Office of Enforcement and Compliance Assurance (2201A) EPA 325-F-013-001
Enforcement Alert
Volume 11, Number 3
Office of Civil Enforcement
May 2013
Manufacturers of Highway Motorcycles andNonroad
Vehicles and Engines Fall Short of Recordkeeping
and Reporting Requirements
Purpose
This Enforcement Alert is intended to help those involved
with certifying, assembling, importing, distributing, and
servicing highway motorcycles and nonroad vehicles
and engines understand their recordkeeping and reporting
requirements under the Clean Air Act (CAA). It describes
who must keep records and make reports, as well as the
Environmental Protection Agency's (EPA's) authority to take
enforcement actions when companies fail to comply with
these requirements.
The emissions standards and compliance and enforcement
provisions for highway motorcycles are found in 40
C.F.R. Parts 85 and 86 and 42 U.S.C. §§ 7521-7542.
The same provisions for nonroad recreational vehicles
and nonroad small gasoline engines are found in 40
C.F.R. Parts 1051, 1054, 1060 and 1068 and 42 U.S.C.
7547.
Introduction
The CAA requires EPA to promulgate regulations reducing
harmful emissions from mobile sources of air pollution,
such as vehicles and engines. Pollutants, including carbon
monoxide, nitrogen oxides, and hydrocarbons, pose significant
health and environmental
concerns, and contribute Proper recordkeeping
to smog, respiratory and reportmg facilitates
illnesses, cancer, and compiiance, enables the
in extreme cases, even EpA to assesg Compiiance5
and, where necessary,
allows the EPA to take an
enforcement action to correct
violations. Most importantly,
recordkeeping and reporting
are required by law.
death.
To achieve the
CAA's goals to protect
human health and the
environment, EPA
administers a vehicle
and engine certification
program. The program
is designed to ensure that every vehicle and engine sold in,
or imported into the United States conforms to the design
specifications that apply to vehicles or engines that have
been demonstrated to meet emission standards and have been
approved by EPA.
EPA approves vehicles and engines by issuing certificates
of conformity (COCs). EPA's decision to issue a COC is based
on a review of a detailed COC application, which describes
exactly how vehicles or engines are designed, tested, and will
be produced under that COC.
Recordkeeping and reporting requirements are critical to
the success of this program because they help ensure that
vehicle and engine manufacturers are in compliance with
the law and that their products are legal to sell in the United
States. The CAA and its regulations impose recordkeeping and
reporting obligations on abroad range of parties involved with
certifying, assembling, importing, distributing, and servicing
vehicles, engines, and parts.
Recent EPA investigations have revealed widespread
recordkeeping and reporting violations. Many vehicle and
engine manufacturers failed to keep and maintain records
of emission testing and other information that is necessary
to support the applications for their COCs. Companies also
neglected to keep records of the vehicle identification numbers
and the quantities of vehicles produced under their COCs. Such
recordkeeping failures are explicitly prohibited by the CAA
and its regulations. Additionally, these recordkeeping failures
often mask more serious violations, including the importation
and sale of uncertified vehicles or engines. Thus, it is important
that the vehicle and engine manufacturing industry understand
their recordkeeping and reporting obligations.
Who Must Keep Records and Make
Reports
Parties involved in the certification, assembly, or
distribution of vehicles and engines must keep records
and make reports. Generally, EPA regulations state that
"manufacturers," "certificate holders," and sometimes
"certifying manufacturers" are responsible for recordkeeping
and reporting. These regulations give flexibility to industry
participants to choose how to structure their businesses.
These regulations do not, however, allow parties in the
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Enforcement Alert
industry to avoid recordkeeping and reporting obligations
by virtue of the naming or characterization of their business.
The term "manufacturer" is denned broadly in the CAA
and its regulations. The term includes not only "any person
engaged in the manufacturing or assembling" of vehicles
or engines ("assemblers"), but also anyone who imports
vehicles or engines or who is "under the control of any
such person in connection with the distribution" of vehicles
or engines. 42 U.S.C. § 7550(1); 40 C.F.R. §§ 1051.801,
1054.801, 1060.801. Also, the COC applicant must certify in
its application—regardless of the applicant's affiliation with
the company that assembles the vehicles or engines—that
all vehicles or engines intended to be covered by the COC
will conform to the description in the COC application and
otherwise comply with the law.
EPA is aware that the certification, assembly, and
distribution of a vehicle or engine sometimes involves
multiple companies with varying degrees of affiliation.
Especially in the case where foreign companies assemble
vehicles or engines, a second company may hold a COC
for the vehicles or engines, and a third company hired by
that COC holder may have performed emission testing and
prepared and submitted the COC application to EPA, which
would enable any number of additional companies to import
and distribute the vehicles or engines.
EPA requires that all COC holders, vehicle and engine
assemblers, and importers meet the recordkeeping and
reporting requirements of the CAA and its regulations.
Although there are many possible business relationships,
at a minimum, every company that holds a COC and every
company that assembles vehicles or engines covered by that
COC is a "manufacturer" when it comes to the recordkeeping
and reporting requirements. Therefore, both COC holders
and assemblers must keep and maintain the required records
and any other information relevant to showing compliance.
Upon request by EPA, these parties must promptly produce
these records and information. In addition, these parties bear
the responsibility to ensure that every vehicle or engine that
is produced conforms to the design specifications that apply
to the vehicle or engine described in the COC application.
This requirement demands careful attention by the assembler
to ensure that vehicles or engines are manufactured to the
certified design, and careful attention by the COC holder
to ensure that the certified
Reliance on an outside
consultant does not relieve the
COC holder of its obligations;
nor does it protect the COC
holder from liability under
CAA.
design is, at a minimum,
communicated to the
assembler and any changes
in production are reported
to EPA.
Notably, where a COC
holder relies on an outside
consultant to perform
emission testing, prepare and submit COC applications,
or communicate with EPA, the COC holder is nevertheless
required to keep and maintain all records required by law.
Where a consultant refuses to provide a COC holder with this
information, EPA considers that consultant to have caused
that COC holder to fail in its recordkeeping obligations, and
causing violations of the CAA is itself a violation of the law.
Thus both the COC holder and its consultant can be held
liable for the failure of the COC holder to retain the required
records.
Finally, a company that imports vehicles and engines
(regardless of whether it assembles or certifies them) must
also maintain, for at least five years, records sufficient to
allow the United States government to determine exactly
what vehicles and engines were imported (including, for
example, EPA Declaration Forms 3520-1 and 3520-21) and
whether the importation was lawful. 19 C.F.R. §§ 141.0,
142.3, 163.4.
Records to Keep and Reports to Make
Highway motorcycle manufacturers must establish,
maintain, and retain certain adequately organized and indexed
records that are explicitly listed in the EPA regulations.
These records include: (1) completed COC applications;
(2) identification and description of test vehicles (called
emission data vehicles or EDVs); (3) a complete record of all
emission tests performed on EDVs including test results; (4)
the date of each service accumulation run; (5) a record and
description of all maintenance and other servicing performed
on the EDV; (6) a record and description of each test
performed to diagnose engine or emissions control system
performance; and (7) a brief description of any significant
events affecting the vehicle during testing. Generally, this
data must be kept for six years from the date of issuance of
the applicable COC. 40 C.F.R. § 86.440-78.
,
Types of Nonroad Vehicles and Engines
Similarly, nonroad vehicle and engine manufacturers must
keep certain records including: (1) COC applications and
accompanying summary information; (2) records specified
in 40 C.F.R §§ 1051.205, 1054.205, and 1060.205 that are
not included in the COC application; (3) a detailed history
of each EDV; (4) production figures for each engine family
organized by assembly plant; and (5) vehicle identification
numbers for all the vehicles produced under each COC. 40
C.F.R. §§ 1051.250(b), 1054.250(b). Generally, this data
must be kept for eight years from the date of issuance of
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Enforcement Alert
the applicable COC. 40 C.F.R. §§ 1051.250(c), 1054.250(c),
1060.250(b).
Note that EPA may allow test data to be reused for
subsequent model year COCs if the vehicle or engine designs
do not change (carry-over of test data). In the case of a
carry-over COC, the requirement to maintain the supporting
records applies from the date of issuance of the carry-over
COC. These records should be written in English, kept
organized and readily available so that they can be promptly
provided to EPA upon request.
In addition to the records explicitly listed in the regulations,
all manufacturers must provide other information that
EPA may reasonably require to determine whether the
manufacturer has acted, or is acting, in compliance with the
CAA and its regulations. 42 U.S.C. § 7542(a). This includes,
for example, importation documents and descriptions of a
company's business structure and ownership. Where a COC
holder is a separate business entity from the company that
assembles vehicles or engines under that COC, the CAA
authorizes EPA to require both companies to provide, for
example, correspondence regarding whether the companies
coordinate to ensure that the production vehicles or engines
conform to the description in the COC application.
In addition to recordkeeping obligations, manufacturers
must report certain information to EPA. For example,
manufacturers must investigate and report emission-
related defects in vehicle or engine design, materials, or
workmanship. 40 C.F.R. §§ 85.1903, 1068.501. Also,
motorcycle and nonroad vehicle and engine manufacturers
must report total production volumes and production line
testing, where such testing is required. 40 C.F.R. §§ 86.414-
78(a), 1051.250(a), 1054.250(a), 1051 Subpart D, 1054
Subpart D.
Recordkeeping and reporting obligations
concern all stages of the certification,
production, and distribution of vehicles and
engines
Certification (e.g. Emission Testing)
Production
Distribution (e.g. Shipping)
Consequences of Failing to Keep Records
and Make Reports
If a company fails to maintain records or make reports,
EPA may void, suspend or revoke its COC, assess civil
penalties, require remedial action, or initiate a criminal
investigation.
First, in the case of nonroad vehicles and engines, EPA
may void a COC upon finding that the COC holder failed
to create or maintain the required records. 40 C.F.R.
§§ 1051.255(d), 1054.255(d), 1060.255(d). If the COC
holder knowingly failed to create required records, EPA
may initiate a criminal investigation which could result in
criminal penalties pursuant to 42 U.S.C. § 7413(c)(2)(A).
Additionally, for nonroad vehicles and engines and highway
motorcycles, upon finding that the COC holder knowingly
or intentionally submitted false, incomplete, or inaccurate
information, EPA may void a COC pursuant to 40 C.F.R
§§ 86.442-78(c), 1051.255(e), 1054.255(e), 1060.255(e),
and initiate a criminal investigation which could result in
criminal penalties pursuant to 42 U.S.C. § 7413(c)(2)(A). A
voided COC is considered never to have been granted. Thus,
voiding a COC renders all vehicles or engines imported or
sold under that COC, whether before or after the voiding, to
be uncertified.
Case Example: In April 2013, EPA voided 44 nonroad
vehicle COCs and 37 motor vehicle COCs, and in June
2010, EPA voided 12 nonroad vehicle COCs, in part
because the COC holders did not maintain the records
required by EPA regulations pertaining to vehicle emissions
testing.
EPA may also take an enforcement action to assess
civil penalties and require remedial action. The CAA and
implementing regulations prohibit parties from failing to keep
records and make reports, and authorize civil penalties up to
$37,500 per day per violation. These penalties also apply to
anyone who causes another party to fail to comply with its
recordkeeping obligations.
EPA often discovers that a party does not possess the
required records when it fails to provide records, or submits
incomplete records, in response to an EPA-issued Request for
Information authorized by section 208 of the CAA. 42 U.S.C.
§ 7542. EPA presumes that a party does not have certain
records if that party does not provide them in response to
EPA's request for them. The egregiousness of recordkeeping
and reporting violations increases with the number of missing
records, the number of vehicles or engines involved, the risk
of unlawful emissions from those vehicles or engines, and the
importance of the missing information to documenting vehicle
emissions, assessing compliance, and facilitating recalls and
other remediation.
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Enforcement Alert
Three examples illustrate recent EPA enforcement actions for recordkeeping violations:
• January 2012: EPA settled a case against Loncin (USA), Inc. and Longting USA LLC, who held three COCs
that the EPA voided, based, in part, on recordkeeping violations. The company paid a $680,000 penalty to resolve its
violations of the CAA and implemented an emissions mitigation project.
• October 2011: The United States filed a civil complaint against MotorScience, Inc., a California-based certification
services consulting firm, and its owner, for allegedly failing to create, or refusing to provide, records that its clients were
required to keep. The United States also alleges that MotorScience caused the illegal importation of all of the vehicles
that were imported under subsequently-voided COCs.
• July 2012: EPA settled a case against Pacific Rim International West Inc., Haili Icebear Inc., and Huzhou Daixi
Zhenhua Technology & Trade Co., Ltd. These companies paid a $325,000 penalty. Though they eventually provided
EPA with most of the records they were required to keep, EPA took this enforcement action for their failure to do so
within a reasonable timeframe.
Conclusion
EPA has broad authority to void COCs, assess civil penalties, initiate a criminal investigation, and seek remedial
action where companies fail to keep required records and make required reports. EPA enforces these recordkeeping and
reporting requirements to deter violations, maintain a level playing field in the industry, and ensure that EPA's certification
program effectively prevents illegal air pollution from vehicles and engines that can be harmful to people's health and the
environment.
Disclaimer: This document attempts to clarify in plain language some EPA regulatory provisions. Nothing in the Enforcement
Alert revises or replaces any regulatory provisions in the cited part, any other part of the Code of Federal Regulations, the
Federal Register, or the Clean Air Act. For more information go to: www.epa.gov/enforcement
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