On Tuesday, a federal judge approved a $1.5 billion settlement to pump the brakes on an investigation conducted by the U.S. government pursuing claims that Daimler used illicit software that allowed excess diesel emissions on 250,000 units. This runs in tandem with another $700 million settlement the automaker is making with vehicle owners, which is likely to see final approval in a few months, and an extensive recall campaign.
The federal case involves the U.S. Justice Department, the California Air Resources Board, and follows a trend of fines for automakers accused of misleading regulators so that diesel vehicles could continue being sold. This kicked off with Volkswagen’s Dieselgate in 2015, with numerous government probes taking place in Europe and North America over the next five years. Many automakers have since been discouraged from relying on diesel powertrains due to rising regulatory actions. European countries that once championed the fuel as ecologically preferable to gasoline, after the advent of biodiesels, are now obsessed with tamping down NOx emissions and getting more electric vehicles onto the road.
Diesel isn’t just dying, it has become a liability. Some companies have even stopped selling diesel-powered vehicles in places like the U.S., where demand is mostly limited to HD pickups and vehicles used for hauling freight. This includes Volkswagen and Daimler, both of which could have avoided another layer of huge fines had they simply kept diesels out of the country — since nobody seems willing or able to adhere to emission guidelines.
Daimler’s U.S. settlement was announced in September after being under review for years. According to Reuters, court documents stipulate that the automaker is being issued an $875 million civil penalty levied under the Clean Air Act, $70 million in additional penalties, and $546 million to sort out vehicles that didn’t pass emissions or to help “offset” excess emissions.
U.S. District Judge Emmet G. Sullivan called the California settlement fair, reasonable and in the public interest, and noted settlement talks lasted for more than three years.
As part of the settlement, Daimler will pay California $285.6 million.
The German company has separately agreed to a $700 million settlement with diesel vehicle owners. That settlement has won preliminary approval and is likely to get final approval this summer, said Steve Berman, a lawyer for the owners.
It also had to spend over an additional billion dollars in its home country to appease German regulators in 2019. Meanwhile, the American settlement represents the “second-largest civil penalty in the history of the Clean Air Act” when it was first announced, according to then-EPA head Andrew Wheeler. Volkswagen still remains the largest.
A Daimler spokesperson said that the settlement ruling allows the company to take the necessary steps toward “legal certainty in connection with various diesel proceedings” and issued a reminder that it had cooperated with U.S. regulators. Final approval is expected this summer.