The D.C. Circuit Court of Appeals has vacated a U.S. Environmental Protection Agency (EPA) interim final rule (IFR ) that would have allowed truck manufacturer Navistar Inc. to produce certain heavy-duty diesel engines that exceed emissions limits for nitrogen oxides if it pays nonconformance penalties. Mack Trucks, Inc. v. EPA, No. 12-1077 (D.C. Cir. 6/12/12). EPA issued the IFR on January 31, 2012, because Navistar was nearly out of emissions credits that would have allowed it to continue producing non-compliant heavy-duty diesel engines in model years 2012 and 2013.

Intended to alleviate concerns that manufacturers would be forced out of the marketplace if they could not meet emissions standards based on technological issues, the nonconforming penalties are based in part on money that nonconforming manufacturers save during production. Navistar controls nitrogen oxide emissions from its engines with “exhaust gas recirculation technology,” which cleans emissions within the engines and has apparently been unsuccessful at meeting the 2010 nitrogen oxide standard. Navistar’s competitors, on the other hand, have invested hundreds of millions of dollars in a liquid, urea-based selective catalyst reduction technology, which requires truck drivers to regularly refill a container with a fluid that reduces nitrogen oxide emissions; engines using this technology comply with the standard. The competitors challenged the IFR.

According to the court, EPA failed to provide notice and an opportunity to comment on the rule, as required by the Administrative Procedure Act (APA). EPA argued that it was exempt from notice and comment under the APA’s “good cause” exception, which applies if notice and comment are impracticable, unnecessary or contrary to the public interest. The court, however, determined that EPA failed to meet these criteria.