UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT ) 

# NA VISTAR, INC., )) 

# Petitioner, ) ) 

# v. )
) 

### U.S. ENVIRONMENTAL PROTECTION )
AGENCY, and 

### LISA JACKSON, Administrator, ) ) 

# Respondents. ) ) Case No. 09-1113

(Consolidated with No. 09-1114) and Case No. 09-1317



### SETTLEMENT AGREEMENT WHEREAS, Navistar Inc. ("Navistar") fied petitions for review against the United States Environmental Protection Agency ("EPA") in this United States Court of Appeals for the D.C. Circuit styled as Navistar, Inc. v. U.S. Environmental 

### Protection Agency, et aL, and docketed as Case No. 09-1113 (fied March 31, 

### 2009), Case No. 09-1114 (fied March 31, 2009, and consolidated under Case No. 09- 1113), and Case No. 09-1317 (fied December 18, 2009) (collectively, the "Petitions for Review");

WHEREAS, on 

### April 13,2009, December 7,2009, and January 12,2010, Navistar also initiated requests pursuant to the Freedom of Information Act, 5 

### U.S.c. § 552 (the "FOIA Requests");WHEREAS, EPA intends to undertake a public process to review its policies

with regard to the use of selective catalytic reduction ("SCR") emission control technologies on heavy-duty diesel engines; and WHEREAS, EPA and Navistar (collectively the "Parties") wish to implement this Settlement Agreement ("Agreement") to avoid protracted and costly litigation and to preserve judicial resources; NOW, THEREFORE, the Parties, intending to be bound by this Agreement, hereby stipulate and agree as follows: 1. EP A shall engage in a public process to reexamine its policies, forfuture model year 2011 and later heavy-duty diesel engines, for operation of SCRequipped engines without DEF, with improper DEF, or when tampering (or some

other defect in the SCR system) is detected. The public process shall take the form of a workshop, hearing, or other public process as EP A determines to be appropriate. 2. Not later than June 30,2010, or twenty-eight (28) days after the date this Agreement becomes final, whichever is later, EP A shall issue a public notice

of

### the selected public process to be published in the Federal Register. EPA shall include in the public notice statements that: (a) the public process is designed to 

### provide a thorough review ofEPA's policies regarding operation ofSCR-equipped heavy-duty diesel engines without DEF, with improper DEF, or when tampering

2(or some other defect in the SCR system) is detected for future 201 1 and later

model year engines, in order to ensure, among other things, that SCR-equipped engines are designed to properly control emissions as required under applicable law and regulations; (b) it is appropriate for EP A to review and reexamine its policies as technologies are introduced into the marketplace; ( c) EP A intends to

review any information that has become available to determine whether its policies

regarding SCR-equipped engines should be revised; and (d) the scope of the

review includes the "Revised Guidance for Certification of Heavy-Duty Diesel 

### Engines Using Selective Catalyst Reduction (SCR) Technologies" dated December 30, 2009 (the "December 2009 Guidance"). 3. EPA shall conduct the selected public process not later than sixty (60)

days after the publication of the public notice in the Federal Register. 4. EPA may suspend all work on the FOIA Requests. At such time as this Agreement becomes final, Navistar's FOIA Requests shall be deemed withdrawn. 5. Not later than ten (10) days after this Agreement becomes final, the

Parties shall fie a joint stipulation of dismissal with prejudice of Navis tar's

Petitions for Review, in accordance with Rule 42(b) of 

### the Federal Rules of Appellate Procedure. The joint stipulation of dismissal shall state that each part shall bear its own costs and attorney's fees.

3". '-"'-' --- ~'''~-: - :"''''-'':--'-''''-'---~--~- .--

6. If this Agreement does not become final, the Parties agree that 

### Navistar may pursue its pending Petitions for Review and FOIA Requests. With 

### respect to the Petitions in the above-captioned matter, Navistar wil promptly move the Court to lift the stay dated May 6, 2010, and to reschedule the oral argument as 

### soon as possible. EP A wil not oppose such motion.

7. If this Agreement becomes final, Navistar shall be precluded from filing any petition for review: (a) challenging directly or indirectly individual certificates of conformity issued for a model year prior to the 2012 model year, provided, however, that nothing herein shall prevent Navistar from bringing suit, instituting action of any kind, or otherwise exercising its rights regarding certifications of its own engines in any model year; and (b) challenging the December 2009 Guidance, provided; however, that nothing herein shall prevent Navistar from bringing suit, instituting action of any kind, or otherwise exercising its rights regarding any changes or modifications to such Guidance issued after the public process selected by EPA. 8. Except for the specific petitions identified above in Paragraph 7, Navistar shall retain all its rights and remedies to challenge EPA's final action that
( 

### occurs following the public process selected by EPA. With respect to such

challenges under this Paragraph 8, nothing in this Agreement shall limit Navistar's right to seek whatever remedies Navistar believes are appropriate, or prohibit EPA

4from raising any defenses it believes are appropriate to any challenge brought by

Navistar. 9. EPA and Navistar agree and acknowledge that before this Agreement 

### is final, EPA must provide notice in the Federal Register and an opportnity for comment pursuant to Clean Air Act § 113(g), 42 V.S.C. § 7413(g). EPA wil

forward such notice to the Federal Register within ten (10) business days of the 

### date all Parties have signed this Agreement. After this Agreement has undergone notice and an opportnity for comment, the Administrator and/or the Attorney 

### General, as appropriate, shall promptly consider any such written comments and determine whether to withdraw or withhold his/her consent to this Agreement, in

accordance with Section 113(g) of 

### the Clean Air Act. EPA shall provide written

notice of the Administrator's and/or Attorney General's decision to Navistar as

expeditiously as possible. If the Administrator and/or the Attorney General elects not to withdraw or withhold his/her consent to this Agreement, this Agreement

shall become final on the date that EPA provides written notice of such finality to Navistar. 10. Except as set forth above, nothing in the terms of this Agreement shall limit or modify the discretion accorded EPA by the Clean Air Act or by general 

### principles of administrative law. The obligations undertaken by EPA under this

Agreement can only be undertaken using appropriated funds. No provision of this

5Agreement shall be interpreted as or constitute a commitment or requirement that

EPA obligate funds in contravention of the Anti-Deficiency Act, 31 U.S.C. § 1341. Furthermore, nothing in the terms of this Agreement shall be construed to limit EPA's authority to alter, amend or revise any final rule or policy EPA may issue pursuant to this Agreement or to promulgate superseding regulations or issue superseding policies. 

### 11. The undersigned representatives of each part certifY that they are fully authorized by the part that they represent to bind that respective part to the terms of this Agreement. Dated: Juneß( 2010 

# cJ La ence H. Levine (IlL. Bar o. 1 459) L URENCE H. LEVINE LAW OFFICES 190 S. LaSalle St. Suite 3120 Chicago, IL 60603 Phone: (312) 291-7010 Fax: (312) 291-7015
Laurence. Levine(§)hlevine. com Cary R. Perlman (IlL. Bar No.6 i 97698) LATHAM & WATKINS LLP 233 South Wacker Dr. Suite 5800 Chicago, IL 60606-6401 Phone: (312) 876-7700 Fax: (312) 993-9767 Cary.Perlman(fJw. com Attorneys for Petitioner Navistar, Inc. 6Kent E. Hanson 

### Matthew B. H 'um United States Department of Justice 

### Environment & Natual Resources Division Environmental Defense Section P.O. Box 23986 Washington, D.C. 20026-3986 Tel: (202) 514-2327 Fax: (202) 514-8865 Of Counsel: 

### Michael Horowitz Offce of General Counsel U.S. Environmental Protection Agency 

### Ariel Rios Building North, 7340M 1200 Pennsylvania Avenue, N.W. Washington, D.C. 20460 Counsel for Respondents

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