Court won’t nix Navistar engine credits

Updated Oct 22, 2013

A federal court on Friday dismissed a challenge from three of the world’s largest heavy truck makers aimed at voiding emissions compliance certificates granted to Navistar from the U.S. Environmental Protection Agency.

The certificates allowed Navistar to make and sell non-complaint model engines while paying a fine on each unit sold.

The decision by a three-judge panel for the U.S. Court of Appeals in Washington, D.C., involved a case brought by Daimler Trucks North America – and joined by Mack Trucks and Volvo Trucks North America – originally asked a lower court to revoke the “certificates of conformity” the EPA issued to Navistar when its engines failed to meet federal clean air regulations.

Daimler says Navistar benefited from the certificates at the expense its competitors, who pumped millions of dollars into the research, development and engineering of engines that met tightening emissions standards while Navistar was allowed to sell non-compliant engines and assessed a penalty of $1,919 per truck.

The plaintiffs say voiding the certificates would open Navistar up to potential fines and lawsuits, which would divest the company of any financial gains obtained from selling non-complaint engines.

“Daimler’s rationale fails to persuade us,” Circuit Judge Karen Henderson wrote in her opinion. “Even assuming…penalties awarded to the United States Treasury could qualify as redress to Daimler, the prospect of such relief in an EPA enforcement action or citizen suit by Daimler is unduly speculative.”

Henderson further says that if there was any perceived improper use of the credits, it was more the fault of the EPA than it was Navistar.

“Here, to the extent Navistar could be found to have violated the CAA by operating under certificates that subsequently were found to have been issued improperly by EPA, Navistar acted in good faith reliance on the validity of the certificates, EPA’s brief
acknowledges that it considers Navistar to have acted in good faith, the violation stemmed from the agency’s failure to follow its own procedural requirements and any violation took place for a limited time before issuance of the Final Rule,” she wrote.

Henderson continued that the certificates became invalid after the completion of model year 2012 engine manufacturing.

“With the expiration at the end of the 2012 model year, the certificates ceased to have any effect whatsoever,” and they “can no longer profit Navistar or injure Daimler.”

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