| 4:22 PM EST

Daimler Will Pay $1.5 Billion for Diesel Emission Cheating in U.S.

Settlement covers 250,000 diesel sold in 2009-2011.
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Daimler has agreed to pay about $1.5 billion to settle U.S. charges that it used illegal software and other defeat devices to cheat on diesel emission tests.

The proposed agreement, which awaits the approval of the U.S. District Court for the District of Columbia, covers 250,000 imported Mercedes-Benz passenger vehicles and Sprinter vans.

The U.S. Environmental Protection Agency says the engines were rigged between 2009 and 2016 to operate cleanly during emission testing but allow significantly higher emission of nitrogen oxides under real-world driving conditions.

NOx contributes to the formation of ground-level ozone, which can aggravate such conditions of asthma, bronchitis and emphysema.

Fines and Repairs

In the U.S., Daimler will pay a civil fine of $875 million ($131 million of it to the California Air Resources Board) and about $70 million in additional penalties for violating federal regulations.

Another $436 million will be used the cover the cost of a vehicle recall, extended engine warranties and the implementation of new audit procedures to avoid future cheating.

2011 Mercedes R-Class diesel   (Image: Daimler)

EPA says the company will pay an additional $110 million to fund environmental mitigation projects in California. Among other things, that will include replacing or retrofitting 15 long-haul railroad locomotives with cleaner engines.

16 “Defeat Devices”

Daimler equipped the diesels with at least 16 unreported software tweaks and physical devices that hiked fuel economy and stretched out the need to refill an onboard emission treatment tank, both at the cost of greater NOx output, according to Reuters.

Daimler violated federal emission rules by failing to mention any of the targeted devices in its certification paperwork for the affected vehicles, according to EPA. The agency says it discovered the bogus equipment during engine testing in the wake of Volkswagen’s diesel emission cheating scandal.

The company, which has denied any intent to cheat on diesel emissions, is not required to buy back any of the diesel vehicles it sold in the U.S.

After-Repair Tests

The agency adds that Daimler faces additional fines if it fails within two years to recall and repair at least 85% of the vehicles covered by the settlement.

All recalled vehicles will receive a software update. Depending upon the model, they also will get a new catalytic converts and one or more replacement sensors.

Daimler will be required to retest the repaired cars and vans every year for five years to verify that the vehicles continue to meet U.S. emission limits. The company new penalties if any category of updated vehicles flunks the retests.

European Recalls

This isn’t new territory for Daimler. Germany fined the company $958 million a year ago for using illegal software in 674,000 diesel cars, vans and SUVs over 11 years.

Over the previous two years, Daimler was ordered by European regulators to update software in nearly 3.8 million diesels sold across Europe.

Getty Images

Daimler remains under scrutiny in Europe about its diesel engines. So does Fiat Chrysler Automobiles, which also has been in European regulatory crosshairs.

Like other European dieselmakers, both companies say they have always conformed to the region’s vaguely defined regulations, which allow diesel emission shutoff controls under certain operating conditions.

Caution Ahead

Critics grouse that many European companies abused the intent of the loophole, which was intended only to protect the engine under unusual circumstance. Now, like Daimler, they are being required to update the diesels they sold.

Carmakers also being required to include on-the-road emission readings when they certify new diesels in Europe.

Diesel limits are tougher in the U.S. than they are in Europe. But the regulatory message in both markets is unmistakable: Play it straight or pay the consequences.

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