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GM will pay $146 million in penalties because of excess carbon dioxide
WASHINGTON | General Motors will pay nearly $146 million in penalties to the federal government because 5.9 million of its older vehicles do not comply with emissions and fuel economy standards.
The National Highway Traffic Safety Administration said in a statement Wednesday that certain GM vehicles from the 2012 through 2018 model years did not comply with federal fuel economy requirements.
The penalty comes after the Environmental Protection Agency said its testing showed the GM pickup trucks and SUVs emit over 10% more carbon dioxide on average than GM’s initial compliance testing claimed.
The EPA says the vehicles will remain on the road and cannot be repaired. The GM vehicles on average consume at least 10% more fuel than the window sticker numbers say, but the company won’t be required to reduce the miles per gallon on the stickers, the EPA said.
“Our investigation has achieved accountability and upholds an important program that’s reducing air pollution and protecting communities across the country,” EPA Administrator Michael Regan said.
GM said in a statement that it complied with all regulations in pollution and mileage certification of its vehicles. The company said it is not admitting to any wrongdoing nor that it failed to comply with the Clean Air Act.
The problem stems from a change in testing procedures that the EPA put in place in 2016, GM spokesman Bill Grotz said.
Owners don’t have to take any action because there is no defect in the vehicles, Grotz said.
“We believe this voluntary action is the best course of action to resolve the outstanding issues with the federal government,” he said.
The enforcement action involves about 4.6 million full-size pickups and SUVs and about 1.3 million midsize SUVs, the EPA said. The affected models include the Chevy Tahoe, Cadillac Escalade and Chevy Silverado. About 40 variations of GM vehicles are covered.
GM will be forced to give up credits used to ensure that manufacturers’ greenhouse gas emissions are below the fleet standard for emissions that applies for that model year, the EPA said. In a quarterly filing with the Securities and Exchange Commission, GM said it expects the total cost to resolve the matter will be $490 million.
Because GM agreed to address the excess emissions, EPA said it was not necessary to make a formal determination regarding the reasons for the excess pollution.
But David Cooke, senior vehicles analyst for the Union of Concerned Scientists, questioned how GM could not know that pollution exceeded initial test by more than 10% because the problem was so widespread on so many different vehicles. “You don’t just make a more than 10% rounding error,” he said.
Dan Becker, director of the Safe Climate Transport Campaign for the environmental group Center for Biological Diversity, said the violations by GM “show why automakers can’t be trusted to protect our air and health, and why we need strong pollution rules. Supreme Court, take notice!”
In similar pollution cases in the past, automakers have been fined under the Clean Air Act for such violations, and the Justice Department normally gets involved, Cooke said. Hyundai and Kia, for instance, faced Justice Department action in a similar case.
The Justice Department declined to comment, and GM said the settlement resolves all government claims.
Cooke said it’s possible that GM owners could sue the company because they are getting lower gas mileage than advertised.
In 2014, Hyundai and Kia entered into a settlement in which they had to pay a $100 million civil penalty to end a two year investigation into overstated gas mileage on window stickers of 1.2 million vehicles.
The affiliated Korean automakers denied allegations that they violated the law. Hyundai blamed the inflated mileage on honest misinterpretation of the EPA’s complex rules governing testing.
In 2015, Volkswagen admitted it intentionally rigged nearly half a million cars to defeat U.S. smog tests.
The German company admitted that it intentionally installed software programed to “defeat” emissions testing, enabling cars to drive more powerfully on the road while emitting as much as 40 times the legal pollution limit. The scandal cost Volkswagen more than $30 billion in fines and settlements and saw two U.S. executives sent to prison.
Southwest Air adopts ‘poison pill’ as Elliott takes significant stake
Southwest Airlines has adopted a ‘poison pill’ following activist investor Elliott Investment Management taking a significant stake in the company.
The airline said Wednesday that the shareholder rights plan is effective immediately and expires in a year. Southwest shareholders would need to give prior approval for an extension.
Shareholder rights plans, or “poison pills,” allow existing shareholders to acquire shares at a discounted rate to discourage a takeover by an outside entity. Southwest’s plan is triggered when a shareholder acquires 12.5% or more of its common stock, which would let all other shareholders buy stock at a 50% discount.
Southwest said that it adopted the rights plans due to several concerns, including Elliott’s approximately 11% stake in the company and the flexibility that the firm has to acquire a significantly greater percentage of Southwest’s voting power across two of its funds starting as early as July 11.
“In light of the potential for Elliott to significantly increase its position in Southwest Airlines, the board determined that adopting the rights plan is prudent to fulfill its fiduciary duties to all shareholders,” Southwest Chairman Gary Kelly said in a statement. “Southwest Airlines has made a good faith effort to engage constructively with Elliott Investment Management since its initial investment and remains open to any ideas for lasting value creation.”
Last month it was disclosed that Elliott bought a $1.9 billion stake in Southwest and was looking to force out the CEO of the airline, which has struggled with operational and financial problems.
Elliott, in a letter to Southwest’s board, then said that Southwest’s stock price has dropped more than 50% in the last three years. The firm also criticized the airline, saying it has failed to evolve, hurting its ability to compete with other carriers. Elliott blamed the Dallas-based company’s massive flight cancellations in December 2022 on what it described as the airline’s outdated software and operational processes.
Elliott is looking for executives from outside the company to replace CEO Robert Jordan and Kelly, and for “significant” changes on the board, including new independent directors with experience at other airlines.
Southwest has said that it remains confident in Jordan and its management and their ability to drive long-term value for shareholders. For his part, Jordan has said that he won’t resign and that in September his leadership team will present a plan to boost the airline’s financial performance.
In midday trading, Southwest shares added 11 cents to $28.41. Shares of the company are down about 21% in the past year, while the benchmark S&P 500 index is up roughly 25% over the same time.
Microsoft will
pay $14M to
settle allegations
SAN FRANCISCO | Microsoft Corp. has agreed to pay $14.4 million to settle allegations that the global software giant retaliated and discriminated against employees who took protected leave, including parental and disability, the California Civil Rights Department announced Wednesday.
The proposed settlement stems from a multi-year investigation by the California agency and the consent decree is subject to approval in state court in Santa Clara County, where the Redmond, Washington-based company has an office.
The state agency, which launched its investigation in 2020, alleged that employees who took leave from work due to pregnancy or disability, or to bond with a new baby or care for a sick family member, received lower bonuses and unfavorable performance reviews.
Those factors, in turn, harmed employee eligibility for merit pay increases and promotions and the practice disproportionately impacted women and people with disabilities, the department said.
In a statement, civil rights department director Kevin Kish applauded the company “for coming to the table and agreeing to make the changes necessary to protect workers in California.”
Microsoft responded in a statement that the agency’s allegations are inaccurate, but it “will continue to listen, learn, and support our employees.”
As part of the proposed settlement, Microsoft will take steps to prevent future discrimination, including updated manager training. An outside consultant will monitor and report on the company’s compliance.
Most of the settlement money — $14.2 million — will go toward harmed workers. Covered employees worked at Microsoft from May 13, 2017, to a yet-to-be-determined date of court approval for the settlement, and who took at least one leave protected under state or federal law.
Each eligible employee will receive a base payment of $1,500 with more available based on factors such as salary and length of employment.
Microsoft has about 221,000 employees worldwide, including nearly 7,000 in California, according to the state civil rights agency. The agency did not have an estimate for how many workers could receive payment.
U.S. filings for jobless claims inch up modestly
WASHINGTON | The number of Americans filing for unemployment benefits inched up last week and remain historically low, however the total number of people collecting jobless benefits continues to grow.
The Labor Department reported Wednesday that jobless claims for the week ending June 29 rose by 4,000 to 238,000 from 234,000 the previous week. The data was issued one day earlier than its regular Thursday release due to the July Fourth holiday.
The total number of Americans collecting unemployment benefits rose for the ninth straight week, to 1.86 million, for the week of June 22. That’s the most since November of 2021.
Economists say that while the number of new people applying for jobless aid each week remains relatively modest, some who are receiving benefits are finding it harder to land new jobs. That suggests that demand for workers is waning, even as the economy remains strong. That, combined with recent data showing that inflation continues to ease, could point to the so-called “soft-landing” the Federal Reserve was aiming for when it began its rate-hiking campaign.
The Federal Reserve raised its benchmark borrowing rate 11 times beginning in March of 2022 in an attempt to extinguish the four-decade high inflation that shook the economy after it rebounded from the COVID-19 recession of 2020. The Fed’s intention was to cool off a red-hot labor market and slow wage growth, which can fuel inflation.
Many economists had expected the rapid rate hikes would trigger a recession, but so far that hasn’t happened, thanks in large part to strong consumer demand and a sturdier-than-expected labor market.
“The data bear watching for signals about a more material weakening in the labor market going forward, which will have implications for Fed policy,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.
The Fed’s next policy meeting comes at the end of this month, but few experts are expecting a rate cut then. However, investors are betting that there is nearly a 70% chance for a reduction at the Fed’s September meeting.
The Fed will release the minutes from its most recent interest rate policy meeting Wednesday afternoon and there may be more hints as to how Fed officials feel about the state of the U.S. economy, and what they may be thinking about current interest rates.
While the labor market remains sturdy, recent government data suggest some softness taking hold.
The four-week average of claims, which evens out some of the week-to-week volatility, also continued to climb, rising by 2,250 to 238,500.
Applications for jobless benefits are trending higher in June after mostly staying below 220,000 this year. The unemployment rate ticked up to 4% in May, despite the fact that America’s employers added a strong 272,000 jobs last month. Job postings in May rose slightly to 8.1 million, however, April’s figure was revised lower to 7.9 million, the first reading below 8 million since February 2021.
The government issues its June jobs report on Friday. Analysts are forecasting that U.S. employers added 190,000 jobs last month, a healthy figure but down from May.
Weekly unemployment claims are widely considered as representative of layoffs.
—From AP reports
