Navistar Inc.’s 2009-2010 “transition” strategy for exhaust-emissions compliance has led to a lawsuit filed on Wednesday by the U.S. Environmental Protection Agency.
EPA claims 7,750 Navistar diesels sold in International trucks during 2010 were not true 2009 models, and without formal exemptions, they were illegal.
The suit is the latest development resulting from the company's tried but failed strategy to use a less costly method to meet emissions limits. It was temporarily helped by EPA in an emergency ruling that allowed continued production of the engines while Navistar continued to work on its technology. That ruling was challenged by competitors and thrown out by a federal judge.
In 2009, Navistar executives announced that their 2010 emissions strategy would include their own engines using “advanced exhaust gas recirculation,” but not selective catalytic reduction that its competitors were adopting. It also continued selling ’09 pre-SCR Cummins ISX15 diesels well into 2010, and used EPA-issued credits that it had previously earned. Executives criticized SCR, saying it put the burden of compliance on customers.
In its lawsuit this week, EPA charged that Navistar “sold, offered for sale, introduced or delivered engines that did not satisfy emissions standards applicable to model-year 2010 engines.” EPA said that because the 7,750 Navistar engines in question were not fully assembled in 2009 but in 2010, the company should have obtained an exemption in the form of a certificate of compliance, but didn’t. Navistar has said the engines should be considered “transitory” and legal.
“We dispute these allegations,” said Navistar spokesman Steve Schrier. “We believe our 2010 engine transition was appropriate and we intend to aggressively defend our position going forward. Beyond this, we don’t comment on pending litigation.”
The company could face fines of up to $300 million, though observers say that the penalties probably wouldn’t run that high. The suit was filed in the U.S. District Court for Northern Illinois.
Navister never could quite meet absolute limits for nitrogen oxides, or NOx, and the engines proved unreliable, prompting multiple lawsuits from customers. Navistar spent millions for warranty repairs and ran numerous “campaigns” that sought to reset electronic controls and otherwise correct deficiencies.
Missed sales and financial losses caused a decline in stock value and shakeups in top management.
In 2012 Navistar abandoned its EGR-only strategy and got help from Cummins for SCR equipment, and resumed buying Cummins diesels for use in International trucks. Navistar’s sales have been recovering and its financial performance has improved.