US court ruling blocks Navistar from selling nonconforming engines

13 June 2012

A US court of appeals has vacated the EPA engine emission nonconformance penalties (NCP) program introduced by an interim final rule adopted by the agency in January 2012. The NCP program allowed Navistar to sell heavy-duty engines that did not comply with the US 2010 NOx emission limit of 0.2 g/bhp-hr. In the absence of the program, Navistar will be prevented from selling noncompliant diesel engines in the United States.

“We disagree with the court's ruling and will ask for a rehearing,” said Navistar in a statement.

Navistar—the only US manufacturer who chose to control NOx via in-cylinder methods, without the use of urea-SCR—has not yet certified an engine to the 0.2 g NOx limit. Most of Navistar engines have been certified to NOx levels of about 0.4-0.5 g, with the difference being covered by emission credits accumulated by the company in the past.

As the emission credits are running out, Navistar was taking advantage of the NCP program to continue selling nonconforming engines. The NCP program allowed a manufacturer of heavy-duty engines whose engines fail to conform to applicable emission standards to be issued a certificate of conformity upon payment of a monetary penalty. For heavy heavy-duty engines, the penalty increased in a linear manner from $0 at 0.20 g NOx to $1,919 at 0.50 g/bhp-hr NOx. For medium heavy-duty engines, the maximum penalty was $682. In the recently released financial results for the second quarter of 2012, Navistar showed a charge of $10 million for nonconformance penalties.

The NCP program was challenged in court by three Navistar competitors: Volvo Group North America, Daimler Trucks North America and Cummins Inc. The engine makers have complained that the noncompliance penalties were too low (compared to the cost of SCR aftertreatment) and that the EPA issued the NCP rule without the usual public comment process.

The court agreed with the latter argument and ruled: “EPA took this action without providing formal notice or an opportunity for comment, invoking the ‘good cause’ exception provided in the Administrative Procedure Act (APA). Because we find that none of the statutory criteria for ‘good cause’ are satisfied, we vacate the IFR (interim final rule).”

Under this ruling, once the emission credits run out, Navistar will need a 0.2 g NOx emission certification to be able to sell engines in the US market. Without the use of SCR technology, this would likely bring a further fuel economy penalty in Navistar engines.

Source: Navistar | US Court of Appeals for the District of Columbia Circuit