United States Air and Radiation EPA420-F-01-034
Environmental Protection December 2001
Agency
Office of Transportation and Air Quality
&EPA Environmental
Fact Sheet
Non-Conformance Penalties for
Heavy-Duty Diesel Engines
The U.S. Environmental Protection Agency (EPA) is proposing non-
conformance penalties that would be available to manufacturers with
heavy-duty diesel engines unable to meet the 2004 model year
hydrocarbon plus nitrogen oxides emission standard. These penalties
allow a manufacturer to produce and sell non-conforming engines upon
payment of a penalty. The penalty, which is assessed on a per-engine
basis, varies with the certified emission level for the engine family
involved.
What are Non-conformance Penalties?
Non-conformance penalties (NCPs) are monetary penalties that allow a
vehicle or engine manufacturer to sell engines that do not meet the
emission standards. Under a penalty structure previously established by
regulation, manufacturers may choose to pay a penalty on a per-engine
basis rather than comply with the applicable standard.
The Clean Air Act outlines the key requirements of an NCP program.
The Act requires that:
• The penalties increase with the degree of non-compliance with
the emission standard and that the penalties increase over time.
• Emissions under an NCP program may not go above an upper
limit established by regulation.
• The NCPs remove any competitive disadvantage that might other-
wise accrue to a manufacturer that is complying with the standards.
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Which Engines and Vehicles would be Covered?
The non-conformance penalties (NCPs) would be available for 2004 and
later model year heavy-duty highway diesel engines, including engines
used in urban buses. EPA is proposing NCPs for the 2004 non-methane
hydrocarbon plus nitrogen oxides (NMHC+NOx) standard for highway
heavy-duty diesel engines. This standard is 2.5 grams per brake-horse-
power-hour of NMHC+NOx.
Why is EPA Proposing Penalties?
NCPs are authorized for heavy-duty engines under section 206(g) of the
Clean Air Act. A 1985 rulemaking established three basic criteria for
determining the eligibility of emission standards for NCPs in any given
model year. First, the emission standard in question must become more
difficult to meet. Second, substantial work must be required in order to
meet the emission standard. Third, a "technological laggard" must be
likely to develop. A technological laggard is considered to be a manu-
facturer who cannot meet a particular emission standard due to techno-
logical (not economic) difficulties and who, in the absence of NCPs,
might be forced from the marketplace.
EPA now believes that these three criteria have been satisfied with
respect to the NMHC+NOx standard that applies to 2004 and later
model year heavy-duty diesel engines. Therefore, it is appropriate at this
time to propose NCPs for this emission standard.
What are the Proposed Requirements?
The actual penalties that a manufacturer could pay for each non-comply-
ing engine are determined by formulas that already exist in the federal
regulations. The proposal specifies certain parameters that, when
plugged into the formulas along with the emissions of the engine and the
incorporation of other factors, will determine the amount a manufacturer
must pay. Key parameters that determine the NCP a manufacturer must
pay are the estimated average cost of compliance, the estimated 90th
percentile cost of compliance, and the degree to which the engine ex-
ceeds the emission standard. Engine emissions may not exceed an upper
limit designated in the proposed regulations. The table below provides
some examples of the proposed calculated penalties at several emission
rates.
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Proposed Penalty Rates at Several Example Emission Levels1
NMHC+NOx
Compliance Level
(g/bhp-hr)2
2.5
3.0
3.5
4.0
4.5
6.0
Heavy-Duty Service Class
Light
$0
$1,162
$1,644
$2,127
$2,610
N/A3
Medium
$0
$1,170
$2,340
$3,759
$6,870
N/A3
Heavy
$0
$4,680
$9,043
$10,193
$11,342
$14,790
Urban Bus
$0
$3,185
$5,042
$6,081
$7,120
N/A3
1 The proposed penalties are for exceedance of the 2.5 gram per brake horsepower-
hour NMHC+NOx standard. They are expressed in 2001 dollars and are for the first
year of non-compliance (the penalties increase with subsequent years).
2 g/bhp-hr = grams per brake horsepower-hour.
3 For the light and medium heavy-duty service classes, and for urban buses, the
proposed upper limit is 4.5 g/bhp-hr, therefore no NCPs are applicable to emissions at
6.0 g/bhp-hr. For the heavy heavy-duty diesel engine service class, the proposed upper
limit is 6.0 g/bhp-hr.
Health and Environmental
NCPs have a minimal environmental impact. They provide flexibility
that fosters long-term improvement in emissions without driving manu-
facturers out of the market. We can not predict how many manufacturers
would make use of the proposed NCPs, therefore the emission impact
can not be quantified. These impacts, nevertheless, should be short-term
in nature, because the structure of the penalties, by increasing over time,
discourages long-term use, and because the penalty figures are high
enough such that long-term use is not a viable option for the manufactur-
ers.
Costs
NCPs generally have minimal adverse economic impacts. Use of them is
optional; manufacturers have the flexibility and will likely choose
whether or not to use NCPs based on their ability to comply with emis-
sions standards. Manufacturers that choose to make use of the NCPs will
incur those costs, which are based, in part, on the cost of complying with
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the emission standards. Without NCPs, a manufacturer that has difficulty
meeting the standards has only two alternatives: fix the non-conforming
engines, perhaps at a prohibitive cost, or prevent their introduction into
commerce. The availability of NCPs provides manufacturers with a third
alternative, yet protecting the manufacturer that has chosen to incur the
costs of complying with the standards.
Public Participation Opportunities
The proposal and related documents are available at www.epa.gov/otaq.
We welcome your comments on this proposal. For instructions on
submitting written comments, please see the Federal Register notice.
You may submit written comments until February 28, 2002. Please refer
to Docket No. A-2001-25. The address for submitting written comments
is:
Margaret Borushko (Docket No. A-2001-25),
U. S. Environmental Protection Agency
Office of Transportation and Air Quality
2000 Traverwood Drive
Ann Arbor, MI 48105.
A public hearing will be held near Washington, DC on January 29, 2002.
Detailed information about the hearings will be published in the Federal
Register and at www.epa.gov/otaq.
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