A year on the brink

It’s rare that a current political controversy directly affects your near-term business decisions. The uproar over the Environmental Protection Agency’s mandate for October 2002 emissions reductions is an exception. Should you modify your equipment strategies for 2002 based on that mandate? The answer depends on many factors, including whether EPA will truly enforce the deadline.

On the surface, there doesn’t seem to be much to discuss. The Oct. 1 deadline for production of new engines is a key term of the settlement between EPA and the engine manufacturers struck in October 1998 and confirmed by a federal judge in July 1999. Last year, EPA reaffirmed its intention to enforce the terms of the consent decree. Only one engine supplier says it won’t make the deadline. End of discussion, right? Maybe. But just because people say the deadline is set in stone doesn’t mean it really is.

While the Bush administration wants to help big business, it’s just as eager to avoid appearing soft on the environment. You can bet that if EPA grants any relief, it will do so quietly and, probably, at the last possible moment. Relief might come as a “reinterpretation” of the terms of the consent decree, perhaps in a form unrecognizable as relief to anyone other than an automotive engineer. Or it might come as unacknowledged relaxed enforcement.

Let’s assume, however, that EPA’s hands are tied, either politically or legally, and that enforcement will be swift and certain. That’s not necessarily the end of the story. First of all, the settlement agreements between EPA and the engine makers are written in a language only vaguely resembling English. Might there be a loophole or two that will allow some engine makers to continue selling existing engines without significant penalties? If there are, you can bet that no one will discuss them, at least not publicly. Remember, it’s not just politics we’re dealing with here. It’s also the sales and marketing strategies of vigorous competitors.

Congressional intervention also is possible. Forget what you learned in high school about how a bill becomes a law. The process is often quite different for legislation that could be seen as anti-environment or anti-safety.

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Don’t be surprised if one day this summer the chairman of an appropriations subcommittee presents his colleagues with a funding bill that contains a sentence like this: “None of the funds provided in this act shall be used to enforce the consent decree signed Oct. 22, 1998, by EPA and manufacturers of heavy-duty diesel engines insofar as it requires engines manufactured on or after Oct. 1, 2002, to meet more stringent emissions standards.” It takes enormous political power to kill such a measure, at least until House and Senate leaders negotiate on a final version of the bill. If the provision survives, the EPA deadline instantly becomes null and void through Sept. 30, 2003, the end of the government’s next fiscal year.

That’s precisely the tactic that forced the Federal Motor Carrier Safety Administration to shelve its hours-of-service proposal in 2000.

Apparently, others see a way out as well. “Everyone is talking about the October emissions deadlines, but no one is behaving as if it’s real,” says Donald Broughton, transportation analyst with A.G. Edwards. Broughton argues that if large carriers truly believed they were facing, for example, a 4 percent reduction in fuel economy, they would already be aggressively replacing their older trucks. That doesn’t seem to be happening, he says.

Where does that leave you? It’s safest to assume the EPA deadline is firm. But depending on your situation, that could mean choosing between technology you may not be comfortable with and either the increased capital burden of accelerating truck buying or the increased maintenance burden of holding your equipment longer. You may just have to play a hunch. In the words of Dirty Harry Callahan: Do you feel lucky? Well, do ya, punk?