Fiat Chrysler Accused Of Cheating On Emissions Tests

The Environmental Protection Agency has accused Fiat Chrysler (NYSE:FCAU) of cheating on emissions test by using specialized software. The EPA says that the company installed software on certain diesel trucks that allowed them to emit far more pollutants than emissions laws allow under the Clean Air Act. The software reduced the amount of nitrogen oxide emitted during emissions tests.

The EPA said it found at least eight undisclosed pieces of software that can alter how a vehicle emits air pollution. Fiat Chrysler had previously recalled vehicles for one of the undisclosed software programs. Failing to disclose the software may itself be a violation of the law. According to Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance, “Failing to disclose software that affects emissions in a vehicle’s engine is a serious violation of the law.” Officials said the company has not yet offered another explanation for the software.

The number of diesel-powered vehicles that Fiat Chrysler sells is actually quite low. The allegations affect roughly 104,000 vehicles, including 2014 to 2016 model year Dodge Ram 1500 pickup trucks and Jeep Grand Cherokees with 3.0-liter diesel engines. The number of Fiat Chrysler vehicles affected is about one-sixth the vehicles in the Volkswagen case. Janet McCabe, head of EPA’s Office of Air and Radiation, said the vehicles are still safe and legal to drive. The company has no plans to stop selling 2016 U.S. diesel models.

The EPA expanded its vehicle testing in September 2015 following a similar scandal at Volkswagen. The software Volkswagen installed in cars allowed them to emit up to 40 times legally permissible level of pollution. The scandal eventually led to about $20 billion in fines and charges against seven employees. As part of the settlement, Volkswagen plead guilty to defrauding regulators and consumers.

Fiat Chrysler officials have denied the accusations. In a statement, the company claimed that its emission control system complies with necessary regulatory requirements. The company also said it has offered to make extensive changes to its software to address EPA concerns. Fiat Chrysler’s stock price dropped as much as 18 percent Thursday morning after the news broke. The maximum fine for the alleged violations would be about $4.6 billion.

EPA officials said that they are looking into whether other automakers may be using similar devices. Advocacy groups have praised the EPA for holding corporations accountable.