The Department of Justice, the Environmental Protection Agency (EPA) and the State of California announced Thursday a settlement with Fiat Chrysler Automobiles N.V., FCA US, and affiliates (Fiat Chrysler) for alleged violations of the Clean Air Act and California law.
Fiat Chrysler has agreed to implement a recall program to repair more than 100,000 noncompliant diesel vehicles sold or leased in the United States, offer an extended warranty on repaired vehicles, and pay a civil penalty of $305 million to settle claims of cheating emission tests and failing to disclose unlawful defeat devices.
Fiat Chrysler also will implement a program to mitigate excess pollution from these vehicles. The recall and federal mitigation programs are estimated to cost up to approximately $185 million. In a separate settlement with California, Fiat Chrysler will pay an additional $19 million to mitigate excess emissions from more than 13,000 of the noncompliant vehicles in California. In addition, in a separate administrative agreement with the United States Customs and Border Protection, Fiat Chrysler will pay a $6 million civil penalty to resolve allegations of illegally importing 1,700 noncompliant vehicles.
The Environmental Protection Agency and California settlement (EPA/California Settlement) resolves claims of EPA and California relating to Fiat Chrysler’s use of defeat devices to cheat emission tests. Defeat devices are design elements (in this case software functions) installed in vehicles that reduce the effectiveness of the emission control system during normal on-road driving conditions. The affected vehicles are model year 2014 through 2016 Ram 1500 and Jeep Grand Cherokee vehicles equipped with “EcoDiesel” 3.0 liter engines.
Thursday’s settlement does not resolve any potential criminal liability. The settlement also does not resolve any consumer claims or claims by individual owners or lessees who may have asserted claims in the ongoing multidistrict litigation. In addition to its separate settlement addressing excess emissions for affected vehicles in California, the state of California has also entered into another separate settlement with Fiat Chrysler resolving alleged violations of California consumer protection laws relating to the affected vehicles.
“The Department of Justice is committed to the full and fair enforcement of the laws that protect our nation’s environment,” said Principal Deputy Associate Attorney General Jesse Panuccio. “Fiat Chrysler broke those laws and this case demonstrates that steep penalties await corporations that engage in such egregious violations. Assistant Attorney General Jeff Clark, and his team in the Environment and Natural Resources Division, are to be commended for securing significant relief in this case for the American people.”
“Fiat Chrysler deceived consumers and the federal government by installing defeat devices on these vehicles that undermined important clean air protections,” said EPA Acting Administrator Andrew Wheeler. “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.”
As alleged in the civil complaint filed by the United States Justice Department on behalf of EPA on May 23, 2017, Fiat Chrysler equipped over 100,000 EcoDiesel Ram 1500 and Jeep Grand Cherokee vehicles (Model Years 2014-2016) sold in the United States with illegal and undisclosed software that causes the emission control system to operate differently during emission control tests than when it is driven on the road. When the vehicle is being tested for compliance with EPA or California emission standards, the software activates full emission controls. In contrast, during real world driving, the software features reduce or deactivate emission controls, reducing the effectiveness of the vehicles’ emission control systems. The United States alleged that one or more of these software features, as configured in Fiat Chrysler’s vehicles, are defeat devices. The result is vehicles that meet emission standards during standard regulatory testing, but that emit air pollutants, including oxides of nitrogen (NOx), at a higher rate when the vehicles are on the road, much higher than the EPA and California emission standards allow. NOx pollution contributes to harmful ground-level ozone and fine particulate matter, pollutants associated with a range of serious health effects, including asthma attacks, respiratory illnesses, and other respiratory-related or cardiovascular-related effects, including damage to lung tissue and premature death.
EPA discovered these defeat devices in Fiat Chrysler’s vehicles during vehicle emission testing EPA performed in 2015 and 2016 at the National Vehicle and Fuel Emissions Laboratory (NVFEL).
Recall Program and Corporate Reforms
The EPA/California Settlement requires Fiat Chrysler to implement a recall and repair program to remove all defeat devices in the vehicles and replace the vehicles’ software so that they comply with EPA and California emission standards. Fiat Chrysler tested vehicles with the new software and demonstrated to EPA and California that the repaired vehicles will meet the applicable emission standards. EPA and California also tested the repaired vehicles and determined that they perform the same on emission tests as they do under normal driving conditions. Fiat Chrysler must repair at least 85% of the vehicles within two years or face stiff penalties. Fiat Chrysler must offer an extended warranty for vehicles that are repaired. Fiat Chrysler also must test repaired vehicles for five years to ensure the vehicles continue to meet emission standards over time and will pay additional penalties if the vehicles fail to meet those standards.
The settlement further requires Fiat Chrysler to implement corporate governance, organizational and technical process reforms to minimize the likelihood of future Clean Air Act violations, and to hire a compliance auditor for three years to oversee and assess the effectiveness of these reforms.
The EPA/California Settlement requires Fiat Chrysler to implement a federal mitigation program to offset the environmental impacts of the non-compliant vehicles by reducing NOx emissions in the atmosphere. Fiat Chrysler will be required to work with one or more vendors of aftermarket catalytic converters to improve the efficiency of 200,000 converters that will be sold in the 47 states that do not already require the use of the California-mandated high efficiency gasoline vehicle catalysts. Such converters are purchased by vehicle owners to replace out-of-warranty catalytic converters. The mitigation program under the EPA/California Settlement is expected to fully mitigate NOx emissions caused by Fiat Chrysler’s violations across the country outside of California. The State of California’s separate mitigation program will fully address excess NOx from affected vehicles in California.
The Plaintiffs’ Steering Committee has secured a settlement for consumers with FCA and Bosch. Class members will receive between $990 and $3,075—an aggregate value of over $300 million if all class members participate—plus an extended warranty and an emissions fix also provided for in the EPA/California Settlement. Under California’s separate consumer settlement, FCA also must provide consumers with the relief contained in the PSC agreement. For more information, consumers can go to EcoDieselSettlement.com or call FCA at 1-833-280-4748.
EPA/California Settlement Consent Decree
The EPA/California Settlement Consent Decree will be lodged in federal court in the Northern District of California and there will be a period of 30 days for public notice and comment. The penalty is due within 30 days of the court’s entry of the Consent Decree.