EPA says fines may add $3,500 to truck costs

| 8/2/2002

The Environmental Protection Agency (EPA) August 1 set penalties ranging from a few hundred dollars for an engine nearly meeting its October 1, 2002 emission standard to more than $12,000 for an engine far off from compliance.

If engine makers are unable to meet the October emission limits, they pay penalties based on their emissions level above the 2004 standard. The penalty increases with the amount of emissions exceeding the standard.

"The EPA's proposed penalties are significantly higher than the levels included in the consent decree signed in 1998," a Caterpillar Inc. spokesman said. "We're disappointed in the EPA's ruling, but the issue of penalties will now be resolved in the courts."Caterpillar of Peoria, IL, and Detroit Diesel Corp., face millions of dollars in penalties because they won't meet EPA's October deadline. They have filed suit in U.S. District Court for the District of Columbia, saying they need more time to prepare to avoid penalties. EPA said manufacturers that cannot meet the standards can choose to pay a penalty on a per-engine basis. That allows a manufacturer to continue to produce and sell engines rather than be forced from the marketplace, the agency said.

Meanwhile, EPA Administrator Christine Todd Whitman took issue with industry estimates that manufacturers will have to pay $15,000 for each engine that does not meet the standard. She said the actual per-engine penalty is more likely to be $4,000 to $5,000.

Further, Whitman said, engine manufacturers are not likely to pass this full cost along to truck buyers - "the actual per engine price increase will be in the range of $3,000 to $3,500," she wrote in a letter to Rep. Ray LaHood, R-IL, and a group of congressmen who asked for a deadline delay.

She also noted that while EPA expects some trucking companies are pre-buying trucks to avoid the more expensive, compliant engines, the extent of the activity is not clear. "A major pre-buy has not yet occurred - at least through May of this year," Whitman said.