Feds, California reach $1.5 billion pollution settlement with Daimler and Mercedes

The U.S. Department of Justice, Environmental Protection Agency, and California Air Resources Board on Monday announced a proposed settlement worth around $1.5 billion with auto titan Daimler AG and U.S. subsidiary Mercedes Benz USA, in connection with the company allegedly selling more than a quarter million vehicles while failing to comply with emissions requirements.

The automaker over a period spanning from 2009 to 2016 allegedly sold in excess of 250,000 vehicles with undeclared auxiliary emission control devices (AECDs) "and defeat devices programmed into the vehicles' complex emissions control software," the Justice Deparment said in a press release. 

"These devices cause the vehicles to produce compliant results during emissions testing. But when not running a test, the vehicles’ emissions controls perform differently, and less effectively, resulting in an increase in NOx emissions above compliant levels," the department said.

As part of the proposed settlement, the company would pay $875,000,000 for civil penalties and approximately $70,300,000 for other penalties. It would also recall and fix emissions systems for Mercedes-Benz diesel vehicles that were sold in America between 2009-2016.

Other aspects of the settlement would boost the estimated amount to approximately $1.5 billion.

"The company will also extend the warranty period for certain parts in the repaired vehicles, perform projects to mitigate excess ozone-creating nitrogen oxides (NOx) emitted from the vehicles, and implement new internal audit procedures designed to prevent future emissions cheating," according to the Justice Department. "The recall program and federal mitigation project are expected to cost the company about $436,000,000. The company will pay another $110,000,000 to fund mitigation projects in California."