Caterpillar is not recalling 590,000 on-highway and off-road diesel engines, as reported previously. In fact, the number of engines actually recalled is just 925. The company will, however, pay a $2.55 million penalty to resolve alleged Clean Air Act violations for shipping some 590,000 engines without the correct emissions controls.

Caterpillar allegedly failed to comply with emission control reporting and engine-labeling requirements.

A Caterpillar spokesperson explains the situation this way:

"EPA's complaint states that Caterpillar shipped 590,000 engines separate from their aftertreatment devices and/or with incorrect fuel programming software to OEMs. In the vast majority of cases of separate shipment, the engines were matched with the correct aftertreatment devices when installed in vehicles.

"As EPA's complaint states, approximately 925 of those 590,000 engines were not in their certified configuration when the equipment or vehicles they powered were delivered to end users and placed into service. Per paragraph 9 in the consent decree, Caterpillar is not required to recall 590,000 engines, but rather is required to recall approximately 925 engines. All but a small percentage of those 925 recalled engines have already been corrected."

The U.S. Environmental Protection Agency (EPA) and the U.S. Department of Justice (DOJ) announced a settlement with Caterpillar recently.

From February 2002 to November 2006, the government says, Caterpillar shipped the 590,000 engines to more than 50 original equipment manufacturers, engines that were not equipped with the aftertreatment devices and/or fuel programming software that were present on Cat engines that had been certified by EPA.

As a result, says the EPA, the engines emitted excess nitrogen oxides and particulate matter.

"Caterpillar denies any wrongdoing, but does agree that the decree represents a good faith effort between the parties to resolve their differences and avoid potentially lengthy litigation," said Cat in a statement. "Caterpillar is committed to following the terms of the decree."

Caterpillar will recall the affected engines and install the correct aftertreatment devices and re-program the fuel-injector and fuel-map settings. This recall will continue until all engines with incorrect catalysts, fuel injectors or fuel-map settings have been addressed or until December 31, whichever is earlier.

In addition to the recall, Caterpillar will mitigate excess emissions through permanent retirement of banked emission credits on the 925 recalled engines.

The proposed settlement is subject to a 30-day public comment period and final court approval.