EPA (D) enacted a rule requiring a 95 percent reduction in the emissions of nitrogen oxide from heavy-duty diesel engines. The effective gave industry nine years to innovate the necessary new technologies. Manufacturers of heavy-duty diesel engines invested hundreds of millions of dollars to develop a technology called 'selective catalytic reduction.' With selective catalytic reduction, manufacturers have managed to meet the 2010 NOx standard. Navistar opted for a form of 'exhaust gas recirculation,' and its engines failed to meet the standard. Navistar has been able to continue selling its noncompliant engines by using banked emission credits. It would run out of credits in 2012. Without formal notice and comment, D promulgated the IFR under the authority of 42 U.S.C. § 7525(g), to make NCPs available to Navistar. To issue NCPs under its regulations, D must first find that a new emissions standard is 'more stringent' or 'more difficult to achieve' than a prior standard, that 'substantial work will be required to meet the standard for which the NCP is offered,' and that 'there is likely to be a technological laggard.' D found these criteria were met. Navistar was to pay a penalty of $1,919 per engine and as long as the engines emit fewer than 0.50 grams of nitrogen oxide per horsepower-hour. Navistar was to pay a penalty of $1,919 per engine and as long as the engines emit fewer than 0.50 grams of This permits emissions of up to two-and-a-half times the 0.20 grams permitted under the 2010 NOx standard with which P complies. P appealed the IFR. D claimed the 'good cause' exception of the APA (§ 553(b)(B)), which provides that an agency may dispense with formal notice and comment procedures if the agency 'for good cause finds . . . that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.' P claimed that D lacked good cause and also acted arbitrarily and capriciously in setting the penalty and the upper limit. D denied P’s appeal. P appealed.