Photographer: Getty Images

Smoky Stoves Aren't Harley's Problem Now, Thanks to Sessions

  • Justice Department knocks $3 million from pollution penalty
  • Motorcycle maker first to benefit from new settlement policy

A curious marriage between Harley-Davidson Inc. and the American Lung Association is over before it even began -- the latest twist in a tale of motorcycle fumes, wood smoke and shifting winds of American justice.

Harley-Davidson has for the past year faced the prospect of paying $3 million to help fund a Lung Association initiative to replace conventional wood stoves with cleaner-burning ones. The obligation was part of a $15 million emissions-rigging settlement the motorcycle maker reached last August with the Obama administration’s Justice Department. On Thursday, the department reached back into the pending settlement and removed the wood-stove penalty.

It’s the first example of a new approach to corporate punishments by the Justice Department under President Donald Trump. The department’s adjustment to the Harley deal makes good on a vow to eliminate what had become a fixture of many settlements -- so-called soft-dollar portions of penalties aimed at redressing the underlying harm by providing money to groups that offer services like housing advice or anti-pollution initiatives.

Attorney General Jeff Sessions implemented the new policy last month, responding to Obama-era criticism from Republicans that civil settlements were being used to fund liberal organizations or projects. Sessions ordered that money collected as part of civil and criminal settlements be used only to reimburse parties to the litigation or compensate victims.

Sessions’ policy was meant to apply to new cases, not ones already filed in court. But Harley-Davidson’s settlement deal had yet to be approved by a judge -- allowing the Trump Justice Department to adjust the terms, which it did in a filing Thursday.

‘Screamin’ Eagle’

The Justice Department under Obama had accused Harley-Davidson of selling hundreds of thousands of its “Screamin’ Eagle” Pro Super Tuners, which allowed dealers and owners to tweak motorcycles to emit more pollution than the company had certified to the U.S. Environmental Protection Agency, according to a civil complaint. Harley argued that the tuners were meant for off-road and closed-course competition, not public roads, and said it did nothing wrong by selling them.

In the August settlement, Harley-Davidson admitted no liability and said it would stop selling more tuners, and buy back and destroy those already out there. It agreed to pay a $12 million civil fine.

Harley-Davidson also agreed to fund an emissions-mitigation program to retrofit or change out wood-burning appliances in a project to be run by the American Lung Association of the Northeast, according to court documents.

In the documents it filed Thursday, the Justice Department said the project may conflict with the new Sessions policy and was dragging out a final deal. The delay was caused in part because the settlement’s wood-stove component was the subject of a legal opinion being developed by the Government Accountability Office that would have taken months to complete, the filing said.

The Justice Department and Harley-Davidson attempted to negotiate a substitute mitigation project but were unable to, according to the court filing, so the U.S. gave the company a $3 million break on the penalty. 

“It was certainly a large project and we were absolutely looking forward to it,” said Michael Seilback, a spokesman for the American Lung Association. “This would have had a demonstrable effect on improving air quality.”

Patricia Sweeney of Harley-Davidson and Mark Abueg of the Justice Department declined to comment.

U.S. District Judge Emmet Sullivan, who is known for being outspoken and unpredictable when weighing government enforcement cases, will decide whether to accept the new agreement.

— With assistance by Andrew M Harris

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE