A federal judge in Washington, D.C. gave final approval to a settlement that will cost Daimler AG $1.5 billion. The find comes for violating the Clean Air Act and evading California state law by cheating on emission tests and employing unlawful defeat devices on 250,000 vehicles equipped with diesel engines.
The resolution brings to and a major enforcement action against Daimler by the U.S. Department of Justice, the Environmental Protection Agency, and the California Air Resources Board.
The settlement covers roughly 250,000 passenger cars and Sprinter vans, commonly used in commercial applications sold primarily between 2009 and 2016. All the vehicles are equipped with diesel engines.
Daimler paying heavy fines
It also will cost Daimler an estimated $1.5 billion, including $875 million in civil penalties and roughly $70.3 million in other penalties.
The company will also extend the warranty period for certain parts in the repaired vehicles, perform projects to mitigate excess ozone-creating nitrogen oxides emitted from the vehicles, and implement new internal audit procedures designed to prevent future emissions cheating.
The recall program and federal mitigation project are expected to cost the company about $436 million. The company will pay another $110 million to fund mitigation projects in California. Taken together, the settlement is valued at about $1.5 billion, according to the EPA.
Automaker tried to escape fall out
Daimler argued it has not used defeat devices; however, it’s now paid billions of dollars in fines and settlements in North America and Europe.
The EPA discovered the defeat devices in Daimler’s vehicles through testing conducted in the wake of the Volkswagen scandal at the National Vehicle and Fuel Emissions Laboratory. The agency found several devices in Daimler’s diesel vehicles that were not described in the application for the certificate of conformity that purportedly covers each vehicle.
As part of the settlement, Daimler agreed to implement a recall program to repair the noncompliant vehicles, offer an extended warranty on repaired vehicles, in addition to paying the aforementioned $875 million fine.
In a separate settlement with California, Daimler will mitigate excess emissions from more than 36,000 of the noncompliant vehicles in California. In addition, in a separate administrative agreement with the United States Customs and Border Protection, Daimler resolved allegations of illegally importing many of the noncompliant vehicles.
The settlement requires Daimler to update the software and certain hardware to remove all defeat devices and ensure the vehicles comply with all applicable emission standards. The hardware changes vary across the various electronic module controller or EMCs. Each vehicle also will receive a new NOX sensor, and any vehicle not already equipped with a copper catalyst will have one installed as part of the settlement.
DOJ, EPA and CARB cooperated
The DOJ, EPA and CARB, in an unusual display of cooperation, filed the original complaint and proposed settlement in September 2014.
The Clean Air Act and federal regulations require vehicle manufacturers to apply for and receive a certificate of conformity from EPA before selling a new model year vehicle in the United States. As part of the application process, manufacturers must demonstrate through testing that a vehicle meets applicable emissions standards and disclose to EPA all auxiliary emission control devices and any defeat devices installed in the vehicle.
“The consent decrees provide relief to the parties now, as compared to the potential years of litigation the parties could face if the United States and California elected to pursue their claims to trial,” Judge Emmet G. Sullivan noted in the legal memorandum attached to the settlement.