EPA accuses Fiat Chrysler of cheating emissions laws

EPA accuses Fiat Chrysler of cheating emissions laws

The Fiat Chrysler Automobiles Group sign at the Chrysler Group headquarters May 6, 2014 in Auburn Hills, Mich.

U.S. regulators accused Fiat Chrysler Automobiles of violating emissions standards in more than 100,000 diesel vehicles, spawning concerns among investors that the company could become ensnared in a scandal like the one that engulfed Volkswagen Group and cost the German automaker billions of dollars.

The Obama administration's Environmental Protection Agency said Thursday that Fiat Chrysler installed software on about 104,000 pickup trucks and sport-utility vehicles and failed to disclose the technology, thus cheating emissions standards.

The allegations involve the 2014, 2015 and 2016 Jeep Grand Cherokee and light-duty Ram 1500 trucks with 3-liter diesel engines.

The EPA said the automaker installed eight different undisclosed software programs on the vehicles that collectively caused them to spew harmful nitrous oxide emissions, which can exacerbate breathing conditions.

"This is a clear and serious violation of the Clean Air Act," Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance, told reporters. "There is no doubt they are contributing to illegal pollution."

Fiat Chrysler CEO Sergio Marchionne blasted the EPA in a quickly arranged press call, saying he was offended by the agency's "incredibly belligerent" attacks on the auto industry and that his company had done "nothing" illegally.

"There is nothing in common between the VW reality and what we are describing here," he said, saying it's "absolute nonsense" to suggest so and anything who disagrees with him is "smoking illegal material."

He added: "We're trying to do an honest job here. We're not trying to break the bloody law."

Marchionne rejected the suggestion that rogue employees could have schemed to violate EPA laws. "If I found a guy like that, I would have hung them on a door," he said.

Fiat Chrysler (FCAU)  shares traded in New York plunged 14.2% at 11:41 a.m. to $9.52 as investors fretted about the financial implications.

The EPA has the authority to fine automakers up to $44,539 per vehicle for the worst violations of the Clean Air Act. The agency threatened possible fines on Thursday if it determines that the software installed on the vehicles qualify as illegal "defeat devices" under U.S. laws.

But it's possible the incoming Trump administration won't continue the Obama administration's investigation or won't crack down as aggressively.

"We find it very, very strange it would happen before this administration changes over," Marchionne said.

Kelley Blue Book analyst Rebecca Lindland said there was no indication that Fiat Chrysler had intentionally cheated.

"So they're not meeting the standards, but right now it doesn't appear to be the same type of deliberate act that Volkswagen admitted to," she said.

Fiat Chrysler said in a statement that it had offered to the EPA to develop software fixes to "further improve emissions performance" because it wants to "resolve this matter fairly and equitably."

The vehicles were programmed with software that violated standards and was not disclosed to the EPA, Giles said. In lab testing, the vehicles met standards but at high speeds and in extended driving they violate regulations, EPA's Giles said.

"That means that the vehicles were sold illegally," she said.

But Lindland said the sin might have been a failure to mention the technology when requesting EPA certification to sell the vehicles.

"It's like bringing a calculator to your math test -- you're allowed to bring it and it's one thing to have it on your desk, but it's another thing to have it in your lap," she said.

The EPA said it discovered the alleged violations after expanding its testing of on-road vehicle performance following the Volkswagen scandal.

Volkswagen admitted to cheating emissions laws on more than half a million vehicles and has since agreed to criminal and civil settlements totaling nearly $22 billion. Six VW executives were charged Wednesday with allegedly weaving a conspiracy to dodge regulations while the company pled guilty to similar charges on a corporate level.

In Volkswagen's case, vehicles were spewing NOx emissions at rates of up to 40 times the U.S. standard. Giles declined to provide a comparable assessment for Fiat Chrysler.

But Marchionne sought to distance himself from VW.

"To be perfectly honest I think it's being blown out of proportion," he said. "I find this to be a bizarre characterization of FCA's activities and we will defend our behavior."

Unlike VW, the EPA has not yet ordered Fiat Chrysler to halt sales of diesel vehicles accused of violations. And Marchionne said he would not stop sales proactively.

Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.

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