In a case of déjà vu, Chinese small spark-ignited nonroad engines are the latest imports which run afoul of U.S. standards. These engines potentially do not meet the requirements of the Clean Air Act. Examples of such products include landscaping and lawn mowing equipment; gas or diesel powered tools, such as chainsaws, power-washers and snow blowers; recreational vehicles, such as boats, jet skis, off-road vehicles and snowmobiles; warehousing equipment, such as forklifts and conveyor systems; generators; and other construction equipment, such as pumps, earth movers and tractors. Thus, the scope of the problem with imported engines may vastly exceed the issues previously raised by imported Chinese goods.

The EPA has been criticized for lack of enforcement of the small nonroad air emissions requirements of the Act, and promised more vigilant enforcement going forward. The emissions from these engines include particulate matter, volatile organic compounds, air toxics and nitrates of oxygen. In fact, almost half of the air pollution in the United States is caused by on-road and nonroad engines. The U.S. EPA established emission standards to reduce the impact from these emissions, and their testing suggests that an imported engine properly certified under the Act emits two to three times less emissions than a noncertified engine.

In furtherance of its stepped-up enforcement, the EPA is working with other Federal agencies. First, the U.S. EPA and the U.S. Customs and Border Protection ("CBP") have partnered to intercept illegal imports of such engines. Also, working with the Department of Justice, a complaint has been filed against PowerTrain, Inc., Wood Sales Co., Inc. and Tool Mart, Inc. in the U.S. District Court for the District of Columbia, for violating the Clean Air Act. The defendants are importers of small nonroad engines who allegedly did not meet the requirements of the Act for imported nonroad engines. They failed to obtain proper certification from the U.S. EPA, not properly warranting the engines by posting deficient labels on the engines, and for violating regulatory recordkeeping requirement. The complaint seeks substantial penalties to have the importers remedy the violation and to mitigate the impact on the environment.

REQUIREMENTS OF THE ACT  

Manufacturers and importers of goods containing small nonroad engines should review the requirements of the Act and seek immediate compliance. The basic requirements under the Act for importers and manufactures of small nonroad equipment are:  

  1. Nonroad engines must be certified by the U.S. EPA to be in compliance with emissions standards;
  2. an U.S. EPA approve air emission label must be permanently affixed to each engine and be readily visible;  
  3. U.S. EPA Declaration Form 3520-21 must be completed for all imported engines;   
  4. Importers must ensure that the engine manufacturers will honor an emissions warranty; and;  
  5. Records must be kept and maintained.

THE PENALTIES  

The penalties which U.S. EPA may impose include engines seized and exported out of the United States and civil penalties of $37,500 per engine per day of violation. In addition, in concert with CBP, liquidated damages may be assessed for failure to redeliver nonconforming imported product upon request, and civil penalties of 20 to 40 percent of the appraised value of the engines may be imposed for any material false statements related to EPA compliance and admissibility of the engines. This could result in criminal penalties, including fines up to $250,000 and imprisonment for up to two years.

THE RESPONSE  

It is important to note that an importer is liable if they import engines which are not certified, or if the imported engines are otherwise in violation of the statutory and regulatory requirements. While an importer is not the manufacturer, an importer must exercise due diligence to insure compliance, and must communicate with the foreign manufactures of the nonroad engines regarding the requirements of the Act. If an importer learns of a violation after importation, the importer should notify U.S. EPA of the violation (First time violators who voluntarily disclose and remedy the violations may have the penalty substantially reduced, provided the disclosure occurs within 21 days of discovery), and institute a recall if necessary.

A company using nonconforming imported engines in its operations does so at its own peril. Expect the regulators to seek authority to impose sanctions on commercial and industrial end-users who employ nonconforming engines. Regulators may force end-users to cease and desist from using polluting engines, or to outright seize the engines. Companies using imported engines should inspect their inventory to determine whether they currently possess any nonconforming ones. If so, remedial and preemptive action will be necessary.