The U.S. Department of Justice, alongside the Environmental Protection Agency (EPA), and the California Air Resources Board (CARB), have recently announced a proposed settlement with the renowned German automaker Mercedes Daimler Benz, specifically Daimler AG and its U.S. subsidiary Mercedes-Benz USA, LLC. This settlement aims to resolve alleged violations of the Clean Air Act and California law, stemming from what authorities describe as emissions cheating.
This significant legal action mandates Mercedes Daimler Benz to undertake a comprehensive recall and repair program for Mercedes-Benz diesel vehicles sold across the United States between 2009 and 2016. Alongside this, the settlement includes substantial financial penalties. Mercedes Daimler Benz is expected to pay $875 million in civil penalties, and approximately $70.3 million in additional penalties. Furthermore, the agreement requires the company to extend warranty coverage for specific components in the repaired vehicles. To further mitigate the environmental impact, Mercedes Daimler Benz will execute projects designed to counteract excess ozone-creating nitrogen oxides (NOx) released from these vehicles and implement enhanced internal audit procedures to prevent any recurrence of emissions irregularities. The projected cost for the recall program and the federal mitigation project is estimated at around $436 million. An additional $110 million is allocated by Mercedes Daimler Benz to fund mitigation projects specifically within California. Cumulatively, the total value of this settlement is estimated to be approximately $1.5 billion.
The Clean Air Act and associated federal regulations stipulate that vehicle manufacturers must apply for and secure a certificate of conformity from the EPA before introducing any new model year vehicle into the U.S. market. This application process necessitates manufacturers to demonstrate through rigorous testing that a vehicle adheres to the applicable emissions standards. Crucially, they are also obliged to disclose to the EPA all Auxiliary Emission Control Devices (AECDs) and any defeat devices incorporated within the vehicle’s systems.
The core of this settlement addresses allegations detailed in civil complaints filed separately by the United States and CARB. These complaints assert that from 2009 through 2016, Mercedes Daimler 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. The function of these devices was allegedly to ensure compliant results during standard emissions testing. However, under normal driving conditions outside of a testing environment, the vehicles’ emissions controls would operate differently and less effectively. This discrepancy led to a significant increase in NOx emissions, exceeding the legally compliant levels.
NOx emissions from vehicles are a major contributor to the formation of ground-level ozone, a pollutant known to have detrimental effects on human health. Research indicates that exposure to ozone can cause damage to lung tissue in both children and adults and can exacerbate respiratory conditions such as asthma, emphysema, and bronchitis. Moreover, this pollutant has been linked to cardiovascular disease, highlighting the serious public health implications of excess NOx emissions.
Deputy Attorney General Jeffrey Rosen emphasized the gravity of the situation, stating, “By requiring Mercedes Daimler Benz 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, stating, “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 was a result of enhanced testing protocols implemented following the Volkswagen scandal. These tests were conducted at the EPA’s National Vehicle and Fuel Emissions Laboratory in Michigan and CARB’s testing facility in El Monte, California.
As part of the settlement terms, Mercedes Daimler Benz is mandated to execute a recall and repair program aimed at removing all defeat devices from the affected vehicles. This service will be provided at no cost to consumers. The objective is to bring all vehicles into full compliance with the emissions standards stipulated by the Clean Air Act. The repair process will involve software updates and the replacement of specific hardware components, with the exact nature of these changes varying across different models and model years.
Mercedes Daimler Benz faces strict deadlines for the recall completion. The company must repair at least 85 percent of the affected passenger cars within a two-year timeframe and at least 85 percent of the affected vans within three years. Furthermore, to ensure long-term compliance, Mercedes Daimler Benz is obligated to offer an extended warranty covering all updated software and hardware. The company must also conduct annual testing of the repaired vehicles for a period of five years to verify continued adherence to emissions standards. Failure to meet these standards or the required recall rates will result in substantial penalties for Mercedes Daimler Benz.
Beyond vehicle repairs, the settlement mandates systemic corporate reforms within Mercedes Daimler Benz. These reforms are designed to proactively detect and prevent future violations. Key measures include rigorous testing of new diesel and gasoline vehicles using Portable Emissions Measurement Systems (PEMS) to assess real-world emissions compliance. The company must also establish a robust whistleblower program, enhance annual training for employees on AECDs and defeat devices, and conduct internal audits that will be subject to external review by a compliance consultant.
In addition to the vehicle-related measures, Mercedes Daimler Benz is required to undertake projects to offset the excess NOx emissions. This includes replacing 15 older locomotive engines with new, less-polluting engines.
The proposed settlement is now subject to a 30-day public comment period and requires court review and approval before it is finalized. Detailed information about the settlement is publicly accessible on the EPA’s website.
