Office of Transportation and Air Quality

EPA-420-F-12-049

August 2012

Non-Conformance Penalties for 

Heavy-Duty Diesel Engines Subject 

to the 2010 NOx Emission Standard

The U.S. Environmental Protection Agency (EPA) 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. 

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 unable to 

comply with the applicable standard may choose to pay penalties, which are assessed 

on a per-engine basis. 

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 otherwise accrue 

to a manufacturer that is complying with the standards. 

Regulatory Announcement
Regulatory Announcement

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Which Engines and Vehicles are Covered?

EPA 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).

Why is EPA Establishing These Penalties?

NCPs were authorized for heavy-duty engines under the Clean Air Act to provide flexibility 

that fosters long-term improvement in emissions without forcing manufacturers out of the 

market. A 1985 rulemaking established the three basic criteria for determining the eligibility of 

emission standards for NCPs in any given model year. First, the emission standard in question 

must have become more difficult to meet. Second, substantial work must have been required in 

order to meet the emission standard. Third, a technological laggard must exist or be likely to 

develop. A technological laggard is considered to be a manufacturer who cannot meet a particular emission standard due to technological difficulties and who, in the absence of NCPs, might 

be forced from the marketplace. EPA has determined it is appropriate at this time to establish 

NCPs for this emission standard because these three NCP criteria have been met.

What are the Penalty Levels?

The actual penalties that a manufacturer would pay for each non-complying engine are determined by formulas that already exist in the federal regulations. 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. The figure below provides the calculated 

per-engine penalties up to $3,775 for emission rates between 0.20 and 0.50 g/hp-hr NOx for 

2012 model year heavy heavy-duty engines. The maximum penalties will increase by several 

hundred dollars per engine each year for later model years.
Regulatory Announcement

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How does this Final Rule relate to the Interim Final Rule EPA 

promulgated in January?

On January 31, 2012 EPA established interim NCPs under section 553(b)(B) of the Administrative Procedure Act. As part of that rule, we committed to replace the interim NCPs with 

final NCPs after considering public comments on a parallel Notice of Proposed Rulemaking. On 

June 12, 2012 the U.S. Court of Appeals for the District of Columbia Circuit issued an opinion 

vacating the Interim Final Rule, ending the availability of the interim NCPs. This Final Rule 

makes NCPs available again for these engines. 

What are the Health and Environmental Impacts?

These NCPs will have a minimal environmental impact. They provide an optional flexibility 

that fosters long-term improvement in emissions without driving manufacturers out of the 

market. We cannot predict how many manufacturers would make use of the NCPs, and thus, 

the specific emission impact cannot be quantified. We expect relatively few engines to be certified under these provisions. Any impacts should be short-term in nature, because the penalties 

increase over time to discourage long-term use, and because the penalty figures are high enough 

such that long-term use is not a viable option for the manufacturers.

$-

$500 

$1,000 

$1,500 

$2,000 

$2,500 

$3,000 

$3,500 

$4,000 

0.20 0.25 0.30 0.35 0.40 0.45 0.50

N

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V

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NOx Emissions Level (g/hp-hr)

2012 Heavy Heavy-Duty Engine NCP
Regulatory Announcement

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What are the Total Costs?

NCPs generally have minimal adverse economic impacts. 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 nonconforming engines, perhaps at a prohibitive cost, or not produce/sell them. The availability of 

NCPs provides noncomplying manufacturers with a third alternative, yet protects those manufacturers that have incurred the costs of complying with the standards.

For More Information 

You can access the Final Rule and related documents on EPA’s Office of Transportation and Air 

Quality (OTAQ) Web site at: 

www.epa.gov/otaq/hd-hwy.htm

For more information on these and related rules, please contact EPA through EPA OTAQ 

Public Inquiries at: 

www.epa.gov/otaq/oms-cmt.htm