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(CNN)Mercedes-Benz’s parent company, Daimler AG, has agreed to pay $1.5 billion in penalties and settlements to US and California state regulators in order to resolve allegations that its vehicles were rigged to cheat on diesel emissions tests.

“This is the second largest civil penalty under the Clean Air Act on per vehicle basis. This penalty is larger than both the 2017 Volkswagen penalty and the 2019 Fiat Chrysler penalty,” EPA administrator Andrew Wheeler said.
Engineers at the Environmental Protection Agency said they had found that the software in Daimler’s (DMLRY) vehicles included software designed to cheat on emission tests.

    The company agreed to an $875 million settlement with the EPA, the Department of Justice and the California Air Resources Board. As part of the agreement, Daimler will be required to fix the more than 250,000 diesel-powered vans and passenger vehicles that it manufactured, imported and sold between 2009 and 2016 in order to bring them into legal compliance, and to mitigate the effects on the environment of the excess emissions the software allowed.
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    The total cost of the settlement is estimated by the agencies and Daimler to be about $1.5 billion.

    “The company has fully cooperated with the U.S. authorities. Daimler has not received a Notice of Violation (NOV) from the EPA or the CARB during this process,” the company said in a statement.
    Separately, lawyers representing plaintiffs in a class action lawsuit against Daimler for allegedly cheating on diesel emissions test announced details of a $700 million settlement with the automaker.
    Despite the settlement, Daimler denies any wrongdoing.
    “As stated in the consent decrees and the class action settlement, the company denies the authorities’ allegations as well as the class action plaintiffs’ claims and does not admit any liability to the United States, California, plaintiffs, or otherwise,” the company said.

      Diesel engines are more fuel-efficient than gasoline engines, but they tend to release more dangerous emissions that can have adverse health effects.
      “Long-term, if you cheat, you’re going to get caught. Daimler is finding that out today. But they’re not the first — nor likely the last — to try,” California Attorney General Xavier Becerra said in a statement.
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