More details from the new EPA small emissions regulations announced last month are emerging, including key provisions that protect both dealers and OEMs from unfair competition by firms importing non-compliant engines into the U.S. market. The new regulations place a much stronger burden on offshore suppliers and importers, forcing those companies to “put their money where their mouth is” when it comes to bringing products into the U.S.
In a nutshell, beginning in model year 2010 offshore firms bringing small engine products into the U.S. must now have a minimum service center network in place, or if not must post a minimum bond beginning at $500,000 before even starting the engine compliance process.
In the past, once non-compliant products made it through customs, there was nothing EPA could do to take them out of retail circulation. The new regulations seek to “create an infrastructure to weed out those companies that don’t want to certify and are actively trying to get around the regulations,” says James McNew, OPEI vice president of technical and marketing systems.
“Putting your money up front says you will be legitimate, and it really does weed out those who don’t want to compete on a level playing field,” McNew adds.
The new regulations require importers and manufacturers to have a minimum of 100 authorized repair centers in the U.S., or at least one service center for every 5,000 engines sold into the U.S. Those that do not meet the requirements will have to post a minimum bond of $500,000 (going up as product volume increases) to cover potential costs of emissions-related penalties. Manufacturers or importers that don’t have at least $3 million in fixed assets in the U.S. will also need to post a minimum $500,000 bond.
In both cases, the bonds must be posted before the certification process even begins, providing another level of protection for dealers and manufacturers from unfair, non-compliant competition.
For a manufacturer like Stihl, Shindaiwa or Briggs & Stratton, companies that import and manufacture engines and have extensive investments in emissions compliance and well-trained, established dealer networks, the new service network and bonding requirements are no problem. But for a non-compliant offshore manufacturer selling to a U.S. shell importer running a business out of a post-office box and mini warehouse, the new requirements force those companies to come correct to the market.
The new requirements hope to stem the flow of non-compliant and cheaper products from even reaching the U.S., as in the case early this year: Jenn Feng, MTD, MTD Southwest and McCulloch Corp. were fined $2 million for selling non-compliant chain saws after Taiwanese manufacturer Jenn Feng and certification document supplier McCulloch conveniently missed noticing that 200,000 chain saws brought into the U.S. didn’t have the catalytic converters needed to meet emissions regulations.
To its credit, MTD notified EPA about the potential violations, but not before the damage was done with 200,000 non-compliant saws in the U.S. market.
The service center, bonding and asset requirements are efforts to stop these products from even entering the market, protecting manufacturers and dealers alike from unscrupulous operators, whether they be offshore manufacturers or local retailers looking to unload cheap, non-compliant products on unsuspecting consumers.
In a newspaper report several months ago, John Foster, product compliance manager for Stihl, Inc. noted in a letter to the EPA that Stihl invests millions to comply with EPA regulations, yet foreign manufacturers “are becoming ever more sophisticated and brazen” in their efforts to avoid compliance costs.
McNew says the new requirements also reflect an effort by OPEI and its members to protect U.S. manufacturers from the same fate that’s befallen North American ATV manufacturers, which have lost more than 50% of the market to a rising tide of imports.
The more lucrative ATV market was the first targeted by offshore suppliers, “and we’re just beginning to see that in small engine and lawn and garden products,” McNew says.
OEM/EPA Info Seminar
As part of its efforts to educate manufacturers on the new EPA emissions regulations and requirements, OPEI is sponsoring an EPA Compliance Workshop at GIE+EXPO this year on Thursday, October 23 from 3-5 p.m.
The two-hour workshop will be led by an EPA regulation official and will cover basic regulatory framework and timelines for manufacturers of engines, equipment and components such as fuel lines and exhaust systems.
NOTE: Due to EPA public meeting requirements, the workshop is being held in a publicly accessible area just outside the main GIE+EXPO entrance.
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