WASHINGTON, D.C. — A US appeals court has denied Navistar International the ability to pay non-conformance penalties (NCPs) and continue selling non-compliant engines into the North American market.

Navistar has yet to receive EPA certification for some of its EPA2010 engines at 0.2 grams NOx. In January 2012, the EPA issued an interim final rule allowing Navistar to continue selling engines that exceed 0.2g NOx, provided it paid a non-conformance penalty of $1,919 per engine.

Competitors sued the EPA, arguing it didn’t go through the necessary legislative process when issuing the interim final rule, for instance, by submitting the rule to the public for comment.

Today, the US Court of Appeals for the District of Columbia Circuit, agreed with that argument.

“EPA took this action without providing formal notice or an opportunity for comment, invoking the ‘good cause’ exception provided in the Administrative Procedure Act,” the court ruled. “Because we find that none of the statutory criteria for ‘good cause’ are satisfied, we vacate the IFR (interim final rule).”

This means that once its emissions credits run out, Navistar will have to discontinue production of non-compliant engines for the North American market until its products are certified by the EPA at 0.2 grams NOx. Court documents indicate its credits are “dwindling” and according to documents, Navistar informed he EPA in October 2011 that it would run out of credits “sometime in 2012.” The company says it already has submitted its 13-litre MaxxForce engine for certification and is awaiting approval.

“While this was a lawsuit filed by certain Navistar competitors against the EPA, Navistar is impacted by the decision. We disagree with the court’s ruling and will ask for a rehearing,” Navistar said in a statement. “Navistar will work with EPA to fully understand the ruling and its impact on the use of NCPs until a final rule is implemented. At the same time, we will continue to cooperate with the EPA on the final NCP rule and will continue to work with the EPA on our 0.2g NOx certification. Navistar continues to make and ship engines and our customers will continue to receive the products they ordered with EPA certified engines.”