EPA’s Transition Program for Equipment Manufacturers (TPEM) on Non-Road Diesel Engines

Following up on the Tier 4 Final (Tier 4f) regulations coverage, we wanted to shed light on an additional program created by the EPA that directly coordinates with the Tier 4f emissions standards.

This program is called the Transition Program for Equipment Manufacturers, also known as TPEM.

TPEM has been dubbed a “flexibility program”, which provides a temporary exemption allowing diesel equipment manufacturers to delay installing Tier 4 compliant engines in their products for up to 7 years.

TPEM was created in response to equipment manufacturers’ concerns that engine manufacturers would not be able to provide sufficient notice of possible design changes in engines that are caused by the stricter regulation standards. This in turn would lead to equipment manufacturers being unable to make necessary adjustments to their equipment that would be in compliance with the Tier 4f emissions standards within the timeframe provided by the regulations.

The TPEM program may provide flexibility by offering temporary exemption to diesel equipment manufacturers, but it does not allow these participants to do as they wish. The participants must comply with specific production limitations and are required to file paperwork.

Who Does TPEM Mainly Apply To?

TPEM is only available to diesel equipment manufacturers who:

• Are primarily responsible for designing & manufacturing their own equipment, and
• Install the engines

Importers that import TPEM equipment to the U.S., but do not design or manufacture the equipment are not eligible for participation in the TPEM program on their own. These importers can only participate by bringing equipment into the U.S. that is exempt via an equipment manufacturer’s validated exemption.

What If My Company Is Still Struggling Even Under TPEM?  

If your company is currently participating in the TPEM program, but facing unusual circumstances that results in technical or economic hardships, the EPA regulations provide additional opportunities that afford companies additional allowances for hardship relief.

If your company is granted the allowances (aka credits) for hardship relief, the amount of hardship relief will still vary and may depend on the applicant’s circumstances and the type of relief requested to the EPA.

What Kind of Relief Is Provided?  

Requirements for hardship relief are dependent on the type of relief that applicants need.

These two types of relief are:

• Technical or engineering hardship relief
• Economic hardship relief

Who Does the Hardship Relief Program Apply To?

Hardship relief is available to equipment manufacturers who:

• Manufactures heavy equipment
• Are already participating in TPEM
• Are not in violation of TPEM regulations and the select allowances (credits)
• Meet the requirements for the type of hardship relief they are seeking
• Can demonstrate that their company will face hardship when their regulated TPEM allowances run out
• Can demonstrate that alternate engine suppliers could not ease of eliminate the impending hardship
• Can demonstrate that the impending hardships are:
  • Not their fault
  • Outside of their own control
  • Not avoidable, even with prudent planning

What Are These Allowances? A TPEM Allowance Overview

The EPA classifies eligibility for these allowances, as stated in their TPEM documentation, Section 1039.625(a) – “Consider all U.S.-directed equipment sales in showing that you meet the requirements of this section, including those from any parent or subsidiary companies and those from any other companies you license to produce equipment for you. If you produce a type of equipment that has more than one engine, count each engine separately”.

As you can see from the section taken right from their TPEM documentation, each engine that is used in equipment must be counted separately. This is considered a large hurdle for many companies, especially those that are designing and/or manufacturing equipment to be Tier 4f compliant.

This is what prompted the EPA to include TPEM and TPEM Allowances (Credits) into their Tier 4 emissions and regulations standards.

Let’s briefly go over the types of allowances:

• Percent of Production
• Small Volume
  • Single Engine Family
  • Multi-Engine Family
• Number of engines manufacturers can exempt under each allowance varies by power category
  • Companies must consult EPA regulations for limits

These allowances and their meanings can be a bit vague and require further elaboration.

Why don’t we break them down?

Percent-of-Production

• Permits the use of non-complying engines on a certain percentage of the equipment that you manufacture for the U.S. market in each power category. The rest of the equipment must use engines certified under the currently applicable standards
• Calculate the percent (%) annually
  [% of production = equipment with flex engines/total product/sales]
• Add up the percentage figures for each calendar year
• If the sum does not exceed 80, you are eligible for this allowance
• After the eligibility period is over, manufacturers CANNOT claim any exemptions. This applies, even if they haven’t reached the 80% cap. Your company’s calculations must be made every calendar year using your actual U.S.-directed production volume for each year

Small Volume Allowance:  

• If you are a small OEM and only manufacture a few models (or if you are a larger OEM, but only manufacture a few pieces of equipment in a particular power category), you might qualify and benefit from this allowance
• Single Engine Family:
  • Exempt up to 200 pieces of equipment per year in each power category, as long as the total number of exempted pieces after seven (7) years does not exceed 700, and provided that you only exempt equipment using engines from a single engine family per power category per year
• Multi-Engine Family:
  • May use multiple engine families as long as limits are met
  • Limits are lower and vary by power category
  • > 130 kW, Max: 100 units/Year, 350 units over allowance period
  • < 130 kW, Max: 150 units/Year, 525 units over allowance period
• There is a general rule that you can only use ONE (1) allowance per power category
• Companies do have the opportunity to switch allowances, as long as you meet the requirements

Switching Allowances

• After you’ve started participation in TPEM, you may only switch allowances if you have not already violated the terms of the allowance you want to switch to
• You must comply with one allowance per power category during your entire participation in TPEM
• No need to file a new notification
  • Explain your switch in the comments section of your report

It should be noted that most manufacturing companies have already used up their allotted allowances (credits), which means that there it has been near impossible to produce a consistent and reliable inventory.

Application and Reporting Processes

Due to the TPEM and TPEM Hardship Relief programs being launched in support of one another, there are many regulatory rules and processes to follow.

The first step is to see if your company meets the requirements and can qualify for TPEM or TPEM Hardship Relief, then follow the instructions provided by the EPA to begin the application process.

A guideline on how to fill out applications and keeping up with the regulatory reports for both TPEM and TPEM Hardship Relief can be found on the official EPA website.

https://www.epa.gov/vehicle-and-engine-certification/transition-program-equipment-manufacturers-tpem

The Woodstock Power Company Experience

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