WASHINGTON - Toyota Motor Sales U.S.A. Inc. has been careful to build its image by portraying itself as an environmental leader and by taking a low-key approach to the federal government.
Now it simultaneously has put those two images on the line by refusing to cut a deal with the EPA over allegations that 2.2 million of its 1996-98 Toyota and Lexus vehicles contain faulty emissions equipment. The company is the defendant in a multibillion-dollar federal clean air lawsuit instead.
'We think we're right,' said Jim Olson, Toyota's senior vice president for external affairs, when asked for the rationale. The company contends emissions rules have been changed in the middle of the regulatory game.
'Sure, it's always a difficult decision when you know you are going up against a federal agency,' he said. 'Everyone else rolled over, but a Japanese-owned company decided to say, `No, you're wrong, and we're not going to fold.' '
He referred to a series of agreements over the past four years in which General Motors, American Honda Motor Co., Ford Motor Co. and major diesel engine manufacturers settled emissions disputes with the EPA rather than face off in court.
A CHANCE TO MAKE ITS CASE
Besides contending that the EPA is factually wrong, Olson said the repairs sought by the agency would cost hundreds of millions of dollars. The Justice Department, which filed suit for the EPA, is seeking damages of up to $27,500 per vehicle, or nearly $60 billion.
'It's a calculated risk,' Olson said.
At least, legal experts said, Toyota will get to make its case before a federal district court judge in Washington instead of a potentially more unpredictable jury, as is the case with so much other automotive litigation.
In addition, they say, the EPA has been on something of a losing streak in the federal courts, especially over attempts to tighten clean air rules.
Many factors can go into a decision not to settle, said Maxine Lipeles, professor of environmental policy and regulation at Washing-ton University in St. Louis.
The Toyota case could be tied up in courts for years, perhaps into the next administration, which may or may not have environmental policies like those of the Clinton administration, she noted.
The nub of the case is this: Toyota got approval in 1995 from the California Air Resources Board for an on-board diagnostics system that is supposed to detect evaporative emissions - vaporized gasoline that escapes from the fuel or intake systems.
CARB subsequently tested in-use vehicles and said the on-board diagnostics don't work as promised. Toyota says that the in-use testing requirement was not properly adopted, and that the vehicles do not generate illegal pollution.
The federal government, which accepts CARB certification of on-board diagnostics systems, appears to go further in its court complaint. It says Toyota designed into the system extra but secret monitoring conditions that impede its operations.
Frank O'Donnell, executive director of the Clean Air Trust, an environmental group, is one who is surprised that Toyota is the company that decided to go to the mat with the EPA.
'Toyota has worked pretty hard to cultivate a green image,' he said. 'It's bad public relations for them.'