Fiat Chrysler Fights EPA Over Diesel Claims, Awaits Trump

Updated at 9:46 a.m. ET

Fiat Chrysler Automobiles (NYSE:FCAU) is firing back at the U.S. Environmental Protection Agency over allegations that the automaker failed to disclose its use of software allowing higher tailpipe emissions in two diesel-powered models.

Regulators say 2014-2016 Jeep Grand Cherokee SUVs and Ram 1500 pickup trucks have engine-management software that alters the way they emit pollution. Based on EPA tests, the vehicles—equipped with 3-liter diesel engines—emitted nitrogen oxides at levels exceeding federal standards under normal driving conditions.

For consumers, the vehicles are safe and legal to drive, EPA officials said on a conference call with reporters. The EPA has not told Fiat Chrysler to cease sales of the affected diesel-powered vehicles.

“This is a preliminary investigation into a procedure that is legal. This is not the same thing as Volkswagen at this point,” Rebecca Lindland, executive analyst at Kelley Blue Book, told FOXBusiness.com. “It’s one thing to use a calculator on a math test if it’s allowed. It’s another thing if you don’t tell anybody.”

Fiat Chrysler is pushing back on the EPA’s claims, arguing that its software meets regulatory requirements.

The Italian-American automaker issued a statement saying it has “spent months providing voluminous information” to the EPA and other government agencies in an attempt to explain its emissions-control technology. Fiat Chrysler also said it proposed multiple fixes, including software updates that could be implemented immediately.

Waiting for Trump

In a little more than a week, the EPA will have a new leader.

President-elect Donald Trump’s pick to head the EPA, Oklahoma Attorney General Scott Pruitt, has been a longtime critic of the agency’s policies. Fiat Chrysler conveyed its intent 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.”

The company added that it “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.”

Fiat Chrysler intends to show that its technology bears no resemblance to a “defeat device,” or software that turns on the emissions-control system when a test is underway.

The EPA, which stopped short of accusing Fiat Chrysler of cheating on emissions tests, has initiated an investigation.

Shares of Fiat Chrysler plunged as much as 16% on Thursday, eventually closing 10.3% lower. The stock dipped another 2.1% to $9.74 a share on Friday morning.

This isn’t the only ongoing feud between the auto industry and the EPA. The Alliance of Automobile Manufacturers accused the EPA of cutting short a mid-term review of the Obama administration’s fuel-economy rules. The EPA, which had expected to draft final standards by April 2018, instead issued a recommendation to keep the rules unchanged. In response, the industry said it would seek changes once Trump takes office.

No VW Ties

Fiat Chrysler stressed that the EPA’s accusations are different than the diesel scandal that has plagued Volkswagen. Anyone who compares the two cases is “smoking illegal material,” CEO Sergio Marchionne told reporters.

Volkswagen has acknowledged that up to 11 million vehicles around the world were equipped with software that helped vehicles cheat on diesel-emissions tests. The German automaker will buy back or fix nearly 580,000 affected vehicles in the U.S.

In a settlement with the U.S. Department of Justice, Volkswagen pleaded guilty and agreed to pay $4.3 billion in fines. The DOJ also announced charges against six Volkswagen supervisors from Germany.

“If I found a guy like that, I would have hung them on a door,” Marchionne said when asked about employees potentially breaking the law, according to USA Today.

Renault also faced questions over its diesel-emissions controls this week. French authorities said Friday they are investigating whether the manufacturer cheated on emissions tests. Renault, which issued a recall last year for an emissions issue, said its vehicles comply with the law and don’t contain cheating software.