WASHINGTON (Reuters) – Fiat Chrysler Automobiles NV (FCHA.MI) 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 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/File Photo

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 said previously 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 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.

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.

($1 = 0.87 euro)

Reporting by David Shepardson; editing by Jonathan Oatis


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