SACRAMENTO – The California Environmental Protection Agency's Air Resources Board (ARB) announced today that Toyota has agreed to a $7.9 million settlement stemming from a 1998 recall order for potential defects in evaporative emission system monitors.

ARB's Executive Officer Michael Kenny said, "We are pleased that we have reached an agreement in this case. We believe that this settlement will not only benefit the owners of the vehicles but all Californians."

Through discussions finalized February 20, 2002, Toyota agreed to fund a package valued at $7.9 million. A $1.2 million contribution will go to the California Air Pollution Control Fund (APCF). The state uses this fund to educate the public and provide programs to minimize the output of smog-forming emissions from various sources. And, $4.3 million will go toward supplemental environmental projects to be agreed upon jointly between ARB and Toyota.

Also, Toyota will extend the warranty coverage for defects that may occur in the evaporative emission control system of the affected vehicles from three years or 50,000 miles to 14 years or 150,000 miles. And, Toyota has agreed to introduce some of their new models earlier than required to comply with ARB's near-zero evaporative emissions standards. The extended warranty and the early compliance efforts are together valued at $2.4 million.

ARB tests indicated that during the years 1996-1998, Toyota sold vehicles in California with diagnostic systems that were unable to routinely detect fuel system vapor leaks. The defects were found during tests by the ARB who subsequently ordered a recall of approximately 330,000 cars. Toyota challenged the order claiming that their leak-check systems met California requirements.

Both parties agreed to allow the case to be heard by an administrative law judge. The judge concluded that ARB testing did not conclusively demonstrate Toyota vehicles were out of compliance with California regulations when reviewing the strict regulatory language. The judge did agree that Toyota failed to fully disclose required information during certification approval that would have alerted ARB staff to the problem before Toyota received approval.

To prevent future problems, the ARB is working to amend its regulations to ensure that all diagnostic system designs will work as intended in customer's hands.