EPA Doubles Fines on Navistar Engines

The U.S. Environmental Protection Agency will fine Navistar International Corp. as much as $3,800 for each heavy-duty diesel engine the company sells that doesn't meet 2010 federal emission standards.

Lisle, Ill.-based Navistar has been paying as much as $1,900 to the agency on each of its noncompliant diesels since January. Its competitors complain that the new fines aren't high enough and could give Navistar a competitive advantage.

The affected engines use an exhaust gas recirculation system co-developed with EPA. Navistar had hoped the technology would enable it to meet emission standards without the use of expensive reduction catalysts.

Now the company says it will switch to the urea-based selective catalytic reduction technology used by its competitors. Navistar aims to introduce trucks equipped with regulation-compliant engines by early next year. Those powerplants will be supplied by rival Cummins Inc. under a deal Navistar signed in July.

Navistar paid $10 million fines in the three months ended April 30. The company had expected its penalties to total $40 million in the fiscal year ending on Oct. 31, based on the previous $1,900 rate. Analysts estimate the new fines will cost Navistar about $20 million per quarter.