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Toyota settles U.S. probe into delayed emissions reports for $180 million

Toyota Motor settled a lengthy Justice Department civil investigation into its delayed filing of emissions-related defect reports for $180 million, the government said on Thursday.

Toyota first revealed in 2016 it was going through investigation for the delayed reports to the Environmental Protection Agency (EPA). The Justice Department had not previously verified the investigation until Thursday’s announcement by the U.S. Attorney’s Office in Manhattan that the government had filed a civil lawsuit against the automaker. It simultaneously announced the settlement, which includes a consent decree that needs semi-annual compliance reports.

Toyota will record $180 million in after-tax charges against revenues in the fiscal year ending March 31, 2021, for costs associated with the agreement.

The government said the settlement resolved the automaker’s “systematic, longstanding violations of Clean Air Act emission-related defect reporting requirements, which need manufacturers to report potential defects and recalls affecting vehicle components designed to control emissions.”

Acting U.S. Attorney Audrey Strauss in New York said: “Toyota shut its eyes to the noncompliance, failing to provide proper training, attention, and oversight to its Clean Air Act reporting obligations.”

Strauss added that “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.”

Toyota said in a statement the company almost five years ago “identified and self-reported a process gap that resulted in a delay in the filing of certain non-public EPA reports for emissions-related defects in vehicles.”

The automaker added that “while this reporting delay resulted in a negligible emissions impact if any, we recognize that some of our reporting protocols fell short of our own high standards, and we are pleased to have resolved this matter.”

During a 10-year period ending in 2015, Toyota “routinely filed emission defect reports to EPA materially late and, in many cases, failed to file such reports at all until a self-disclosure of non-compliance” in 2015, the Justice Department said in a court filing.

The government initially sought a significantly higher civil penalty from Toyota, sources briefed on the matter said.

The $180 million fine is the largest civil penalty for violation of EPA’s emission-reporting requirements.

“Toyota failed to report mandatory information about potential defects in their cars to the EPA, keeping the agency in the dark and evading oversight. EPA considers this failure to be a serious violation of the Clean Air Act,” said EPA Assistant Administrator Susan Bodine.

In recent times, the Justice Department has brought penalties in a number of auto emissions investigations, but unlike others such as Volkswagen AG, Daimler AG, and Fiat Chrysler Automobiles NV, the Toyota case has no allegations of emissions cheating.

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