The latest salvo in the ongoing litigation between the U.S. Department of Justice and FCA over the ongoing EcoDiesel emissions complaint comes in the form of a settlement letter demanding recalls and fines. These fines could be “substantial.”
The DOJ letter, dated January 27, 2018, is an official notification between the two groups and comes after months of ongoing court-ordered mediation. In the letter, the DOJ says any settlement “must include very substantial civil penalties” and these penalties must “adequately reflect the seriousness of the conduct that led to these violations” according to a Bloomberg News story quoting directly from the letter.
Plus, the DOJ is demanding internal policies within FCA change to prevent future violations.
When asked about the letter, an FCA spokesman confirmed it exists, but declined to comment further on the ongoing legal matter.
The case stems from a complaint filed on May 23, 2017 by the Environmental Protection Agency. EPA officials allege FCA used illegal software, undisclosed to regulators, on 2014-2016 EcoDiesel-powered Ram 1500 and Jeep Grand Cherokee vehicles to pass laboratory emissions while on-road tests exceeded the pollution standards. The EPA contends this software is the same as a “defeat device” meant to game the system.
For FCA, the recall part of the complaint is a foregone conclusion and it could be as simple as a re-flash of the truck’s computers as it did with mid-2017 and new 2018 EcoDiesel vehicles when it got federal and California Air Resource Board approval.
Coming to an agreement on the size of the fines looks like another matter entirely.
In the letter, FCA says they acknowledge any settlement must include an emission fix and civil penalties. They offered to also engage in environmental mitigation efforts like low- or zero-emissions “mobility projects.”
DOJ wrote their regulators would take those projects into consideration, but they are not the same as civil penalties.
The amount of the civil penalties could vary dramatically.
For example, the EPA settled VW’s so-called emission’s scandal for a record $2.8 billion criminal fine and $14.7 billion civil fine last year. A few years before, Hyundai and Kia paid a relatively small $100 million for misstating fuel economy numbers.
From the beginning, this case has created quite a stir. Last January, 2017 FCA CEO Sergio Marchionne called the claims “unadulterated hogwash” and “absolute nonsense” during a hastily arranged press conference.
Meanwhile, the EPA, DOJ and the California Air Resource Board haven’t backed off .
“We are engaging in conversations but I’m not involved in the settlement talks,” Mary Nichols, chair of the California Air Resources Board, quoted in the aforementioned Bloomberg News article. “It’s interesting that Fiat Chrysler has the same team of lawyers representing them that worked with VW.”
It also seems now the DOJ has “compelling evidence” FCA knew or had reason to know its vehicle did not comply with the clean-air rules according to the letter. They also claim FCA’s behavior was “egregious” as the company misled DOJ regulators.
While the civil penalties are one matter, another is a possible criminal investigation into the company. This isn’t a small issue. For reference, VW’s Oliver Schmidt, a compliance executive, was sentenced to seven years in prison related to his role in the diesel-emissions scandal. An FCA official could potentially face a similar fate if the DOJ goes ahead with their investigation.
One thing is for sure, this isn’t the last time we will hear about this matter.