The U.S. Justice Department announced on Friday that truck engine manufacturer Cummins Inc. has agreed in principle to pay a $1.675 billion fine for placing devices on hundreds of thousands of engines to allow them to emit excess pollution. This is the largest-ever civil penalty for a Clean Air Act violation.
According to the Department, Cummins allegedly placed “defeat devices” to disable or circumvent pollution controls, including onboard computers and emission sensors.
The agency claimed that to get around emissions control regulations, Cummins installed covert auxiliary emission control devices on 330,000 RAM 2500 and 3500 pickup truck engines from 2019 to 2023 and defeat devices on 630,000 RAM 2500 and 3500 pickup truck engines from 2013 to 2019.
“Preliminary estimates suggest that defeat devices on some Cummins engines have caused them to produce thousands of tons of excess emissions of nitrogen oxides,” stated U.S. Attorney General Merrick Garland. The government claimed that it is the second-biggest environmental penalty agreement ever made.
Michael Regan, the administrator of the EPA, stated that “vulnerable communities are more likely to reside near highways where these harmful emissions are concentrated, making this agreement critical to advancing our environmental justice agenda.”
To address regulatory claims for around one million engines from the Justice Department and California Air Resources Board, Cummins stated that it anticipates incurring approximately $2.04 billion in costs in the fourth quarter.
Cummins said in a statement, “The Company has seen no evidence that anyone acted in bad faith and does not admit wrongdoing.”
The formal settlement will be made public as early as next month, subject to court approval.
Stellantis, the owner of RAM, declined to comment. Cummins, which previously charged $59 million for emissions recalls, announced that the 960,000 vehicles have been recalled and that the emissions control software will be updated.
In April 2019, Cummins initially declared that it was going to be internally assessing its compliance and emissions certification procedures.
Previously, Cummins stated that it was creating a new hardware fix and software calibration and that it would recall Nissan Titan trucks from the 2016 to 2019 model years in response to US regulators looking into the vehicles.
To cover the expenses of the RAM and Titan recalls, Cummins previously had to pay $59 million in charges. On Friday, Nissan did not immediately respond.
The business, which also includes Daimler Trucks North America and PACCAR among its clients, stated that payments totaling roughly $1.93 billion are anticipated in the first half of 2024.
In a research note, Jeffries stated that the charge “is significant but not expected to impact normal business operations.” In early afternoon trading, Cummins shares dropped 2.3% to $238.47.
In August 2022, the American division of Fiat Chrysler Automobiles, which is currently a part of Stellantis, entered a guilty plea to criminal conspiracy and made a payment of around $300 million to end a multi-year investigation into diesel emissions fraud by the US Justice Department. Additionally, FCA US LLC was placed on organizational probation for three years.
Volkswagen admitted in 2015 that it had installed “defeat devices” in 11 million cars worldwide, employing advanced software to cut emissions only during emissions testing. As a result, the German automaker had to pay $1.45 billion in U.S. civil fines in 2017.
Over $20 billion was paid by VW to resolve civil and criminal lawsuits brought about by the emissions issue in the United States.
