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Climate Change

Ahead of Biden era, Toyota agrees to pay $180m in emissions case

Carmaker reaches record settlement to avoid drawn-out court battle

Toyota Motor's U.S. settlement avoids a lengthy court battle over problems with reporting potential emissions defects.   © Reuters

NAGOYA, Japan -- Toyota Motor will pay $180 million to settle the U.S. government's charge that it violated the country's Clean Air Act, in a deal reached just days before President-elect Joe Biden takes office with an ambitious climate agenda.

Though Toyota had the option of fighting the lawsuit in court, the carmaker decided to reach a settlement, which amounted to "the largest civil penalty" for violating the law's reporting requirements, according to the Justice Department.

The quickness of Toyota's settlement suggests Japan's leading automaker seeks to bolster its environmental credentials in the transition to a Biden administration.

Under outgoing President Donald Trump, who expressed doubts about climate change, the U.S. announced its withdrawal from the Paris climate agreement. The Environmental Protection Agency eased fuel economy standards for automobiles.

Biden, by contrast, has put forward an environmental agenda for the U.S. that includes a goal of achieving "a 100% clean energy economy and net-zero emissions no later than 2050."

Biden's EPA is likely to toughen its stance on the auto industry. The president-elect's climate plan calls for "developing rigorous new fuel economy standards aimed at ensuring 100% of new sales for light- and medium-duty vehicles will be electrified and annual improvements for heavy duty vehicles," as well as maintaining the current Clean Air Act.

Biden, a Democrat, has stopped short of endorsing the so-called Green New Deal, which Republicans have labeled as costly and unrealistic, but progressives such as the policy statement's author Alexandria Ocasio-Cortez are expected to gain a larger voice under the new administration.

While Toyota's remarks on the emissions reporting case differ from those of the U.S. Justice Department, the automaker appears to have chosen a quick settlement to mend fences with the EPA rather than poison their relationship with a prolonged legal dispute.

Under the Clean Air Act, automakers are supposed to report possible defects and recalls concerning vehicle parts that control emissions. Toyota routinely failed to comply with these reporting requirements for at least a decade through 2015, according to Thursday's statement from the Justice Department.

Toyota was late in filing 78 emissions defect reports to the EPA, the Justice Department said. Some reports were delayed by as much as eight years.

Toyota said through a spokesperson that it voluntarily notified authorities about five years ago after becoming aware of problems with its reporting. The delayed reports were all filed "within several months of the problems coming to light," the Japanese automaker said.

The stalled reporting "resulted in a negligible emissions impact, if any," the spokesperson said. Toyota says it has notified customers of potential defects and offered repairs.

The $180 million settlement will be booked in the fiscal year ending in March.

The settlement is the result of a civil suit filed by the U.S. against Toyota, which differs from a fine connected to misconduct or criminal activity.

Toyota separately agreed in 2014 to pay a $1.2 billion civil penalty in the U.S. to settle a case over what the Justice Department then called "misleading public statements" on vehicle safety.

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