Exclusive: Fiat Chrysler nearing U.S. diesel emissions settlement - source

WASHINGTON (Reuters) - Fiat Chrysler Automobiles NV is nearing a settlement to resolve the U.S. Justice Department’s allegations that the Italian-American automaker used illegal software to allow 104,000 U.S. diesel vehicles to pollute beyond legal limits, a person briefed on the matter said on Tuesday.

FILE PHOTO: A Fiat Chrysler Automobiles (FCA) sign is seen at its U.S. headquarters in Auburn Hills, Michigan, U.S. May 25, 2018. REUTERS/Rebecca Cook

The settlement, which could be announced as early as this week, is expected to include significant civil fines and company funds to offset excess diesel emissions, the person said, and will cover claims from the Justice Department, U.S. states and vehicle owners.

The company, which declined to comment on Tuesday, has denied any wrongdoing and previously said there was never an attempt to create software to cheat emissions rules. In October, Fiat Chrysler set aside 713 million euros ($815 million) to cover potential costs related to the case.

Reuters reported earlier that the Justice Department was seeking “substantial” civil fines from Fiat Chrysler after it sued in May 2017, accusing the company of illegally using software that led to excess emissions in 104,000 U.S. diesel vehicles sold since 2014.

Fiat Chrysler won approval from U.S. regulators in July 2017 to sell diesel vehicles with updated software. The company has repeatedly said it hoped to use that software as the basis of a fix to address agencies’ concerns over 2014-2016 Fiat Chrysler diesels.

The Justice Department declined to comment on Tuesday.

U.S. and California regulators stepped up scrutiny of diesel vehicles after Volkswagen AG VOWG_p.DE admitted in 2015 to illegally installing software in U.S. vehicles for years to evade emissions standards.

VW has agreed to pay more than $25 billion in the United States for claims from owners, environmental regulators, states and dealers.

Regulators have said Fiat Chrysler diesel vehicles had undisclosed emissions controls that allowed vehicles to emit excess pollution during normal driving.

Reuters reported in February that a settlement offer sent to Fiat Chrysler lawyers by the Justice Department in January 2018 would require the company to offset excess pollution and take steps to prevent future excess emissions. The letter included language that a settlement must include very substantial civil penalties.

The company and government lawyers have sparred for months over the size of penalties, the person said.

The Justice Department has a separate ongoing criminal investigation into the excess emissions. The U.S. Securities and Exchange Commission and a group of U.S. state attorneys general have also been investigating.

Additionally, U.S. regulators have been probing diesel emissions in Daimler AG vehicles. Daimler has said in financial filings it faced ongoing investigations by U.S. and German authorities into excess diesel emissions that could eventually lead to significant penalties and recalls.

Unlike VW and Daimler, Fiat Chrysler still sells diesel-powered passenger vehicles in the United States and it plans to offer diesel versions in two additional Jeep SUVs by 2020.

Reporting by David Shepardson; editing by Jonathan Oatis and G Crosse