By David Shepardson
WASHINGTON (Reuters) – Daimler AG is set to pay an $875 million civil penalty for violating U.S. clean air laws as part of a $1.5 billion settlement with U.S. and California regulators over excess diesel emissions in passenger vehicles and vans, two people briefed on the matter said.
The U.S. Justice Department and Environmental Protection Agency confirmed they will hold a 2 p.m. news conference on Monday to detail the settlement over “emissions cheating in Mercedes-Benz diesel vehicles.”
The German automaker and parent of Mercedes-Benz disclosed on Aug. 13 it had reached a settlement in principle resolving civil and environmental claims tied to 250,000 U.S. diesel cars and vans after the automaker used software to evade emissions rules.
Daimler said in August expected costs of settlements with U.S. authorities 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 require Daimler to address the vehicles’ excess emissions as part of binding consent decrees that must be approved by a U.S. judge. Daimler will issue extended warranties but will not be required to buy back vehicles, two people briefed on the matter said.
The Justice Department filed a civil complaint against Daimler ahead of the settlement, saying the German automaker used illegal defeat devices that increased 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 disclose at least 16 auxiliary emissions control devices, the government alleged, allowing “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” used to evade emissions tests.
It will also include a separate Customs and Border Protection civil penalty to resolve allegations of illegally importing noncompliant vehicles and a separate California Air Resources Board settlement.
Daimler and the EPA declined to comment, but the automaker said last month the proposed settlements are an “important step towards legal certainty” in the United States.
Diesel vehicles have come under scrutiny in the United States since Volkswagen AG <VOWG_p.DE> admitted in September 2015 to installing secret software on 580,000 U.S. vehicles that allowed them to emit up to 40 times legally allowable emissions.
In September 2019, Daimler in Germany agreed to pay a fine of 870 million euros ($1 billion) for breaking diesel emissions regulations.
Fiat Chrysler Automobiles NV in 2019 reached a settlement worth about $800 million to resolve claims by regulators and owners that it used illegal software that produced false results on diesel-emissions tests.
Fiat Chrysler said in July it was in talks to resolve an ongoing Justice Department criminal probe.
(Reporting by David Shepardson; Editing by Robert Birsel and Jonathan Oatis)
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