Justice Dept. Offers FCA Settlement – With “Substantial” Fines for Diesel Scam

Prosecutors in Germany expand their own probe of FCA and Bosch.

by on Feb.05, 2018

1 2014 Ram 1500 EcoDiesel.

The Justice Department wants to settle its probe accusing Fiat Chrysler Automobiles of rigging more than 100,000 diesel-powered vehicles to illegally pass emissions tests – but its offer would require “substantial” penalties.

Regulators have accused FCA of using a defeat device, software similar to what was used by Volkswagen, to bring down emissions of exhaust gases like smog-causing oxides of nitrogen while undergoing tests. Under real-world operation, however, the vehicles reportedly would produce substantially more of the emissions than legally permissible.

Enviro-News!

The alleged scheme has gotten FCA into trouble on both sides of the Atlantic. In German, prosecutors are ramping up their own investigation into apparent collusion between Fiat Chrysler and mega-supplier Robert Bosch. The company, which has supplied engine control technology to FCA, as well as VW and other automakers, claims it did not attempt to held the Italian-American automaker sidestep regulatory mandates.

The Bloomberg news service said it has reviewed a letter sent on January 27 by the U.S. Justice Dept. to FCA offering to settle the case. However, it said any deal “must include very substantial civil penalties.”

The Jeep Grand Cherokee EcoDiesel.

The automaker’s CEO Sergio Marchionne initially denied claims that FCA’s engines did not meet emissions standards and the company has since tried to spin the issue to indicate it didn’t intentionally tine its diesels to create excess pollution.

(Ram Panned…truck maker hammered for Super Bowl spot using MLK speech to sell pickups. Click Here for the story.)

In December, FCA lawyer Robert Giuffra told a court that the automaker felt confident it could fix vehicles now on the road to bring them into compliance. That would become part of any settlement – if the EPA accepted that a fix can, indeed, be found. One indication that this is possible came last July when the automaker was granted permission by both the EPA and the California Air Resources Board to resume sales of 2017 model-year diesel vehicles that are now considered compliant with standards.

But there apparently would be fines, as well. How much is far from certain, but they could be substantial. About 104,000 Ram pickups and Jeep SUVs using the suspect engines were sold in the U.S. since 2014, or roughly a fifth as many rigged diesel vehicles Volkswagen AG sold in the States. That automaker has since agreed to spend about $30 billion to address the problem, though that figure includes not only criminal and civil fines but the cost of recalls and buybacks, as well as settlements with owners and dealers.

The potential fine could run as high as $4.6 billion, though it could come in at a substantially lower figure.

(VW fires exec who OK’d emissions tests on monkeys. Click Here for the latest.)

Bosch claims it didn't collude with either FCA or VW to sidestep diesel emissions standards.

But the Justice Department may also expected to seek some sort of mitigation to offset the added pollution the rigged engines created.. That could follow the VW model in which the automaker is spending over $1 billion to promote the sale of zero-emissions vehicles. Among other things, it is funding a national network of public battery charging stations.

FCA is also hoping to work out a final settlement with U.S. owners of the rigged diesel vehicles sometime in the coming month.

There is still the question of resolving ongoing investigations in Europe, where thousands of the implicated vehicles were sold by FCA. German prosecutors have been especially aggressive, and they have launched investigations of two managers from the U.S. Bosch subsidiary alleging they may have aided and abetted fraud.

Bosch technology was used in the rigged VW diesels, as well, but the supplier contends it is blameless, only supplying technology meeting Volkswagen’s specifications, not participating in any attempt to conceal a plot to evade emissions rules. Bosch has similarly denied involvement in FCA’s alleged scam.

(Automakers spending over $20b annually as recalls and repair costs surge. Click Here for more.)

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