Navistar International Corp. is having engine trouble.

On Tuesday, the D.C. Circuit struck down an Environmental Protection Agency (EPA) interim final rule (IFR) that allowed the Illinois-based truck and engine manufacturer to pay fines in exchange for the right to sell heavy-duty diesel engines that don’t comply with the agency’s latest pollution standards or the Clean Air Act. The rule allowed Navistar to pay about $2,000 for each engine that failed to meet the EPA’s regulations for nitrogen oxide emissions.

The decision is a victory for Navistar competitors, including Cummins Inc., units of Volvo AB and Daimler AG, which sued the EPA because it didn’t notify them about or allow them to comment on the IFR. The companies say they have invested millions of dollars to ensure their engines are compliant with the agency’s emissions standards.

“The EPA took this action without providing formal notice or an opportunity for comment, invoking the ‘good cause’ exception provided in the Administrative Procedure Act,” Judge Janice Rogers Brown wrote for the court. “Because we find that none of the statutory criteria for good cause are satisfied, we vacate the IFR.”

Navistar plans to ask for a rehearing and says it will continue to make and ship engines while waiting for further EPA guidance.

Read the Chicago Tribune, Wall Street Journal and Reuters for more about the D.C. Circuit’s decision.

For another InsideCounsel story about Navistar’s noncompliant engines, read:

EPA investigating Navistar’s diesel-engine production