Transition Program for Equipment
Manufacturers:
End-of-TPEM Scenarios
SEPA
United States
Environmental Protection
Agency
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Transition Program for Equipment
Manufacturers:
End-of-TPEM Scenarios
Compliance Division
Office of Transportation and Air Quality
U.S. Environmental Protection Agency
United States
Environmental Protection
^1 Agency
EPA-420-F-16-048
October 2016
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Transition Program for Equipment Manufacturers:
END-OF-TPEM SCENARIOS
This document provides information to engine and equipment manufacturers participating in the
Transition Program for Equipment Manufacturers (TPEM) on topics related to ending their participation
on TPEM as the program phases out.
Table of Contents
Closing out your TPEM participation as the program comes to an end 2
TPEM Availability Dates 2
TPEM End-of-Program FAQs for Equipment Manufacturers 3
When is the last day that I can produce TPEM equipment? 3
What if I didn't get to use/install all my TPEM engines before the TPEM period ended? What if I have
left-over engines after I reached the limits of my allowance? 3
How long do I have to import TPEM equipment after the program ends? 4
What if I keep producing TPEM equipment for the US market after TPEM has ended? 5
What if I have already violated the terms of the program? 5
Examples of End-of-program scenarios: 5
Scenario #1: Canceled orders 5
Scenario #2: I did not receive enough orders 5
Scenario #3: I overestimated the number of TPEM engines I would need 6
TPEM End-of-Program FAQs for Engine Manufacturers: 6
When is the last day that I can produce TPEM engines? What can I do with remaining TPEM engines? 6
How long do I have to import TPEM engines into the US after the program ends? 7
What if I keep producing or importing TPEM engines for the US market after TPEM has ended? 7
What if I have already violated the terms of the program? 8
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Closing out your TPEM participation as the program comes to an end
The Transition Program for Equipment Manufacturers (TPEM) is coming to an end. As shown in the
TPEM Availability Dates tables, all allowances will expire between December 31, 2018 and December 31,
2021, for power categories above 19 kW. (The program already ended for power categories under 19
kW.)
If you are participating in TPEM, either as an equipment manufacturer, engine manufacturer or
importer, you must be aware of the end dates and what you can do and cannot do with remaining TPEM
engines and equipment after the program expires. If you are an equipment importer, please refer to the
sections for equipment manufacturers as that information also applies to you. If you manufacture TPEM
engines outside the US, please refer to the engine manufacturers' section.
TPEM Availability Dates
TPEM ends on December 31st of the last calendar year shown in the tables below, depending on the
power category and the allowance period you are participating in - general allowances (Table 1) or
delayed allowances (Table 2). Please note that if you participated during the general allowance period,
you cannot also participate in the delayed allowance period for the same power category. Please see 40
CFR 1039.625(a)(1) and (a)(2).
Table 1 of §1039.625—General Availability of Allowances
Power category
Calendar years
kW <19
2008-2014
19 560
2011-2017
Table 2 of §1039.625—Availability of Delayed Allowances
Power category
Calendar years
kW <19
Delayed allowances are not available for this
power category.
19 560
2015-2021
END-OF-TPEM SCENARIOS
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TPEM End-of-Program FAQs for Equipment Manufacturers
When is the last day that I can produce TPEM equipment?
As an equipment manufacturer, you may produce or manufacture1 TPEM (or "flex") equipment until the
last day the program is available for your power category and allowance period, as long as you have not
exceeded your allowance limits. For example, if you are participating in TPEM in the 56 kW to 130 kW
power category during the general availability allowance period, you may produce TPEM equipment
until December 31st, 2018. You may not manufacture TPEM equipment on or after January 1st, 2019.
For equipment, the date of manufacture is generally defined at 40 CFR 1068.30 as the date on which the
engine is installed or some point later in the assembly process. If you customarily designate the day you
install the engine in a piece of equipment as the date of manufacture, you may install your last TPEM
engine no later than December 31 of the last year when allowances are available to you. You may select
another point in the assembly process for a piece of equipment as the date of manufacture, as long as
that point occurs after you install the engine.
After the TPEM program has ended, there is no limit to how long you have to sell TPEM equipment as
long as it was manufactured before the program expired and in compliance with your allowance.
However, please note that there are time limits regarding the importation of TPEM equipment to the
U.S.
What if I didn't get to use/install all my TPEM engines before the TPEM period ended?
What if I have left-over engines after I reached the limits of my allowance?
If you purchased more TPEM engines than you were able to install in a piece of equipment before your
allowance period is over (or in excess of the total or annual volume limits of your allowance), you may
dispose of them in any of the following ways:
• You may export them if they meet the requirements of the destination country;
• You may sell them back to the engine manufacturer if they accept them;
• You may destroy them; or
• You may sell them to an equipment manufacturer that still has allowances available to them if
the allowance period is not over yet. However, you should first notify and obtain
acknowledgement from the engine manufacturer of the sale and the purchaser must separately
provide the engine manufacturer with written assurance that the engines are needed under
TPEM (see 40 CFR 1039.625(j)). Please keep clear records of the transaction. Both the engine
1 Please note that the terms "produce" and "manufacture" are used interchangeably, both in the TPEM regulation
at 40 CFR 1039.625 and in this guidance. The term "manufacture" is defined at 40 CFR 1039.801 as "the physical
and engineering process of designing, constructing, and assembling a nonroad engine or a piece of nonroad
equipment."
END-OF-TPEM SCENARIOS
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manufacturer and EPA must be able to locate the engines if needed. Note that the sale of TPEM
engines to someone other than an equipment manufacturer (i.e., someone authorized to use
exempted TPEM engines under 40 CFR 1039.625(a)) is not permissible.
You may not install TPEM engines in a piece of equipment after the applicable period has ended or after
you have exhausted your TPEM allowances. There are no flexibilities for TPEM engines like the normal
inventory provisions of 40 CFR 1068.105(a). so you may not manufacture new equipment with TPEM
engines after the program has ended.
A number of equipment manufacturers have asked if they may keep excess TPEM engines and request
that the engine manufacturer re-designate and/or relabel them as replacement engines exempt under
40 CFR 1068.240 for servicing of equipment in the field. We are currently considering this question, but
unable to provide a response as to its appropriateness at this time. This guidance will be updated in the
near future with more information on the topic.
How long do I have to import TPEM equipment after the program ends?
If you manufacture equipment outside the US (or if you import someone else's equipment), you may
import your TPEM equipment up to December 31st of the year after the end of your allowance period.
Per 40 CFR 1068.360(b), engines installed in new equipment imported into the US must comply with, at
minimum, the emission requirements applicable to the model year prior to its importation. That means,
for example, that new equipment brought into the US in 2018 must have engines that comply with 2017
model year or newer requirements. Likewise, new equipment imported in 2019 must have engines that
comply with 2018 model year or newer requirements.
The effects of this provision on your business depends on the TPEM power category and allowance
period you are participating in. For example, TPEM provisions expire on December 31, 2017 for
equipment manufacturers participating in the general availability allowance period for the 130 kW to
560 kW power category. Equipment manufactured after that date must have engines that comply with
Tier 4 final standards. As a result, if they import equipment into the US in 2018, the engines must be
2017 model year or newer and may comply with either TPEM or Tier 4 final requirements (both engine
options were available to these equipment manufacturers in 2017). However, since TPEM is no longer
available to them in 2018, any equipment they import in 2019 must have 2018 model year or newer
engines that comply with Tier 4 final. Therefore, participants in the 130 to 560 kW power category
during the general availability allowance period have until December 31, 2018 to import their TPEM
equipment. Please consult the TPEM End Dates chart to identify the last year that TPEM is available to
you according to the power category and allowance period you are participating in and to determine the
last year you can import TPEM equipment into the US.
Please note that for the purpose of applying 1068.360(b) to TPEM equipment, the actual date of
manufacture is not relevant as long as the equipment was built at any time during the allowance
availability period AND it has not been used. In the previous example, participants of the 130 to 560 kW
power category during the general availability allowance period can import TPEM equipment in 2018 as
long as it was manufactured after the start of that allowance period in 2011. [For importation
requirements applicable to used equipment, please see 40 CFR 1068.360(c).]
END-OF-TPEM SCENARIOS
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What if I keep producing TPEM equipment for the US market after TPEM has ended?
40 CFR 1068.101(a)(1) states that "you may not sell, offer for sale, or introduce or deliver into
commerce in the United States or import into the United States any new engine/equipment after
emission standards take effect for the engine/equipment, unless it is covered by a valid certificate of
conformity for its model year and has the required label or tag. You also may not take any of the actions
listed in the previous sentence with respect to any equipment containing an engine subject to this part's
provisions unless the engine is covered by a valid certificate of conformity for its model year and has the
required engine label or tag." If you install TPEM engines in a piece of equipment intended for the US
market after the program has ended, we may find you in violation of 40 CFR Part 1068.101(a)(1), and we
may assess a civil penalty up to $44,5392 for each engine or piece of equipment in violation. For
additional information, please refer to 40 CFR Part 1068, Subpart B.
What if I have already violated the terms of the program?
If you find that you have already exceeded your TPEM allowance, used ineligible engines, produced
equipment after TPEM ended, or in any other way violated the terms of the program, please report the
violation to EPA. See self-reporting guidelines at http://www2.epa.gov/compliance/epas-audit-policy.
Examples of End-of-program scenarios:
Scenario #1: Canceled orders.
"I am an equipment manufacturer and had not exceeded my allowance. I had a customer order and
assembled the equipment before the end of the final year of the TPEM period, but the order was
canceled."
ANSWER: You may still sell your equipment to another customer after TPEM has ended. There are no
limitations in the time you have to sell your legally produced TPEM equipment. However, if you
manufactured your equipment outside the US, there is a limit on the amount of time you have to import
that equipment into the US.
Scenario #2: I did not receive enough orders.
"I am an equipment manufacturer and had not exceeded my allowance. I assembled a number of TPEM
pieces of equipment before the end of the TPEM period, but did not receive enough orders to sell all the
equipment before the program ended."
ANSWER: As in the previous scenario, you can sell your equipment after the TPEM period is over. All that
matters is that the equipment was manufactured under an available allowance. That means that you
had not reached the maximum number of pieces of equipment you can manufacture under your
2 New maximum as of August 1, 2016, per the 2016 Civil Monetary Penalty Inflation Adjustment Rule (81 Federal
Register 43091, July 1, 2016). For additional information, go to https://www.epa.gov/sites/production/files/2016-
07/documents/finalpenaltvinflationguidance.pdf.
END-OF-TPEM SCENARIOS
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allowance and TPEM had not expired for your power category and allowance period (general availability
vs. delayed).
Scenario #3: I overestimated the number of TPEM engines I would need.
"I am an equipment manufacturer and had not exceeded my allowance. I purchased and inventoried
TPEM engines before the end of the TPEM period with the intent to assemble a piece of equipment with
that engine in a future year."
ANSWER: You may not manufacture TPEM equipment (which means that you may not install a TPEM
engine into a piece of equipment) after the program has ended. Engine inventory provisions [40 CFR
1068.105(a)1 do not apply to TPEM engines. Engine inventory provisions allow equipment
manufacturers to continue to use certified engines in their inventory after new emission standards
apply. TPEM engines are exempted engines for the model year in which they were manufactured, and
are not certified.
TPEM End-of-Program FAQs for Engine Manufacturers:
When is the last day that I can produce TPEM engines? What can I do with remaining
TPEM engines?
For an engine to be exempted under TPEM provisions, it must have been requested in writing by an
equipment manufacturer under 40 CFR 1039.625. Therefore, it must have been manufactured during an
available TPEM period. Engines manufactured after December 31st of the last year of availability for
either allowance period are not exempt under TPEM and must comply with applicable standards or be
covered under another valid exemption, such as an export-only exemption. Written assurance from an
equipment manufacturer does not limit your liability for complying with 40 CFR 1068.101 after the end
of the program. However, since equipment manufacturers may not install engines past December 31st of
the last year of their allowance availability, it is expected that engine manufacturers will need to cease
production of TPEM engines for the US market before that date. We also expect that engine
manufacturers will not keep TPEM-labeled engines in inventory after the end of the program.
These statements also apply to the transition between the general availability period and the delayed
availability period as the standards TPEM engines must meet are different—see 40 CFR 1039.625(e).
Likewise, we expect that your customers (or the equipment manufacturing side of your company, if
applicable) will not keep TPEM engines in inventory after the end of the program as the inventory
provisions at 40 CFR 1068.105(a) do not apply to TPEM engines. Please destroy any left-over TPEM
labels.
A number of equipment manufacturers have asked if they may keep excess TPEM engines and request
that you, the engine manufacturer, re-designate and/or relabel them as replacement engines exempt
END-OF-TPEM SCENARIOS
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under 40 CFR 1068.240 for servicing of equipment in the field. We are currently considering this
question, but unable to provide a response as to its appropriateness at this time. This guidance will be
updated in the near future with more information on the topic.
How long do I have to import TPEM engines into the US after the program ends?
If you manufacture engines outside the US, you could technically import your TPEM engines up to
December 31st of the year in which the applicable TPEM allowance period ends. However, since that is
also the deadline for equipment manufacturers to install TPEM engines into their equipment, it is
expected that you will import your last TPEM engine with sufficient lead-time for an equipment
manufacturer to install it before the deadline expires.
Likewise, the provisions of 40 CFR 1068.360(b) that allow equipment manufacturers to import their
TPEM equipment for sale in the US up to a year after the end of the program, does not apply to the
importation of TPEM engines not already installed in a piece of equipment. Since the TPEM exemption
expires on December 31st of the last year of availability, any engine imported after the expiration date
must be either certified or covered under a valid exemption.
Please note that these statements also apply to the transition between the general availability period
and the delayed availability period as the standards TPEM engines must meet are different—see 40 CFR
1039.625(e).
We also expect that you will not keep TPEM-labeled engines in inventory after the end of the program.
Please destroy any left-over TPEM labels.
What if I keep producing or importing TPEM engines for the US market after TPEM has
ended?
As for equipment manufacturers, 40 CFR 1068.101(a)(1) states that "you may not sell, offer for sale, or
introduce or deliver into commerce in the United States or import into the United States any new
engine/equipment after emission standards take effect for the engine/equipment, unless it is covered
by a valid certificate of conformity for its model year and has the required label or tag. You also may not
take any of the actions listed in the previous sentence with respect to any equipment containing an
engine subject to this part's provisions unless the engine is covered by a valid certificate of conformity
for its model year and has the required engine label or tag." If you import or introduce into United
States commerce TPEM engines after the program has ended, we may find you in violation of 40 CFR
Part 1068.101(a)(1) and we may assess a civil penalty up to $44,5393 for each engine or piece of
equipment in violation. For additional information, please refer to 40 CFR Part 1068, Subparts B and D.
3 New maximum as of August 1, 2016, per the 2016 Civil Monetary Penalty Inflation Adjustment Rule (81 Federal
Register 43091, July 1, 2016). For additional information, go to https://www.epa.gov/sites/production/files/2016-
07/documents/finalpenaltvinflationguidance.pdf.
END-OF-TPEM SCENARIOS
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What if I have already violated the terms of the program?
If you find that you have already violated the terms of the program, please report the violation to EPA.
See self-reporting guidelines at http://www2.epa.gov/compliance/epas-audit-policy.
END-OF-TPEM SCENARIOS
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