Fiat Chrysler to pay nearly $500M to settle claims of emissions cheating

Fiat Chrysler will pay almost $500 million to settle claims that the auto giant used integrated vehicle software to cheat on emissions tests, the Department of Justice (DOJ) announced Thursday.

As part of the settlement with the DOJ, the Environmental Protection Agency (EPA) and the state of California, more than 100,000 noncompliant diesel vehicles sold or leased in the United States will be recalled and repaired. The agreement includes a civil penalty of $305 million and a $19 million penalty paid to the state of California, totaling nearly half a billion dollars in penalties, according to officials.

{mosads}Under the settlement the company will not plead guilty and the EPA will not submit a finding of wrongdoing.

The administration hailed Thursday’s announcement as proof that the federal government will go after bad actors who aim to get a leg-up in the market by cheating on emissions standards.

“Fiat Chrysler deceived consumers and the federal government by installing defeat devices on these vehicles that undermined important clean air protections,” EPA acting Administrator Andrew Wheeler said in a statement Thursday. “Today’s settlement sends a clear and strong signal to manufacturers and consumers that EPA will vigorously enforce the nation’s laws designed to protect the environment and public health.”

The DOJ sued Fiat Chrysler over the cheating software in May 2017. The EPA in the last days of the Obama administration recommended the case to the Justice Department.

DOJ spokespeople said the effort to enforce the law under the Clean Air Act was equal under both administrations.

“Regardless of the administration, when EPA and DOJ find violations of the Clean Air Act and environmental laws the message should be that we’re going to go after that,” said an official on a call with reporters Thursday.

Principal Deputy Associate Attorney General Jesse Panuccio said the settlement proved that the DOJ is “committed to the full and fair enforcement of the laws that protect our nation’s environment.”

“Fiat Chrysler broke those laws and this case demonstrates that steep penalties await corporations that engage in such egregious violations,” he said in a statement.

Under the agreement, the auto giant will recall about 104,000 model year 2014, 2015 and 2016 diesel-powered Ram 1500 trucks and Jeep Grand Cherokee sport utility vehicles.

The company must carryout recalls of 85 percent of its affected trucks to retrofit them with updated compliant software, or face additional penalties.

Officials said the penalty amounts focused largely on the lengths Fiat Chrysler went to deny cheating. Even after the company had been alerted by the government that there were concerns they were not in compliance with emissions laws, the company denied it. 

“Not only did they violate the law, they tried to hide their actions,” Wheeler said to reporters Thursday. “EPA engineers at our national lab caught them cheating, and that is no easy feat. It was a monumental challenge to find hidden defeat devices and hidden software.”

Fiat Chrysler joins the ranks of Volkswagen, an automobile company that in 2016 settled with the DOJ for its use of a “defeat device” to beat emissions tests. The German car company settled for $4.3 billion with the DOJ. It also was required to buy back 600,000 of its vehicles in the U.S. Later, two Volkswagen executives pleaded guilty to criminal charges.

U.S. officials said Fiat Chrysler’s penalties were lower because the cars were on the roads for a much shorter period of time and there were fewer of them. But, they pointed out that the per-car penalty was higher.

Thursday’s announcement did not include any updates on whether criminal charges would be given to company executives. It’s anticipated that personal civil settlements and local state settlements with the automobile company will be ongoing.

Separately Thursday, a $307.5M class action settlement was announced with owners of the vehicles involved in the recall. The settlement, if approved by the government, aims to provide eligible owners and lessees with payments as well as government-approved emissions modifications and extended warranties. 

Wheeler said that in the coming days EPA will release its full annual enforcement report, promising that the agency under President Trump had taken additional steps to increase compliance rates and timelines. Enforcement numbers — the number of lawsuits settled with polluters — dropped significantly under Trump, according to the annual numbers released by EPA in 2018.

“There still are bad actors, we can make the bad actors think twice by vigoroulsy enforcing the law and exposing them,” Wheeler said.

“We will protect the environment and public health. And if you try to cheat the system, and hide it, you will be caught.”

Updated at 11:56