According to reports, lawyers for the EPA and CARB have notified Fiat Chrysler that they are prepared to settle the civil suits filed against the company as a result of its alleged emissions violations from its Ram diesel vehicles. The legal eagles sent a letter dated January 27 to company attorneys advising them that any settlement, “must include very substantial civil penalties” large enough to deter future violations and that “adequately reflect the seriousness of the conduct that led to these violations,” according to Bloomberg, which has obtained a copy of the letter.
In addition to the fines, Fiat Chrysler must retrofit the 104,000 recall-affected vehicles to bring them into compliance with all applicable regulations and take steps to insure compliance in the future. Unlike the Volkswagen settlement, the current demand does not require a buy-back of the affected vehicles by the manufacturer.
Mary Nichols, chair of the California Air Resources Board, tells Bloomberg, “We are engaging in conversations but I’m not involved in the settlement talks.” She then added, “It’s interesting that Fiat Chrysler has the same team of lawyers representing them that worked with VW.”
Estimates of what it will cost Fiat Chrysler to settle the civil suit range from about $400 million to $1 billion. Volkswagen agreed to a civil penalty settlement of just over $4 billion, but its actions covered a longer period of time and almost 500,000 vehicles, compared to a much smaller number of Ram diesel trucks. Fiat Chrysler stock closed down 7.5% after the Bloomberg story was published.
FCA CEO Sergio Marchionne has taken the whole thing in his typically combative style. He claimed to be outraged when the EPA first filed a notice of violation against the company last year. Marchionne termed the allegations “unadulterated hogwash.” But Justice Department lawyers insist they have “compelling evidence” that Fiat Chrysler knew or should have known its engines did not comply with emissions standards. They go so far as to term what the company did as “egregious.” That makes it sound like they have the proverbial “smoking gun” tucked away in their briefcases in the event the civil claims ever go to trial.
It should be noted that all this legal maneuvering only concerns civil penalties. The company is still the target of a criminal investigation in the US.