Gas-mileage ratings issued by Korean automakers Hyundai and Kia have been the topic of investigation by the U.S. Environmental Protection Agency (EPA) for some time now.

The companies were accused of misstating fuel-economy figures on the window stickers of certain 2011, 2012, and 2013 models; both had previously been ordered to compensate owners for those discrepancies.

Now the government has announced a settlement under which they will also have to pay $300 million in penalties.

MORE: Hyundai, Kia Rapped By EPA Over Misstated MPG Stickers (Nov 2012)

As well as paying $100 million in fines, the carmakers will forfeit $200 million in greenhouse-gas emissions credits, which car companies earn by building vehicles with lower emissions than required by government standards.

The fines paid by Hyundai and Kia are the largest ever for a violation of the Clean Air Act, according to The New York Times (subscription required).

2012 Kia Soul

2012 Kia Soul

Together, Hyundai and Kia--both divisions of Hyundai Motor Group--were found to have overstated fuel economy on 1.2 million vehicles across 13 model lines, with the degree of error varying by model.

The penalty is already drawing applause from environmental groups like the National Resources Defense Council, which issued a statement saying that the decision "should deter other automakers from cheating" and ensure that consumers get accurate fuel-economy information.

Hyundai and Kia first admitted to the errors back in 2012--when they were first made public by the EPA--and maintain the widespread discrepancies were not intentional.

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Hyundai recently posted a video on YouTube explaining that the problem lies with a vague testing procedure.

Carmakers conduct actual fuel-economy testing in their own controlled labs according to EPA rules, but Hyundai claims not all of the rules are specific enough.

Testing is run on a dynamometer, but to calibrate it carmakers must first determine a vehicle's "road load"--essentially the amount of friction in its drivetrain.

2013 Hyundai Elantra Coupe

2013 Hyundai Elantra Coupe

To determine this, the carmakers conduct "coast down" tests, where a vehicle is timed as it coasts from one speed to another on a track.

According to Hyundai, the rules governing these tests are too vague, introducing variables that could skew the results.

It points to potential variations in tire wear, temperature and even the smoothness of the test track--Hyundai claims EPA auditors use re-purposed runways that are rougher than its own purpose-built tracks--that can produce less-accurate data.

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The Hyundai video is now private, and no longer available for public viewing--perhaps indicating the company's extreme sensitivity around the topic and its settlement with the EPA.

The EPA plans to issue revised guidelines for the coast-down test, as well as making other changes to its testing rules. It will also audit more gas-mileage test data submitted by carmakers.

[video hat tip: Dave Sullivan]


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