Daimler Agrees to $1.5 Billion Settlement to Resolve Allegations It Cheated on Emissions Tests

  • California AG Xavier Becerra, the California Air Resources Board (“CARB”), the U.S. Environmental Protection Agency, and the U.S. Department of Justice (“DOJ”) reached a settlement with automaker Daimler AG and its affiliates and subsidiaries (collectively, “Daimler”) to resolve allegations that it used an undisclosed device to circumvent emissions testing in violation of the federal Clean Air Act and California’s environmental safety and unfair competition laws.
  • The complaint alleged that Daimler installed an undisclosed defeat device software on its diesel engines, thus enabling the vehicles’ emissions controls to run more efficiently during testing than in normal driving conditions, which allowed Daimler to sell thousands of non-compliant vehicles that emitted impermissibly high levels of the smog-forming pollutant NOx.
  • Under the terms of the proposed consent decree, among other things, Daimler will pay approximately $945 million in penalties to the federal government and $110 million to CARB to fund mitigation efforts and NOx-reduction activities, as well as $17.5 million to the California AG’s office. Daimler will also be required to recall and repair the emissions systems of impacted Mercedes-Benz diesel vehicles and fund a federal mitigation project with a combined estimated cost of $436 million. In addition, Daimler will extend warranty periods, implement systemic corporate reform to detect violations in the future, create a robust whistleblower program, and contract with an external compliance consultant.