EPA Opens Probe of Navistar Engines; Alleges 2009 Units Assembled in 2010

The Environmental Protection Agency is investigating whether Navistar Inc. completed assembly of 7,600 heavy-duty 2009 model truck engines in 2010, thereby making them noncompliant with current emission regulations.

EPA said in a “notice of violation” letter to Navistar that fines could run as high as $37,500 per violation, if any are found. The letter did not specify whether every improper engine found would count as an individual violation. If so, the company’s financial exposure could be as much as $285 million.

In EPA’s letter, Phillip Brooks, air enforcement division director, wrote that the agency believes that Navi-star violated provisions of the federal Clean Air Act prohibiting manufacturers from “selling, offering for sale, or introducing or delivering for introduction into commerce” any new motor vehicle or engine unless it is certified as meeting emissions standards for the year it was made.

EPA said Navistar’s own data, requested by the agency in November, led it to conclude the engine maker completed the assembly of the 7,600 heavy-duty engines during 2010, yet claimed the engines were 2009 models.

“Engines produced after Dec. 31 of the calendar year for which the model year is named are not covered by the certificate of conformity for that model year,” Brooks wrote.

Navistar, Lisle, Ill., sold 35,928 trucks in the United States last year and had a 21% share of the U.S. heavy truck market.

A Navistar spokeswoman confirmed that the company is being investigated but declined to discuss any specifics, such as which heavy-duty engine models were in question.

“Navistar firmly believes that its 2010 transition was appropriate,” said Karen Denning. “We’re going to continue our discussions with the agency about that.”

Denning said Navistar complied with EPA’s request that the company respond to its notice within 10 business days, but she declined to discuss the nature of its response.

A media spokeswoman for EPA said the agency does not comment on continuing enforcement matters.

However, an EPA source who asked not be identified said a notice of violation “tells someone we think you have broken the law.”

The source added: “But it’s not an adjudication, and it’s not a court finding. No one is declaring that they’re guilty.”

Still, Brooks warned in his letter that EPA has the right to file a complaint or refer the matter to the Department of Justice.

Navistar is the only heavy-duty engine maker to use exhaust gas recirculation technology exclusively to reduce nitrogen oxides emissions in its current model engines. Because its 2010 engines failed to meet the EPA standard, the company has been able to certify its engines by using emissions credits built up by selling other engines that performed better than federal standards.

All engine makers other than Navistar now use selective catalytic reduction for NOx reduction.

EPA’s notice claimed that Navistar began production of 4,100 engines in 2009 by installing a crankshaft into the blocks but installed no other parts.

“Navistar completed the assembly of these delegated assembly subject engines in 2010,” the letter said. “In other words, these engines were fully assembled in 2010.”

EPA said the assembly of the other 3,500 engines also began in 2009 with the installation of crankshafts to the engine blocks.

Those engines were fully assembled in 2010 into saleable units and included emission control labels that “designated the engines as members of the model year 2009 engine families,” EPA said.

The practice of using stockpiled engines completed earlier was common during the first half of 2010.

EPA allowed truck makers to sell engines from the previous year without the required emissions technology as long as the engines are fully completed by Dec. 31 of their designated model year.

The emissions systems added about $10,000 in each changeover to the price of a new 2010 truck.

Truck and engine manufacturers legally stockpiled thousands of new engines before each changeover to tighter emissions standards.

EPA’s Jan. 30 notice of violation marked the second time in recent weeks that the truck maker has been threatened with a financial penalty.

Last month, EPA announced an unprecedented emergency plan to impose penalties as high as $1,900 per engine against Navistar for each 2012 and later noncompliant engine produced (1-30, p. 1).

Agency officials said the reason for the penalty is that the federal emission credits Navistar has used to certify its heavy-duty engines as meeting 2010 federal emissions standards are currently projected to run out by the end of February.

On Feb. 1, Navistar announced that it had filed an application to certify a 13-liter 2010 emissions-complaint engine. The application is pending.