Toyota Subsidiary Hino Motors Pleads Guilty and Pays Over $1.6B to Resolve Emissions Fraud Scheme

In January 2025, Hino Motors Ltd., a subsidiary of Toyota Motor Corporation, agreed to a comprehensive settlement exceeding $1.6 billion with U.S. authorities to resolve allegations of emissions fraud. This resolution addresses both criminal charges and civil claims related to the company's misconduct in falsifying engine emission and fuel consumption data. Of interest to whistleblowers are several aspects of the settlement, which included claims brought by NHTSA and by the State of California under the California False Claims Act.

Hino’s Misconduct

Between 2010 and 2022, Hino Motors engaged in deceptive practices by submitting fraudulent data to regulatory bodies, including the U.S. Environmental Protection Agency (EPA) and the California Air Resources Board (CARB). The company manipulated test results to falsely represent compliance with U.S. emissions standards. This enabled the sale of over 110,000 diesel engines that, in reality, emitted pollutants beyond permissible limits. This deceit not only violated environmental laws but also undermined public health protections.

The Settlement

The settlement comprises several key components:

  • Criminal penalty: Hino Motors pled guilty to conspiracy charges, acknowledging its role in defrauding the United States, violating the Clean Air Act, committing wire fraud, and smuggling goods into the country. As part of the plea agreement, the company will pay a criminal fine of approximately $521.76 million.
  • Civil penalties: In addition to the criminal fines, Hino will pay substantial civil penalties amounting to $525 million. These penalties address the company's violations of environmental regulations and the resultant harm caused by excessive emissions.
  • Probation and compliance: The agreement imposes a five-year probation period during which Hino is prohibited from importing diesel engines into the United States. Furthermore, the company is mandated to implement rigorous compliance programs designed to prevent future violations and ensure adherence to environmental standards.

A Deeper Dive on Civil Penalties

California: Hino reached a settlement with the State of California to resolve allegations of fraudulent activities, including violations of the California False Claims Act. The settlement amounted to approximately $236.5 million. Of that amount, $30.3 million is specifically allocated to address claims under the California False Claims Act. The remainder, a payment to CARB of about $206 million, is for civil penalties and mitigation programs to reduce excess nitrogen oxide (NOx) emissions.

The California False Claims Act prohibits entities from knowingly submitting false claims for payment or approval to California or its political subdivisions. Hino Motors was found to have violated this act by submitting falsified emissions data to the California Air Resources Board (CARB) to obtain certifications and financial incentives. Specifically, Hino manipulated or fabricated emissions test results to falsely demonstrate compliance with California's stringent environmental standards.

Hino's misconduct involved the Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project (HVIP), a program designed to promote the adoption of cleaner vehicle technologies by providing financial incentives. Hino submitted false statements in its HVIP applications, thereby fraudulently obtaining subsidies intended for manufacturers of low-emission vehicles. This not only resulted in financial losses for the state but also undermined California's environmental objectives.

NHTSA: Hino’s settlement agreement with National Highway Traffic Safety Administration (NHTSA) requires the company to pay a $525 million civil penalty. Specifically, Hino Motors admitted to submitting to NHTSA falsified carbon dioxide emissions test data for their model year 2017 and 2018 J05E engines. This manipulation led to inaccurate fuel consumption values being reported to NHTSA's fuel consumption program, violating federal regulations. Payment of that penalty amount also resolves related civil claims by the United States on behalf of the U.S. Environmental Protection Agency and U.S. Customs and Border Protection.

Was a Whistleblower Involved in the Hino Motors Investigation or Settlement?

The resolution of claims by NHTSA and the California Attorney General under the CFCA suggest that a whistleblower may have provided the government with information that initiated the investigation. That is because NHTSA, the California False Claims Act, and other laws provide monetary incentives to whistleblowers to provide this kind of information to regulators.

However, based on available information, there is no indication that a whistleblower was involved in uncovering the emissions fraud leading to Hino’s $1.6 billion settlement. The discovery of the fraudulent activities appears to have resulted from regulatory investigations, likely started by CARB in 2019.

CARB’s review of Hino’s certification applications revealed inconsistencies in the emissions data. CARB’s investigation, undertaken with the U.S. Environmental Protection Agency, revealed undisclosed and unapproved auxiliary emission control devices on 2010-2019 model year J05E and J08E heavy-duty engines used in both on-road trucks and off-road equipment.

Implications

This settlement represents one of the most significant enforcement actions in the automotive industry since the Volkswagen "Dieselgate" scandal. The substantial financial penalties reflect the seriousness of Hino's misconduct and serve as a deterrent to other manufacturers considering similar deceptive practices. By holding Hino accountable, U.S. authorities reaffirmed their commitment to enforcing environmental laws and protecting public health.

The Hino Motors case underscores the critical importance of corporate integrity and accountability, particularly in industries with significant environmental impacts. It highlights the necessity for robust regulatory oversight and the enforcement of stringent standards to safeguard environmental quality and public health. This settlement also serves as a reminder to consumers and stakeholders to remain vigilant and demand transparency from corporations regarding their environmental practices.

The $1.6 billion settlement emphasizes that deceptive practices will be met with significant consequences to uphold the integrity of environmental regulations.