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Diesel Manufacturers Settle Suit With EPA; Will Pay $1.1 Billion

By Joby Warrick and Michael
The Washington Post

Diesel engine manufacturers Thursday agreed to pay $83 million in fines and spend $1 billion on environmental improvements to avoid a federal lawsuit over alleged cheating on engine performance tests.

The landmark deal, the most expensive settlement ever of an air pollution case, will hasten the implementation of tough new pollution controls for the world's top manufacturers of truck and bus engines, while substantially improving air quality for millions of Americans, federal officials said.

In sheer size, the settlement rivals the criminal penalties imposed in the 1989 Exxon Valdez oil spill, which resulted in $125 million in fines and restitution and $900 million for environmental cleanup.

"The diesel engine industry has illegally poured millions of tons of pollution into the air," said Attorney General Janet Reno, who announced the settlement jointly with Carol M. Browner, head of the Environmental Protection Agency. "It's time for the industry to clean up its act - and clean up our air."

The agreement ends a year of negotiations over whether seven U.S. and foreign diesel companies deliberately tried to thwart federal pollution controls with their engine designs. Government lawyers accused the manufacturers of using "defeat devices" that enabled engines to pass federal vehicle emissions tests even though they belched prodigious amounts of sooty fumes at highway speeds.

Because of the devices, the EPA alleged, diesels spewed an additional 1.3 million tons of smog-causing nitrogen oxide (NOx) into the air last year alone. That is equivalent to the pollution produced by 65 million passenger cars, or about 6 percent of all the NOx emitted by factories, automobiles and power plants combined.

More than 1 million trucks currently use the devices, which are essentially software commands in the computer-controlled fuel systems of diesel trucks. While suppressing pollution at low engine speeds, the systems enrich the fuel mix at high speeds to improve fuel economy and performance.

"Today, we're sending a clear message: If you illegally pollute, you will pay," Browner said. "We set air quality standards to ensure that the air people breathe is safe, clean and healthy. No person, no company has the right to violate these standards and put the American people at risk."

The companies, which include U.S. diesel giants Mack Trucks Inc., Cummins Engine Co. and Caterpillar Inc., maintain they did not break any laws. But they collectively agreed to an $83.4 million fine that is being called the largest civil penalty ever for an alleged environmental infraction - the "Exxon Valdez of civil enforcement," as one official put it. There have been larger fines levied in criminal cases.

Besides the fine, the companies agreed to spend $110 million to finance anti-pollution projects around the country. For example, the payments could help improve urban air quality by financing new fleets of buses and delivery trucks that run on electricity or clean-burning natural gas, the EPA said.

But most of the cost for engine makers come from new requirements for building cleaner new engines and upgrading old ones. The settlement stopped short of an engine recall, but it forces manufacturers to upgrade older diesel engines the next time they are brought in for scheduled maintenance.