Fiat Chrysler Automobiles will pay more than $500 million to settle a Justice Department lawsuit over its alleged use of illegal software to enable its diesel vehicles to cheat emissions tests, the Justice Department announced Thursday.
But the total cost of the emissions scandal could ultimately exceed $800 million. Fiat Chrysler is expected to resolve class-action civil claims brought by vehicle owners, which could total more than $300 million. Individual car owners could receive as much as $3,000 each, according to the consumer consent decree.
Fiat Chrysler did not admit to wrongdoing as part of the settlement, but it does not resolve any potential criminal liabilities.
Under the settlement’s terms, Fiat Chrysler agreed to implement a recall program to repair more than 100,000 out-of-compliance pickup trucks and SUVs, offer an extended warranty on repaired vehicles and pay a civil fine of $305 million.
The recall program is expected to cost the Italian-American automaker about $185 million. Fiat Chrysler will also pay $19 million to California to settle claims it violated the state’s environmental laws and other $6 million to U.S. Customs and Border Protection to resolve claims it illegally imported 1,700 noncompliant vehicles.
The Department of Justice is committed to the full and fair enforcement of the laws that protect our nation’s environment,” Jesse Panuccio, principal deputy associate attorney general, said when announcing the settlement. “Fiat Chrysler broke those laws and this case demonstrates that steep penalties await corporations that engage in such egregious violations.”
Fiat Chrysler said in a statement it has implemented “rigorous new validation procedures and updated our training programs to ensure continued compliance with the increasingly complex regulatory environment.
“We acknowledge that this has created uncertainty for our customers and we believe this resolution will maintain their trust in us,” Mark Chernoby, Fiat Chrysler’s head of North American Safety and Regulatory Compliance, said in a statement.
In May 2017, the Justice Department sued Chrysler Fiat over the Environmental Protection Agency’s claim it had used the illegal software to shut off pollution controls under certain driving conditions. The EPA said the software enabled vehicles to pass emissions tests but release higher levels of pollutants once they hit the road.
The software reduced the amount of nitrogen oxide released during emissions tests, covering up that the vehicles actually spewed more pollutants than allowed under the Clean Air Act.
The Justice Department said the software was installed in 104,000 diesel vehicles from 2014-2016, including Dodge Ram 1500 pickup trucks and Jeep Grand Cherokees with diesel engines.
Fiat Chrysler has repeatedly denied the software defeated emissions testing. The EPA discovered the software in September 2015 when it expanded testing for such devices in the wake of Volkswagen’s emissions scandal.
In the lawsuit, the Justice Department said Fiat Chrysler’s software was similar to emissions-defeating devices used by Volkswagen. Fiat Chrysler has disputed that claim, saying a software fix could solve the problem in contrast to Volkswagen, which needed to install new devices to meet regulations.
Fiat Chrysler’s fines and penalties pale in comparison to the Volkswagen scandal. The German automaker was forced to pay $2.8 billion in criminal fines and $1.5 billion in civil penalties for what authorities allege was a 10-year plot to skirt U.S. emissions standards.
Separately, Volkswagen reached a $14.7 billion settlement with the EPA last year, requiring Volkswagen to spend $10 billion to either buy back or repair about 475,000 diesel cars affected by the emissions scandal.
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