The Dave Matthews Band won a Grammy in 1996

The band's bus dumped the raw sewage while crossing a bridge over the Chicago River in August 2004.

Last month, the driver of the bus pleaded guilty to the charges.

Illinois Attorney General Lisa Madigan called the settlement "reasonable and appropriate given the public health threat cause by this foul incident".

The money from the settlement will go into a fund for environmental protection and other projects.

The band also agreed to take steps to avoid any repeat incident, by recording when and where its tour buses empty septic tanks.

Bus driver Stefan Wohl was also fined $10,000 (£5,200)

They had already donated $100,000 (£54,252) to two groups that protect the Chicago River and its surrounding area.

Bus driver Stefan Wohl, who was alone on board the bus at the time the sewage was dumped, got 18 months probation and 150 hours community service for reckless conduct and discharging contaminants into the Chicago River.

Band spokesman John Vlautin said Wohl had been fired.

'Deepest apologies'

"Although the band members were not on the bus when the incident took place, we have always said that if it was our bus we would take responsibility for what happened," said Mr Vlautin.

Mr Wohl, 42, from Selma, Texas, originally denied discharging waste from Chicago's Kinzie Street Bridge.

But a surveillance camera at a nearby health club proved the bus was on the bridge at the time.

The Dave Matthews Band offered their "deepest apologies" to more than 100 boat passengers who were on an architectural tour.

However, Friday's agreement does not settle several personal-injury lawsuits that have also been filed.

Passengers on the tour were given full refunds and authorities said there were no reports that anyone developed infections or diseases.