntarily self-disclosing four years ago, we have been fully transparent and cooperative with the agencies to resolve these complex issues.”

The company reported the issues to the EPA and California Air Resource Board when it became aware of them in late 2015.

The settlement also requires Kohler to retire “unlawfully generated” hydrocarbon and oxides of nitrogen emission credits that will result in a 3,600-ton emission reduction.

The deal is still subject to a 30-day public comment period and final court approval.

A separate settlement with CARB calls for Kohler to provide $1.8 million worth of zero-emissions solar-powered enCUBE generators to low-income residents in California who live in areas subject to public safety power shutoffs to mitigate wildfire risk. Kohler will also pay a $200,000 civil penalty in California.

“Today’s settlement holds Kohler accountable for flouting federal law, and evens the playing field for others in the regulated community who invest in compliance programs designed to prevent illegal and harmful emissions to the air,” said Assistant Attorney General Jeffrey Bossert Clark of the Justice Department’s Environment and Natural Resources Division.

Bossert Clark added that the settlement was the result of an “aggressive investigation of actors who thwart the emissions testing regime” while also recognizing that Kohler self-reported some violations and cooperated with the investigation.

“This settlement is the result of the Justice Department’s and the EPA’s aggressive investigation of actors who thwart the emissions testing regime, and recognizes that Kohler self-reported some violations and cooperated with the government’s investigation.”

According to the DOJ, Kohler self-disclosed to the EPA and CARB in December 2015 that it had been using the wrong test cycle for many of its small spark-ignition engines. The subsequent investigation uncovered millions of noncompliant engines.

The issues discovered during the investigation included not fully complying with the test procedures Kohler told the EPA it was using, not complying with emission limits, not aging emission-related components for deterioration testing, not disclosing auxiliary emission control devices, making changes to production engines without changing EPA certifications and not complying with production line testing requirements.

In addition to the civil penalties and mitigation efforts, Kohler was required to establish an independent environmental regulatory compliance team, conduct annual compliance training for engine division employees and establish a code of conduct and an ethics hotline for reporting noncompliance.

The company is also required to hold semiannual compliance meetings with engine division managers and regulatory personnel, conduct annual audits and implement an emissions testing validation plan that includes third party observation.

The total cost of the compliance measures is estimated at around $3.7 million.

Arthur covers banking and finance and the economy at BizTimes while also leading special projects as an associate editor. He also spent five years covering manufacturing at BizTimes. He previously was managing editor at The Waukesha Freeman. He is a graduate of Carroll University and did graduate coursework at Marquette. A native of southeastern Wisconsin, he is also a nationally certified gymnastics judge and enjoys golf on the weekends.