On January 14, the U.S. Department of Justice (DOJ) announced a settlement with four Toyota entities for violations of reporting regulations related to emissions defect investigations under the Clean Air Act (CAA). Under the Settlement, the Toyota defendants will pay a $180 million civil penalty and agreed to be subject to a number of compliance measures, including enhanced investigation and reporting, staff training and internal oversight requirements.

The consent decree states that in 2015 the defendants disclosed to the government that it had failed to file 30 EDIR reports over a ten-year period. The consent decree also states that the defendants filed 39 EDIR reports late and failed to file 20 voluntary emissions recall reports and associated quarterly reports. The $180 million fine is the largest to be levied for violations of EPA’s emissions reporting requirements. This case highlights the benefits of having a robust and effective compliance program in place, including regular compliance reviews and audits that can help a company catch and correct compliance problems before they create the risk of severe penalties.

Under the emissions defect investigation report (EDIR) regulations at 40 CFR § 85.1903, manufacturers must report to the U.S. Environmental Protection Agency (EPA) when they determine that an emissions-related defect exists and affects 25 or more motor vehicles or engines in a model year. The regulations set a short, 15-day time frame to submit these reports. California’s Emissions Warranty Information Reporting program is similar but has higher thresholds for reporting requirements (warranty claims must be reported at the 1% level and there are additional reporting requirements when a component’s warranty claim rate exceeds 4%). Under EPA regulations at 40 CFR § 85.1904, manufacturers are also required to submit reports to EPA when they initiate voluntary emissions recall campaigns, as well as quarterly reports on the campaigns for six quarters thereafter. Failure to file these reports puts companies at risk of penalties of up to $48,192 per day per violation, as adjusted for inflation.

The case was pursued by the U.S. Attorney's Office for the Southern District of New York, which continued its practice of requiring defendants in environmental cases to admit, acknowledge and accept responsibility for a number of facts alleged in the complaint, including facts that the government asserts as a basis for finding a violation.

The proposed consent decree is here: https://www.justice.gov/enrd/consent-decree/file/1354131/download.