The dispute over Navistar International Corp.’s failed emissions strategy continues long after the truck maker pulled the plug on its exhaust gas recirculation (EGR)-only technology: The Environmental Protection Agency (EPA) alleged this week the company put thousands of noncompliant engines in its 2010 trucks, according to a lawsuit filed in U.S. District Court in Illinois, where the company is based.
At issue is whether the engines were “fully assembled” in 2009—in which case the engines had the appropriate a certificate of conformity (COC) as issued by EPA under the Clean Air Act—or in 2010 as EPA claims, and in which case they were not duly certified.
Navistar disputes allegations.
“We believe our 2010 engine transition was appropriate and we intend to aggressively defend our position going forward,” spokesman Steve Schrier said, declining to comment further on pending litigation.
The complaint notes that EPA in 2005 enacted regulations granting engine manufacturers a “delegated assembly exemption,” which authorized the actual truck OEM to install after-treatment devices (ATDs) at the time of vehicle assembly, and the date the ATDs were attached did change the engine’s date of manufacture.
And while Navistar did use the assembly exemption for many of the nearly 8,000 engines covered in the complaint, and while the engine production did begin in 2009, Navistar completed the manufacturing and assembling processes later. So “each and every engine was ‘produced’ in 2010 and is therefore not a model year 2009 engine,” the government claims.
Civil penalties could amount to $300 million.
Navistar originally received a Notice of Violation (NOV) from EPA in February 2012. The matter was referred to the U.S. Department of Justice (DOJ) a year ago, according to company securities documents.
“Navistar and the DOJ are in continuing discussions concerning this matter,” the company said in its most recent quarterly report, filed last month. “If the DOJ ultimately initiates litigation, it is likely that the DOJ will request a significant civil penalty.”
Navistar and EPA have been to court before over the 2010 emissions standards and the company’s engines. Navistar started the legal wrangling in March 2009 when it claimed the agency’s guidance documents for selective catalytic reduction (SCR) implementation were invalid because they were adopted without a public process and with input only from the SCR engine makers.
Navistar and EPA settled that lawsuit about a year later.
Navistar was the only North American truck and engine maker not to adopt SCR. From 2010 through 2011 Navistar used emissions “credits” to continue to build and install EGR engines that did not reach EPA's emissions targets.
But after Navistar alerted EPA in late 2011 that it was running out of credits, EPA adopted an interim final rule in January 2012 that allowed the company to continue selling engines subject to non-conformance penalties (NCPs). Several competitors sued, claiming the ruling gave Navistar an unfair pricing advantage, and in June 2012 the same appeals court ruled that EPA’s interim rule was invalid because it did not give the public notice and an opportunity for comment. Navistar had already completed the transition to SCR for all of its Class 8 products when the final rule was struck down in December 2013.
