Another air pollution scandal: Fiat Chrysler settles with California for $500 million

Mae Love

January 11, 2019

As a result the cars spewed nitrogen oxide and other pollutants at "much higher" levels than allowed in the United States or California, the Justice Department said.

The Fiat Chrysler settlement won't include a determination that the company committed wrongdoing, a second person familiar with the matter said.

The government accused FCA of putting eight "software-based features" on 3-liter V6 engines that powered the Jeep and Ram vehicles. Apart from this, part of the settlement includes US$ 311 million in fines and US$ 72 million to other states.

The automaker will recall approximately 100,000 vehicles including model year 2014-2016 Jeep Grand Cherokees and Ram pickup trucks for the software update.

Bosch and its USA unit must pay $98.7 million to 47 states, the District of Columbia and Puerto Rico and Guam, and $27.5 million to 104,000 Fiat Chrysler diesel owners. The remaining $400 million covers a software update and payments to current and former vehicle owners in amounts that average $2800 per person.

"By concealing this software, Fiat Chrysler deceived regulators and violated environmental law", said Associate Attorney General Jesse Panuccio. Fiat Chrysler has two years to fix 85 percent of the vehicles being recalled, and it will face more penalties if it fails to do so.

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Fiat Chrysler will agree to corporate governance reforms meant to prevent future emissions violations under the agreement, the person said.

FCA said that the total cost of owner compensation, extended warranties, and environmental mitigation is estimated at $400 million.

The settlement is the second between the USA government and an automaker over allegations of cheating on diesel emissions. VW was found to have colluded with Bosch to pass US emissions only while its vehicles sensed they were being tested by federal agencies, while otherwise they operated in a completely different driving mode that polluted up to 40 times above the legal limit. The practice was discovered in September 2015 when Volkswagen admitted to using them.

Representatives for Fiat Chrysler and the Justice Department declined to comment. The Fiat Chrysler settlement does not resolve any criminal allegations, according to Assistant Attorney General Jeffrey Clark.

Asked about the message the settlement would send, acting Environmental Protection Agency Administrator Andrew Wheeler responded: "Don't cheat".