Cummins Inc. Settlement

(WASHINGTON, DC - February 22, 2010) - Cummins Inc., a major motor vehicle engine company based in Columbus, Ind., will pay a $2.1 million penalty and recall 405 engines under a settlement agreement resolving violations of the Clean Air Act, the U.S. Environmental Protection Agency and the Justice Department announced today.

On the page:

• Overview of Company
• Violations
• Injunctive Relief
• Pollutant Reductions
• Health and Environmental Benefits
• Civil Penalty
• State Participation
• Comment Period

Overview of Company:

Cummins Inc. designs, manufactures, distributes and services engines and related technologies, including fuel systems, controls, air handling, filtration, emission controls and electrical power generation systems. The company is based in Columbus, Ind., and operates in 190 countries, with approximately 5,200 dealers.

Violations:

The settlement resolves an enforcement action for Clean Air Act (CAA) violations involving Cummins' shipment of over 570,000 engines to Chrysler and other vehicle original-equipment manufacturers without the exhaust after-treatment devices (ATDs) required by the applicable certificate of conformity for these engines. ATDs are devices that control engine exhaust emissions once the emissions have exited the engine and entered the exhaust system. Typical ATDs include catalytic converters and diesel particulate filters.

Section 203 of the CAA, 42 U.S.C. § 7522, prohibits motor vehicle manufacturers from introducing into commerce engines that are not covered by an EPA-approved certificate of conformity. These certificates are issued to ensure that specific configurations of engines, with specific emission controls, meet federal emission standards.

The AB&T Program

EPA established an AB&T program for heavy duty on-highway diesel engines at 40 C.F.R. Part 86 Subpart A. These regulations contain provisions allowing engine manufacturers to certify cleaner engines than required by the standards, thereby generating credits that may be used on the same model year or later engines in order to certify those engines with emissions above the standard. These credits may be banked or traded.

Injunctive Relief:

• Cummins will recall 405 noncompliant engines and install the correct ATDs. This recall will continue through 2012.

• Within 30 days of the entry of the consent decree, Cummins will mitigate excess emissions through permanent retirement of banked emission credits. The emissions credits to be retired are the equivalent to the lifetime excess emissions from the 633 engines either known or projected to have been installed in vehicles with incorrect or missing ATDs.

• Banked emissions credits will come from Cummins' on-road averaging, banking and trading (AB&T) account with EPA, Cummins' off-road AB&T account, or will be purchased on the open market through a licensed broker.

Pollutant Reductions:

Cummins has agreed to mitigate excess emissions through permanent retirement of banked emission credits equivalent to 167.1 tons of nitrogen oxides plus hydrocarbons (NOx+HC) and 30 tons of particulate matter (PM). NOx and HC mobile source emission standards are expressed as the sum of the emissions of these pollutants.

Health and Environmental Benefits:

• Nitrogen Oxides - Nitrogen oxides can cause or contribute to a variety of health problems and adverse environmental impacts, such as ground-level ozone, acid rain, global warming, water quality deterioration, and visual impairment. Affected populations include children and people with lung diseases such as asthma. Exposure to these conditions can cause damage to lung tissue for people who work or exercise outside.
• Ground-level ozone - Ground-level ozone is formed by reactions involving HC and NOx in the presence of sunlight. Breathing ozone can trigger a variety of health problems, including chest pain, coughing, throat irritation, and congestion. It can also worsen bronchitis, emphysema, and asthma. Ground-level ozone damages vegetation and ecosystems as well. In the United States, ozone is responsible for an estimated $500 million in reduced crop production each year.
• Particulate Matter - Particulate Matter, especially fine particles, contains microscopic solids or liquid droplets that are so small that they can get deep into the lungs and cause serious health problems. PM is linked to a variety of problems, including increased respiratory symptoms such as irritation of the airways, coughing, or difficulty breathing, decreased lung function, aggravated asthma, and premature death in people with heart or lung disease.

Civil Penalty:

Cummins will pay a $2.1 million civil penalty. Of this amount, Cummins will pay $1.68 million to the United States and the remaining $420,000 to the State of California.

State Participation:

The State of California, through the Air Resources Board, has been an active co-litigant in this case for violations arising from the sale of trucks containing these engines in California. California is sharing the penalty as discussed above, and intends to enter into its own settlement agreement with Cummins.

Comment Period:

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 comments is available at the Department of Justice website.

For more information, contact:

Christopher A. Thompson
U.S. Environmental Protection Agency (2242A)
1200 Pennsylvania Ave., N.W.
Washington, DC 20460-0001
(202) 564-3313
thompson.christopher@epa.gov