1054.690—What bond requirements apply for certified engines?
(a)
Before introducing certified engines into U.S. commerce, you must post a bond to cover any potential compliance or enforcement actions under the Clean Air Act unless you demonstrate to us in your application for certification that you are able to meet any potential compliance- or enforcement-related obligations, as described in this section. See paragraph (j) of this section for the requirements related to importing engines that have been certified by someone else. Note that you might also post bond under this section to meet your obligations under § 1054.120.
(b)
The bonding requirements apply if you do not have long-term assets in the United States meeting any of the following thresholds:
(1)
A threshold of $3 million applies if you have been a certificate holder in each of the preceding ten years without failing a test conducted by EPA officials or having been found by EPA to be noncompliant under applicable regulations.
(3)
A threshold of $10 million applies if you do not qualify for the smaller bond thresholds in paragraph (b)(1) or (2) of this section.
(c)
For the purpose of establishing your level of long-term assets under paragraph (b) of this section, include the values from your most recent balance sheet for buildings, land, and fixed equipment, but subtract depreciation and related long-term liabilities (such as a mortgage). If you have sufficient long-term assets to avoid bond payments under this section, you must identify the location of these assets in your application for certification.
(d)
The minimum value of the bond is $500,000. A higher bond value may apply based on the per-engine bond values shown in Table 1 to this section and on the U.S.-directed production volume from each displacement grouping for the calendar model year. For example, if you have projected U.S.-directed production volumes of 10,000 engines with 180 cc displacement and 10,000 engines with 400 cc displacement in 2013, the appropriate bond amount is $750,000. Adjust the value of the bond as follows:
(1)
If your estimated or actual U.S.-directed production volume in any later year increases beyond the level appropriate for your current bond payment, you must post additional bond to reflect the increased volume within 90 days after you change your estimate or determine the actual production volume. You may not decrease your bond.
(2)
If you sell engines without aftertreatment components under the provisions of § 1054.610, you must increase the per-engine bond values for the current year by 20 percent.
| For engines with displacement falling in the following ranges . . . | The per-engine bond valueis . . . |
|---|---|
| Disp. < 225 cc | $25 |
| 225 ≤ Disp. < 740 cc | 50 |
| 740 ≤ Disp. ≤ 1,000 cc | 100 |
| Disp. > 1,000 cc | 200 |
(e)
The threshold identified in paragraph (b) of this section and the bond values identified in paragraph (d) of this section are in 2008 dollars. Adjust these values in 2010 and later calendar years by comparing the Consumer Price Index values published by the Bureau of Labor Statistics for the preceding June and June 2008 (see ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt ). Round calculated values for the thresholds and for total bond obligations to the nearest thousand dollars.
(f)
You may meet the bond requirements of this section by obtaining a bond from a third-party surety that is cited in the U.S. Department of Treasury Circular 570, “Companies Holding Certificates of Authority as Acceptable Sureties on Federal Bonds and as Acceptable Reinsuring Companies” (http://www.fms.treas.gov/c570/c570.html#certified ). You must maintain this bond for every year in which you sell certified engines. The surety agent remains responsible for obligations under the bond for two years after the bond is cancelled or expires without being replaced.
(g)
If you forfeit some or all of your bond in an enforcement action, you must post any appropriate bond for continuing sale within 90 days after you forfeit the bond amount.
(h)
You will forfeit the proceeds of the bond posted under this section if you need to satisfy any United States administrative settlement agreement, administrative final order, or judicial judgment against you arising from your violation of this chapter, or violation of 18 U.S.C. 1001, 42 U.S.C. 7413(c)(2), or other applicable provisions of the Clean Air Act.
(i)
If you are required to post a bond under this section, you must note that in your application for certification as described in § 1054.205. Your certification is conditioned on your compliance with this section. Your certificate is automatically suspended if you fail to comply with the requirements of this section. We may also revoke your certificate.
(j)
The following provisions apply if you import engines for resale when those engines have been certified by someone else (or equipment containing such engines):
(1)
You and the certificate holder are each responsible for compliance with the requirements of this part and the Clean Air Act. For example, we may require you to comply with the warranty requirements in § 1054.120.
(2)
You do not need to post bond if you or the certificate holder complies with the bond requirements of this section. You also do not need to post bond if the certificate holder complies with the asset requirements of this section and the repair-network provisions of § 1054.120(f)(4).