In July 2020, Cummins, the largest independent maker of diesel engines in the United States, reached a $1.5 billion settlement with the U.S. government over accusations that the company cheated on emissions tests to make its engines appear cleaner than they actually were. This penalty is the largest ever imposed for a violation of the Clean Air Act.
The U.S. Environmental Protection Agency’s investigation found that Cummins had developed software that allowed its diesel engines to pass emissions tests but operate with higher levels of pollutants than legally allowed in actual conditions. In addition, Cummins was accused of failing to disclose the software’s existence to the EPA.
Under the terms of the settlement, Cummins agreed to pay $4 million in civil penalties, spend $2.2 billion to install or upgrade equipment and make other improvements in order to reduce emissions, as well as fund a federal trust fund that will support projects focused on improving air quality and offsetting the effects of emissions violations. In addition, Cummins will spend $500 million on emissions-related research and development over the next 10 years. The company also agreed to implement tighter internal controls and compliance procedures.
The settlement marks the latest example of the EPA cracking down on emissions-cheating scandals in the diesel engine industry. In 2018, for example, Volkswagen agreed to pay $14.7 billion in civil and criminal penalties after it was found to have deployed software on more than 11 million vehicles worldwide to evade emissions tests.
The massive fines imposed on companies in these types of cases are a reminder that businesses must comply with environmental regulations in order to avoid severe legal penalties.