EPA Wears Two Hats Regulating Business “Partners”


EPA Wears Two Hats Regulating Business “Partners”

Call for IG Review of Regulatory Conflicts and Value of EPA Tech Developments

Washington, DC — The U.S. Environmental Protection Agency develops and licenses technology to corporations it then regulates without any safeguards to prevent conflicts of interest. Today, Public Employees for Environmental Responsibility (PEER) asked the EPA Office on Inspector General (IG) to review measures needed to prevent favoritism in regulation and enforcement, as well as to determine how worthwhile EPA continuing investments in industrial technology actually are.

The request is sparked by the debacle involving Navistar, a maker of heavy-duty truck and mid-range diesel engines. EPA licensed clean diesel truck technology to Navistar that fails to meet EPA’s own emission standards. Rather than banning noncompliant engines from the road, EPA allowed Navistar to simply pay a fine. Navistar’s competitors (Mack Trucks, Daimler, Detroit Diesel and Volvo) cried foul and filed suit to block EPA’s favorable treatment of Navistar but last Friday the U.S. Court of Appeals for the D.C. Circuit rejected their attempt to reverse EPA’s action.

All the while, Navistar was paying royalties to EPA for the failed technology. In addition, individual EPA engineers who develop patents, including patents licensed to Navistar, directly profit from these licensing arrangements – to the tune of $1,841,388 in payments since 2001.

“EPA lacks institutional buffers to prevent insider dealings benefitting its ‘technology partners,’” stated PEER Executive Director Jeff Ruch, noting that EPA is not even required to publicly disclose partnerships or inform corporate competitors. “Nor are there any rules stopping EPA employees who reap royalties from regulatory tampering to feather the nest of the goose laying golden eggs.”

PEER urges the IG to identify steps EPA should take to avoid both perceived and real conflicts, including arms-length agreements for EPA staff directly receiving corporate payments. More broadly, PEER is also asking the IG to assess the appropriate role for EPA in developing industrial R&D.

The federal government has poured billions of dollars into developing motor vehicle technologies to improve fuel economy and reduce emissions. A large portion of this funding flowed through EPA’s National Vehicle & Fuel Emissions Laboratory – including an estimated $250 million for its “Advanced Technology” efforts since 2001 according to agency figures obtained by PEER.

Despite this sizeable investment, it is not clear what returns the taxpayer has received. Presumably, whatever that return is has been diminished by the failure of EPA patents licensed by Navistar to fulfill their stated purpose of passing emission tests. Nor does EPA have a business model or other gauge to determine when and how much to invest in engine technology.

“When EPA tries to be both a referee and a player, it fills neither role very well,” Ruch added, arguing that in an era of diminished resources, EPA should take a hard look at its activities, and reevaluate priorities. “Given major advances in automotive engine technology, it appears that EPA is no longer on the cutting edge but continues to pour money into obsolete approaches.”


Read PEER letter to IG

Look at EPA regulatory conflicts with Navistar

View EPA automotive technology patents over past decade

See EPA technology partnerships

Review appeal court ruling against Navistar’s competitors

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