Navistar Fined $7.5M in Truck Emission Case

April 01, 2016

The Securities and Exchange Commission on Thursday charged Navistar International Corp. with misleading investors about its development of an advanced technology truck engine that could be certified to meet U.S. emission standards.

Navistar, without admitting or denying the charges, reached a settlement with the SEC and agreed to pay a $7.5 million penalty.

Separately, in a complaint filed in federal court in the Northern District of Illinois, the SEC charged former Navistar CEO Daniel C. Ustian, who left the company in 2012, with misleading investors and with aiding and abetting violations by the Illinois-based Navistar. Multiple new outlets report they have been unable to get a comment from Ustian regarding the case against him.

The SEC alleges that Navistar and Ustian failed to fully disclose the company’s difficulties obtaining Environmental Protection Agency (EPA) certification of a truck engine able to meet stricter EPA Clean Air Act standards that took effect in 2010.

“We believe that it was time to put this matter behind us and that this settlement was in the best interests of Navistar and its stockholders. Settling this matter will avoid the expense and distraction of a potential dispute with the SEC and allow us to continue our focus on building and sustaining momentum on behalf of our shareholders,” said Lyndi McMillan, external communications manager for Navistar in a statement to Truckinginfo.com.

Navistar and Ustian also are alleged to have repeatedly misled investors about Navistar’s development of the engine, which used exhaust-gas-recirculation (EGR) technology. Navistar later abandoned the effort and adopted the selective catalytic reduction (SCR) technology used by its competitors.

“When public companies and top executives discuss important regulatory developments with investors, they must tell the whole truth,” said Andrew J. Ceresney, director of the SEC’s Division of Enforcement. “Here, we allege that Navistar and its former CEO misled investors about their dealings with the EPA and the likely approval of its new emissions technology."

David Glockner, director of the SEC’s Chicago Regional Office said, “We allege that in 2011 and 2012, the EPA repeatedly raised serious concerns with Navistar about its applications to certify an engine using EGR technology and that top Navistar officials knew the company had not succeeded in developing a commercially viable engine that would meet EPA standards. Navistar and its then-CEO misled investors about these difficulties in numerous SEC filings, press releases, and public conference calls, and today we seek to hold them accountable for that misconduct.”

According to the SEC’s order instituting a settled administrative proceeding against Navistar:

“In early 2011, in an effort to reassure investors about its emissions control strategy, Navistar applied for certification of an engine it knew was not ready for production and sale even if the EPA certified it. The EPA did not approve the application and by summer 2011, Navistar decided not to pursue it any longer.

“In late 2011, Navistar began preparing another application for EPA certification. Four days after a meeting in which the EPA staff told Navistar that the proposed engine did not appear to meet the certification requirements, Navistar filed its 2011 annual report on Form 10-K, which stated that it planned to apply to have the EPA certify the engine and that it believed the engine met EPA’s certification requirements.

“After Navistar submitted a new application in early 2012, EPA staff raised ‘several serious concerns’ that it said would need to be resolved before it could approve the application. Nevertheless, in a press release and filings in March 2012, Navistar characterized the application as a 'milestone,' and in a conference call with analysts and investors, Ustian indicated that certification was proceeding in a typical timeframe and that Navistar could begin production on the engine in June 2012.

“In May 2012, Navistar withdrew its January 2012 application and submitted a third one incorporating changes to lower emissions at the expense of fuel economy and other engine performance features. In a June 4, 2012 meeting, EPA staff told Navistar that it had serious concerns about this application as well and the next day informed Navistar in writing that the engine as currently designed was 'unlikely' to be certified. Despite this, Navistar’s June 2012 quarterly filing and conference call suggested that Navistar was unaware of any concerns by the EPA regarding the May 2012 application – one of several misstatements in the filing and call regarding the application.

“In July 2012, Navistar announced that it was withdrawing its application and would begin work on an engine using SCR technology.”



  1. 1. Ace Diamond [ April 02, 2016 @ 10:08AM ]

    The EPA is run by socialists who hate oil and gas. They are also proud investors in TESLA and Musk.

    The EPA doesn't care about water quality in Colorado or Flint....their most important directive is to attack oil and gas.

    Just as the EPA is forcing automobile manufacturers to make battery electric vehicles (and exploiting the American taxpayers to do so), the EPA is now attacking trucks that use diesel because diesel is very efficient and it is difficult for battery electric technology to compete with diesel engines that are 50% efficient (power plants that make electricity are 35% efficient).

    Also, the EPA is fully aware that having children sit on electric motors more powerful than 400 swimming pool pumps will have long term exposure consequences. In TESLAs, 400+ HP electric motors are stuffed under the kids seats. So, your wonderful Musk invested EPA is using Taxpayer money to convince more and more Americans to drive their children in TESLAs.

  2. 2. Kenny Scott [ April 04, 2016 @ 03:42AM ]

    Hopefully the EPA and Fmcsa will be looking for jobs after this election. They are both out of control. I will fight the rest of my life to get them revamped because now they are lairs and destroyers of many a good person. 🇺🇸

  3. 3. Carlton [ April 04, 2016 @ 04:46AM ]

    I am glad someones think like I do . abolish this EPA and FMCSA and this country would be better off. they are putting small businesses out and I am one of them.

  4. 4. Diesel Geek [ April 04, 2016 @ 05:53AM ]

    In 2014, the Environmental Protection Agency and the U.S. Department of Energy undertook a study to look at the environmental impact of lithium-ion batteries for EVs. The study showed that batteries that use cathodes with nickel and cobalt, as well as solvent-based electrode processing, have the highest potential for environmental impacts, including resource depletion, global warming, ecological toxicity, and human health. The largest contributing processes include those associated with the production, processing, and use of cobalt and nickel metal compounds, which may cause adverse respiratory, pulmonary, and neurological effects in those exposed.

    Doesn't sound like the EPA are investors in Tesla.

  5. 5. Ace Diamond [ April 04, 2016 @ 08:48PM ]

    That's why they cleverly call them Lithium batteries and not Nickel-Lithium batteries.

    What the EPA will not tell you is that it is actually the Lithium production process that causes the greatest environmental harm. Cathodes can be made from various materials...but the only death blow to batteries would be if the Lithium was proven to be very harmful for the environment to extract.

    The EPA states that Lithium is a wonderful metal and very environmentally friendly (Nickel is actually a very powerful carcinogen). The EPA does not tell you that every Tesla battery requires tens of thousands of gallons of fresh water to be evaporated and/or contaminated with hazardous chemicals in order to produce a sufficient quantity of Lithium. As bad a the Nickel mining process is, Lithium extraction is much worse.

    So if the EPA are not investors in Tesla, why does the EPA force other automobile manufacturers to pay Musk as much as $25,000 in credits per vehicle sold. Musk gets as much as $40,000 per Tesla sold in credits and subsidies. The EPA chief loves Tesla....let me know if you need proof.

    Also, look at what the EPA did to VW. The EPA desperately needs another automobile manufacturer to stuff powerful electric motors under the rear seats where the kids would sit. The EPA sees this opportunity with VW/Audi/Porsche because they need a foreign manufacturer to be just as evil as Tesla is....the EPA knows that time is running out and they don't want the worst offender to be Tesla.

    Perhaps you should do some research on the EPA chief and her infatuation with Tesla.

    Bottom line, the government and the EPA are rewarding manufacturers who produce electric vehicles and punishing the ones that don't.

  6. 6. Ace Diamond [ April 05, 2016 @ 07:05AM ]

    Connecticut does not allow direct sales of Teslas, so the EPA Chief used taxpayer money to recently travel to Connecticut and ask the lawmakers there in person to screw the dealers and to allow Tesla's direct sales in the Constitution State.

    Also, Diesel Geek, your hang name and your support of the EPA are in direct conflict. You should call yourself exactly what you are....EPA Geek.

  7. 7. Todd Brown [ April 05, 2016 @ 11:58AM ]

    You people are missing the point on this story. Daniel Ustian and Navistar mislead their Dealers and the truckers who make their living with this equipment. The entire industry was aware that EGR technology caused many problems and was not reliable, however Navistar and Ustian continued a lie. The truckers and the Dealers are paying the price for this fraud. Yes it is true that the EPA is to far reaching and a hindrance to all of us, But in this case Ustian knowingly robed all of us. These trucks don't run and of course have no resale value. He should be in jail.

  8. 8. Diesel Geek [ April 05, 2016 @ 01:16PM ]

    Todd is correct,

    I didn't need to post what I did, but I enjoy seeing how conspiracy theorists weave the webs.

    Ace, I am not in favor of the EPA.

    I have owned VW's for 20+years. But, I understand that VW sh!t the bed with the diesel emissions, don't see a conspiracy though.

    I am also a Service Manager at a heavy truck dealership (not Navistar) and see first hand how much money the EPA is costing everyone to save a fraction of a percent of all the emissions produced across the board.

    I am a firm believer that the EPA should take it easy on the transportation industry and concentrate on the biggest polluters - agriculture, energy and manufacturing.

    Not sure why I am trying to justify myself someone who probably believes the earth is flat...

  9. 9. I WANT TO RIDE MY BICYCLE [ April 05, 2016 @ 01:22PM ]

    I have a brand new streamers on my schwin!! no DEF needed.

  10. 10. FLAT EARTHER [ April 05, 2016 @ 01:28PM ]

    Diesel Geek.... I totally agree!!!! Oil and gas is all a hoax.... we've been lied to!..... [email protected]

  11. 11. ace Diamond [ April 06, 2016 @ 06:13AM ]

    So now you're calling my comments "conspiracy theory"???

    You say you don't favor the EPA??? Meanwhile: "Diesel Geek.... I totally agree!!!! Oil and gas is all a hoax" You're a pathetic liar...typical socialist.

    I can smell you socialists from miles away.

    The manufacturers are doing all they can to meet the EPA's standards that are designed to kill off the internal combustion engine, because the EPA's #1 directive is "oil and gas bad, everything else good"

    Yeah...I'm sure you're a mechanic...who just happens to be well versed in politics and knows all about chemical engineering.

    So one of the biggest emissions offenders was Ford with their SD diesel pick-ups. Do you know why the EPA is giving Ford a pass?? Because Ford delivered the requisite number of Hybrids and EVs....AND....Ford CEO promised 20 different electric vehicles by 2020.

    I've seen a lot of things, but you've gotta be knocking futs if you think I will believe that an auto mechanic pro diesel truck service manager (that you claim you are) will attack a defender of the internal combustion engine like me with conspiracy theory BS.

    You say.."I am not in favor of the EPA"....yeah..right....that's because you're in bed with the EPA.

  12. 12. Diesel Geek [ April 06, 2016 @ 09:33AM ]

    Oooh, now I am part of the conspiracy.
    I had no choice but to get in bed with someone else because it was getting too crowded in your mother's bed.

  13. 13. Momma Diamond [ April 06, 2016 @ 09:36AM ]

    Hey Diesel Geek! I miss you. Please come back.

  14. 14. FLAT EARTHER [ April 06, 2016 @ 09:47AM ]

    I'm not socialist... I'm canadian.... awe shit... I broke my arm.... better go get it fixed for free.

  15. 15. FLAT EARTHER [ April 06, 2016 @ 09:51AM ]

    ...I bed with the ETA. Do you know what the word sanctioned means....

  16. 16. Ace Diamond [ April 06, 2016 @ 09:52AM ]

    Oh no, my biological father is a socialist... :(

  17. 17. lance bielenda [ April 06, 2016 @ 10:05AM ]

    The story goes like this
    IH or Navistar stink they and the feds took the best medium duty truck In history and destroyed it they are un reliable out of control expensive
    and the customer is the test dummy. its a crap shoot if these trucks will start in the morning
    or make home from a job the quality of parts is not good also the reman parts we purchase are junk I wish some one would do some thing
    when you buy these trucks they offer towing insurance omg

  18. 18. John [ April 06, 2016 @ 12:24PM ]

    7.5 million. A drop in the bucket. Navistar will gladly pay this with a sigh of relief. It's a slap on the wrist. I don't believe they tried to defraud anyone, they took a shot ,and upper management believed engineering who really though they could pull it off and they were going to be lauded as the company that knew and did something nobody else could & they were going to grab a big market share from the other builders. Kind of reminds me of CAT and there magical ACERT system (remember that?) that everyone in the fleet industry told them was overly complicated & wouldn't work, and guess what- no more CAT truck engines.

  19. 19. Diesel Geek [ April 06, 2016 @ 03:00PM ]

    I hope Elon Musk and the EPA put all you ICE gasoline, natural gas and diesel burning retards out of business.

    If you can't handle the future that Elon Musk promises, you shouldn't be a part of it.

  20. 20. Ace Diamond [ April 06, 2016 @ 03:13PM ]

    Navistar is the only company that does not charge extra for making their trucks CNG ready.

    As the government and the EPA are trying to force powerful batteries and electric motors down everyone's throats, Navistar recognizes that the best technology out there right now that will benefit our children and environment the most is natural gas.

  21. 21. Barack Obama [ April 06, 2016 @ 04:45PM ]

    Stop listening to that Ace dude....I'm your president for crying out loud.

    So what if Musk experiments on American Children by having them sit on top of electric motors more powerful than 400 swimming pool pumps? It's all for the greater socialist good.

    So what if Musk arms all of his Teslas with cancer causing radar....you can't make an omlette without breaking a few eggs.

    Socialism is about the entire world, so yeah I will give up America to advance the only possible future which is socialism, and you can kiss my socialist ESS if you think you can stop me.

    That Ace dude is toast. I make sure all my snipers know what he looks like and then I fly Air Foce One to go to the events he goes to...like auto shows. My snipers gotta listen to me cause I'm the president. Do you have any clue how much Musk is gonna pay me to take out that anti-socialist Herley ridin Ace dude?

    Fcuk pediatric cancer....Socialism is the only cause worth fighting for. That Ace dude can try to save all the American babies he wants.

    Then that Diamond dude is gonna tell me that if Musk and I don't stop experimentin on American Children, he's gonna unleash some Ace of Spades...well good luck with that...I've got my sharpshooters and JJ ready for you.....FCUK ISIS....they're Junior Varsity....the real threat is some Ace dude thinking he's gonna stop our socialist experiments on American Children....one day his luck will run out.

  22. 22. Ace Diamond [ April 06, 2016 @ 05:02PM ]

    You know that there is only one way to stop me Barack, and so far your sharpshooters seem to be cross-eyed.

    The most powerful Ace is the Ace of Spades....and you got a glimpse of him last week. I am nothing compared to him.

    Out of respect for the American People, I gave you over a year to stop this whole child experimentation thing known as TESLA....but somehow you thought I was bluffing...I would never bluff when it comes to pediatric cancer.

    I gave you the opportunity to be so awesome...perhaps the best president ever...and you chose to listen to Musk....to be a villain. I cannot undo the Ace of Spades, and I am not sorry. Real Monsters only exist for children who have cancer...I wish I could fight those monsters...I will settle for Musk and...

  23. 23. Barack Obama [ April 06, 2016 @ 06:50PM ]

    Oooo....I'm real scared now....some Ace of Spades is gonna make some difference......Big deal....who cares.

    I hear you're some kind of a fighter....I will send so many of my socialist animals to fight you that there will be nothing left of you....and I'm going to make sure they rip you apart slowly.

    So I was supposed to see your all powerful Ace of Spades last week....is he going to stop more kids from getting cancer??? Nope...I don't think so...not as long as Elon and I are calling the shots.

    Last week was not very eventful....I had a nuclear summit but it was a big waste of time because Putin decided not to show up....so...no Putin and no Ace of Spades last week.

    Speaking of Putin....you guys should talk....I think the only one who likes natural gas more than Putin is you. You don't matter and Putin does not matter. All he's got is natural gas and some oil. Soon I will have little Russian kids driving around in Musk's Teslas...I think they already are...and then you can go and be a cry baby to Putin all you want....Putin thinks Bashar is some bad S dude...Putin has no clue what bad S is. Musk and I experiment on children every single moment of every single day, and we make their parents pay for it. How's that for bad S???

  24. 24. Ace Spade [ April 06, 2016 @ 07:00PM ]

    You bring all of your socialist animals Barack....and yes please do instruct them to tear me apart slowly....it will be good practice for me...I need to have some fun on this earth....and all of my kids with cancer need to see that there is someone on their side who can tear apart all of the real monsters...and I will do it the way you like it...slowly and with a lot of pain involved....the more the better.

    There is a reason why President Putin did not show up last week.

  25. 25. Case [ April 07, 2016 @ 06:34AM ]

    What am I reading?

  26. 26. Case of Shades [ April 07, 2016 @ 01:58PM ]

    What am I reading?
    Is this gonna be forever?


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