Harley Davidson (HOG) Is Paying A Major Fine For This

The U.S. Justice Department announced on Thursday that Harley Davidson has agreed to pay $12 million in a civil fine and to stop selling illegal after-market devices that cause the company’s motorcyles to emit too much pollution.

The government has allegded that Harley sold roughly 340,000 “super tuners” enabling motorcycles since 2008 to pollute the air at levels greater than what the company certified to the U.S. Environmental Protection Agency.

Harley disagrees with the government’s position and did not admit any liability. The Milwaukee company has argued that the devices were designed and sold to be used in “competition only.”

The company was also accused of selling more than 12,600 motorcycles that were not covered by an EPA certification governing clean air compliance.

According to Harley Davidson, the settlement 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.”

In the settlement, Harley will have to stop selling the super tuners by Aug. 23, as well as buy back and destroy all such tuners in stock at its dealerships.

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 toward our goal of stopping the sale of illegal after-market defeat devices that cause harmful pollution on our roads and in our communities.”

“This settlement immediately stops the sale of illegal after-market 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 Davidson will also spend $3 million on an unrelated project to reduce air pollution, the Justice Department said.

Shares of the stock fell as much as 8% after the news of the allegation first surfaced before the settlement was announced.

Disclaimer: We have no position in Harley-Davidson In. (NYSE: HOG) and have not been compensated for this article.