STLAM Stellantis NV

The Department of Justice on Wednesday said it had reached a proposed settlement with Indiana-based diesel engine maker Cummins over alleged violations of the Clean Air Act and California law that included the use of software "defeat devices" that circumvented emissions testing and certifications requirements.

Under the proposed settlement, Cummins agreed to pay a $1.675 billion in civil penalty -- the largest ever assessed in a Clean Air case -- and spend more than $325 million to remedy the violations related to the defeat devices, DOJ, EPA, the California Air Resources Board and the California attorney general said in a joint statement.

Cummins must also "complete a nationwide vehicle recall to repair and replace the engine control software in hundreds of thousands of RAM 2500 and RAM 3500 pickup trucks equipped with the company's diesel engines," the agencies said.

The Dodge RAM series pick-up trucks are among the best-selling vehicles in the U.S. marketed by Stellantis -- formed from the merger of Italian-American automaker Fiat Chrysler and the French PSA Group.

The proposed deal will also require the company to "extend the warranty period for certain parts in the repaired vehicles, fund and perform projects to mitigate excess ozone-creating nitrogen oxides emitted from the vehicles and employ new internal procedures designed to prevent future emissions cheating," the statement said.

The settlement is valued a total of more than $2 billion, the agency said.

NOx pollution contributes to the formation of harmful smog and fine particulate matter in air, according to the EPA. Nitrogen dioxide formed by NOx emissions can aggravate respiratory diseases, particularly asthma, and may also contribute to asthma development in children.

A Cummins spokesman said in a statement that Wednesday's settlement "marks another step toward concluding that four-year review."

EPA said it discovered defeat devices in Cummins engines used in RAM pickup trucks through its testing protocol. It said tests of RAM trucks were done as follow-up on a 2015 EPA warning to manufacturers that the agency planned to conduct special testing to "identify defeat devices using driving cycles and conditions that were non-standard, but still reflected normal vehicle operation and use."

In a related set of complaints filed on Wednesday, the U.S. and California alleged that nearly 1 million model year 2013-2023 RAM 2500 and RAM 3500 pickup trucks with Cummins diesel engines "utilized undisclosed engine control software features, and more than 630,000 of trucks made in model years 2013-2019 had illegal emissions control software defeat device features."

The settlement requires Cummins to work with Fiat Chrysler and its dealers on a "vehicle recall and repair program that will remove all defeat devices from the affected 2013-2019 RAM trucks." The repair only involves software updates, and Cummins has begun the recall and repair program, the agencies said.

As part of the settlement, Cummins will "make a lump sum payment to CARB of slightly more than $175 million to fund mitigation actions or projects that reduce NOx emissions in California through CARB mitigation programs," according to the news release.

For the rest of the country, Cummins will "secure offsetting NOx reductions by working with railroad locomotive owners on two types of locomotive emission reduction projects," which include replacing high-emission locomotive engines, among other steps.

This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.

--Reporting by Frank Tang, ftang@opisnet.com; Editing by Jeff Barber, jbarber@opisnet.com

(END) Dow Jones Newswires

January 10, 2024 17:57 ET (22:57 GMT)

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