U.S. sues Fiat Chrysler over diesel emissions: $4.6 billion fine possible

May 24, 2017

Last Thursday, we reported that after months of back-and-forth between Fiat Chrysler Automobiles, the Environmental Protection Agency, and the California Air Resources Board, FCA was about to be slapped with a federal lawsuit. The cause? Excess emissions from more than 100,000 Jeep Grand Cherokee and Ram 1500 diesels sold in model years 2014, 2015, and 2016.

This week, that lawsuit was filed in U.S. District Court in Detroit.

The suit

The civil suit is identical to the one described by insiders late last week--a suit that FCA's CEO Sergio Marchionne alluded to back in March. In the Department of Justice's own words:

"The complaint alleges that nearly 104,000 light duty diesel vehicles containing 3.0 liter EcoDiesel engines are equipped with software functions that were not disclosed to regulators during the certification application process, and that the vehicles contain defeat devices. The complaint alleges that the undisclosed software functions cause the vehicles’ emission control systems to perform differently, and less effectively, during certain normal driving conditions than on federal emission tests, resulting in increased emissions of harmful air pollutants."  

In other words, the DOJ has two major beefs with FCA: 

1. FCA diesels contain defeat devices that allow them to emit higher levels of nitrogen oxide (NOx) than regulatory lab tests showed. If the allegations prove true, FCA will have done what Volkswagen did on 11 million vehicles worldwide, when it installed software that was specifically designed to help diesels cheat on emissions tests. 

2. Even if the software doesn't meet the definition of a defeat device (and it may not, as FCA has repeatedly said that it was designed to protect engines, not skirt the law), FCA failed to notify regulators that it was there. So, whether or not there was malicious intent behind the software, FCA broke the rules by installing "at least eight software-based features that were not disclosed in FCA’s applications for certificates of conformity and that affect the vehicles’ emission control systems". 

Item number two is particularly damning. FCA might be able to debate the function of its emissions software and convince a court of its innocence. However, there's not so much gray area in the second claim: the DOJ says that the software was included on the vehicles, and so far, FCA hasn't denied it.

If allegation number two is allowed to stand, it could mean that the diesel vehicles in question differed substantially from the way that they were presented to regulators. That, in turn, would mean that their certification under the Clean Air Act was invalid and FCA sold them illegally. Which would be not good.

The response

FCA issued a brief response to the DOJ's lawsuit. Here's the most important bit:

"FCA US is currently reviewing the complaint, but is disappointed that the DOJ-ENRD has chosen to file this lawsuit. The Company intends to defend itself vigorously, particularly against any claims that the Company engaged in any deliberate scheme to install defeat devices to cheat U.S. emissions tests."

FCA also states that when it submitted its model-year 2017 diesels for approval last week, it notified regulators at the EPA and CARB about updated software that addressed emissions concerns. The automaker says that the same software can be installed on the 104,000 Jeep and Ram diesels included in the DOJ lawsuit, bringing them in line with the law.

The outcome 

If the DOJ is successful in court, FCA could face fines of up to $44,539 for every affected vehicle, or up to $4.6 billion in total. Whether the DOJ can prevail in proving both allegations seems questionable, meaning that the max fine would likely be less. And of course, FCA could opt to settle out of court for an even smaller sum.

That said, it seems likely that FCA will end up paying something. In its statement about the case, the DOJ mentions the health risks associated with excess diesel emissions--something we've frequently discussed. That suggests that if FCA is found guilty, it'll shell out more than a nominal fine for failing to file the appropriate paperwork

For more, please visit our colleagues at Green Car Reports.

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