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Speaker 1: You're listening to Bloomberg Law. Just about forty five minutes ago,

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Speaker 1: we got word that the Justice Department was suing Fiat Chrysler.

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Speaker 1: The claim is that more than a hundred thousand diesel

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Speaker 1: pickups and SUVs had software that caused the emissions control

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Speaker 1: system to perform less effectively during normal driving conditions than

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Speaker 1: on federal emissions tests. With us to talk about this

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Speaker 1: lawsuit is Bloomberg News is Autos reporter Jamie Butters. He's

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Speaker 1: with us in Detroit. Jamie, thank you for joining us.

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Speaker 1: Tell us a little bit about this lawsuit. What does

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Speaker 1: it allege specifically that Fiat Chrysler might have done. Yeah,

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Speaker 1: So this lawsuit, this filing, it's a civil lawsuit, is

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Speaker 1: not not the criminal case. Um. And it's sort of

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Speaker 1: a ratcheting up of a complaint that the EPA made

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Speaker 1: in the waning days of the Obama administration. They sent

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Speaker 1: a notice in mid January kind of on the tail

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Speaker 1: into the Detroit Auto Show saying Krysler had software uh

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Speaker 1: in the control devices of their diesel engines that allowed

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Speaker 1: more allowed emissions and that those worths, those are pieces

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Speaker 1: of software they had not told the e p A

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Speaker 1: about and Krysler is saying, you know, we're sorry. We

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Speaker 1: you know, we thought these were sort of standard and

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Speaker 1: everyone knew about this and it's really no big deal.

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Speaker 1: And the e p A is saying, you put in

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Speaker 1: software and that is by definition cheating, so you're in

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Speaker 1: big trouble. Uh. Now, the question, you know, is, is

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Speaker 1: this sort of VW like right and f Chrysler has

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Speaker 1: really resisted and they said, look, we put the software

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Speaker 1: in just for safety purposes so that the engines last

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Speaker 1: as long as they're supposed to, and we did not

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Speaker 1: make any efforts to specifically have our cars, you know,

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Speaker 1: get by the test. These these were not put in

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Speaker 1: just to make them pass the test and sort of

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Speaker 1: the way that that VWS were. Uh. The e p

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Speaker 1: A says, that doesn't really matter. Uh, you know, if

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Speaker 1: you put any software in that you didn't tell us about,

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Speaker 1: that is a that is there to cheat as far

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Speaker 1: as we're concerned. If you didn't tell us about it,

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Speaker 1: you're you're doing it because you're cheating. And so that's

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Speaker 1: kind of where they're still at this standstill. Which you know,

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Speaker 1: with VW, we didn't find out about it until the

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Speaker 1: automaker had admitted it you know, there were a whole

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Speaker 1: series of meetings and finally they confessed and we haven't

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Speaker 1: gone to that, but there's a consumer hearing tomorrow, hearing

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Speaker 1: on consumer suits, and it looks like, uh, Justice Partment

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Speaker 1: made this filing so that the e p A could

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Speaker 1: get their case kind of folded in with that and

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Speaker 1: they can share discovery and apply pressure that way. So

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Speaker 1: the two sides had been negotiating over this um in

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Speaker 1: fact that these are not brand new issues. As you said,

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Speaker 1: what do we know about why those negotiations apparently fell apart? Yeah,

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Speaker 1: you know, negotiations are sort of the polite term. It's

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Speaker 1: certainly it's the term that christis is another way to

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Speaker 1: look at them as be arguments. Uh. So they've been

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Speaker 1: having this argument for months and it sounds like they

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Speaker 1: just keep saying the same things over and over at

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Speaker 1: each other, which is, you know, we're not cheating. Maybe

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Speaker 1: this was a paperwork error. Maybe you know, and uh

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Speaker 1: and the regulators saying your paper you call it a

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Speaker 1: paperwork error, but that is by definition cheating, and they

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Speaker 1: just keep going round and round, and so maybe by

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Speaker 1: taking it to a court, getting a judge involved, it

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Speaker 1: can put pressure on both sides too to come to

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Speaker 1: a settlement right to either to work something out where

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Speaker 1: they can figure out what is the appropriate penalty, what

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Speaker 1: is the appropriate course of action. If you have Chrysler

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Speaker 1: in their applying for their twenty now this should explain.

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Speaker 1: This all relates to UH model year fifteen and sixteen vehicles.

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Speaker 1: These are ram pickups and cheap Grand share keys, a

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Speaker 1: fairly small percentage of them. Diesel isn't that popular in

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Speaker 1: the US, but there's a little more than a hundred

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Speaker 1: thousands of them out there. In their application for their diesels. Uh,

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Speaker 1: they're saying, okay, we'll we want to make these software

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Speaker 1: changes and if you're okay with that, will make those

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Speaker 1: changes on the old ones and then everybody is happy.

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Speaker 1: But you know that the regulators tend to not go

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Speaker 1: along with that because they say, you put this in

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Speaker 1: to protect the durability or the performance. If you make

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Speaker 1: these changes to how it operates, it's going to hurt

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Speaker 1: the consumer. You know, we don't want you to hurt

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Speaker 1: the environment, but we also don't want you to hurt

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Speaker 1: the consumer, or if you do, you're going to have

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Speaker 1: to pay some penalties to make things right for them,

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Speaker 1: and that that negotiation is now going to have to

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Speaker 1: take place in court. I guess. So what's the worst

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Speaker 1: case scenario for for what is the complaints seeking? Well,

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Speaker 1: we haven't seen I don't think we've seen a total

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Speaker 1: dollar figure. Now when when E p A first brought

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Speaker 1: this up, they said the fines could total more than

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Speaker 1: four and a half billion dollars um With VW there

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Speaker 1: were about five times as many vehicles involved. The total

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Speaker 1: caused his run up well passed twenty billion dollars. Uh,

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Speaker 1: kind of approaching thirty. There's still some some cases hanging

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Speaker 1: out there. Um, you know, it could be a criminal

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Speaker 1: matter if they decided this was all a conspiracy to

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Speaker 1: avoid uh, complying with the Clean Air Act. So there's

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Speaker 1: potentially you know, billions of dollars at stake for Fiat

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Speaker 1: Chrysler and a huge reputational hit. Uh. You know, this

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Speaker 1: is a company that's effectively for sale. Uh. Sergio Marchioni

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Speaker 1: has said he he preferred he wants to retire after

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Speaker 1: next year. He's you know, really tried to bolster their profits,

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Speaker 1: payoff their debt and get them ready to be merged

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Speaker 1: with someone else. And if there's billions of dollars of

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Speaker 1: liability to the u s e p A. Or the

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Speaker 1: Justice Department, let alone a hundred thousand consumers. That's going

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Speaker 1: to make that all the more complicated. Jimmy Butters, thank

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Speaker 1: you so much for explaining that to us UH in

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Speaker 1: lawsuit filed by the federal government against the Chrysler over

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Speaker 1: emissions