(Washington, DC - February 28, 2011) The U.S. Environmental Protection Agency (EPA) and the U.S. Justice Department announced today that PowerTrain, Inc. will pay a civil penalty of $2 million to resolve EPA's claims that the company imported and sold nonroad engines and equipment that were not covered by a certificate of conformity, and in most cases could not be certified because they exceeded emissions standards under the Clean Air Act. PowerTrain will also implement projects to offset the excess emissions caused by the use of these engines and will ensure that future imports meet Clean Air Act requirements, under the terms of the settlement filed in federal court.

On this page:

• Overview of Company
• Violations
• Injunctive Relief
• Health Effects and Environmental Effects
• Civil Penalty
• Comment Period
• Contact

Overview of Company

PowerTrain, Inc., Wood Sales Company, Inc., and Tool Mart, Inc. (collectively referred to as PowerTrain in this settlement), are all based in Golden, Miss. Between 2002 and 2008, PowerTrain imported and sold nonroad engines and equipment containing nonroad engines nationwide. PowerTrain, Inc. imported the engines and sold them to Wood Sales Company, Inc. Wood Sales Company, Inc. then sold the engines to Tool Mart, Inc. where they in turn sold the engines to businesses and individuals primarily through its web site.

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Violations

This is an action under Sections 203 and 213 of the Clean Air Act (CAA), 42 U.S.C. §§ 7522 and 7547, and the regulations promulgated thereunder at 40 C.F.R. Part 90 (Nonroad Regulations). The Nonroad Regulations are designed to reduce air pollution from nonroad equipment and engines.

Between 2002 and 2008, PowerTrain allegedly imported at least 79,830 nonroad engines or pieces of equipment containing nonroad engines that were not covered by certificates of conformity, and in most cases, could not be certified because they exceeded the emission standards.

Additionally, some of the engines allegedly bore EPA emission information labels that did not meet the regulatory requirements. Although PowerTrain held EPA-issued certificates of conformity for 2002 through 2008 model year engines, PowerTrain allegedly imported engines that did not conform to the certified configurations because they were different models, had different power ratings, had different emissions-related components, and/or were made by a different manufacturer than the certified engines.

On its face, a certificate of conformity covers only those nonroad engines that conform to the description of the engines provided in the application for certification. In addition, PowerTrain obtained certificates of conformity for a 9 horsepower engine for model years 2007 and 2008. These certificates were subsequently voided by EPA because the test engine failed to meet emission standards when EPA retested it. Thus, these 9 horsepower engines imported by PowerTrain were not covered by a certificate of conformity because the certificate was not valid. Finally, the Complaint alleged that PowerTrain did not provide a two-year warranty for emissions-related components, as required by law.

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Injunctive Relief

The settlement requires PowerTrain to:

• Export or Destroy Engines in Inventory: PowerTrain agrees to destroy or export all of the noncompliant engines in its inventory that are not covered by valid certificates of conformity.

• Establish and Implement a Corporate Compliance Plan: PowerTrain will implement a program to ensure that the engines and equipment containing engines it imports in the future will comply with regulatory requirements.

The Corporate Compliance Plan includes a Pre-Import Program that requires PowerTrain to have contractual provisions with all engine suppliers to ensure that:

• The engines are covered by a certificate of conformity
• A sample engine from each model is tested prior to delivery or shipment of a new Engine Model to the U.S.
• The engines are labeled properly
• The engines are covered by a complying emissions warranty
• The engines are inspected prior to shipment and delivery

The Corporate Compliance Plan also includes a Post-Importation Compliance Verification Program where, on a semi-annual basis, PowerTrain must inspect at least one sample of each engine model to confirm that the sample is built in conformity with the emission-related design specifications.

If a nonconformity is discovered, PowerTrain must perform emission testing. If the emission testing indicates emissions are above applicable standards, PowerTrain must notify EPA and the supplier of the engines, cease sales of the engines and remediate the nonconformity (including exportation).

EPA, upon petition of PowerTrain and a showing that the nonconformity is limited to a subset of the engines, may allow PowerTrain to resume sales of the engines. PowerTrain, on a semi-annual basis, must submit compliance reports demonstrating compliance with the Corporate Compliance Plan.

• Implement Emissions Offset Programs: PowerTrain is also required to offset 152 tons of hydrocarbons (HC) plus nitrogen oxides (NO_x) and 4533 tons of carbon monoxide (CO) within five years from the effective date of the Consent Decree.

PowerTrain will implement a project that results in the replacement or upgrading of old, higher polluting, and less energy efficient wood-burning appliances with cleaner burning, more energy efficient heating appliances. At its option, PowerTrain may also implement a Catalyst Emission Offset Project that would involve installation of catalysts on engines where there is no regulatory requirement to have a catalyst, to reduce emissions of CO and HC+NO_x. PowerTrain is required to submit reports on the conduct of the Emissions Offset Projects.

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Health Effects and Environmental Effects

EPA estimates that the PowerTrain engines that were sold to the public caused excess emissions of 152 tons of HC+NO_x, which contribute to the formation of ground-level ozone, and 4,533 tons of CO, over the useful life of the subject engines.

• Nitrogen Oxides -NO_x can cause or contribute to a variety of health problems and adverse environmental impacts, such as ground-level ozone, acid rain, global warming, water quality deterioration, and visual impairment. Affected populations include children and people with lung diseases such as asthma. Exposure to these conditions can cause damage to lung tissue for people who work or exercise outside.

• Ground-level ozone - Ground-level ozone is formed by reactions involving HC and NOx in the presence of sunlight. Breathing ozone can trigger a variety of health problems, including chest pain, coughing, throat irritation, and congestion. It also can worsen bronchitis, emphysema, and asthma. Ground-level ozone damages vegetation and ecosystems as well. In the United States, ozone is responsible for an estimated $500 million in reduced crop production each year.

• Carbon Monoxide (CO) - CO is a colorless, odorless gas that is formed when carbon in fuel is not burned completely. It is a component of motor vehicle exhaust, which contributes about 56 percent of all carbon monoxide emissions nationwide. Carbon monoxide can cause harmful health effects by reducing oxygen delivery to the body's organs (like the heart and brain) and tissues.

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Civil Penalty

PowerTrain will pay a $2 million penalty.

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Comment Period

The proposed settlement, lodged in the U.S. District Court for the District of Columbia, is subject to a 30-day public comment period and final court approval. Information on submitting comments is available at the Department of Justice website.

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For more information, contact:

Marcia S. Ginley
U.S. Environmental Protection Agency
OECA/AED/Western Field Office (8MSU)
1595 Wynkoop Street
Denver, CO 80202 - 1129
ginley.marcia@epa.gov
(303) 312-7156

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