German automaker Daimler AG will pay $2.2 billion to resolve a U.S. government diesel emissions cheating investigation and claims from 250,000 U.S. vehicle owners, according to court documents.
The automaker and its Mercedes-Benz USA LLC unit revealed on August 13 it had reached a settlement in principle resolving civil and environmental claims associated with 250,000 U.S. diesel cars and vans after the automaker used software to evade emissions regulations.
Daimler said in August the expected costs of settlements with U.S. officials would total $1.5 billion, settling with owners will cost another $700 million and also revealed further expenses of a mid three-digit-million EUR (euro) amount to fulfill the requirements of the settlements.
Deputy Attorney General Jeff Rosen said the settlements, which came after a nearly five-year investigation, will “serve to deter any others who may be tempted to violate our nation’s pollution laws in the future”.
In court documents, Daimler agreed to pay 250,000 owners up to $3,290 each to get polluting automobiles repaired and agreed not to oppose paying $83.4 million in attorney fees and expenses for the owners’ lawyers. Owners will get $800 less if a prior owner submits a valid claim.
Daimler noted in court papers it rejects the allegations and does not admit any liability. It noted that the settlement does not include an external compliance monitor. The German automaker still deals with an ongoing criminal back investigation and could face further U.S. financial penalties.
The settlements require the automaker to address the vehicles’ excess emissions as part of binding consent decrees. Daimler will issue recalls and extended warranties but is not needed to purchase back vehicles unless it is unable to offer emissions fix within a required timetable.
The Justice Department said Daimler failed to reveal at least 16 auxiliary emissions control devices, the government alleged, enabling “vehicles to perform in a variety of consumer-desirable ways, including allowing for fewer (diesel exhaust fluid) tank refills (and) better fuel mileage”.
The settlement includes an $875 million civil penalty levied under the Clean Air Act and $546 million to repair the polluting vehicles and offset excess emissions, according to court papers. Daimler will pay California $285.6 million in total.
Diesel automobiles have come under scrutiny in the United States and elsewhere since Volkswagen AG admitted in September 2015 to set up secret software on 580,000 U.S. vehicles that allowed them to emit up to 40 times legally permissible emissions.
In September last year, Daimler in Germany agreed to pay a fine of 870 million euros ($1 billion) for breaching diesel emissions regulations.
Both Volkswagen and Daimler have stopped sales of U.S. passenger diesel vehicles.