EPA investigating Navistar over engine dates

Updated Feb 22, 2012

The U.S. Environmental Protection Agency alleges that thousands of Navistar Inc. engines sold as pre-2010 models were actually assembled during 2010 and are subject to fines up to $37,500 per violation for not conforming to 2010 emissions standards.

Navistar disputes the EPA charge, says spokesman Steve Schrier. “We firmly believe our 2010 transition was appropriate, and we will continue our discussions and cooperation with the agency on this matter,” he says.

After the agency analyzed data Navistar submitted in response to EPA’s Nov. 3, 2010, information request, says a Jan. 30, 2012, letter to Navistar, it discovered Navistar claimed a 2009 model year for more than 7,600 heavy-duty diesel engines produced after Dec. 31, 2009. If fined at the maximum level, the total would exceed $285 million.

Avondale Partners’ analyst Kristine Kubacki said an investigation could take a long time and that fines in these cases “vary widely.”

The letter, published on the trucking blog Commercial Motor, says EPA is investigating Navistar. An EPA spokeswoman said the agency does not discuss ongoing enforcement matters.

The letter says the engines were partially assembled in 2009. Financial analyst Stephen Volkmann, quoted by Reuters news service, said he believes that completion of engine assembly after an EPA deadline has been “standard industry practice,” so the EPA scrutiny could extend beyond Navistar.

In a separate action, Navistar learned in late January that it could face EPA penalties of about $1,900 per engine if its heavy-duty engines do not conform to 2010 model year nitrogen emissions standards.

Navistar diesel engines emit more grams of nitrogen oxide than their competitors’ engines. But because Navistar exceeded the performance parameters set for earlier emissions reduction regulations, the company was awarded emissions credits by the EPA that allow production to continue.

The California Air Resources Board had issued a public letter to Navistar saying the company’s emissions credits for the MaxxForce 13 would expire Feb. 29. However, Navistar says it has submitted to EPA its MaxxForce 13 diesel engine, refined with an air management system and electronic engine controls, for compliance testing.

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The company’s MaxxForce 11 and MaxxForce 15 engines were not included in CARB’s announcement and will continue to be sold using their existing EPA credits, said a Navistar spokesman.

“The bottom line is that Navistar will sell engines in 2012 that are fully certified in all 50 states,” said Jack Allen, president of Navistar’s Engine Group, during a Feb. 1 stock analysts’ meeting.

Navistar diesel engines use an in-cylinder exhaust gas recirculation technology to reduce exhaust emissions. Its North American heavy-duty engine competitors use selective catalytic reduction aftertreatment technology to meet the required emissions levels.