Fiat Chrysler, U.S. Justice Department in diesel emissions settlement talks

(Reuters) - Fiat Chrysler Automobiles NV is in advanced settlement talks with the U.S. Justice Department and California Air Resources Board over accusations that the company illegally used software that led to excess emissions in 104,000 U.S. diesel vehicles sold since 2014, a court-appointed adviser said at a hearing on Tuesday.

FILE PHOTO: A woman walks past a logo of Fiat Chrysler Automobiles (FCA) in Turin March 31, 2014. REUTERS/Giorgio Perottino

The adviser, Ken Feinberg, disclosed at a federal court hearing in San Francisco that government lawyers and Fiat Chrysler had exchanged and “redlined” documents after lengthy talks that were moving “at a rather swift pace.”

A lawyer for Fiat Chrysler, Robert Giuffra, said the company and government lawyers were exchanging drafts of settlement documents. He said he expected a settlement would be reached “probably sometime during the summer.”

The Justice Department sent Fiat Chrysler lawyers a Jan. 27 settlement offer that would require the company to offset excess pollution and take steps to prevent future excess emissions, Reuters reported in February. The letter included language that a settlement must include very substantial civil penalties.

Lawyers in court did not disclose the potential amount of any fine state and federal governments would want Fiat Chrysler to pay as part of any settlement or if the sides had agreed on that issue. California Air Resources Board chair Mary Nichols on Monday declined to discuss the amount of any potential civil penalty.

The sides have engaged in lengthy settlement talks and have three more rounds of talks planned for later in April and May. Lawyers said a settlement could be reached this summer.

Fiat Chrysler and the Justice Department have discussed some consumer-related provisions that could be part of a settlement including warranty and recall provisions.

Last July, Fiat Chrysler won approval from federal and California regulators to sell 2017 model year diesel vehicles after it was sued by the Justice Department in May 2017 for excess emissions.

To resolve the pollution issue, the company is confident it can use updated emissions software in the 2017 vehicles as the basis of a fix to address agencies’ concerns over 2014-2016 diesel vehicles. The company hopes to complete testing the proposed fix by the end of June.

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

The company has denied any wrongdoing, saying there was never an attempt to create software to cheat emissions rules. The Justice Department has a separate ongoing criminal investigation into the excess emissions.

U.S. Judge Edward Chen set a June 1 hearing to get another update on the talks.

Reporting by David Shepardson in Washington