Fiat Chrysler Automobiles, FCA U.S., and affiliates will pay a civil penalty of $305 million for alleged violations of the Clean Air Act and California law in connection with emissions-cheating devices, the Department of Justice announced on Jan. 10.

Fiat Chrysler also has agreed to implement a recall program to repair more than 100,000 non-compliant diesel vehicles sold or leased in the United States and offer an extended warranty on repaired 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 non-compliant vehicles in California. In addition, in a separate administrative agreement with the U.S. Customs and Border Protection, Fiat Chrysler will pay a $6 million civil penalty to resolve allegations of illegally importing 1,700 non-compliant vehicles.

The Environmental Protection Agency (EPA) and 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 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.

The 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.

Case facts

As alleged in the civil complaint filed by the Justice Department on behalf of the EPA in May 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 the 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.

The EPA discovered these defeat devices in Fiat Chrysler’s vehicles during vehicle emission testing the EPA performed in 2015 and 2016 at the National Vehicle and Fuel Emissions Laboratory.

Compliance reforms

As part of the settlement, Fiat Chrysler must implement a recall and repair program to remove all defeat devices in the vehicles and replace the vehicles’ software so that they comply with the EPA and California emission standards.

The settlement further requires Fiat Chrysler to implement corporate governance and 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.

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