EPA Rule Gives Navistar Breathing Room

September 3, 2012

The U.S. Environmental Protection Agency said it will allow manufacturers to sell diesel engines that don't meet federal emission standards, a ruling that has immediate implications for Navistar. The market responded positively following the announcement, moving shares up 2 percent.

The ruling will allow Navistar to sell its noncompliant engines by paying a maximum fine of $3,800 each. Navistar had been paying $1,900 per engine, but the ruling allows the company to continue its transition from Advanced EGR to a urea-aftertreatment engine.

"We are pleased that the U.S. Environmental Protection Agency (EPA) has issued the Final Rule for nonconformance penalties (NCPs) for on-highway heavy heavy-duty diesel engines," Troy Clarke, Navistar president/COO said. "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."

Navistar will not have to pay retroactive fines on engines already sold. The company also announced plans for nonvoluntary layoffs in order to reduce costs.

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