Navistar, an Illinois-based transportation company, is believed by the EPA to be the sole beneficiary of the Agency’s final rule establishing nonconformance penalties (NCP) for heavy heavy-duty diesel engines (HHDDE) that are unable to comply with the federal NOx emissions standard.  However, the NCP will apply to any manufacturer of HHDDEs that for technological reasons is unable to comply with the HHDDE NOx standard for model years 2012 and later.  HHDDEs are used in the largest highway trucks and buses.  The standard for these engines is 0.20 grams NOx per brake-horsepower-hour (g/bhp-hr). 
Increasing penalty
The Clean Air Act (CAA) Section 206(g) directs the EPA to promulgate the NCP, which is intended to penalize manufacturers of nonconforming engines while allowing them to continue to sell their products.  The section outlines three key requirements for an NCP program:

• The penalties must increase as the engine’s exceedance over the emissions limit increases; the penalty must also increase over time to discourage manufacturers from making continued use of it. 
• Emissions under an NCP program may not go above an upper limit established by regulation.
• The NCP removes any competitive disadvantage that might otherwise accrue to a manufacturer that is complying with the emissions standards.

“Technological laggard”
Also, in a 1985 rule, the EPA established three criteria for determining the eligibility of emissions standards for NCPs in any given model year. 

• First, the emissions standard must either be a new standard or an existing standard that becomes more difficult to meet (e.g., because of its interaction with another emissions standard that has become more stringent).
• Second, substantial work must be required to meet the emissions standard.
• Third, the EPA finds that it is likely that a manufacturer will be unable to comply by the end of the lead time provided for technological reasons; this manufacturer is referred to as a “technological laggard.”

Under the final penalty regulations, nonconforming manufacturers with engines at the upper NOx limit of 0.50 g/bhp-hr would pay a penalty of $3,775 for each model year 2012 engine they produce.  Manufacturers would pay a lesser penalty if NOx emissions from the engine are lower.  For example, the penalty for a 2012 engine with NOx emissions at 0.30 g/bhp-hr would be $1,259.  The EPA uses a complex mathematical formula (located at 40 CFR 86.1113-87) to calculate the monetary NCP. 
Companies adopting SCR
According to the Agency, Navistar attempted unsuccessfully to develop emissions-compliant HHDDEs using a unique technology that differed from the selective catalytic reduction (SCR) approach successfully employed by other engine manufacturers.  Navistar recently announced that it would switch to SCR for its 2013 line of HHDDEs, and the company’s need for NCPs is expected to end.
The EPA believes that the environmental impact of the NCP rule will be small because relatively few engine families will be certified. 
The final NCP rule was published in the September 5, 2012, FR.