By David Shepardson
WASHINGTON (Reuters) -Cummins agreed to a record-setting fine in a $2 billion settlement of a lawsuit filed on Wednesday by the U.S. Justice Department and California charging the truck engine maker with installing devices designed to cheat emissions control.
The lawsuit said Cummins (NYSE:CMI) installed "defeat devices" to bypass or disable emissions controls such as emission sensors and onboard computers.
U.S. officials they were ramping up enforcement after a series of excess emissions cases in recent years.
"These results should send a powerful message that admission cheating attempts by vehicle and engine manufacturers will not be tolerated," said Todd Kim, who heads the Justice Department’s Environment and Natural Resources Division.
Cummins, which is to pay a record-setting $1.675 billion fine, did not admit any wrongdoing under the settlement agreement.
The Justice Department said Cummins used defeat devices on 630,000 pickup truck engines it produced for RAM trucks made by Stellantis (NYSE:STLA). It said the engines were made for RAM 2500 and 3500 vehicles from 2013 to 2019. Justice said Cummins also had undisclosed auxiliary emission software on 330,000 2019-2023 pickup truck engines.
Under the settlement, which is subject to court approval, the $1.675 billion fine to be paid by Cummins includes $1.48 billion to the federal government, $164 million to the California Air Resources Board and $33 million to the California Attorney General's Office. The Justice Department said it is the largest-ever civil penalty for a Clean Air Act violation.
Cummins will also spend more than $325 million to remedy the excess emissions, including $175 million to California to reduce excess nitrogen oxide, and will fund replacement high-emitting diesel locomotive engines.
Cummins said the settlement does "not involve any additional financial commitments beyond those disclosed by Cummins" last month. It said in December that it expected to take a $2.04 billion charge in the 2023 fourth quarter to resolve emissions claims.
"The company has seen no evidence that anyone acted in bad faith and does not admit wrongdoing," Cummins has said.
EPA enforcement chief David Uhlmann told reporters Wednesday that "Cummins would not be paying $2 billion today to settle these claims if the company did nothing wrong." He said using illegal on more than 600,000 vehicles "over a six-year period is wrongdoing."
RAM-owner Stellantis declined comment. The 960,000 vehicles have been recalled and emissions controls software updated. Cummins must pay higher penalties if at least 85% of recalled vehicles do not get software updates.
In August 2022, the U.S unit of Fiat Chrysler Automobiles -- now part of Stellantis -- pleaded guilty to criminal conspiracy and paid nearly $300 million to resolve a Justice Department diesel-emissions fraud probe.
Volkswagen (ETR:VOWG_p) paid $1.45 billion in civil penalties in 2017 after the German automaker disclosed it cheated emissions tests by installing defeat devices" in 11 million vehicles worldwide, using sophisticated software to reduce emissions only during emissions tests.