Manitowoc Crane has revealed that is holding discussions with the US Environmental Protection Agency (EPA), relating to its participation in the ‘Transition Program for Equipment Manufacturers’ between 2014 and 2017. During this period, it installed 1,420 non Tier 4 final engines for which it has already reserved $14.9 million in its 2021 accounts. But it is now facing statutory penalties under the Clean Air Act that could be as high as $174.0 million. However, it says that it will vigorously defend itself against the allegations of Noncompliance that would trigger such a large penalty.
The full statement from Manitowoc is as follows:
“In July 2017, the company received an Information Request from the United States Environmental Protection Agency (EPA) relating to the sales of cranes manufactured between January 1, 2014, and July 31, 2017, and the company’s related participation in the Transition Program for Equipment Manufacturers (TPEM). The TPEM program allowed equipment manufacturers to delay installing engines meeting Tier 4 final emission standards in their products, subject to certain allowances. The company has provided, and continues to provide, information to the EPA and the U.S. Department of Justice on the approximately 1,420 engines included in the company’s cranes relating to the TPEM program and other certification matters. As such, the Company is engaged in confidential discussions with the EPA and DOJ.
Based on management’s current assessment, the company recorded an additional charge of $13.9 million in the fourth quarter of 2021. As of December 31, 2021, the total recorded estimated liability in the company’s balance sheet is $14.9 million. Other than the foregoing, the company is unable to provide further meaningful quantification as to the final resolution of these matters.
However, the company calculated the statutory maximum penalties under the Clean Air Act to be approximately $174.0 million. The company believes it has strong legal and factual defences and will vigorously defend any allegations of noncompliance and the factors that could apply in the assessment of any fines and penalties. Final resolution of these matters may have a material impact on the Company’s financial condition, results of operations or cash flows.”
Last year Tadano faced similar noncompliance issues relating to errors made under the self-reporting scheme and ended up with a $40.5 million civil penalty. See: Environmental penalty for Tadano