FCA warns shareholders of potential diesel fines

Keith Laing
Detroit News Washington Bureau

Washington — Fiat Chrysler Automobiles NV warned its shareholders Tuesday that it could face fines of up to $4.6 billion if federal regulators conclude that the company has installed pollution-control defeat devices on about 104,000 diesel-powered pickups and SUVs.

The automaker said Tuesday that it has received subpoenas and requests for information from the U.S. Department of Justice, the Security and Exchange Commission and several states’ attorneys general since being accused in January by the Environmental Protection Agency of cheating on federal emission standards.

“We are investigating these matters and we intend to cooperate with all valid governmental requests,” the company said.

FCA has adamantly denied that the company’s diesel engines have any kind of illegal software or defeat devices, but it said Tuesday in an annual report that was presented to its stockholders that it could face fines of $44,539 for each vehicle that is found to have a violation.

The Environmental Protection Agency in January accused the automaker of failing to disclose software that it says could be similar to the “defeat devices” Volkswagen AG used to cheat emissions testing on millions of its diesel cars.

“If we are found to have violated any of the provisions of the Clean Air Act, we could be subject to penalties imposed by the EPA and (California Air Resources Board) as well as other government authorities,” FCA said in the report.

The company added, “EPA employs a civil penalty policy that takes into account cooperation and the degree to which emissions standards are exceeded, which we believe should reduce substantially any penalty the agencies may seek to impose from the statutory maximum.”

The EPA has alleged that FCA did not disclose at least eight auxiliary emission control devices on Jeep Grand Cherokees and Dodge Ram 1500 pickups from the 2014-16 model years with 3-liter diesel engines. Automakers can legally use to deactivate a vehicle’s emission control system in certain conditions, but regulators require the disclosures when companies apply for certificates that are required to sell cars in the U.S.

FCA has contended that its vehicles are fully in compliance with regulations.

“We have cooperated fully with the EPA, CARB and with other governmental authorities when jurisdictionally appropriate both prior to and following the issuance of the (notice of violations),” the company said the annual report. “Further, we intend to continue to cooperate with the EPA, CARB and other government authorities to present our case as we seek to resolve this matter fairly and equitably, and to assure the agencies and our customers that the company’s diesel-powered vehicles meet applicable regulatory requirements and do not include defeat devices.”

However, FCA warned its shareholders that it is “currently unable to predict the outcome of any proceeding or investigation arising out of the (notice of violations) or any related proceedings or investigation nor can we estimate a range of reasonably possible losses for the lawsuits and investigations because these matters involve significant uncertainties at these stages.

“Such investigations could result in the imposition of damages, fines or civil and criminal penalties,” the company said. “It is possible that the resolution of these matters could have a material adverse effect on our financial position, results of operations or cash flows and may adversely affect our reputation with consumers, which may negatively impact demand for our vehicles.”

FCA declined to comment further on Tuesday, as did the SEC.


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Twitter: @Keith_Laing