United States Obtains Consent Decree Against Apex Building Company For Violating Lead Paint Safety Regulations
Audrey Strauss, the Acting United States Attorney for the Southern District of New York, Jeffrey Bossert Clark, the Assistant Attorney General for the Environment and Natural Resources Division (“ENRD”) of the U.S. Department of Justice, and Susan Bodine, Assistant Administrator for Enforcement and Compliance Assurance of the U.S. Environmental Protection Agency (“EPA”), announced today that the United States has 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. (“TOYOTA”) for systematic, longstanding violations of Clean Air Act emission-related defect reporting requirements, which require manufacturers to report potential defects and recalls affecting vehicle components designed to control emissions.
Along with the civil complaint, the United States has filed a consent decree, agreed to by TOYOTA, that resolves the government’s complaint through TOYOTA’s payment of a $180 million civil penalty and the imposition of injunctive relief. The $180 million penalty is the largest civil penalty for violation of EPA’s emission-reporting requirements. The injunctive provisions require TOYOTA to follow compliance and reporting practices designed to ensure timely investigation of emission-related defects and timely reporting to EPA, and include training, communication, and oversight requirements. The consent decree remains subject to a period of public comment and Court approval.
Acting U.S. Attorney Audrey Strauss said: “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. 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.”
Assistant Attorney General Jeffrey Bossert Clark said: “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.
EPA Assistant Administrator Susan Bodine stated: “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. EPA considers this failure to be a serious violation of the Clean Air Act.”
The complaint filed in Manhattan federal court today alleges that from approximately 2005 until at least 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 regulations require manufacturers to notify EPA by filing an Emissions Defect Information Report (“EDIR”) when 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 regulations also require vehicle manufacturers to file a Voluntary Emissions Recall Report (“VERR”) with EPA when they perform a recall to correct defects in emission-related parts, and to update 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.
For 10 years, TOYOTA routinely failed to comply with these reporting requirements. During that time, TOYOTA materially delayed filing an estimated 78 EDIRs, filing many only when disclosing non-compliance to EPA in 2015, at which point some were as much as eight years late. These EDIRs related to millions of vehicles with the potential to exhibit emission-related defects. TOYOTA also failed to file 20 VERRs and more than 200 Quarterly Reports.
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.
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In the consent decree lodged with the federal court today, TOYOTA admits, acknowledges, and accepts responsibility for the following:
Representations to EPA
TOYOTA’s Conduct from Approximately 2005 to 2015
Notice of the proposed consent decree will be published in the Federal Register and the public will have the opportunity to submit comments on the consent decree for a period of at least 30 days before it is submitted for the Court’s approval.
Acting U.S. Attorney Strauss thanked the attorneys in EPA’s Air Enforcement Division, the program staff at EPA’s Office of Transportation and Air Quality, and the agents at EPA’s Criminal Investigative Division for their critical work on this case. Acting U.S. Attorney Strauss also thanked the ENRD attorneys who assisted in the matter.
This case is being handled by the Environmental Protection Unit of the Office’s Civil Division. Assistant U.S. Attorneys Robert William Yalen, Dominika Tarczynska, and Jennifer Jude are in charge of the case.
James Margolin, Nicholas Biase