1
TO:
EPA
Air
Docket
OAR­
2003­
0012
FROM:
Byron
Bunker,
Philip
Carlson,
and
Cleophas
Jackson
SUBJECT:
Tier
4
Nonroad
Diesel
Equipment
Flexibility
Provisions
_________________________________________________________
_

Early
in
the
process
of
developing
the
Tier
4
emissions
program
EPA
recognized
that
it
was
important
to
comprehensively
evaluate
the
impact
that
the
introduction
of
new
catalyst
based
emission
control
technologies
to
nonroad
engines
would
represent
for
the
manufacturers
of
nonroad
equipment
that
will
make
use
of
the
new
engines.
As
part
of
a
broader
outreach
program,
we
therefore
met
with
a
variety
of
equipment
manufacturers
to
better
understand
their
design
and
engineering
processes,
procedures,
and
experiences
with
previous
emission
standard
changes.
EPA
evaluated
how
manufacturers
successfully
prepared
for
and
met
the
prior
changes
in
engine
emissions
standards,
whether
the
lead
time
provided
for
the
prior
changes
was
adequate,
how
the
challenges
presented
by
the
Tier
4
standards
compares
to
those
presented
by
the
prior
engine
standards,
and
what
conclusions
can
be
drawn
from
this
past
practice
with
respect
to
the
lead
time
needed
by
equipment
manufacturers
under
the
Tier
4
program.
This
memorandum
documents
these
visits
and
meetings
with
representative
equipment
manufacturers
and
describes
our
evaluation
of
the
information
learned
from
these
meetings.

The
nonroad
diesel
Tier
4
program
starts
in
2008.
The
final
engine
emissions
standards
phase­
in
from
2011
to
2015.
The
current
program
affords
both
engine
and
equipment
manufacturers
four
years
or
more
lead
time
to
implement
control
technology.
In
addition
the
Averaging,
Banking,
and
Trading
(
ABT)
program
for
engine
manufacturers
provides
the
ability
to
generate
additional
lead
time
for
the
engine
manufacturer,
and
thereby
the
equipment
manufacturer.
Equipment
manufacturers
also
have
the
ability
to
delay
the
use
of
the
Tier
4
engines
for
a
specified
amount
of
equipment,
under
the
Transition
Program
for
Equipment
Manufacturers
(
TPEM)
to
facilitate
the
transition
to
new
emissions
standards.

After
careful
study,
as
discussed
below,
EPA
believes
that
requiring
equipment
manufacturers
to
begin
using
Tier
4
engines
on
the
same
schedule
that
engine
manufacturers
are
required
to
produce
them
provides
lead
time
that
is
generally
adequate
for
equipment
manufacturers,
across
the
entire
industry
and
across
the
breadth
of
equipment
applications.
At
the
same
time,
there
are
likely
to
be
1Some
manufacturers,
such
as
John
Deere
and
Case
New
Holland,
are
vertically
integrated
(
using
their
own
engines)
for
some
product
lines
and
non­
vertically
integrated
(
externally
sourcing
the
engines
for
their
equipment)
for
other
product
lines.

2Our
meetings
with
companies
like
Sweepster
and
Eagle
Crusher
that
have
a
smaller
percentage
of
the
land­
based,
nonroad
diesel
market
based
on
sales
volume
was
a
follow­
up
to
our
Small
Business
Regulatory
Enforcement
and
Fairness
Act
(
SBREFA)
panel
effort.

2
a
variety
of
narrow
situations
where
a
limited
amount
of
additional
lead
time
for
the
equipment
manufacturer
would
be
appropriate.
These
situations
are
most
likely
to
occur
in
the
first
few
model
years
of
Tier
4
engines
in
a
power
category.
This
need
for
targeted
additional
lead
time
is
not
limited
to
any
one
segment
of
the
industry,
or
general
size
of
engine
or
type
of
application.
The
variety
of
equipment
maker
flexibilities
provided
under
the
TPEM
program
provide
a
reasonable
and
targeted
safety
valve
to
deal
with
the
narrow
situations
where
additional
lead
time
is
likely
to
be
required.
Requiring
equipment
manufacturers
to
use
Tier
4
engines
on
the
same
schedule
that
applies
to
the
engine
manufacturers,
in
the
context
of
the
TPEM
program
in
the
final
rule,
does
not
present
any
type
of
across­
the­
board
or
specific
lead
time
problem
necessitating
additional
equipment
manufacturer
lead
time,
either
through
direct
lead
time
extensions
or
through
a
significant
expansion
of
equipment
manufacturer
flexibilities.

We
base
these
conclusions
largely
on
three
factors:
a)
our
investigation
and
understanding
of
the
engineering
process
by
which
engine
makers
and
equipment
manufacturers
bring
new
products
to
market;
b)
the
specific
engineering
challenges
which
equipment
manufacturers
will
address
in
complying
with
the
Tier
4
rule;
and
c)
past
practice
of
equipment
manufacturers
under
previous
rules
for
nonroad
equipment.
We
discuss
each
of
these
points
below.

A.
The
Equipment
Manufacturer
 
Engine
Supplier
Relationship
We
visited
a
number
of
nonroad
equipment
manufacturers
over
the
last
three
years
in
order
to
understand
their
development
and
production
processes
with
regard
to
the
time
they
need
to
produce
equipment
with
engines
meeting
new
nonroad
engine
emission
standards.
These
manufacturers
ranged
from
those
that
manufacture
their
own
engines
for
their
equipment
to
those
who
rely
on
engine
suppliers;
that
is,
both
vertically
and
non­
vertically
integrated
equipment
manufacturers.
1
(
Many
equipment
manufacturers
choose
to
obtain
powertrains,
or
powertrain
components,
through
external
vendors.)
We
visited
small
manufacturers
(
e.
g.,
Eagle
Crusher
Company
­
sales
<
100
per
year)
2,
medium
size
manufacturers
(
e.
g.,
Vermeer
and
Charles
Machine
Works
~
5,000
per
year),
and
the
largest
manufacturers
(
e.
g.,
Caterpillar,
John
Deere
and
Ingersoll­
Rand).
Many
of
these
companies
sell
their
products
in
both
domestic
and
overseas
markets.
The
visits
to
these
equipment
manufacturers
included
site
visits,
as
well
as
subsequent
conference
calls
for
those
manufacturers
interested
in
additional
dialogue.
The
site
visits
and
meetings
occurred
on
the
dates
listed
below.
This
is
not
meant
to
be
an
all­
inclusive
list;
however,
it
does
provide
an
overview
of
the
outreach
effort
undertaken
by
EPA
staff
to
gather
additional
data
from
the
nonroad
diesel
equipment
manufacturing
industry.
3

Case
New
Holland
­
October
9,
2001;
November
1,
2001;
October
23,
2002;
August
12,
2003

Caterpillar
­
July
30
and
July
31,
2002;
October
16,
2002;
October
21,
2003

Charles
Machine
Works
­
August
15,
2002

Eagle­
Crusher
­
August
14,
2003

Ingersoll­
Rand
­
July
9,
2002;
September
29,
2003;
October
24,
2003

John
Deere
­
April
3,
2002

Sweepster
­
November
12,
2002

Vermeer
­
August
13,
2002
We
specifically
discussed
their
experience
with
previous
new
equipment
introductions
related
to
new
emission
standards
(
i.
e.
Tier
1,
Tier
2,
and
early
Tier
3
product
design
plans).
In
general,
we
learned
that
18
to
24
months
is
a
representative
period
for
most
new
equipment
development.
Some
applications
may
differ.
Equipment
manufacturers
typically
use
this
time
for
engine
integration
and
equipment
feature
enhancement
as
well
as
prototype
development
and
durability
testing.

The
design
and
new
product
introduction
processes
were
similar
among
most
of
the
companies.
The
smallest
manufacturers
deviated
most
significantly
with
shorter
development
times
and
fewer
interactions
with
their
engine
suppliers
prior
to
new
engine
introductions.
For
the
medium
size
and
larger
manufacturers,
concurrent
engineering
programs
between
the
engine
supplier
and
the
equipment
manufacturer
were
more
typical.
This
means
that
the
new
equipment
design
process
occurred
simultaneous
to
the
new
engine
development
process
(
i.
e.
the
new
equipment
design
process
started
before
the
new
engine
was
released
as
a
product).
As
engine
updates
occurred
that
would
impact
equipment
designs,
equipment
manufacturers
were
typically
made
aware
of
the
update.
While
the
communication
and
process
are
not
perfect,
engine
suppliers
have
a
vested
interest
in
ensuring
that
changes
in
engine
designs
or
specifications
do
not
have
a
significant
adverse
impact
on
equipment
manufacturer
product
planning
and
subsequent
sales.
It
is
in
both
parties'
paramount
interest
to
get
complying
products
to
the
ultimate
market
in
a
timely
manner.
This
process
was
similar
for
both
vertically
integrated
companies
(
i.
e.,
companies
that
manufacture
both
engines
and
equipment)
and
non­
vertically
integrated
equipment
companies
(
i.
e.,
those
companies
that
buy
engines
from
an
external
engine
supplier).
We
saw
little
evidence
that
engine
suppliers
treat
the
engine
customers
(
equipment
manufacturers)
differently
if
they
are
external
or
internal
customers.
If
anything,
the
implication
was
that
external
customers
not
being
captive
to
a
single
in­
house
engine
supplier,
have
additional
leverage,
as
they
could
switch
to
an
alternative
engine
supplier
should
they
be
dissatisfied
with
the
products
or
support
of
the
engine
supplier.
It
is
our
expectation
that
given
the
market
place
pressures
that
exist
to
maintain
a
customer
base
and
given
the
diversity
of
engine
suppliers
 
in
each
power
range
there
are
at
a
minimum,
two
to
three
alternative
engine
suppliers
­
it
is
likely
that
market
mechanisms
will
continue
to
serve
as
a
driver
for
providing
engines
and
engine
related
information
to
equipment
manufacturer
customers
with
adequate
lead
time.

The
experience
of
both
vertically
integrated
and
non­
vertically
integrated
equipment
manufacturers
during
the
Tier
2
engine
introductions
were
similar.
Equipment
manufacturers,
in
general,
received
specific
descriptions
of
new
product
intent
engines
18
to
24
months
(
or
longer)
3Engine
manufacturer
new
engine
development
processes
can
last
from
18
months
to
four
years
depending
on
the
amount
of
new
content
in
the
engine
design.

4Little
information
is
available
about
the
soon­
to­
be
implemented
Tier
3
design
process.
As
explained
in
the
following
section,
however,
late
term
engine
design
changes
are
less
likely
(
or
at
least
no
more
likely)
to
occur
in
the
Tier
4
design
cycle
than
in
the
Tier
2
cycle.
Equipment
manufacturers
also
generally
strive
for
design
improvements
leading
to
faster
cycle
times,
improved
torque
rise,
and
smaller
packages
with
greater
power
(
e.
g.
higher
power
density).
Given
the
range
of
technologies
expected
to
be
used
with
Tier
4
engines,
it
is
likely
the
impact
on
engine
package
size
will
be
optimized
based
on
these
design
goals.

5We
note
that
there
was
consensus
among
many
of
the
equipment
manufacturers
during
our
visits
that
diesel
equipment
retains
strong
customer
allegiance
notwithstanding
that
many
applications
are
priced
higher
than
potentially
substitutable
gasoline­
powered
applications.
Manufacturers
attributed
this
allegiance
to
a
number
of
factors
including,
better
diesel
engine
performance
and
lower
diesel
engine
operating
costs
due
to
superior
fuel
economy.
There
was
no
indication
that
the
market
relationship
between
diesel
and
gasoline
engines
warrant
TPEM
program
changes.

4
prior
to
the
new
engine
introduction
dates
consistent
with
the
new
engine
design
process
and
the
equipment
manufacturers'
needs
for
product
design.
3
The
information,
which
sometimes
included
complete
engines
for
installation
and
testing,
was
sufficient
for
new
equipment
to
be
designed
considering
the
expected
introduction
of
a
new
engine.
Smaller
equipment
manufacturers
that
tend
to
purchase
their
engines
through
a
distributor
or
through
smaller
volume
contracts
with
the
engine
manufacturer
have
less
direct
interaction
during
the
engine
design
process.
Some
may
be
less
impacted
by
late
engine
design
changes.
The
small
businesses
we
met
with
typically
have
shorter
design
cycles
and
appear
to
have
less
need
for
information
on
new
engines
18
to
24
months
prior
to
production.
While
this
may
not
be
indicative
of
all
small
manufacturers,
in
the
case
of
Eagle
Crusher,
engines
are
purchased
one
at
a
time
from
three
different
suppliers.
This
provides
their
customers
with
the
option
to
use
consistent
engine
products
for
various
pieces
of
equipment.
Eagle
Crusher
accommodates
differences
in
engine
designs
in
each
piece
of
equipment
built.
Our
meeting
with
Sweepster
showed
a
similar
pattern
,
three
engine
choices
were
offered.
Sweepster
purchased
engines
from
the
local
or
regional
engine
distributor.
Further,
given
the
transition
provisions
provided
to
small
volume
manufacturers,
which
can
provide
additional
lead
time
of
up
to
seven
years,
we
believe
the
transitional
program
can
provide
substantial
additional
redesign
lead
time
for
these
manufacturers.

Equipment
manufacturers
did
indicate
a
need
to
retain
the
equipment
flexibility
provisions.
They
highlighted
the
need
to
address
those
situations
where
engine
designs
are
not
being
finalized
in
a
timely
manner
 
"
late
design
changes."
Many
of
these
concerns
originated
with
the
Tier
2
design
process.
4
They
also
indicated
that
additional
lead
time
was
needed
where
resource
constraints
prevent
completion
of
certain
applications,
or
where
for
business
reason
it
makes
sense
for
equipment
manufacturers
to
delay
completion
of
small
volume
families
in
order
to
complete
larger
volume
equipment
applications.
5
6For
naturally
aspirated
engines,
charge
air
cooling
is
not
used.

5
B.
Comparison
of
Design
Challenges
Faced
by
Equipment
Manufacturers
in
Earlier
Tiers
with
Tier
4
Design
Challenges
The
predominant
technologies
applied
to
meet
the
Tier
2
emission
standards
were
intake
charge
air
coolers
(
aftercoolers
or
intercoolers)
and
/
or
injection
timing
retard6.
Charge
air
coolers
cool
the
incoming
fresh
air
entering
an
engine
increasing
the
density
of
the
air
and
reducing
its
temperature.
The
higher
air
density
increases
the
amount
of
oxygen
available
and
reduces
PM
emissions.
The
lower
air
temperature
reduces
NOx
emissions.
Injection
timing
retard
reduces
NOx
emissions
by
reducing
the
combustion
rate
and
lowering
peak
cylinder
temperatures.
Both
charge
air
cooling
and
injection
timing
retard
impact
equipment
designs.

A
charge
air
cooler
is
a
new
component
which
must
be
packaged
within
the
nonroad
equipment
or
on
the
engine
(
depending
on
whether
it
is
an
air­
to­
air
cooler
or
a
jacket
water
cooler).
In
either
case,
the
engine­
mounted
fan
flow
generally
must
be
increased
to
account
for
the
heat
transfer
in
the
charge
air
cooler.
Thus,
a
larger
fan
and
potentially
larger
radiator
(
in
the
case
of
the
jacket
water
cooler)
must
be
accommodated
in
the
new
equipment
design.
We
understand
that
this
aspect
of
the
new
engine
design
was
determined
early
in
the
design
process
and
remained
relatively
unchanged
through
the
new
product
introduction.
Thus,
although
the
charge
air
cooler
significantly
impacted
equipment
designs,
the
changes
were
anticipated
early
in
the
design
process.
This
allowed
equipment
design
changes
to
be
made
in
typical
timeframes
and
in
the
normal
concurrent
manner.

Changes
in
injection
timing
retard
have
relatively
little
impact
(
within
some
limits
at
the
extreme)
on
diesel
engine
design.
Such
changes
can,
however,
significantly
increase
the
amount
of
heat
rejected
into
the
engine
coolant
leading
to
a
need
for
a
larger
radiator
and
fan
on
the
equipment
in
which
it
is
installed.
It
is
our
understanding
that
for
Tier
2,
engine
manufacturers
continued
to
optimize
the
injection
timing
retard
used
in
nonroad
engines
until
relatively
late
in
the
engine
development
process.
This
was
done
to
provide
an
optimum
solution
regarding
cost
and
performance
for
their
end
customers,
but
with
the
consequence
of
changing
the
heat
rejection
and
thus
necessitating
changes
in
radiator
size
for
some
equipment.
Most
medium
and
large
equipment
manufacturers
we
visited,
including
both
vertically
integrated
and
non­
integrated
manufacturers,
noted
the
need
to
make
unanticipated
equipment
design
changes
late
in
the
design
process
due
to
such
late
stage
Tier
2
engine
optimization.
For
the
smallest
equipment
manufacturers,
these
issues
seemed
to
be
less
of
a
concern.
In
the
case
of
Eagle
Crusher,
diesel
engines
are
bought
one
at
a
time
as
new
products
are
built
and
changes
to
accommodate
new
engines
were
made
after
receiving
the
new
engine.
Each
of
these
manufacturers
have
been
able
to
continue
to
provide
product
to
their
customers.
As
discussed
in
the
following
section,
some
have
made
use
of
the
flexibility
provisions
and
others
have
not.

Despite
the
challenges
discussed
above,
all
of
the
equipment
manufacturers
have
provided
product
to
their
customers.
As
discussed
in
the
following
section,
some
have
made
use
of
the
6
flexibility
provisions
and
others
have
not.
There
have
only
been
a
limited
number
of
requests
for
economic
hardship
relief
to
deal
with
the
impact
of
the
Tier
2
program.

We
should
be
clear
that
the
design
experience
described
here
is
meant
to
be
an
illustrative
generic
description
of
common
experiences
described
to
EPA
in
our
meetings.
This
discussion
is
not
an
attempt
to
capture
every
aspect
of
each
company's
Tier
2
redesign
experience.
However
it
does
make
clear
the
nature
of
the
redesign
process
and
the
ways
in
which
changes
to
engine
design,
especially
changes
late
in
the
design
process,
may
or
may
not
impact
the
redesign
of
new
equipment.
Based
on
this
experience,
changes
to
engine
designs
can
be
broadly
grouped
into
four
categories:
1)
engine
design
changes
that
significantly
impact
engine
companies
and
equipment
companies
(
e.
g.,
changes
to
the
engine
block),
2)
engine
design
changes
that
significantly
impact
engine
companies
but
not
equipment
companies
(
e.
g.,
changes
to
the
piston
bowl
that
necessitate
new
tooling
for
an
engine
company
but
have
no
impact
externally
on
the
engine);
3)
engine
design
changes
that
have
no
impact
on
engine
companies
but
can
impact
equipment
companies
(
e.
g.,
changing
timing
retard
is
simple
for
an
engine
manufacturer
but
the
resulting
increase
in
heat
rejection
can
impact
equipment
designs);
and
lastly
4)
engine
design
changes
that
have
little
impact
on
either
engine
or
equipment
companies
(
e.
g.,
changes
to
catalyst
formulations
that
do
not
change
catalyst
size
or
shape).

In
evaluating
the
appropriate
lead
time
for
the
Tier
4
program
from
an
equipment
manufacturer
perspective,
we
are
primarily
concerned
with
new
Tier
4
technologies
that
might
fit
into
category
three
above,
engine
design
changes
that
have
little
impact
on
engine
manufacturers
but
can
have
a
significant
impact
on
equipment
redesign.
In
the
context
of
equipment
redesign,
category
one
types
of
changes
that
have
a
significant
impact
on
engine
manufacturers
must
be
anticipated
by
the
engine
manufacturer
years
prior
to
production
and
therefore
in
the
lead
time
provided
can
be
adequately
conveyed
to
equipment
manufacturers
prior
to
the
beginning
of
their
redesign
process.
In
the
context
of
equipment
redesign,
category
two
and
four
types
of
engine
changes
that
have
little
impact
on
equipment
redesign
do
not
present
lead
time
problems
for
equipment
manufacturers.

We
can
compare
the
experience
in
Tier
2
to
the
technical
solutions
expected
for
Tier
4,
and
how
they
may
impact
equipment
designs.
In
general,
we
expect
the
concurrent
design
process
to
work
well.
We
expect
that
relatively
early
in
the
design
process,
engine
manufacturers
will
be
able
to
define
the
size
and
characteristics
of
the
emission
control
technologies
(
e.
g.,
NOx
adsorbers
and
CDPFs),
based
on
the
same
systems
that
will
be
in
production
for
on­
highway
engines.
The
equipment
manufacturers
will
concurrently
redesign
their
equipment
to
accommodate
these
new
technologies,
including
designing
mounting
and
supporting
the
catalytic
equipment
similar
to
current
exhaust
muffler
systems.
We
do
not
expect
that
the
size,
shape
or
weight
of
these
technologies
will
need
to
change
significantly
in
the
final
24
months
prior
to
engine
introduction.
Thus,
equipment
manufacturers
will
have
adequate
lead
time
to
redesign
equipment
to
accept
these
new
systems.

Moreover,
we
expect
that
the
issue
of
late
design
changes
by
engine
makers
will
not
play
as
large
a
role
in
equipment
redesign
as
in
Tier
2.
In
the
earlier
rule,
as
noted,
late
stage
injection
timing
optimizations
resulted
in
equipment
redesign
issues
in
some
cases
due
to
the
need
to
alter
radiator
design.
We
do
not
see
an
analogous
problem
for
Tier
4.
Thus
we
do
not
forsee
any
category
three
7Of
course,
if
a
breakthrough
in
catalyst
technology
were
to
occur
that
allowed
the
catalyst
size
to
be
reduced
substantially
an
equipment
manufacturer
might
well
choose
to
make
a
late
minute
redesign
of
equipment
to
accommodate
the
smaller
or
cheaper
catalyst.

7
types
of
engine
changes.
Although
we
expect
catalyst
manufacturers
to
continuously
improve
the
catalyst
formulations,
and
further
expect
that
the
catalytic
coatings
on
the
products
may
change
as
little
as
six
months
prior
to
production,
we
do
not
believe
that
these
changes
will
impact
equipment
designs.
This
is
because
the
changes
in
catalyst
chemistry
will
not
cause
a
change
in
catalyst
size
or
in
other
characteristics
that
would
impact
equipment
design.
7
C.
Historic
Use
of
Tier
2/
3
Flexibility
Provisions
We
also
studied
the
existing
use
of
Tier
2/
3
flexibilities.
As
shown
in
the
following
Table,
it
is
apparent
that
to
date,
the
use
of
flexibilities
suggests
that
the
Tier
2
rule
provides
adequate
leadtime
for
equipment
manufacturers.

In
an
effort
to
gauge
the
level
of
engines
being
exempted
under
the
current
flexibility
program,
we
analyzed
the
annual
reports
required
to
be
submitted
by
engine
manufacturers
to
EPA.
Table
1
presents
a
summary
of
the
percent
of
engines
being
exempted
each
year
for
the
power
categories
above
50
horsepower
where
the
Tier
2/
Tier
3
flexibility
program
has
taken
effect.
(
Although
the
flexibility
program
has
been
available
for
engines
below
50
horsepower
since
1999
or
2000,
less
than
0.5%
of
these
engines
have
been
exempted
under
the
flexibility
provisions.)
The
reports
submitted
to
EPA
contain
confidential
sales
information
and
therefore
are
summarized
in
aggregate.
The
reports
have
been
submitted
by
nine
engine
manufacturers
including
Caterpillar,
Case
New
Holland,
Cummins,
Deutz,
John
Deere,
Komatsu,
Lister­
Petter,
Nissan,
and
Perkins.
The
analysis
shows
that
when
the
Tier
2
standards
have
taken
effect
in
a
given
power
category,
anywhere
from
8
to
30
percent
of
engines
are
exempted
in
the
first
year
of
the
new
standards.
For
those
categories
where
multiple
years
of
information
are
available,
the
number
of
engines
exempted
in
subsequent
years
has
decreased
significantly.
This
gives
some
indication
of
the
nature
of
the
intended
usefulness
of
the
flexibility
program
in
serving
as
a
transitional
aid
for
manufacturers
to
shift
to
the
cleaner
emission
standards.
The
precipitous
drop
in
flexibility
program
usage
evidenced
in
the
300
to
600
horsepower
category
seems
to
be
clear
evidence
that
once
manufacturers
are
able
to
expend
their
engineering
resources
with
targeted
transition
efforts
over
the
first
year
of
the
program,
the
need
for
on­
going
flexibilities
is
greatly
reduced.

Table
1
Percent
of
Engines
Exempted
Under
the
Current
TPEM
Program
8The
technical
Hardship
Applications
and
Small
Volume
Allowance
flexibilities
do
not
allow
a
manufacturer
to
change
once
the
initial
determination
is
made.

8
Calendar
Year
Power
Category
100

hp<
175
175

hp<
300
300

hp<
600
600

hp<
750
2001
Not
Applicable
Not
Applicable
22%
Not
Applicable
2002
Not
Applicable
Not
Applicable
3%
8%

2003
16%
29%
1%
3%

As
shown
in
Table
1,
the
TPEM
program
has
been
used
in
a
number
of
categories,
with
minor
use
of
the
program
in
some
categories
and
more
extensive
use
in
others.
Although
equipment
manufacturers
are
clearly
making
use
of
the
provision,
the
data
provided
to
date
indicates
that
across
the
industry
the
flexibilities
are
being
consumed
at
a
rate
which
indicates
there
is
no
widespread
problem
with
the
available
lead
time.
Put
another
way,
we
see
no
indication
that
the
nonroad
diesel
equipment
industry
will
either
need
to
or
will
exhaust
their
available
offsets
prior
to
the
start
of
Tier
4.

This
set
of
data
and
the
analysis
provided
above
suggests
that
a
major
increase
in
lead
time
for
equipment
makers
is
not
needed
for
the
Tier
4
program,
nor
is
there
an
indication
of
any
industrywide
problem.
Vertically
and
non­
vertically
integrated
equipment
manufacturers
do
not
appear
to
be
differently
situated
from
the
standpoint
of
needed
lead
time.

We
have
provided
a
number
of
flexibilities
in
our
Tier
4
rulemaking
that
give
engine
and
equipment
manufacturers
tools
which
they
can
use
to
tailor
their
concurrent
engineering
processes
to
provide
adequate
lead
time
in
those
narrow
instances
where
additional
lead
time
is
needed.
These
are
the
percent
of
production
allowance,
small
volume
allowance,
technical
hardship
allowance
(
case­
by­
case),
and
economic
hardship
relief
provisions.
We
have
also
provided
an
incentive
program
involving
early
production
of
equipment
using
Tier
4
engines.
It
can
be
used
by
equipment
manufacturers
to
generate
further
flexibility
allowances,
and
encourages
the
early
use
of
cleaner
technology
engines.
We
term
these
various
provisions
"
flexibilities"
because,
in
most
instances8,
they
leave
equipment
manufacturers
significant
leeway
to
choose
the
applications
needing
extra
lead
time.
Equipment
manufacturers
will
be
able
to
target
their
redesign
strategies
so
that
higher
volume,
lower
cost
models
can
be
accommodated
earlier
in
the
process.
Other
provisions
in
the
Tier
4
rule
which
provide
additional
flexibility
and
lead
time
are
the
NOx
phase­
in
and
broader
horsepower
categories.
The
ABT
program,
although
a
program
for
engine
manufacturers,
also
results
in
additional
lead
time
for
equipment
manufacturers
because
a
result
of
the
program
is
that
there
are
fewer
engines
to
redesign.

Based
on
the
evaluation
presented
above,
the
basic
lead
time
provided
and
the
various
9
flexibilities
in
the
final
rule
provide
equipment
manufacturers
with
sufficient
and
appropriate
lead
time
to
meet
the
requirements
of
the
Tier
4
program.
