Navistar’s Stance on 2010 Regulations Difficult, Analysts Say
By Dan Leone, Staff Reporter
This story appears in the June 8 print edition of Transport Topics. Click here to subscribe today.
Navistar Inc. could face an uphill battle in its challenge to the Environmental Protection Agency’s 2010 truck exhaust regulations, industry analysts and other manufacturers said.
The Warrenville, Ill., manufacturer recently argued in a federal appeals court petition that it believes EPA might have to go through a lengthy rule-making process before it may legally certify 2010 engines using selective catalytic reduction to comply with the upcoming clean-air standard (click here for related story).
However, engine manufacturer Cummins Inc., with truck makers Daimler Trucks North America, Volvo Trucks North America and Mack Trucks, backed EPA in a friend-of-the-court filing, warning of “significant consequences” if EPA’s regulation were undermined.
Daimler, Volvo and Cummins all plan to use SCR for their 2010 engines, as does Paccar Inc., which did not join the group filing. Navistar is the only truck manufacturer to use a different technology — exhaust gas recirculation.
Paccar declined to comment for this story.
Chris Patterson, who recently retired as chief executive officer of Navistar competitor DTNA, told Transport Topics May 29 that Daimler has “100% confidence that the [2010] standard will stand” up to legal scrutiny.
Patterson added that he doubts SCR “is going to be somehow disallowed in the United States.”
An analyst who follows Navistar said it is unlikely that there would be a single engine provider in 2010.
“I can’t imagine a situation where they basically tell everyone in the truck industry that they can’t sell engines,” said Stephen Volkmann, who follows equipment and machinery manufacturers for Jeffries & Co. in New York.
EPA’s 2010 emissions standard, set to go into effect Jan. 1, mandates that on-highway diesel engines emit no more than 0.2 gram per brake horsepower-hour of nitrogen oxide, down from the 2007 standard of 1.2 g/bhp-hr.
Navistar rallied behind its enhanced EGR technology and denied it wants federal pollution cuts postponed.
“We’re ready for 2010,” said Navistar spokesman Roy Wiley. “EGR is ready, and we’re going ahead. Bring it on.”
In its legal filing earlier this spring, Navistar said EPA “made an express ‘infeasibility’ determination for SCR technology” in 2001, when the agency published its final rule for ratcheting down heavy-duty truck exhaust emissions. Navistar would not comment on its filing.
Navistar will meet the 2010 standard by combining its “enhanced” EGR with its bank of emission credits. Emission credits are needed because enhanced EGR alone cannot yet reduce NOx emissions to less than EPA’s 2010 standard.
Navistar has publicly called for a gradual phase-in of the 2010 standard and argued that buyers should be allowed to purchase trucks certified only to EPA’s 2007 standard, even after Jan. 1.
Former DTNA chief Patterson called the possibility of a gradual phase-in “extremely unlikely.”
EPA already has said it has no intention of postponing the 2010 emission cuts.
Jeffries analyst Volkmann estimated that Navistar has “two to three years of credits and were aiming to get [enhanced EGR] fully compliant within two years.”
Likewise, a research report from Ann Duignan, a J.P. Morgan analyst, estimated that Navistar’s credit bank buys the company between a year and a half to three years to develop and test its enhanced EGR.
Although Navistar said it was not seeking to postpone the 2010 emissions standard, Kirk Ludtke, an analyst who covers equipment manufacturers for CRT Capital Holdings in Stamford, Conn., said, “If there’s a legal challenge that could slow down the advancement of SCR, it might be money well spent” for Navistar.
