On top of paying the largest-ever Clean Air Act penalty, Cummins has agreed to spend an additional $325 million to recall 600,000 Ram 2500 and Ram 3500 pickups that contain emissions defeat devices, according to the U.S. Justice Department.
With the $1.675 billion penalty for violating federal air pollution regulations, Cummins’ estimated costs for the violation and the recall top $2 billion – an amount the company says it will account for in its fourth-quarter financial report and begin paying in the first quarter of 2024.
According to the Justice Department, more than 630,000 Ram trucks between model years 2013-2019 with Cummins diesel engines “had illegal emissions control software defeat device features.” It also alleges another 330,000 of the trucks for model years 2019-2023 had defeat devices. Model years 2020-2023 are not included in the recall.
“Those software defeat devices helped the trucks pass standard EPA emissions tests,” the department says, “but they artificially reduced the effectiveness of the emission controls – and increased NOx (nitrogen-oxide) emissions – during normal driving outside of the standard test conditions.”
Under the proposed settlement, which still faces court and regulatory approval, Cummins must work with Fiat Chrysler and its dealers to update software to remove all defeat devices from the affected 2013-2019 Ram trucks free of charge and bring the vehicles into compliance. Cummins has already started the recall and repair program.
It must complete at least 85% of the repairs within three years, according to the settlement. It must also offer a special extended warranty covering emission control system parts on 2013-2019 Ram trucks that receive the replacement software. And it must test some of the repaired trucks over a number of years to ensure they meet emissions standards over time.
Federal and California governments say the affected diesel engines produced thousands of tons of excess emissions of nitrogen oxides. So as part of the settlement, Cummins must also take steps to offset those excess emissions. To do that, it will pay a lump sum of $175 million for California Air Resources Board pollution mitigation programs.
It will also work with the nation’s railroads on two locomotive emission-reduction projects. One project requires Cummins to finance and ensure the replacement of 27-year-old high-emissions locomotive engines with low-emission diesel or electric engines. The second project involves reducing idling time for diesel-powered switch locomotives.
Cummins says the penalty and other expenses related to the violations 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.
It says it has worked in cooperation with the federal and state agencies since the violations were discovered in 2019.
“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 said in a statement. “Cummins conducted an extensive internal review and worked collaboratively with the regulators for more than four years. The company has seen no evidence that anyone acted in bad faith and does not admit wrongdoing.”
For more details on the Ram recall, click here.
The proposed settlement, lodged in the U.S. District Court for the District of Columbia, is subject to a 30-day public comment period and final court approval. Information on submitting comment is available on DOJ’s Proposed Consent Decree web page.
