Regulatory Announcement

Non-Conformance Penalties for 

Heavy-Duty Diesel Engines Subject 

to the 2010 NOx Emission Standard 

The U.S. Environmental Protection Agency (EPA) is adopting an 

Interim Final Rulemaking on nonconformance penalties (NCP) 

for heavy heavy-duty diesel engines while also issuing a Notice of 

Proposed Rulemaking (NPRM) on nonconformance penalties for both 

medium and heavy heavy-duty diesel engines that could be used by 

manufacturers of heavy-duty diesel engines unable to meet the 2010 

model year oxides of nitrogen (NOx) emission standard. These penalties 

allow a manufacturer to produce and sell nonconforming 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 unable to 

comply with the applicable standard may choose to pay a penalty, which is 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. 

Office of Transportation and Air Quality 

EPA-420-F-12-001 

January 2012 
Regulatory Announcement

Which Engines and Vehicles Would be Covered? 

EPA is establishing NCPs for the 2010 NOx standard for highway heavy-duty diesel engines. 

This standard is 0.20 grams per brake-horsepower-hour (g/hp-hr) of NOx. The non-conformance 

penalties will be available immediately for 2012 and 2013 model year heavy heavy-duty highway 

diesel engines on an interim basis. We are also taking comment on making them available more 

permanently and on making them available for 2012 and later medium heavy-duty highway 

diesel engines. 

Why is EPA Establishing these Penalties? 

NCPs provide flexibility that fosters long-term improvement in emissions without driving 

manufacturers out of the market. As with past NCP rules, this interim final rule and proposed 

rule were developed with the assistance of cost information provided by the manufacturers of 

heavy-duty diesel engines in order to develop the penalty rates. 

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 manufacturer who cannot meet a particular emission standard due to technological (not economic) difficulties and who, in the absence of NCPs, might be forced from the 

marketplace. One manufacturer is currently using NOx credits to certify all of its heavy heavyduty diesel engines near 0.50 g/hp-hr. Based on its current credit balance and projected sales for 

this service class, we do not expect this manufacturer to have sufficient credits to cover its entire 

model year 2012 production. These three criteria have been satisfied with respect to the NOx 

standard that applies to 2010 and later model year heavy-duty diesel engines. Therefore, it is 

appropriate at this time to establish NCPs for this emission standard. 

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. Both the Interim Final Rule and the 

NPRM specify certain parameters that, when plugged into the formulas along with the emissions 

of the engine and the incorporation of other factors, would determine the amount a manufacturer 

must pay. Key parameters that determine the NCP a manufacturer must pay are EPA’s estimated 

average cost of compliance, 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. The 

upper limit in both the Interim Final and Notice of Proposed Rulemaking is 0.50 g/hp-hr. The 

figure below provides the calculated penalties for emission rates between 0.20 and 0.50 g/hp-hr 

NOx for 2012 model year heavy heavy-duty engines under the interim final rule and proposed in 

the NPRM. 

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Regulatory Announcement In addition, the figure below provides proposed level of the penalties at NOx emission rates 

between 0.20 and 0.50 g/hp-hr for 2012 model year medium heavy-duty engines under the 

proposed rule. 

Why is EPA adopting an interim final rule and proposing a rule in 

parallel? 

EPA is taking action as an interim final rule without prior proposal and public comment because 

EPA finds for good cause to do so for heavy heavy-duty diesel engines under section 553(b)(B) 

of the Administrative Procedure Act (APA), 5 U.S.C. 551 et seq. This section allows EPA to 

issue a final rule without notice-and-comment where it would be impracticable, unnecessary or 

contrary to the public interest. EPA has determined that there is good cause for making today’s 

rule final without prior proposal and opportunity for comment, but only for heavy heavy-duty 

diesel engines. In reaching this determination, EPA considered several factors: (1) Taking interim 

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Regulatory Announcement

 

 

final action avoids the possibility of an engine manufacturer being unable to certify a complete 

product line of engines for model year 2012 and/or 2013; (2) the Agency is only amending limited 

provisions in existing NCP regulations in 40 CFR part 86; (3) the rule’s duration is limited; and 

(4) there is no risk to the public interest in allowing manufacturers to certify using NCPs before 

the point at which EPA could make them available through a full notice-and-comment rulemaking. 

EPA is also publishing a Notice of Proposed Rulemaking (NPRM) addressing NCPs for heavyduty engines. Among other things, the NPRM seeks comment on NCPs for model year 2012 

and later heavy heavy-duty diesel engines, as well as medium heavy-duty diesel engines. The 

NCPs in the Final Rule that will follow this NPRM will likely supersede the NCPs being promulgated in the Interim Final Rule, especially for model year 2013 and later. 

What are the Health and Environmental Benefits? 

NCPs have a minimal environmental impact. They provide 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, therefore the emission impact cannot be 

quantified. We expect relatively few engine families to be certified under these provisions. Any 

impacts 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 longterm use is not a viable option for the manufacturers. 

What are the 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 manufacturers with a third alternative, yet protecting the manufacturer that 

has chosen to incur the costs of complying with the standards. 

For More Information 

You can access the interim final and the proposed rules 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 

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