Toyota To Pay $180 Million For Decade-Long Noncompliance With Clean Air Act Reporting Requirements

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Toyota Motor Company just had its hand popped by the U.S. Department of Justice for decade-long noncompliance with the Clean Air Act reporting requirements. Toyota has to pay a $180 million settlement according to the Department of Justice (DOJ) and the Environmental Protection Agency (EPA).

The DOJ and EPA announced that both agencies filed and simultaneously settled a civil lawsuit against Toyota Motor Corporation, Toyota Motor North America Inc., Toyota Motor Sales U.S.A. Inc., and Toyota Motor Engineering & Manufacturing North America Inc. The chargers were for systematic, longstanding violations of Clean Air Act emission-related defect reporting requirements. These require manufacturers to report potential defects and recalls affecting vehicle components designed to control emissions (i.e., cut pollution).

The U.S. has also filed a consent decree alongside the civil complaint and Toyota, which agreed to this, has to resolve the government’s complaint by paying $180 million, a civil penalty. The DOJ noted in its press release that this $180 million penalty is “the largest civil penalty for violation of EPA’s emission-reporting requirements.”

Jeffrey Bossert Clark, Assistant Attorney General of the Justice Department’s Environment and Natural Resources Division, stated, “This settlement is yet another important milestone settlement for this Administration, and it continues our unwavering commitment to ensuring that our environmental laws as written, including EPA’s regulations, are rigorously enforced.”

Audrey Strauss, Acting U.S. Attorney for the Southern District of New York, touched upon Toyota’s violations and that it’s finally paying the price for its misconduct. “For a decade, Toyota systematically violated regulations that provide EPA with a critical compliance tool to ensure that vehicles on the road comply with federal emissions standards,” she said.

“Toyota shut its eyes to the noncompliance, failing to provide proper training, attention, and oversight to its Clean Air Act reporting obligations. Toyota’s actions undermined EPA’s self-disclosure system and likely led to delayed or avoided emission-related recalls, resulting in financial benefit to Toyota and excess emissions of air pollutants. Today, Toyota pays the price for its misconduct with a $180 million civil penalty and agreement to injunctive relief to ensure that its violations will not be repeated.”

Susan Bodine, EPA’s Office of Enforcement and Compliance Assurance Assistant Administrator, noted that this was a major violation of the Clean Air Act. “For a decade Toyota failed to report mandatory information about potential defects in their cars to the EPA, keeping the agency in the dark and evading oversight,” she said. “EPA considers this failure to be a serious violation of the Clean Air Act.”

The DOJ stated that the complaint, filed in Manhattan federal court, alleged that from around 2005 until around late 2015, Toyota “systematically violated Clean Air Act automobile defect reporting requirements designed to protect public health and the environment from harmful air pollutants.”

Clean Air Act Requirements That Were Violated

The Clean Air Act regulations require manufacturers to inform the EPA if “25 or more vehicles or engines in a given model year have the same defect in an emission control part or an element of design installed in order to comply with emission standards and other EPA regulations.” The company is to do this by filing an Emissions Defect Information Report (EDIR).

Another requirement is for vehicle manufacturers to file a Voluntary Emissions Recall Report (VERR) with the EPA when they perform a recall to correct defects in emissions-related parts. They also need to update the EPA on the progress of such recalls through quarterly reports.

“These mandatory reporting requirements are critical to the Clean Air Act’s purpose of protecting human health and the environment from harmful air pollutants: They encourage manufacturers to investigate and voluntarily address defects that may result in excess emissions of harmful air pollutants, and provide EPA with important information about emission-related defects for use in its oversight of manufacturers,” the DOJ stated.

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The Violation

The DOJ shared that for 10 years, Toyota routinely failed to comply with reporting requirements. During this time, Toyota delayed the filings of an estimated 78 EDIRs and only disclosed non-compliance to the EPA in 2015. At this point, some of these filings were 8 years late. The DOJ noted that the EDIRs were related to millions of vehicles with the potential to exhibit emission-related defects. It also stated that Toyota failed to file 20 VERRs and more than 200 quarterly reports. It gets even worse.

“During the period of noncompliance, Toyota managers and staff in Japan knew that Toyota was no longer even attempting to determine whether it was aware of 25 instances of the same emission-related defect in a model year – the threshold requirement for filing an EDIR. Rather than follow this legally required standard, Toyota unilaterally decided to file EDIRs principally when Toyota was required to file distinct reports with California regulators under a less strict standard – a standard that EPA had rejected as too lenient when Toyota had previously proposed to rely on it for federal reporting.  Toyota managers and staff in Japan repeatedly identified the discrepancy between Toyota’s procedures and the plain language of the federal requirements but failed to bring Toyota into compliance.

“As a result of its conduct, Toyota deprived EPA of timely information regarding emission-related defects and recalls and avoided the early focus on emission defects contemplated by the regulations. Toyota’s conduct likely resulted in delayed or avoided recalls, with Toyota obtaining a significant economic benefit, pushing costs onto consumers, and lengthening the time that unrepaired vehicles with emission-related defects remained on the road.”

Toyota & The EPA

In 2002, the EPA requested that Toyota and EPA representatives meet to discuss Toyota’s internal process for identifying whether 25 instances of a specific emissions-related defects existed in its vehicles or engines of the same model year. During that first meeting, Toyota shared its EDIR process, which noted it would investigate whether or not it had 25 defects only upon receiving 25 product reports from its dealers. It would also supplement that review by filing an EDIR upon receiving warranty claims for an emission-related part in 4 of its California fleet. The EPA rejected the process, though, since it’s not timely considering warranty claims.

Toyota revised its process and presented it at another meeting in 2002. Under the new process, Toyota would “commence an investigation to determine whether an EDIR filing was required when it had received warranty claims for an emission-related part for 1 percent of relevant vehicles nationwide; when it received 500 such warranty claims regardless of the percentage; or when it received 25 similar early warning reports.”

Just three years later, in 2005, Toyota stopped following the agreed upon EDIR process — and did so without notifying the EPA. It began filing EDIRs only when filing the California reports triggered by the 4% threshold. Then, from 2005–2015, it stopped making any independent determination of whether 25 defects existed and required an EDIR filing.

Many times during this 10 year period, Toyota staff charged with preparing EDIRs spoke out about the plain language of the EDIR regulations calling for filing an EDIR when 25 defects were spotted. However, Toyota wasn’t doing so and the staff didn’t seem to care enough to convince Toyota to follow the law.

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• Akio Toyoda Incorrectly Warns Electric Vehicles Could Increase Emissions, Collapse Auto Industry

Photos by Kyle Field/CleanTechnica