Navistar Inc. may have to pay penalties of up to $1,900 per engine if it cannot meet heavy diesel emission standards, according to a new Environmental Protection Agency rule.

The Interim Final Rule, scheduled for publication in the Federal Register this morning, essentially sets the cost for Navistar should its heavy heavy-duty engines not comply with NOx standards set in 2010. In a concurrent move, EPA is proposing another rule that would set non-conformance penalties for medium heavy-duty engines, as well.

Navistar has been using NOx credits it earned in earlier years to certify its engines, but it may be running out of those credits, the agency said.

"Based on its current credit balance and projected sales for this service class, we do not expect this manufacturer to have sufficient credits to cover its entire model year 2012 production," the agency said.

Most engine manufacturers are using selective catalytic reduction to meet the standards, but Navistar has opted for an alternative approach, using exhaust gas recirculation.

In today's rule, EPA says: "We believe it is a reasonable possibility that this manufacturer may not be able to comply for technological reasons with respect to the 2010 NOx standards for heavy heavy-duty diesel engines in the 2012 and 2013 model years."

Navistar says it will soon seek certification for an engine that uses EGR to meet the NOx limit of 0.2 grams per horsepower-hour.

"Navistar remains confident in its EGR strategy and we will be submitting a 0.2 engine to EPA for certification very soon," said Navistar communications director Karen Denning. "Once certified, Navistar will be the only company to achieve 0.2 certification without the use of SCR."

For heavy heavy-duty engines, EPA is setting a sliding penalty scale starting at no penalty for 0.20 g/hp-hr of NOx and increasing to $1,900 for 0.50 g/hp-hr.

In the proposed rule covering medium heavy-duty engines, the scale rises to just under $700 per engine for 0.50 g/hp-hr.