The Justice Department took Toyota Motor Corp. to court yesterday, accusing the company of selling 2.2 million cars and trucks with defective smog-control computers.
The suit, filed against Toyota Motors Sales USA Inc., on behalf of the Environmental Protection Agency, asks for penalties of $58.5 billion, an amount based on the number of cars sold with faulty devices, but any award is likely to be much smaller.
Toyota is the first auto company ever to refuse to settle a Clean Air Act case with the EPA -- an unlikely distinction for a company that long has avoided public disputes with government agencies.
But Toyota officials insisted yesterday that their vehicles are environmentally correct, and that the company will fight the government in court as a matter of principle.
The EPA's suit accuses Toyota Motor Sales of knowingly selling 2.2 million Toyota and Lexus cars and trucks equipped with defective onboard diagnostic systems, which are supposed to monitor and help reduce smog-forming hydrocarbon vapors. Affected Toyota and Lexus vehicles include those made during the 1996 and 1997 model years, as well as some manufactured in the first half of 1998.
The only vehicles excluded from the suit are Toyota's heavy sport-utility models, the Toyota Land Cruiser and the Lexus LS 470, which are not now covered by the Clean Air Act.
In its petition, the EPA is seeking up to $25,000 per car sold before Jan. 31, 1997, and $27,500 for each car sold after that date. The aggregate penalty range, based on several other factors, is between $56.4 billion and $58.5 billion.
The suit marks the third time in nine months that the Justice Department has gone after vehicle manufacturers for alleged violations of federal clean air rules.
Last October, the government won a $1 billion settlement with seven makers of heavy-duty diesel engines accused by the EPA of pouring millions of tons of pollutants into the air. The settlement was then the largest in U.S. environmental enforcement history.
In June 1998, the government agreed to a $267 million settlement with American Honda Motor Co., which the EPA had accused of selling vehicles with disabled emissions control systems.
Though filed by Justice and the EPA, yesterday's suit stems from a dispute between Toyota and the California Air Resources Board (CARB) that began in 1991.
In late 1991, CARB implemented regulations governing the performance of advanced emissions monitoring equipment to help control errant fuel vapors.
Toyota officials said they worked closely with the California agency in developing a new system. In mid-1995, CARB approved the Toyota device.
But in August 1997, CARB randomly tested several Toyota and Lexus vehicles and found that they failed to meet the agency's standards. CARB told Toyota to make a fix and Toyota refused, and accused CARB of basing its tests on revised standards that were not in place when the agency approved the Toyota design in 1995.
The two sides attempted to negotiate a compromise, but Toyota,federal sources said, was unyielding in its position that it was the victim of an after-the-game rule change. Negotiations broke off last Dec. 11.
The EPA sided with CARB, and on Jan. 4 announced its intention to take legal action against Toyota. As often happens in such cases, the two sides tried to reach an out-of-court agreement -- one that could have cost Toyota $100 million in civil penalties. But Toyota rejected that idea last week.
As CARB opened a hearing in Sacramento yesterday to force a recall of the affected 380,000 Toyota vehicles sold in that state, Justice and EPA filed their suit against the company in the U.S. District Court here.
"The public cares about driving clean cars," said Lois J. Schiffer, assistant attorney general for Justice's Environment and Natural Resources Division. "Companies that take shortcuts with their vehicle pollution control systems short-change the consumer and our environment. We will hold them accountable."
But Justice officials said they do not necessarily want a recall of the cars. In addition to fines, Toyota could be forced to extend warranties on the vehicles, or implement other remedies.
Toyota said it will do nothing without a fight. "We are right on this," said Toyota spokesman Joe Tetherow.
"None of the vehicles in question poses an emissions concern to the environment, or a safety threat to consumers," said Tetherow. "Toyota contends that no regulatory agency should bring an enforcement action on an after-the-fact reinterpretation of a regulation."