Daimler Truck: concerned about using cash to avoid new NoX rules

(Editor’s note: an earlier version incorrectly attributed a statement to the Engine Manufacturers Association. The statement came from the Manufacturers of Emission Controls Association.)

Madras, Oregon–As the truck manufacturing community awaits word on what the final rule on NoX emissions from heavy and medium duty vehicles will be, Daimler Truck North America (Frankfurt/XETRA: DTNA) is expressing concern about one possible provision aimed at easing the regulatory burden.

In a gathering of the media here at DTNA’s proving ground and test track in the region known as the High Desert of Oregon, in the state where the company has its corporate headquarters, the proposed amendments to the nitrogen oxide (NoX) rule that were released in July by the Environmental Protection Agency served as a backdrop to the primary reason for the gathering: the release of the Detroit 6 engine from Daimler that is designed to meet the specifications.

Various Daimler officials made clear in multiple statements at the press briefing that regardless of the outcome of the amendment process, the Detroit 6 engine already meets the standards. The comment period for the amendment process closed in late August.

The core part of the rule that is to go into effect next year was not part of the amendment process: the standard that will tighten NoX emissions to 0. 035 brake horsepower-hour (bhp-hr) from the earlier standard of 0. 2. That’s staying in place. Warranty changes get big backing The trucking industry for the most part embraced several of the changes.

In particular, a requirement for extended warranties has been rescinded. The new proposed standard is what’s in place now: a 5-year/100,000-milie emissions warranty rather than a warranty of 10 years and 450,000 miles.

At the Oregon event, Dan Potter, manager of product compliance and regulatory affairs at Daimler, said in a presentation that the company “believes that the EPA did a good job when they wrote this rule, creating flexibility, building it into the rule, and we believe it helps support the product we are intending to bring in 2027 and further years.”

Specifically on keeping the current warranty rule in place, Potter said in a separate interview with FreightWaves that “we think in terms of impact to the customer, the proposal to get rid of the warranty extension for 2027 is going to make the biggest bottom line impact.”

Shifts in DEF policy The proposals also call for significant changes to “deratement” of engines running low on diesel exhaust fluid (DEF), substituting various warnings for the current practice of drastically slowing a vehicle. But one thing that is not happening: DEF disappearing.

The proposed rule had received online disinformation that suggested DEF was being phased out. It is not. The proposed changes in DEF usage in the amendments would be the second major change to DEF policy this year. The elimination of DEF sensors earlier this year to help combat deratements, particularly in agricultural applications, was the first.

But the proposed amendment that Daimler is resisting is what is known as non-compliance penalties (NCPs), which would allow an engine manufacturer to pay fines with full disclosure that its engines are not in compliance with the NoX standard.

(This would be different from a non-compliant engine manufacturer now, where they would be subject to potential harsher fines under the Clean Air Act after being charged by the Environmental Protection Agency.) Potter said non-compliance penalties are permitted as a tool under the Clean Air Act.

“Federal law governs how and why the EPA is supposed to use them,” Potter said. “They can or must be used when there is a manufacturer that is unable to meet standards for technological reasons.” Not what they said earlier Potter said all the major engine manufacturers had said at one point they could meet the 0. 035 NoX standard.

“I have quotes from all of them that say we’re well prepared,” Potter said. But that has changed. Potter did not mention any particular manufacturer.

But a spokeswoman for Daimler pointed to a comment made on the second quarter earnings call for truck manufacturer PACCAR (NASDAQ: PCAR) which suggested just paying the penalties might be an acceptable business strategy, at least for now.

“Maybe the situation is very leveling now and maybe to our advantage a little bit in that the NCPs are allowing everybody to make sure we get the right products out there validated so the customers get the experience with the products, they get the experience with our products and the quality of product we’re able to introduce in a more gradual way versus it being a step change,” PACCAR CEO R.

Preston Feight said on the call. Cheaper to break the rules? Feight added that the level of fines under the NoX rule NCPs would be around $6,000 to $7,000. But given other estimates that the cost of ensuring an engine meets the NoX standard through engineering might be as much as $15,000, those fines may look att