Customers would not see an upcharge if Navistar International has to pay government penalties for producing engines whose emissions exceed the absolute federal limit for nitrogen oxide (NOx), said Jim Hebe, senior vice president of North American sales.


Hebe was commenting on the Environmental Protection Agency's announcement that Navistar might have to pay a penalty for each engine produced that exceeds a limit of 0.2 gram per horsepower-hour for NOx. The penalty would be as much as $1,900 per engine, EPA said.

If the issue goes to that, Navistar would not announce actual penalty figures, Hebe said.

"What we pay would be between us and the EPA," he said. "It's no one else's business." Non-compliance penalties are a function of how close or far a manufacturer is to declared limits, and actual amounts have to be calculated, he added.

Navistar now makes 2010-legal diesels which emit as much as 0.5 gram of NOx compared to competitors' engines that meet the 0.2-gram limit. EPA allows the higher amount because of credits Navistar previously earned for producing thousands of engines that were cleaner than required.

EPA said Navistar has estimated its credits would run out at the end of February, but that it could continue making and selling its current engines if it paid penalties.

Hebe, in remarks to trade press reporters last night, said Navistar's credits might not run out when EPA estimates. He also said Navistar has enough credits to deal with a separate issue, certification of its engines by the California Air Resources Board, which will allow continued selling of Navistar diesels there.

Meanwhile, Navistar is ready with an engine that does meet the 0.2-gram NOx limit, and it submitted its specifications to the EPA on Tuesday.

But "we can't get optimum performance" in fuel economy, and executives don't want to release the engine for sale, Hebe said. Tests show the point-2 engine, a 12.4-liter Maxx Force 13, gets fuel economy as good as the current model, but execs want it to be better.

Drivers and owners "won't see the difference" in the point-2 engine's performance if they used it as it now is, because there are no equipment changes, he said. The lower NOx emissions can be achieved with modified fuel pressures, altered introduction of inlet air, and recalibration of electronic controls.

Navistar will continue to avoid liquid urea injection into exhaust, the active part of competitors' selective catalytic reduction method, Hebe insisted.