DOW JONES NEWSWIRES 
 

Pep Boys-Manny Moe & Jack (PBY) will pay $5 million in penalties and take corrective measures to settle claims it violated the Clean Air Act, according to the U.S. Department of Justice.

The Justice Department alleges the auto-parts retailer imported and sold motorcycles, recreational vehicles and generators made in China that didn't comply with environmental requirements. Baja Inc., which supplied the noncompliant vehicles to Pep Boys, also is settling with the U.S. government.

"Importers of foreign made vehicles and engines must comply with the same Clean Air Act requirements that apply to those selling domestic products, and this settlement demonstrates that we will take strong action to ensure that importers comply with their obligations," said Assistant Attorney General Ignacia S. Moreno.

Pep Boys and Baja will also "offset the excess emissions from the vehicles and engines already sold" and ensure that future imports and sales meet regulatory standards, Moreno said. Pep Boys will have to export or destroy more than 1,300 non-compliant vehicles and engines as well as implement projects to offset excess emissions, including offering discounted push or electric lawn mowers in exchange for older mowers that pollute more.

The Justice Department said the case is the biggest vehicle- and engine-importation case brought by the U.S. under the Clean Air Act, both in number of vehicles and engines imported and penalty paid.

In April, Pep Boys said it swung to a fiscal fourth-quarter profit because of cost-cutting and margin controls despite soft holiday sales, and the company posted its first annual profit since 2005.

Shares of Pep Boys were up 5.9% to $11.65 in recent trading amid a sharp market rally following last week's slump. The stock has risen 38% so far this year.

-By Nathan Becker, Dow Jones Newswires; 212-416-2855; nathan.becker@dowjones.com

 
 
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