16 January 2002

The US Environmental Protection Agency (EPA) has proposed non-conformance penalties (NCPs) that would be available to manufacturers of heavy-duty diesel engines unable to meet the 2004 hydrocarbons plus nitrogen oxides (NMHC+NOx) emission standard. The proposed rule allows a manufacturer to produce and sell non-conforming engines upon payment of a penalty. The penalties would be also applicable to the 2004-compliant engines that are required from a number of manufacturers effective October 2002, based on the Consent Decrees between manufacturers and the EPA and the Department of Justice (DOJ).

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Under the Clean Air Act, the EPA may establish NCPs if, among other requirements, a “technological laggard” is likely to develop. The technological laggard is considered to be a manufacturer who cannot meet a particular emission standard due to technological (not economic) difficulties and who, in the absence of NCPs, might be forced from the marketplace. EPA said it believed that the NCP criteria have been satisfied with respect to the 2004 NMHC+NOx standard of 2.5 g/bhp-hr, but did not comment which manufacturer(s) are not likely to meet the standard on time.

Non-conformance penalties are monetary penalties that allow a vehicle or engine manufacturer to sell engines that do not meet the emission standards. Under a penalty structure, manufacturers may choose to pay a penalty on a per-engine basis rather than comply with the applicable standard.

In response to the EPA proposal, Cummins Inc. affirmed that it is ready to meet the terms of its Consent Decree with the EPA and will not be affected by the non-conformance penalties. “We are confident in our ability to offer a product line that will fulfill our commitment to meet the 2.5-gram NOx+NMHC standard and provide our customers with the best possible performance and fuel economy at the lowest cost,” said Cummins.

In 1998, Cummins and a number of other manufacturers of heavy-duty diesel engines signed Consent Decrees with the EPA and the DOJ. At that time, engine manufacturers made a commitment to meet the 2.5-gram NMHC+NOx standards by October 2002. The nonconformance penalties proposed by the EPA will apply to the provisions of the Consent Decrees, meaning that engines which do not meet the standard by October 2002 will be assessed the nonconformance penalty proposed in this rule.

A public hearing on the proposal will be held in Washington, DC on 15 February 2002.

Source: US EPA