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Enforcement

Fiat Chrysler Automobiles Clean Air Act Civil Settlement Information Sheet

(Washington, DC – January 10, 2019) – The Department of Justice, the Environmental Protection Agency (EPA), and the State of California announced today a settlement with Fiat Chrysler Automobiles N.V., FCA US, and affiliates (Fiat Chrysler or FCA) for alleged violations of the Clean Air Act and California law. Fiat Chrysler has agreed to implement a recall program to repair more than 100,000 noncompliant diesel vehicles sold or leased in the United States, offer an extended warranty on repaired vehicles, and pay a civil penalty of $305 million to settle claims of cheating emission tests and failing to disclose unlawful defeat devices. Fiat Chrysler also will implement a program to mitigate excess pollution from these vehicles.

The recall and federal mitigation programs are estimated to cost up to $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 noncompliant vehicles in California. In addition, in a separate administrative agreement with the United States Customs and Border Protection, Fiat Chrysler will pay a $6 million civil penalty to resolve allegations of illegally importing 1,700 noncompliant vehicles.

Overview

EPA alleged that FCA installed undisclosed software functions and defeat devices in approximately 100,000 Ram 1500 and Jeep Grand Cherokee light-duty diesel vehicles (Model Years 2014-2016). The undisclosed software functions and defeat devices cause the vehicles’ emission control systems to perform differently, and less effectively, during certain normal driving conditions than on federal emission tests, resulting in increased emissions of harmful air pollutants.

This settlement resolves EPA’s Notice of Violation issued to FCA on January 12, 2017, and the complaint filed on May 23, 2017, by the United States Department of Justice, on behalf of EPA. The State of California is a co-plaintiff to this settlement.

Defendants are FCA US LLC, Fiat Chrysler Automobiles N.V., V.M. Motori S.p.A. and V.M. North America, Inc.

FCA US LLC is a vehicle manufacturer headquartered in Auburn Hills, Michigan. FCA US LLC manufactured the vehicles, performed emission tests on the vehicles, met with EPA regulators about the vehicles, and submitted information about the vehicles to EPA.

V.M. North America, Inc. and V.M. Motori S.p.A, or their corporate predecessors or successors, are now FCA subsidiaries. At the time the FCA vehicles were developed and manufactured, these companies worked on engine calibration and air emission issues related to the vehicles. 

Fiat Chrysler Automobiles N.V. is the corporate parent of FCA US LLC, V.M. North America, Inc. and V.M. Motori S.p.A. The day-to-day operations of FCA US LLC are managed by a team comprised of Fiat Chrysler Automobiles N.V. and FCA US LLC.

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Clean Air Act Certification Requirements and Violations

The Clean Air Act (“CAA”) and its regulations aim to protect human health and the environment, in part, by reducing harmful emissions from mobile sources of air pollution. This CAA settlement concerns light-duty motor vehicles, which must satisfy tailpipe emission standards for certain air pollutants, including oxides of nitrogen (“NOx”). Pursuant to the CAA, the EPA administers a certification program to ensure that every vehicle introduced into United States commerce satisfies applicable emission standards. Under this program, manufacturers apply to the EPA for a certificate of conformity (“COC”) and must demonstrate in their applications that representative test vehicles meet emission standards. The EPA issues COCs to vehicle manufacturers based on these applications. A COC covers only those new motor vehicles that conform, in all material respects, to the design specifications described in the manufacturer’s application for that COC. Manufacturers are prohibited from selling any new motor vehicle in the United States unless that vehicle is covered by an EPA-issued COC.

On May 23, 2017, the United States filed a complaint against FCA alleging violations of the CAA with regard to approximately 100,000 diesel vehicles sold in the U.S. Specifically, the U.S. complaint alleged that each of these vehicles contain, as part of the engine control module, at least eight software-based features that were not disclosed in FCA’s COC applications to EPA and that affect the vehicles’ emission control systems. The undisclosed software features defeat or lessen the effectiveness of the vehicles’ emission control systems during certain normal driving situations. This results in vehicles that meet emission standards in the laboratory and during standard EPA testing, but during certain normal on-road driving these vehicles emit NOx that is much higher than the EPA-compliant level. Each of these vehicles differs materially from the specifications provided to EPA in the certification applications, and thus the vehicles are uncertified, in violation of Section 203 of the Clean Air Act. One or more of the eight software-based features is a defeat device that defeats the emission control system, which is a separate violation of Section 203 of the Clean Air Act.

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Vehicle Repair: Reducing their Harmful Emissions

The Approved Emissions Modification (AEM) is an FCA-developed software repair that is ready for installation in the vehicles pending final court approval. FCA updated vehicle software and calibrations to meet emission standards and tested Ram and Jeep Grand Cherokee vehicles to prove to EPA and California that the vehicles with the installed AEM meet emission standards. EPA and California independently confirmed that the repaired vehicles with the installed AEM meet emission standards and that the vehicles perform similarly on federal emission tests and in normal driving conditions.

As injunctive relief, FCA must update the vehicle software with the AEM to remove the defeat devices and modify the undisclosed software-based features that affect emissions in the vehicles, disclose all software features in the AEM that affect emissions in the vehicles, and implement corporate governance and organization reforms to minimize the likelihood of future environmental compliance violations. FCA must install the AEM in at least 85% of the U.S. vehicle fleet (“National Recall Target”) within two years of final court approval. For each percentage point by which FCA falls short of this National Recall Target, FCA must pay a civil penalty of $5.5 million to the United States. A separate California Recall Target exists for vehicles registered in California. FCA must meet the 85% California Recall Target or pay $825,000 for each percentage point by which FCA falls short of the California Recall Target.

FCA must offer a broad extended warranty for vehicles once the AEM is installed. FCA must also conduct additional testing to demonstrate to EPA and California that the vehicles will meet emission standards over their full useful life.

Vehicle owners and lessees will directly receive information from FCA concerning the AEM installation and monetary inducements for installation of the AEM on consumer vehicles. More information for vehicle owners and lessees is available at EcoDieselSettlement.com or by calling FCA at 1-833-280-4748.

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Mitigation

FCA must implement a program to fully mitigate the excess NOx emissions from the vehicles. The mitigation program requires FCA to improve the efficiency of 200,000 aftermarket catalytic converters sold for use on light-duty vehicles by July 1, 2020. The State of California will implement a separate mitigation program. 

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Actions to Prevent Future Violations

FCA will take various measures to prevent future problems. FCA has implemented a corporate reorganization to ensure that personnel who test their vehicles for emissions compliance are organizationally separate from the personnel who design their vehicles. FCA will develop enhanced technical training on emissions certification and compliance that highlights the requirements for disclosure to EPA of software features that affect emissions control, and the prohibition on defeat devices. The company, and a third-party tester, will perform portable emission measurement system (PEMS) testing on their new diesel and gasoline vehicles, and FCA will collect emissions and operational data from a small fleet of the repaired vehicles. Lastly, an independent auditor will thoroughly assess FCA’s compliance with the corporate governance reforms.

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Health Effects and Environmental Benefits

NOx pollution contributes to the formation of harmful smog and soot, exposure to which is linked to a number of respiratory- and cardiovascular-related health effects as well as premature death. Children, older adults, people who are active outdoors (including outdoor workers), and people with heart or lung disease are particularly at risk for health effects related to smog or soot exposure. Nitrogen dioxide formed by NOx emissions can aggravate respiratory diseases, particularly asthma, and may also contribute to asthma development in children.

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Civil Penalty

FCA will pay a penalty of $305,000,000 for its alleged civil violations of the Clean Air Act.  

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State and Regional Partners

The California Air Resources Board, and the California Attorney General, joined the United States in this settlement on behalf of the State of California.

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Comment Period

The proposed settlement, lodged in the U.S. District Court for the Northern District of California, is subject to a 30-day public comment period and final court approval. Information on submitting comment is available at the DOJ website.

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For more information, contact:

For technical questions:

Eleanor Kane
Air and Radiation Division
U.S. Environmental Protection Agency, Region 5
Mail Code: AE-18J
77 West Jackson Boulevard
Chicago, IL  60604-3507
Tel. 312-353-4840
Kane.Eleanor@epa.gov

Victor Aguilar
EPA Office of Civil Enforcement
U. S. Environmental Protection Agency
1200 Pennsylvania Avenue, N.W.
Mail Code 2242A
Washington, D.C. 20460
Tel. 202-564-9679
Aguilar.Victor@epa.gov

For legal questions:

Kathryn Caballero
EPA Office of Civil Enforcement
U. S. Environmental Protection Agency
1200 Pennsylvania Avenue, N.W.
Mail Code 2242A
Washington, D.C. 20460
Tel. 202-564-1849
Caballero.Kathryn@epa.gov

Caitlin Meisenbach
EPA Office of Civil Enforcement
U. S. Environmental Protection Agency
1200 Pennsylvania Avenue, N.W.
Mail Code 2242A
Washington, D.C. 20460
Tel. 202-565-0062
Meisenbach.Caitlin@epa.gov

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