Engine maker Cummins agrees to pay $1.67 billion to settle claims it bypassed emissions tests

Cummins Inc. has agreed to pay a more than $1.67-billion penalty to settle claims by regulators that the engine manufacturer unlawfully altered hundreds of thousands of pickup truck engines to bypass emissions tests.

According to the U.S. Justice Department, which announced the agreement in principle Thursday, Cummins’ alleged actions violated the Clear Air Act — a federal law that requires car and engine manufacturers to comply with emission limits.

The $1.675-billion fine would be the largest civil penalty the Justice Department has secured under the Clear Air Act to date and second-largest environmental penalty ever secured.

The Justice Department accuses Cummins of installing defeat devices — which can bypass or defeat emissions controls — on 630,000 2013-2019 Ram 2500 and 3500 pickup truck engines, as well as undisclosed auxiliary emission control devices on 330,000 2019-2023 Ram 2500 and 3500 pickup truck engines.

“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,” Atty. Gen. Merrick Garland said in a prepared statement. “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.”

Garland pointed to the “cascading effect” of these pollutants, notably breathing issues and respiratory infections that can arise with long-term exposure.

In a Friday release about the agreement, Cummins said it does not admit any wrongdoing, noting the company “has seen no evidence that anyone acted in bad faith.”

Cummins added that it “cooperated fully” with regulators. The company also pointed to actions dating back to 2019, including a previous recall of 2019 Ram 2500 and 3500 trucks and now-initiated recall of 2013-2018 Ram 2500 and 3500 trucks.

Cummins said it previously accrued $59 million in estimated costs for these and other related recalls. The company expects an additional charge of about $2.4 billion in 2023’s fourth quarter “to resolve these and other related matters involving approximately one million pick-up truck applications in the United States.”

Cummins’ agreement in principle is with the U.S. and state of California. The settlement is subject to final approvals.

Shares for Cummins Inc. were down about 3% Friday morning. Last month, the engine maker, based in Columbus, Ind., reported third-quarter net income of $656 million on revenue of $8.4 billion.

Stellantis, maker of Ram vehicles, did not comment Friday.