The EPA said in January that FCA was using software that allowed diesel vehicles to emit more pollution on the road than they do in emissions tests. The EPA said around 104,000 Jeep Grand Cherokee SUVs and Ram pickups from the 2014-2016 model years are affected.
FCA denies that allegation.
Bloomberg reported late Wednesday that the Justice Department was preparing to file a civil lawsuit against FCA. But FCA says any litigation would be "counterproductive" to its talks with the EPA.
FCA says it believes a software update can resolve the EPA's concerns.
FCA shares fell 1 percent to $10.44 in midday trading.