Cummins has agreed to pay the largest penalty ever for a federal Clean Air Act violation – $1.675 billion – for allegedly installing emissions defeat devices on nearly 1 million diesel engines in Ram pickup trucks.
The affected engines are in Ram 2500 and 3500 pickups from model years 2013 to 2023, according to the U.S. Justice Department.
Cummins reached the agreement with the Justice Department and the state of California after the company first disclosed a review of the engines in 2019. “Cummins conducted an extensive internal review and worked collaboratively with the regulators for more than four years,” Cummins says.
“The company has seen no evidence that anyone acted in bad faith and does not admit wrongdoing.”
The company previously recalled 2019 Ram 2500 and 3500 trucks and has initiated a recall of model years 2013 through 2018 Ram 2500 and 3500 pickups.
“The company has cooperated fully with the relevant regulators, already addressed many of the issues involved and looks forward to obtaining certainty as it concludes this lengthy matter,” Cummins says.
The Justice Department says the agreement, if approved by the courts and regulators, will result in the largest civil penalty ever under the Clean Air Act and the second-largest environmental penalty ever. The largest penalty was $20.8 billion, issued in 2016, for the Deepwater Horizon oil rig explosion off the Gulf Coast.
“The types of devices we allege that Cummins installed in its engines to cheat federal environmental laws have a significant and harmful impact on people’s health and safety,” said U.S. Attorney General Merrick B. Garland. “For example, in this case, our preliminary estimates suggest that defeat devices on some Cummins engines have caused them to produce thousands of tons of excess emissions of nitrogen oxides. The cascading effect of those pollutants can, over long-term exposure, lead to breathing issues like asthma and respiratory infections.”
Under the Clean Air Act, engines are required to reduce pollution emissions to under certain levels. Defeat devices, which Cummins is accused of deploying, include parts or software “that bypass, defeat or render inoperative emissions controls such as emission sensors and onboard computers,” according to the Justice Department.
The department alleges such defeat devices were installed on 630,000 Ram 2500 and 3500 pickups for model years 2013-2019, and on 330,000 of the same trucks for 2019-2023 model years.
These Ram trucks have Cummins 6.7-liter diesel engines.
Cummins says it expects to record a charge of $2.04 billion in the fourth quarter for the penalty as well as recalls, which have totaled an estimated $59 million so far, and other costs related to the pickup engines. It estimated it will make payments of $1.93 billion on that amount starting in the first quarter of 2024.
Cummins says the penalty will be paid via existing liquidity and access to capital and that the company remains strong financially for continued operations and to execute its growth strategy.