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Caterpillar Inc. Clean Air Act Settlement

(Washington, DC - July 28, 2011) The U.S. Environmental Protection Agency (EPA) and the U.S. Department of Justice (DOJ) today announced a settlement with Caterpillar Inc. to resolve alleged Clean Air Act violations for shipping more than 590,000 highway and non-road diesel engines without the correct emissions controls. Caterpillar also allegedly failed to comply with emission control reporting and engine-labeling requirements. Caterpillar will pay a $2.55 million penalty, continue a recall of noncompliant engines and reduce excess emissions.

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Overview of Company and Location of Facilities

Caterpillar Inc. (Caterpillar) is a Fortune 500 company headquartered in Peoria, Ill. Caterpillar manufactures heavy-duty diesel engines, among other products. The engines at issue in this case are highway engines and non-road engines. Caterpillar sells the engines to original equipment manufacturers (OEMs). The OEMs incorporate Caterpillar's engines into motor vehicles and non-road equipment (e.g., construction equipment) that they manufacture.

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Caterpillar violated the Clean Air Act (CAA) in shipping over 590,000 engines to OEMs without exhaust after-treatment devices (ATDs) and incorrect fuel injector and fuel map settings.

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. The fuel injector and fuel map settings meter the amount of fuel delivered into the engine.

Caterpillar also allegedly failed to comply with defect reporting and engine labeling requirements under the CAA.

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Injunctive Relief

Caterpillar will recall these known defective engines and install the correct ATDs and reprogram the fuel injector and fuel map settings. This recall will continue until all engines with incorrect catalysts, fuel injectors or fuel map settlings have been addressed or until December 31, 2011, whichever is earlier.

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Pollutant Reductions

In addition to the recall, and regardless of its success, Caterpillar will mitigate excess emissions through permanent retirement of banked emission credits. Within 30 days of entry of the Consent Decree, Caterpillar agrees to retire credits equivalent to the lifetime excess emissions from the 925 engines that did not receive the correct ATD or that were programmed with incorrect fuel injector or fuel map settings. These credits will come from Caterpillar's

  • highway averaging, banking and trading (AB&T) account with EPA
  • off-road AB&T account
  • purchase of credits on the open market through a licensed broker.

This permanent retirement of banked emission credits is equivalent to:

  • 17.6 tons (16.0 megagrams) of nitrogen oxides (NOx) and non-methane hydrocarbons (NMHC)
  • 0.97 ton (.88 megagram) of particulate matter (PM).

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Health and Environmental Benefits

  • Nitrogen Oxides - Nitrogen oxides can cause ground-level ozone, acid rain, particulate matter, global warming, water quality deterioration, and visual impairment. Nitrogen oxides play a major role, with volatile organic chemicals, in the atmospheric reactions that produce ozone. Children, people with lung diseases such as asthma, and people who work or exercise outside are susceptible to adverse effects such as damage to lung tissue and reduction in lung function.
  • Ground-level ozone - Breathing ozone can trigger a variety of health problems including chest pain, coughing, throat irritation, and congestion. It can worsen bronchitis, emphysema, and asthma. Ground-level ozone also can reduce lung function and inflame the linings of the lungs. Repeated exposure may permanently scar lung tissue.
  • 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.

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Civil Penalty

Caterpillar will pay a $2.55 million civil penalty:

  • $2.04 million to the United States
  • $510,000 to the state of California.

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State Participation

The State of California, through the Air Resources Board, has been an active co-litigant in this case and intends to enter into its own settlement agreement with Caterpillar.

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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.

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For more information, contact:

Christopher A. Thompson
Air Enforcement Division
Office of Civil Enforcement
U.S. Environmental Protection Agency
1200 Pennsylvania Avenue, NW
Washington, DC 20460
Christopher A. Thompson (
(202) 564-3313


1. EPA established an average banking and trading (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.

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