Cummins consents to pay $1.7 billion to settle a federal Clean Air Act lawsuit

Columbus, Indiana – To address U.S. regulatory claims about its emissions certification and compliance process for specific engines, Cummins Inc. achieved a preliminary agreement.

The majority of these engines’ applications were in pick-up trucks.

The company stated that it has previously resolved many of the concerns at hand, fully cooperated with the relevant agencies, and looks forward to getting certainty as it closes this protracted affair.

For more than four years, Cummins collaborated with the regulators and carried out a thorough internal examination. The business denied any wrongdoing and claimed there was no proof of any acts committed in bad faith.

The Department of Justice’s Environment and Natural Resources Division, the California Attorney General’s Office, the U.S. Environmental Protection Agency (EPA), and the California Air Resources Board (CARB) are the governmental bodies involved.

According to the report on Friday, Cummins started an assessment of these issues in 2019 and has since updated its disclosures on a regular basis as the review has advanced.

In addition to recalling RAM 2500 and 3500 trucks from the 2019 model year, the company has also started to recall vehicles from the 2013 to 2018 model years. They had already accumulated an estimated cost of $59 million for carrying out these and associated recalls.

In the fourth quarter of 2023, Cummins anticipates recording a charge of around $2.04 billion to settle these and other related issues pertaining to roughly a million pick-up truck applications in the United States.

About $1.93 billion of this sum is related to payments that are anticipated to be made in 2024’s first half. The report states that the balance represents our best estimate of linked costs that will affect cash flow in subsequent periods.

The company clarified that it is in a healthy financial position, having access to capital and current liquidity to meet settlement-related commitments, maintain business operations, and carry out its expansion plan.

The settlements are contingent upon final approvals from courts and regulators.