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Green Matters

Navistar Comments on EPA Non-Conformance Penalties

September 4, 2012

In a statement, the U.S. Environmental Protection Agency (EPA) announced it is adopting nonconformance penalties (NCPs) for heavy heavy-duty diesel engines that can be used by manufacturers of heavy-duty diesel engines unable to meet the current oxides of nitrogen (NOx) emission standard. These penalties, which are assessed on a per-engine basis, allow a manufacturer to produce and sell nonconforming engines upon payment of penalties. The actual penalties reflect how close the engines are to meeting the standard – the cleaner the engines are, the lower the penalties will be.

Troy Clarke, Navistar president and chief operating officer, commented “We are pleased that the U.S. Environmental Protection Agency (EPA) has issued the Final Rule for nonconformance penalties (NCPs) for on-highway heavy heavy-duty diesel engines. We can now provide our dealers and customers with clarity and certainty as we transition to our clean engine technology and [we] look forward to utilizing the Final Rule as needed. Implementation of the Final NCP Rule will have no impact on our vehicles previously certified by the EPA under the Interim NCP Rule.”

EPA said it is establishing NOx NCPs for 2012 and later highway heavy heavy-duty diesel engines. These are the engines used in the largest highway trucks and buses. The standard for these engines is 0.20 grams NOx per brake-horsepower-hour (g/hp-hr).

The actual penalties that a manufacturer would pay for each non-complying engine are determined by formulas that already exist in the federal regulations, said EPA. The Final Rule specifies certain parameters that determine the amount a manufacturer must pay, when used in these formulas, along with the emissions of the engine.

Key parameters that determine the NCP a manufacturer must pay are EPA’s estimated cost of compliance for a near worst-case engine and the degree to which the engine exceeds the emission standard (as measured from production engines). Engine emissions may not exceed an upper limit designated in the regulations. EPA has established an upper limit of 0.50 g/hp-hr NOx in this Final Rule.

NCPs generally have minimal adverse economic impacts, said EPA. Use of them is optional, and manufacturers will likely choose whether or not to use NCPs based on their ability to comply with emissions 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 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 do not produce/sell them. The availability of NCPs provides non-complying manufacturers with a third alternative, yet protects those manufacturers that have incurred the costs of complying with the standards.

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