Navistar takes on rivals over emissions rules

By Bernard Simon in Toronto
Published: June 5 2009 00:40

Navistar, the US truck and engine maker, is locked in a high-stakes struggle with five rivals over tightening regulations on diesel-engine emissions due to take effect next January.
The five competitors – Cummins, Volvo, Daimler, Mack and Detroit Diesel – have asked an appeals court in Washington to reject Navistar’s request for a judicial review of the new rules.

“We’re not going to just stand by and let anyone attack the investment we have made in the technology to meet the 2010 standard,” said Patrick Raher, a partner at Hogan & Hartson, who represents the five companies.
Navistar asked for the judicial review last month, alleging the US Environmental Protection Agency had abused its authority and given its rivals an unfair advantage by relaxing the 2010 standards.
The stand-off stems from differing technologies adopted by engine and truck makers in an effort to meet anti-pollution targets set by the EPA in 2001 under the Clean Air act.
Most of the industry has gravitated towards a system known as selective catalyst reduction (SCR).
But Navistar has stuck with exhaust gas recirculation (EGR) technology, contending that it requires less maintenance, among other advantages. It has sharply criticised the SCR technology.
Navistar has said in the past that it would not be able to comply with the 2010 requirement to lower nitrogen oxide (NOx) emissions to a maximum of 0.2 grams per horsepower hour. It planned to delay meeting the standard by using credits received for its existing engines that exceed the EPA’s current standards.
Navistar said it would not comment on pending litigation, but added: “We’re fully ready for 2010. Our EGR complies with 2010 standards. Bring it on.” Company officials may discuss the issue further after the release of second-quarter-earnings next Tuesday.
Oliver Dixon, an industry consultant, said that Navistar could be in serious trouble if its request for a review fails. “Navistar has put itself so far out there in terms of EGR, that it would be laughed out of the marketplace if it tried to use an alternative based on SCR,” said Mr Dixon.
Navistar held a 15 per cent share of the North American market for heavy-truck engines in the first four months of this year, behind Cummins, with 41 per cent, and Detroit Diesel with 20 per cent, according to Ward’s Automotive.
Navistar said in its review request that the EPA’s ruling this year amounted to a “dramatic change” in the implementation of SCR technology, allowing rival diesel engine manufacturers “to release uncontrolled NOx emissions on the highway (and) create highway safety hazards”.
Its rivals responded that they had “an important interest in ensuring that the EPA’s 2009 guidance is not delayed”.
A Cummins spokesman added that “we’ve staked a considerable part of our reputation on our ability to meet these regulations. They’re the right thing to do for the environment.”
Copyright The Financial Times Limited 2009