Toyota will pay a penalty of $180 million for failing to comply with the Clean Air Act’s emissions-reporting requirements from 2005-2015, according to a filing today by the US Department of Justice.
Over that time period, Toyota delayed required filings about emissions defects and failed to inform the EPA about progress on recalls related to emissions defects. This resulted in higher emissions, higher costs for consumers, and greater profit for Toyota.
Emissions regulations largely rely on a “self-disclosure” system where manufacturers are responsible for filing reports detailing their compliance. Over the 10-year period, Toyota delayed filing of 78 emissions reports, some of which were sent in up to eight years late. The company also failed to file 20 emissions recall reports and over 200 quarterly updates on emissions recalls.
In a press release, the DOJ says:
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.
The “significant economic benefit” attained by Toyota through these actions is never calculated or laid out in the government’s complaint. From 2005-2015, Toyota sold between 1.5 and 2 million cars in the US per year, which means this fine represents about $10 per car sold during that period (not accounting for the time value of money). Looked at another way, Toyota’s single-year global revenue for 2019 was $272 billion, over 1,500x higher than this fine for 10 years of noncompliance.
This is not the first time Toyota has been sanctioned for emissions violations. In 2003, the automaker was penalized $20 million for selling 2.2 million vehicles with noncompliant on-board diagnostic systems. The consent decree which resolved this violation was not terminated until 2014 – nine years into the violations covered by today’s settlement.
Today’s fine represents “the largest civil penalty for violation of EPA’s emission-reporting requirements,” though there have been larger fines against other automakers for other violations. VW had to pay ~$25 billion and Daimler $2.2 billion for their inclusion of emissions-testing defeat devices in their cars over a similar period of time as Toyota’s violations occurred.
In addition to the $180 million fine, Toyota will be forced to operate under injunction, ensuring that they comply with emissions-reporting requirements going forward.
Toyota’s green(washed) image
Toyota has long fostered an image of environmental responsibility, being one of the first automakers to introduce hybrid vehicles to the road. Its Prius became the best-selling hybrid car in the US and turned into a widely-recognized symbol of environmental responsibility.
But Toyota’s fleet emissions tell another story. Its US fleet includes many trucks and SUVs with above-average emissions, giving them some of the worst results in overall fleet emissions. We have previously written about Toyota’s consistently low fleet efficiency (though it is doing a little bit better with updated numbers for 2019).
In addition to (and perhaps because of) its poor efficiency, Toyota was one of the highest-profile companies to join a lawsuit by the fossil-lobbyist-led EPA opposing higher efficiency standards, along with GM, Fiat Chrysler and others. Lowering efficiency standards will kill Americans and cost them money, according to the EPA’s analysis.
The company also opposes electric vehicles and has run science-illiterate anti-EV ads and repeatedly spread other disinformation about EVs. Toyota currently sells no battery electric vehicles and one fuel cell electric vehicle, the Toyota Mirai. Toyota’s roadmap does show some possible future electric vehicles, but we have little information about them yet.
It seems likely that Toyota’s opposition to electric cars has influenced Japan’s recently-announced 2035 “gas car ban.” Toyota is the largest company in Japan by a large margin (double the revenue of #2 Honda). The proposed ban doesn’t actually ban gas cars, as it will still allow the sales of new hybrids, which get 100% of their energy inputs from gasoline.
Toyota’s violations come on a similar time frame as the “dieselgate” emissions scandal that rocked VW and many other manufacturers. Dieselgate cheat devices were used by VW between 2009 and 2015, and Toyota’s emissions noncompliance was from 2005 to 2015.
But this same decade also saw governments around the world finally starting to wake up and take some action on what we have known for decades – that the world is warming rapidly due to human activity.
Transportation is one of the world’s largest sources of emissions and is the largest sector of emissions in the US, so automakers will play a big role in avoiding the worst disasters of the climate crisis the world is currently in.
Instead, automakers chose to work against that effort by undermining emissions reporting systems that governments need reliable data from if they are to craft emissions regulations that work for everyone. Toyota hoped that consumers would give them credit for their slightly-cleaner Prius while ignoring their poor efficiency and the emissions rules violations they spent a decade hiding from the government.
We need good data if we are going to solve our problems and develop an international plan of action, and we don’t have time to waste in cleaning up our act. Incomplete information, as a result of Toyota’s deliberate misreporting, can only hurt efforts to solve our collective problem.
We don’t (and perhaps can’t) know if this particular fine is enough to make up for the total benefit Toyota received from their actions, or the total increased costs consumers suffered from it. But Toyota’s willingness to settle with the government instead of putting up a fight suggests that it thinks it’s getting off easy.
When individuals are found guilty of fraud or theft, they don’t (or shouldn’t) get to profit from it. If one were to rob $10,000 from a bank, they wouldn’t be given a $1,000 fine and told to continue about their business. Yet companies that routinely violate environmental regulations get this sort of treatment all too often – not just in automotive, but in other polluting industries as well. It needs to stop – and companies that violate the rules shouldn’t be allowed to profit from it.
And from the perspective of deterrence, fines have heretofore apparently been too small to inspire compliance. Even though Toyota had been fined for emissions violations in 2003, they went on to start violating emissions regulations again in 2005, just two years later, and this continued for another decade. It’s obvious that the original penalty was not enough. Today’s penalty, representing a small fraction of what Toyota makes year-on-year, may also be too low.
But it’s not just Toyota – it’s starting to seem like every manufacturer has gotten caught up in some sort of emissions-cheating scandal. And if that’s the case, clearly there’s a problem with the enforcement mechanisms the government has in place, and those mechanisms could benefit from some reform.
Since companies are seemingly unwilling to self-regulate, we need more independent eyes to hold them accountable. The costs of this additional regulation should fall on the auto companies, who for too long have cheated their way past existing systems and increased costs for consumers and imposed environmental damage that we all suffer from.
Or hey, here’s an idea. Maybe we should shift to vehicles that don’t even have a tailpipe for emissions to come out of, that can’t have errors in the exhaust system or or other emissions management systems because they don’t produce exhaust at all. Then the companies won’t have to worry about installing cheat devices because there’s no exhaust to cheat.
Since this problem is so widespread amongst gas vehicles, maybe it’s time to give up gas entirely.
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