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U.S. Reopens Harley Settlement, Cutting Funds for Pollution Reduction Plan

Last year the United States government fined Harley-Davidson $15 million for selling devices that shut down its motorcycles’ emissions controls — and said part of that money would go toward a project to reduce pollution from wood-fired stoves.

On Thursday, the Trump administration said Harley-Davidson was no longer required to fund the antipollution program, knocking $3 million off the company’s bill.

The move followed a decision last month by Attorney General Jeff Sessions to halt a longstanding practice under which polluters could be compelled to pay for environmental or community projects, in addition to fines and direct compensation to victims.

To settle claims from the Gulf oil spill, for example, BP was required to spend billions on coastal restoration projects that were not directly related to spill damage. Critics have long said the practice effectively creates “slush funds” for favored organizations or causes.

Mr. Sessions had said only future cases would be affected by his decision to end the practice. Department officials declined to comment on why the Harley-Davidson settlement, in a case brought by the Obama administration, was being revisited.

The willingness to reopen cases has raised the prospect that other recent settlements could also unravel. As part of a $14.7 billion deal to settle claims arising from its diesel emissions cheating scandal, for example, Volkswagen is financing electric vehicle charging stations across the country, and funding efforts by states to cut pollution from old diesel engines.

Under the original settlement with Harley-Davidson, it would have paid $12 million in civil penalties and funded a $3 million project administered by the American Lung Association of the Northeast to upgrade wood-burning stoves. A new consent decree, proposed Thursday in federal court, keeps the $12 million penalty but scraps the $3 million in project funding.

Harley-Davidson declined to discuss those changes. “By settling this matter, we can focus our attention on new products rather than on a legal battle,” the company wrote by email.

Environmental and health groups expressed disappointment.

The funds “absolutely” would have had a demonstrable effect on cutting air pollution in the Northeast, said Michael Seilback, vice president for public policy at the lung association.

The money would have funded vouchers to help low-income households replace older wood stoves with more efficient ones, he said, resulting in significant health benefits. The association estimates that more than 32 million Americans had from chronic lung disease in 2015, including 6.2 million children with asthma.

“We were looking forward to moving forward with the project,” Mr. Seilback said.

The lowering of fines for Harley-Davidson is the latest decision by a business-friendly administration that has promised to loosen the government’s regulatory grip on corporations. Amid an effort to ease federal environmental rules, some polluters have started to back away from environmental settlements.

Harley-Davidson, based in Milwaukee, has donated to Republican candidates. Harley executives visited President Trump at the White House in February, and the president and Vice President Mike Pence have mentioned the company in many speeches and at rallies.

“What a great, great group of people and what a fantastic job you do,” Mr. Trump said after the February meeting. “And thank you for all of the votes you gave me in Wisconsin.”

Mr. Trump’s friendly relationship contrasts starkly with that of the Obama administration, which accused Harley-Davidson of violating the Clean Air Act. The company sold more than 340,000 “Screamin’ Eagle” aftermarket devices that enhanced engine performance but increased motorcycle emissions, the administration charged in a consent decree.

The Obama administration’s approach to such cases had already received criticism. In the Volkswagen settlement, conservative groups said the administration was exploiting the deal to increase public funding of electric vehicles without congressional approval.

“Having been twice spurned by lawmakers, the Obama administration leveraged the Volkswagen settlement,” groups including the Competitive Enterprise Institute and Americans for Prosperity said.

Now, a bill working its way through Congress could make Mr. Sessions’s policy law. The bill, sponsored by Representative Robert W. Goodlatte, Republican of Virginia, would prevent the government from using settlement money from civil cases for purposes other than direct victim compensation or remediation, like cleanups of environmental disasters.

The fines should go directly to the Treasury and benefit all Americans, not outside environmental projects, the bill’s supporters argue.

But Eric Schaeffer, executive director of the Environmental Integrity Project and the former director of civil enforcement at the Environmental Protection Agency, noted that the latest move in the Harley case did not follow through on that premise.

“If you’re going on that principle, Harley-Davidson should have taken that money and sent it to the Treasury,” he said. “But that’s not what happened. These guys are just going to cough up less.”

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