Feds, California strikes $1.5B deal with Daimler over emissions allegations

By Alex Guillén 09/14/2020 03:50 PM EDT

German automaker Daimler will pay a total of $1.5 billion to settle allegations lodged by the federal government and California regarding its emissions cheating on more than a quarter-million vehicles sold in the U.S.

The settlement makes Daimler the latest automaker to agree to major penalties over unlawful vehicle emissions, and it will cost Daimler $3,482 per vehicle, the highest-ever per vehicle penalty, officials said. The announcement formalizes the terms of a deal Daimler publicly disclosed last month.

Background: Daimler, the parent of Mercedes-Benz USA, allegedly sold 250,000 diesel cars and vans in the U.S. from 2009 through 2016 equipped with an emission control device. Similar to the defeat devices that ensnared Volkswagen in its own costly emissions cheating scandal, Daimler’s software was able to tell when vehicles were being tested by government authorities in a lab and would perform more effectively there, but shut off in real-world driving conditions, boosting engine performance.

Daimler has already been slapped with major fines in Germany and recalled three-quarters of a million vehicles there.

The terms: Daimler will pay an $875 million civil penalty, the second-largest civil penalty ever. Of that, $743.75 million will go to the federal government and $131.25 million to the California Air Resources Board. It must also pay to recall and fix all 250,000 vehicles, which officials estimate will cost the company $400 million.

The company will also pay for projects to mitigate the additional nitrogen oxides emitted by the vehicles in the U.S. That includes about $40.5 million for upgrades to curb emissions from 15 older locomotive trains and by paying CARB $110 million for NOx-reducing mitigation projects within California.

It will also pay $17.5 million to the California Department of Justice for future enforcement work and for “environmentally beneficial projects.” In addition, Daimler will pay the U.S. $27.6 million and California $42.7 million over non-compliance with on-board diagnostic requirements. And officials said Daimler has agreed to hire a third party to review its corporate compliance measures.

Daimler had previously announced it will separately pay $700 million to settle a class-action suit brought in New Jersey federal courts, as well as hundreds of millions of euros to comply with all settlements.

What’s next: The consent decrees from the federal government and California, both lodged in a federal court in Washington, D.C., on Monday, will require judicial approval.

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