A federal appeals court today rejected a challenge from three of the country's largest long-haul truck manufacturers to air compliance certificates U.S. EPA granted to their competitor.
Daimler Trucks North America LLC, Mack Trucks Inc. and Volvo Group North America asked the court to void "certificates of conformity" that EPA issued to Navistar International Corp. for manufacturing trucks in compliance with EPA's 2001 nitrogen oxides limits for heavy-duty engines.
Navistar needed to obtain the certificates before manufacturing could begin. The company, however, didn't meet the EPA standard, and the agency allowed Navistar to produce the engine if it paid a $2,000 penalty per engine.
The U.S. Court of Appeals for the District of Columbia Circuit ruled in June 2012 that EPA's penalty rule should have been open to public comment and sent it back to the agency (E&ENews PM, June 12, 2012).
Daimler continued fighting the certificates at the D.C. Circuit, however, arguing that EPA should have vacated the original four certificates after the ruling.
But a three-judge panel ruled today that such a challenge is moot because EPA issued a new noncompliance rule that established a higher penalty of about $3,800 per engine.
Further, Judge Karen Henderson wrote, the certificates in question 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," wrote Henderson, a Republican appointee.
The certificates, she wrote in a brief 13-page opinion, "can no longer profit Navistar or injure Daimler."
Henderson was joined on the panel by Judges Thomas Griffith, another Republican appointee, and Srikanth Srinivasan, President Obama's first appointment to the D.C. Circuit. The judges were skeptical of Daimler's positions at oral arguments in September (Greenwire, Sept. 11).
The dispute arose in 2001, after EPA ordered trucker manufacturers to cut soot- and smog-forming NOx emissions by 95 percent.
The industry split on how to accomplish that goal. Daimler, Volvo and Mack used selective catalytic reduction technology and met the standard. Navistar didn't and failed to meet EPA's limit.
Navistar told EPA it was on the verge of shuttering its operations, so EPA issued an "interim final rule" that allowed the company to continue making the engines if it paid the $2,000 penalty. EPA then issued the certificates.
Daimler and the other truck makers argued that the certificates were still important because a citizen could file a Clean Air Act lawsuit alleging Navistar was violating the standard. Or, they said, EPA could bring a separate enforcement action.
But even if that citizen suit were to prevail, any penalties would flow to the U.S. Treasury, not Daimler and the others.
"Even assuming," Henderson wrote, "that 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."
Click here for the opinion.