German automaker Daimler and its American subsidiary Mercedes-Benz USA agreed Monday to settle alleged violations of U.S. and California emission rules totaling $1.5 billion in penalties and other costs, according to an agreement filed in federal court.

The Environmental Protection Agency and Department of Justice filed the proposed settlement in U.S. District Court for the District of Columbia, in the latest instance of U.S. regulators bringing down the hammer on alleged emissions cheating in the auto industry.

The settlement includes an $875 million civil penalty, $436 million to pay for recalls and a federal environmental mitigation program, $110 million for mitigation efforts in California and more than $70 million in other penalties, the EPA said in a statement.

“When something ends up costing a manufacturer $1.5 billion, we would anticipate that has deterrent effects on other automakers as well,” Deputy U.S. Attorney General Jeffrey Rosen said during a virtual news conference Monday afternoon with EPA Administrator Andrew Wheeler.

Daimler’s agreement with U.S. authorities covers civil and environmental claims related to the emission-control systems of about 250,000 cars and vans. Volkswagen AG admitted in 2015 to rigging as many as 11 million diesel engines worldwide, including roughly 600,000 in the U.S.

The U.S. government’s complaint alleges Daimler failed to disclose emissions devices to U.S. regulators in its Mercedes Sprinter vans and various passenger vehicles from 2009 to 2016. The devices caused vehicles’ emissions control systems to perform one way during testing, and another way when consumers were behind the wheel.


“Defendants knew or should have known that one or more undisclosed” devices “would have the principal effect of bypassing, defeating, removing or rendering inoperative” emissions control systems in the vehicles, the government said in the complaint.

Daimler denied the allegations in the complaint and doesn’t admit any liability, according to the consent decree released Monday.

The pact resolves issues that arose when U.S. regulators stepped up their examination of diesel emissions after VW’s cheating scandal emerged in 2015. The Justice Department asked Daimler to investigate its vehicle-certification process the following year.

The case is U.S. V. Daimler AG, 20-2564, U.S. District Court for the District of Columbia (Washington).