EPA rule allows Navistar to sell noncompliant engines

Lisle-based truck manufacturer Navistar International got a reprieve from the U.S. Environmental Protection Agency on a ruling that would have restricted the company from selling truck engines that didn’t meet EPA standards.

The agency, in issuing what it calls a final ruling, agreed to allow Navistar to continue selling non-complaint engines, but will be fined upward to $3,800 per engine, according to Bloomberg News. That fine is almost double of what the company paid in fines to the EPA before a U.S. appeals court last June nullified that arrangement.

“We are pleased that the U.S. Environmental Protection Agency has issued the final rule for nonconformance penalties for on-highway heavy heavy-duty diesel engines,” said Troy Clarke, Navistar president and chief operating officer, in a prepared statement. “We can now provide our dealers and customers with clarity and certainty as we transition to our clean engine technology and look forward to utilizing the final rule as needed.”

Clarke added the new ruling won’t impact engines that were built in the interim between the court’s ruling and the new EPA agreement.

Navistar, which was unable to meet tightened truck emission standards this year, had been selling non-complaint engines and paying fines to the EPA, but that arrangement was challenged in court by Mack Trucks Inc. and Volvo Group North America LLC. The court said the EPA did not follow proper procedures in adopting the rule with Navistar.

Navistar had chosen to meet the new standards with exhaust gas recirculation, according to Bloomberg. Competitors including Volvo AB and Daimler AG adopted selective catalyst reduction technology, and fought the penalties the EPA had proposed in January, saying they were adopted illegally and set too low.

The final rule “allows manufacturers to continue producing and selling engines that come close to air-pollution standards as they work toward full compliance,” the federal agency said in its statement.

Stock in the global manufacturer of commercial and military trucks had taken a hit since the court ruling as the company struggled to find a replacement for the noncompliant engines. In July the company reached a deal with truck engine manufacturer Cummins Corp. to use its engines Meanwhile, pressure from investors, including billionaire Carl Icahn, to increase valuation prompted the company’s board of directors in June adopted a “poison pill” measure to fend off hostile takeover bids.

Earlier this week, the company replaced CEO Daniel Ustian with former Textron executive Lewis Campbell and promoted Clarke to COO.

Last week, Navistar’s military subsidiary lost out on a bid to build a replacement vehicle for the U.S. Armed Forces’ Humvee utility vehicle.

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