LKQ CORP 10-K

ITEM 3. LEGAL PROCEEDINGS On May 10, 2018, our Specialty segment received a Notice of Violation from the U.S. Environmental Protection Agency ("EPA") alleging that certain performance-related parts that we sold in 2015, 2016 and 2017 violated the provisions of the Clean Air Act that prohibit the sale of parts that alter or defeat the emission control system of a motor vehicle. The parties have been attempting to negotiate a settlement of this matter without success. On January 29, 2021, the EPA initiated a civil administrative proceeding against us in this matter seeking a monetary penalty for parts sold between January 1, 2015 and August 28, 2017. Any penalty that is likely to be imposed is not expected to have a material effect on our financial position, results of operations or cash flows. On June 2, 2020, we received a notice from the EPA regarding alleged violations associated with our NPDES stormwater permit at certain of our facilities in Massachusetts. In December 2020, we reached an agreement to settle the matters relating to three of the facilities for an aggregate fine of approximately $0.3 million. Since receiving the notice of violations in June 2020, the EPA has requested information from us relating to our NPDES stormwater permit compliance in additional locations throughout the U.S. We have responded or are in the process of responding to the requests for information. At this time, we do not expect that any penalty that could be imposed would have a material effect on our financial position, results of operations or cash flows. In addition, we are from time to time subject to various claims and lawsuits incidental to our business. In the opinion of management, currently outstanding claims and suits will not, individually or in the aggregate, have a material adverse effect on our financial position, results of operations or cash flows. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II 31