The automotive world witnessed another significant development in emissions regulations as the U.S. Department of Justice, Environmental Protection Agency (EPA), and California Air Resources Board (CARB) announced a proposed settlement with Daimler AG and its Mercedes-Benz USA subsidiary. This agreement addresses alleged violations of the Clean Air Act and California law concerning emissions cheating in Mercedes-Benz diesel vehicles.
The proposed settlement, filed in the U.S. District Court for the District of Columbia, requires Mercedes-Benz to recall and repair emission systems in diesel vehicles sold in the U.S. between 2009 and 2016. Alongside this extensive recall, Daimler will pay a substantial $875 million in civil penalties, and approximately $70.3 million in additional penalties. Further financial commitments include extending warranties on repaired parts, implementing projects to mitigate excess nitrogen oxides (NOx) emissions, and establishing new internal audit procedures to prevent future misconduct. The recall program and federal mitigation project are estimated to cost around $436 million, with an additional $110 million allocated for mitigation projects specifically in California. The total value of this comprehensive settlement is estimated at $1.5 billion.
Vehicle manufacturers must obtain a certificate of conformity from the EPA before selling new model year vehicles in the United States, as mandated by the Clean Air Act. This process includes demonstrating compliance with emissions standards through rigorous testing and full disclosure of all auxiliary emission control devices (AECDs) and any defeat devices incorporated in the vehicle’s design.
The core of the settlement lies in allegations detailed in civil complaints by the U.S. and CARB. These complaints allege that from 2009 to 2016, Mercedes-Benz manufactured, imported, and sold over 250,000 diesel Sprinter vans and passenger cars equipped with undisclosed AECDs and defeat devices. These devices were integrated into the vehicles’ complex emissions control software, designed to produce compliant results during standard emissions testing. However, under normal driving conditions, these vehicles’ emissions controls operated less effectively, leading to elevated levels of NOx emissions, exceeding compliant levels.
Nitrogen oxides (NOx) are significant contributors to ground-level ozone, a pollutant known to have detrimental effects on human health. Scientific studies have linked ozone exposure to potential lung tissue damage in both children and adults, and exacerbation of respiratory conditions like asthma, emphysema, and bronchitis. Furthermore, NOx pollution has been associated with cardiovascular diseases.
Deputy Attorney General Jeffrey Rosen emphasized the significance of the settlement, stating, “By requiring Daimler to pay a steep penalty, fix its vehicles free of charge, and offset the pollution they caused, today’s settlement again demonstrates our commitment to enforcing our nation’s environmental laws and protecting Americans from air pollution.”
EPA Administrator Andrew Wheeler echoed this sentiment: “The message we are sending today is clear. We will enforce the law. We will protect the environment and public health. And if you try to cheat the system and mislead the public, you will be caught. Those that violate public trust in pursuit of profits will forfeit both.”
The discovery of these defeat devices by the EPA and CARB originated from testing procedures implemented following the Volkswagen scandal. Testing was conducted at the EPA’s National Vehicle and Fuel Emissions Laboratory in Michigan and CARB’s testing facility in El Monte, California.
The settlement mandates Mercedes-Benz to execute a comprehensive recall and repair program. This program aims to remove all defeat devices from the affected vehicles, ensuring full compliance with Clean Air Act emissions standards. This service will be provided at no cost to consumers. The repair process will involve software updates and, depending on the specific model and year, replacement of certain hardware components.
Mercedes-Benz is obligated to repair at least 85 percent of the affected passenger cars within two years and 85 percent of the affected vans within three years. To ensure the long-term effectiveness of these repairs, the company must offer an extended warranty covering all updated software and hardware. Additionally, for the next five years, Mercedes-Benz will conduct annual testing of repaired vehicles to verify ongoing compliance with emissions standards. Failure to meet these standards or the required recall rates will result in substantial penalties for the automaker.
Beyond vehicle repairs and financial penalties, the settlement demands systemic corporate reforms within Daimler. These reforms are designed to enhance detection and prevention of future violations. Key measures include rigorous testing of new diesel and gasoline vehicles using portable emissions measurement systems under real-world driving conditions. Implementation of a robust whistleblower program, enhanced annual training for employees on AECDs and defeat devices, and internal audits subject to external compliance consultant review are also mandated.
As part of the settlement’s mitigation efforts, Mercedes-Benz is required to replace 15 older, higher-polluting locomotive engines with new, cleaner alternatives. This action is intended to offset the excess NOx emissions generated by the affected vehicles.
The proposed settlement is now subject to a 30-day public comment period, followed by court review and approval. Detailed information and copies of the consent decree are publicly available on the EPA’s website. This settlement marks a significant step in holding automakers accountable for emissions compliance and reinforces the importance of protecting public health and the environment from harmful pollutants.
