WASHINGTON (CN) - Detroit Diesel Corp. will pay a $14 million fine for claims of emissions violations, and will spend another $14.5 million to reduce pollution, the Justice Department said Thursday.
The company reached the settlement with the federal government for alleged Clean Air Act violations for the sale of nearly 7,800 heavy-duty diesel engines without proper Environmental Protection Agency certification.
According to a 57-page federal complaint filed Thursday in Washington, D.C. federal court, Detroit Diesel began building the engines in 2009 but completed them in 2010.
The EPA adopted more stringent standards in 2001 for nitrogen oxide and non-methane hydrocarbon emissions, and required heavy-duty diesel engines to be in compliance with the new standards by 2010, the complaint states.
Detroit Diesel said in a statement that an unexpected increase in engine orders led the company to take advantage of what it believed was a provision that would allow the company to use a "short block" assembly method to begin production in 2009 and complete the engines the following year.
The company did this to avoid laying off workers at the end of 2009 after ramping up production to fill the engine orders, the statement said.
"Before beginning short block assembly, Detroit informed the EPA of its intent. Ultimately, the EPA disagreed with Detroit's interpretation of the regulations, but not until it was too late for Detroit to reverse course," the company said.
The EPA, however, said it considered the engines produced in 2010, which required certification.
"Because Detroit Diesel completed all manufacturing and assembling processes for the engines in 2010, the engines required a certificate of conformity demonstrating compliance with 2010 emission standards," the agency said in a statement.
Under the terms of the settlement agreement, Detroit Diesel will not have to recall the engines. It agreed to spend nearly $11 million to replace older school buses across the country, and said it will focus on disadvantaged school districts. The company also said it will spend more than $3.6 million to upgrade diesel locomotive engines.
"While Detroit disagrees with the EPA's position and was surprised to receive the EPA's conclusion that its definition of 'produced' didn't apply to our engines, to avoid litigation and stay focused on producing the most efficient engines in the market, Detroit has decided to settle with the EPA," Brian Burton, Detroit Diesel's general counsel, said in a statement.
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