DaimlerChrysler reaches $94 million settlement over emission controls

Wednesday, December 21st 2005, 3:12 pm

By: News On 6

WASHINGTON (AP) _ DaimlerChrysler AG reached a $94 million settlement with the government to repair defective emission controls on nearly 1.5 million Jeep and Dodge vehicles, federal officials said Wednesday.

The Justice Department and Environmental Protection Agency said the agreement involved vehicles from the 1996-2001 model years. It settles allegations the automaker violated the Clean Air Act by failing to properly disclose defective catalytic converters installed in the vehicles.

Federal officials said it represented the largest settlement involving an emission-related defect reporting case.

``Automakers' prompt and full disclosure of emission-system defects to EPA is critical to ensuring that vehicles on the road comply with the Clean Air Act,'' said Sue Ellen Wooldridge, an Assistant Attorney General with the Justice Department.

As part of the deal, DaimlerChrysler will recall about 494,000 vehicles to fix a separate defect in the onboard diagnostic system installed on the vehicles and check the catalytic converters, a device installed in the engine's exhaust system to control emissions and reduce pollutants.

The vehicles covered under the recall include 1996 Jeep Cherokees and Grand Cherokees with 4-liter engines; 1997 Cherokees and Dodge Dakotas with 2.5-liter engines; and 1997 Jeep Wranglers with 2.5-liter engines built after July 1996. Also covered are 1998 Wranglers, Cherokees and Dakotas with 2.5-liter engines.

The automaker said in a statement that it had not violated the law and both the EPA and California officials ``have acknowledged that DaimlerChrysler has acted in good faith in resolving this matter.''

DaimlerChrysler will extend the warranty on the catalytic converters installed on about 700,000 of the vehicles involved. Another 300,000 vehicle owners will receive notification of the catalytic converter problem, which will be covered under the original warranty.

The government estimated the total settlement cost at $90 million. The automaker will pay penalties of $1 million and spend at least $3 million to implement an environmental project to reduce emissions from diesel engines currently in use.

DaimlerChrysler will also pay $1 million to California as part of a settlement with the California Air Resources Board.

The proposed settlement is subject to final court approval.