German automaker Daimler AG is set to pay an $875 million civil penalty for violating clean air laws of the U.S., as part of a $1.5 billion settlement with the country and California regulators over excess diesel emissions in passenger vehicles and vans, two people knowledgeable about the matter said.
The U.S. Justice Department and Environmental Protection Agency (EPA) confirmed they will hold a 2 p.m. news conference on Monday to talk about the settlement over “emissions cheating in Mercedes-Benz diesel vehicles”.
The German automaker and parent of Mercedes-Benz revealed on August 13 it had reached a settlement in principle resolving civil and environmental claims tied to 250,000 U.S. diesel automobiles after the automaker used software to evade emissions rules.
Daimler said in August expected the expenses of settlements with U.S. officials would total $1.5 billion, settling with owners will cost about $700 million and also disclosed “further expenses of a mid-three-digit-million EUR (euro) amount to fulfill requirements of the settlements.”
The settlements will need the automaker to address the vehicles’ excess emissions as part of binding consent decrees that must be authorized by a U.S. judge. Daimler will issue extended warranties but will not be needed to buy back vehicles, two people knowledgeable about the matter said.
The Justice Department filed a civil complaint against Daimler ahead of the settlement, saying the German automaker utilized illegal defeat devices that boosted nitrogen oxide (NOx) emissions “during real-world driving scenarios to levels exceeding the NOx emission standards to which the vehicles were certified”.
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, sources said, the second-highest ever. Court papers label Daimler’s diesel software “defeat devices” was used for evading emissions tests.
It will also include a separate Customs and Border Protection civil penalty to resolve allegations of unlawfully importing non-compliant automobiles and a separate California Air Resources Board settlement.
Daimler and the EPA have not commented on the issue, but the automaker said last month the proposed settlements are an “important step towards legal certainty” in the US.
Diesel vehicles have come under scrutiny in the United States and other parts of the world since Volkswagen confessed in September 2015 to installing secret software on 580,000 U.S. vehicles that enabled them to emit up to 40 times legally permissible emissions.
In September 2019, Daimler in Germany agreed to pay a fine of 870 million euros ($1 billion) for breaching diesel emissions regulations.
