The Environmental Protection Agency accused Fiat Chrysler on Thursday of installing software that enables certain diesel trucks to emit far more pollutants than emissions laws allow. The company denied those accusations, saying its software meets regulatory requirements.
The vehicles involved were the 2014 to 2016 model year Dodge Ram 1500 pickup trucks and Jeep Grand Cherokees with 3.0-liter diesel engines. The allegations affect roughly 104,000 vehicles, EPA officials said.
Janet McCabe, head of EPA’s Office of Air and Radiation, said “no immediate actions are necessary” for owners because their vehicles are still safe and legal to drive.
The software reduced the amount of nitrogen oxide emitted during emissions tests, obscuring the fact that they spew more of the pollutant than is allowed under the Clean Air Act, officials said. They stopped short of calling the technology a “defeat device,” which is illegal, but said the company has not yet offered another explanation for the software.
The technology was brought to light after the EPA expanded its vehicle testing to look for so-called defeat devices in September 2015 following a similar scandal at Volkswagen. FCA did not disclose the software to regulators, which may itself be a violation of the law, the EPA said.
“Failing to disclose software that affects emissions in a vehicle’s engine is a serious violation of the law, which can result in harmful pollution in the air we breathe,” Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance, said in a statement.
Fiat Chrysler officials denied those claims in a statement Thursday. Every automaker must use “various strategies” to reduce tailpipe emissions without compromising the durability and performance of its engines, FCA said, adding that its emission control system complies with necessary requirements.
The company also said it has offered to make extensive changes to its software to address EPA concerns.
“FCA U.S. 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 U.S. customers that the company’s diesel-powered vehicles meet all applicable regulatory requirements,” the company said in a statement.
Fiat Chrysler’s stock price dropped as much as 18 percent Thursday morning and trading was temporarily halted. While the Grand Cherokee and Dodge Ram are iconic brands, the number of diesel-powered vehicles that FCA sells is actually quite low, said Michael Harley, an executive analyst at Kelley Blue Book. The bigger impact may be felt industry wide if consumers grow more wary of diesel-powered vehicles, he said.
EPA officials said on a call Thursday that they are looking into whether other automakers may be using similar devices.
“Other automakers are certainly dotting their I’s, crossing their T’s, and double-checking every single fact and figure with relation to internal emissions testing,” Harley said. “We have to assume that companies are compliant with all current regulations, but the scrutiny on every manufacturer is going to be tougher than it ever has been before.”
The agency’s move is similar to the initial steps it took at the start of the German automaker Volkswagen emissions scandal, which eventually led to about $20 billion in fines and charges against seven employees over the course of the last year and a half. Federal prosecutors announced a settlement that forced Volkswagen to plead guilty to defrauding regulators and consumers, a rare admission of criminal wrongdoing for a large corporation.
David Uhlmann, who served as head of the Department of Justice environmental crimes section from 2000 to 2007, said it remains to be seen whether the Fiat Chrysler violations are as “egregious” as Volkswagen’s. But after the VW scandal, it makes sense that regulators would take a closer look at the industry.
“It is no surprise that the VW investigation has prompted enhanced focus on the automotive industry,” the University of Michigan law professor said. “When corporate misconduct occurs, it often reflects industry practice, not just the wrongdoing of a single company.”
The severe penalties levied against Volkswagen and, in particular, individual employees signals to companies that the Department of Justice intends to pursue and prosecute corporate decision-makers more intently than it has in years past, said Carl W. Tobias, a University of Richmond law professor. Deputy Attorney General Sally Q. Yates released a policy directive in September 2015 that said holding individual executives accountable is “one of the most effective ways to combat corporate misconduct.”
The coming administration change complicates the industry’s response to regulatory investigations carried out by the EPA and DOJ. President-elect Donald Trump has pledged to roll back federal regulation, though he has not specified what that will entail, and his appointment to lead the EPA, Oklahoma Attorney General E. Scott Pruitt, has been critical of the agency in the past.
“There has been discussion from the president elect and others that they plan to not overregulate, if you will, but this seems so clearly detrimental to public health that they may have to rethink that,” Tobias said.
Advocacy groups were quick to praise the EPA for holding corporations accountable and chide those companies for actions that they say are harmful to the public.
“Chrysler, which owes its existence to a generous bailout by American taxpayers, is now demanding weakening changes to antipollution laws, even as it is charged with illegally polluting,” said Dan Becker, director of the Safe Climate Campaign. “In fighting the charges and looking to the new administration for exoneration, perhaps Chrysler hopes that Donald Trump will tell the company it’s okay to cheat and lie.”
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