Fiat re­jects cheat­ing al­le­ga­tion

EPA is­sues vi­o­la­tion no­tice about soft­ware in 104,000 ve­hi­cles


The U.S. govern­ment ac­cused Fiat Chrysler on Thurs­day of fail­ing to dis­close soft­ware in some of its pick­ups and SUVs with diesel en­gines that al­lows them to emit more pol­lu­tion than al­lowed un­der the Clean Air Act.

The En­vi­ron­men­tal Pro­tec­tion Agency is­sued a “no­tice of vi­o­la­tion” to the com­pany that cov­ers about 104,000 ve­hi­cles in­clud­ing the 2014 through 2016 Jeep Grand Chero­kee and Ram pick­ups, all with 3-liter diesel en­gines. The Cal­i­for­nia Air Re­sources Board took sim­i­lar ac­tion.

“Fail­ing to dis­close soft­ware that af­fects emis­sions in a ve­hi­cle’s en­gine is a se­ri­ous vi­o­la­tion of the law, which can re­sult in harm­ful pol­lu­tion in the air we breathe,” said Cyn­thia Giles, EPA as­sis­tant administrator for en­force­ment and com­pli­ance.

Fiat Chrysler CEO Ser­gio Mar­chionne de­nied any wrong­do­ing, say­ing the EPA was blow­ing the is­sue out of pro­por­tion.

“We have done in our view noth­ing that is il­le­gal,” he said Thurs­day on a con­fer­ence call. “We will de­fend our be­hav­ior in the right en­vi­ron­ment.”

Mar­chionne said he was told by com­pany lawyers that the Jus­tice Depart­ment is in­ves­ti­gat­ing the com­pany in con­cert with the EPA, rais­ing the like­li­hood of an on­go­ing crim­i­nal probe. He said the com­pany halted pro­duc­tion of Grand Chero­kees and Rams with diesel en­gines in Septem­ber, but will con­tinue to sell mod­els man­u­fac­tured be­fore then that are still on deal­ers’ lots.

The com­pany said it in­tends to present its case to the in­com­ing Trump ad­min­is­tra­tion. “We will work with the new lead­er­ship to get this is­sue through,” Mar­chionne said.

A spokesman for Pres­i­den­t­elect Don­ald Trump did not im­me­di­ately re­spond to a re­quest for com­ment. The White House said Thurs­day that the EPA makes en­force­ment de­ci­sions in­de­pen­dently and that out­go­ing Pres­i­dent Barack Obama wasn’t in­volved in the de­ci­sion to cite the com­pany.

If found li­able, Fiat Chrysler could face more than $4.5 bil­lion in po­ten­tial fines for vi­o­la­tions

of the Clean Air Act.

The EPA said it will con­tinue to in­ves­ti­gate the “na­ture and im­pact” of the eight soft­ware func­tions iden­ti­fied through an in­ten­sive test­ing pro­gram launched af­ter Volk­swa­gen was caught in a 2015 cheat­ing scan­dal in­volv­ing its “Clean Diesel” line of ve­hi­cles.

Reg­u­la­tors were not defin­ing the soft­ware found in the Fiat Chrysler ve­hi­cles as so-called “de­feat de­vices” in­tended to cheat on govern­ment emis­sions tests. How­ever, the agency said that nu­mer­ous dis­cus­sions with Fiat Chrysler over the past year had not pro­duced any suit­able ex­pla­na­tion for why the com­pany had failed to dis­close the soft­ware, which reg­u­la­tors said caused the ve­hi­cles to emit less pol­lu­tion dur­ing test­ing than dur­ing reg­u­lar driv­ing.

“This is a clear and se­ri­ous vi­o­la­tion of the Clean Air Act,” Giles said.

On Thurs­day, Cal­i­for­nia reg­u­la­tors also an­nounced they were cit­ing Fiat Chrysler for 11 vi­o­la­tions un­der that state’s strict air qual­ity stan­dards.

Fiat Chrysler said that its emis­sions con­trol sys­tems “meet the ap­pli­ca­ble re­quire­ments” and that it spent months giv­ing in­for­ma­tion to the EPA to ex­plain its emis­sions tech­nol­ogy and pro­posed a num­ber of ac­tions in­clud­ing soft­ware changes to ad­dress the agency’s con­cerns.

Reg­u­la­tors said own­ers of the af­fected mod­els do not yet need to take any ac­tion and that they should con­tinue driv­ing their ve­hi­cles.

Fiat Chrysler shares tum­bled 20 per­cent $9.12 Thurs­day morn­ing as the EPA ac­tion was re­ported. The shares re­cov­ered a bit to close at $9.96, down $1.14 or 10.28 per­cent.

The an­nounce­ment came one day af­ter Fiat ri­val Volk­swa­gen pleaded guilty in fed­eral court to crim­i­nal charges re­lated to wide­spread cheat­ing in­volv­ing emis­sions tests, agree­ing to pay a record $4.3 bil­lion penalty. Six high-rank­ing VW ex­ec­u­tives have been charged in the scan­dal.

In the Volk­swa­gen case, pros­e­cu­tors al­leged that top of­fi­cials at the com­pany ap­proved of the cheat­ing scheme, re­peat­edly lied to U.S. reg­u­la­tors and then or­ches­trated a mass at­tempted cover-up. EPA reg­u­la­tors made no such al­le­ga­tions against Fiat Chrysler, though they said their in­ves­ti­ga­tion is in the early stages.

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