Mercedes must also improve its emissions defect investigation and reporting system to ensure future compliance, at an estimated cost of approximately $1 million per year.
The consent decree covers more than 130,000 vehicles subject to the voluntary recalls and extended warranties may have defective catalytic converters or defective air pumps.
Mercedes will incur an estimated cost of $59 million to implement the recalls and the extended warranty.
After EPA initiated its investigation of this matter, Mercedes began voluntary recalls for two of the defects and notified owners that it would extend the warranty coverage to address a third defect.
The Clean Air Act requires auto manufacturers to file a defect information report with EPA not more than 15 working days after an emission-related defect is found to affect 25 or more vehicles, so that EPA may consider whether the defect will cause emission standards to be exceeded and whether a recall is necessary.
'These defect reporting requirements are a critical part of EPA's program to reduce air pollution by ensuring that vehicles on the road comply with the Clean Air Act's emissions standards,' said Catherine McCabe, principal deputy assistant administrator for the EPA's Office of Enforcement and Compliance Assurance.
The voluntary recalls and extended warranty will reduce the emissions of harmful pollutants caused by the defects by over 500 tons cumulatively.
These pollutants include nonmethane hydrocarbons and nitrogen oxides - key ingredients in the production of ground level ozone, or smog. Carbon monoxide will also be reduced, which impairs breathing and is especially harmful to children, people with asthma, and the elderly.
Sue Ellen Wooldridge, assistant attorney general for the Justice Department's Environment and Natural Resources Division, said, 'Mercedes' failure to alert EPA to a number of defects in emission-related components over a multi-year period is a serious violation because it deprived EPA of the opportunity to promptly determine whether emission standards would be exceeded and whether to order a recall of any of these vehicles.'
The proposed consent decree is subject to a 30 day public comment period and final approval by the U.S. District Court in Washington, DC.
To see a list of the defective vehicles, click here.