EPA Accuses Fiat Chrysler of Violating Clean Air Act

EPA Accuses Fiat Chrysler of Violating Clean Air Act

January 12, 2017 — The Environmental Protection Agency (EPA) today accused Fiat Chrysler of violating the Clean Air Act by using software to hide excess diesel emissions in 104,000 vehicles.

Following the news, FCA stocks dropped more than 16% forcing the halt share trading for the automaker.

The EPA claims FCA installed and failed to disclose “engine management software in light-duty model year 2014, 2015 and 2016 Jeep Grand Cherokees and Dodge Ram 1500 trucks with 3.0 liter diesel engines sold in the United States.” The software resulted in the increase of nitrogen oxide emissions.”

The California Air Resources Board (CARB)  also issued a notice of violation to FCA and has started an investigation along with the EPA into the engines.

FCA issued a strong response denying the allegations and says it intends to work with the incoming administration to present its case and resolve this matter fairly and equitably.” (FCA’s full statement is at the bottom of the article.) The EPA’s announcement caught FCA executives by surprised according to insiders inside the company who claimed they were notified only three hours before the EPA issued its press release.

The news comes the day after the U.S. Justice Department indicted six Volkswagen executives for their role in the German automaker’s diesel scandal. Volkswagen also agreed to $4.3 billion in criminal and civil fine.

 News for FCA in recent weeks had been upbeat. A positive CES show in which it unveiled its Portal electric autonomous concept coupled with its announcement this week about adding 2,000 new jobs in Ohio had observers feeling better about the company. Its stock had jumped 19% in December and actually opened at its 52-week high this morning before news of the EPA’s investigation broke. The stock then dropped more than 16% resulting in a stoppage of trade before rebounding to close the day out down 10.28%.
There were signs recently that FCA might have problems with the EPA on the diesel front. Customers filed three separate lawsuits in December alleging the automaker used defeat devices to cheat emission tests. Two of the suits targeted more than 450,000 diesel-powered heavy duty trucks with engines built by Cummins, which was also named in the suit.
 A third lawsuit filed on December 1 last year claims diesel engines in Ram 1500 light-duty pickups and Grand Cherokees also used cheat devices. Engine supplier Robert Bosch also was named in the suit.
 Meanwhile, FCA,  as of late December, still had not received EPA certification for the EcoDiesel engine slated to be available in the 2017 Ram and Grand Cherokee vehicles.
The EPA stopped just short of alleging that FCA used cheat devices in the Ecodiesel engines in question, but may still go down that road as it gets further into the investigation.
 FCA US Response to EPA

January 12, 2017 , Auburn Hills, Mich. – FCA US is disappointed that the EPA has chosen to issue a notice of violation with respect to the emissions control technology employed in the company’s 2014-16 model year light duty 3.0-liter diesel engines.

FCA US intends to work with the incoming administration to present its case and resolve this matter fairly and equitably and to assure the EPA and FCA US customers that the company’s diesel-powered vehicles meet all applicable regulatory requirements.

FCA US diesel engines are equipped with state-of-the-art emission control systems hardware, including selective catalytic reduction (SCR).  Every auto manufacturer must employ various strategies to control tailpipe emissions in order to balance EPA’s regulatory requirements for low nitrogen oxide (NOx) emissions and requirements for engine durability and performance, safety and fuel efficiency. FCA US believes that its emission control systems meet the applicable requirements.

FCA US has spent months providing voluminous information in response to requests from EPA  and other governmental authorities and has sought to explain its emissions control technology to EPA representatives.  FCA US has proposed a number of actions to address EPA’s concerns, including developing extensive software changes to our emissions control strategies that could be implemented in these vehicles immediately to further improve emissions performance.

FCA US looks forward to the opportunity to meet with the EPA’s enforcement division and representatives of the new administration to demonstrate that FCA US’s emissions control strategies are properly justified and thus are not “defeat devices” under applicable regulations and to resolve this matter expeditiously.

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