You can add small nonroad engines to the list of imports from China that do not meet
U.S. standards. In this case, while China is probably not the only manufacturer of small
nonroad engines that fail to meet United States Environmental Protection Agency (EPA) air
emission standards, these Chinese engines are the first to be subject to a complaint filed
by the Department of Justice (DOJ).

The DOJ states in its recent complaint that PowerTrain, Inc., Wood Sales Co., Inc., and
Tool Mart, Inc. allegedly failed to certify, label, warranty, and keep records for imported
portable generators, water pumps, and other “non-handheld equipment,” and introduced
these small engines into commerce without a certificate of conformity. Not only is the
DOJ seeking substantial penalties, but it is also requiring the importers to remedy the
violation and mitigate the impact. While it is believed that the parties have settled this
matter, a Consent Decree is not publicly available at this time.

Keeping their promise from earlier this year to focus on enforcement of small nonroad air
emissions requirements, the EPA anticipates bringing more enforcement actions against
those who do not comply. Importers of lawn mowers, chainsaws, generators, pumps,
forklifts, generators, mini-vehicles, snowmobiles, dirt bikes, all-terrain vehicles, boats, jet
skis and larger nonroad engines should review the applicable EPA regulations to ensure
imported engines comply with the applicable requirements. Especially in this economy,
no importer needs the additional costs arising from failure to comply with these requirements
and the attendant administrative penalties and supply chain delays that may
result.

WHO IS AFFECTED BY THESE REQUIREMENTS?

Importers and manufactures of small gasoline and diesel-powered engines used in nonroad
equipment such as small tractors, lawnmowers, off-road motorcycles, generators
and the engines listed above are liable under the EPA requirements.

WHAT ARE THE BASIC EPA REQUIREMENTS?

  • Nonroad engines must be certified to be in compliance with emissions standards by the EPA.1
  • An EPA air emission label must be permanently affixed to each engine and be readily visible.
  • EPA Declaration Form 3520-21 must be completed for all imported engines.
  • Importers must ensure that the engine manufacturers will honor an emissions warranty. 2
  • Importers must recall engines that are found not to conform during the warranty period.
  • Records must be kept and maintained.

HOW DO WE CERTIFY AND MAINTAIN
CERTIFICATION OF THE ENGINES?

  • Register with EPA.
  • Submit a certification application to EPA each year for each engine family.
  • Build to the certified specifications and label accordingly.
  • Conduct emission tests on production vehicles, if EPA requires.
  • Provide warranty information and maintenance instruction to purchasers.
  • Conduct and pay for emissions warranty repairs.
  • Submit defect reports and conduct recalls, if necessary.

WE ARE THE IMPORTER, HOW CAN WE COMPLY
WITH THESE REQUIREMENTS?

While importers are unable to comply with each of these requirements directly if they do
not have control of the engines and are not the manufacturer, they nevertheless remain
liable if they import nonconforming engines that are in violation of the EPA certificate
requirements. Therefore, importers must be diligent to ensure that the engines they
import comply with these requirements and properly communicate the applicable regulations
to their foreign vendors.

WHAT ARE THE PENALTIES IF WE FAIL TO COMPLY?

  • EPA may seize the engines and export them out of the United States.
  • Potential EPA penalties could be as high as $37,500 per engine.
  • Potential liquidated damages may be assessed for failure to redeliver nonconforming imported product upon request by U.S. Customs and Border Protection (CBP).
  • Potential civil penalties of 20 to 40 percent of the appraised value may be imposed for any material false statements related to EPA compliance and admissibility of the engines.
  • Criminal action my be initiated against an importer who knowingly makes false or fraudulent statements or that omits material information required in a CBP entry document. Also, fines of $250,000 and imprisonment for up to two years, or both, may be imposed.

WHY IS EPA FOCUSING ON THESE ENGINES?

The EPA and CBP have partnered to intercept illegal imports at the border because almost half of the air pollution in the United States is caused by on-road and nonroad engines. The emissions from these engines include particulate matter, volatile organic compounds, air toxics and nitrates of oxygen. EPA established emission standards to reduce the impact from these emissions. A certified engine emits two to three times less emissions than a noncertified engine.

WHAT CAN IMPORTERS DO TO PROTECT THEMSELVES?

  • Importers can inspect the engines they intend to import to verify that the engines are EPA-certified and labeled.
  • Importers should clearly communicate the EPA requirements to their foreign vendors and include compliance requirements within the terms and conditions
    of any supply agreement or purchase order.

WHAT IF WE SUSPECT THAT THE ENGINE MANUFACTURER OR WE MAY NOT HAVE COMPLIED WITH THESE REQUIREMENTS?

For first time violators who voluntarily disclose and remedy the violations, EPA penalties can be substantially reduced, often by 75 percent or more. EPA has issued two policies
that encourage voluntary discovery and disclosure. These policies require that any violation be reported within 21 days of discovery in order to qualify for the most penalty
reductions. Similarly, voluntary disclosures are available for any identified customs violations. Any voluntary EPA or CBP disclosure should be coordinated with in-house or outside legal counsel.