Agency: U.S. Environmental Protection Agency (EPA)
Action: Notice of Proposed Rulemaking
Affected Model Years: 2027 and later
Comment Deadline: August 29, 2026
Virtual Hearings: July 29–30, 2026
Affected Regulation: 40 C.F.R. Parts 86, 1036, 1037, 1039, 1042, 1065, 1068

EPA's proposed rule addresses multiple regulatory parameters for model-year 2027 and later heavy-duty highway engines. The proposal is technically complex and covers several distinct regulatory areas:

EPA proposes changes to the regulatory useful-life periods for heavy-duty engines — the period over which manufacturers must demonstrate that engines comply with applicable emission standards. Changes to useful-life periods affect:

• The duration of manufacturer warranty obligations
• The period over which in-use compliance testing may be conducted
• The scope of recall and corrective action obligations if in-use engines are found to exceed standards

The proposal includes amendments to emissions-warranty periods — the period during which manufacturers must warrant that engines will conform to applicable emission standards. Extended warranty periods increase manufacturer exposure for:

• Warranty claims from fleet operators and end users
• Recall obligations for systematic non-conformance
• Potential civil penalty exposure for warranty-related violations

EPA proposes changes to compliance testing procedures, including modifications to test cycles, test fuel specifications, and measurement methodologies. Compliance testing changes affect:

• Certification costs and timelines for new engine families
• The comparability of test results across model years
• The basis for in-use compliance determinations

The proposal addresses emissions credit provisions under EPA's averaging, banking, and trading (ABT) program. Changes to credit provisions affect:

• The value and transferability of banked emissions credits
• Compliance flexibility for manufacturers with diverse engine portfolios
• The competitive dynamics between manufacturers with different technology strategies

EPA proposes changes to requirements governing selective-catalytic-reduction (SCR) systems and diesel-exhaust-fluid (DEF) inducement — the systems that reduce engine power or impose other operational restrictions when DEF is absent or depleted. Changes to inducement requirements affect:

• Engine performance and uptime for fleet operators
• DEF supply chain and logistics planning
• Maintenance obligations and downtime risk for construction and agricultural equipment

The proposal would make nonconformance penalties (NCPs) available to certain medium and heavy-duty engine manufacturers beginning with model year 2027. NCPs allow manufacturers to sell engines that do not fully conform to emission standards by paying a per-engine fee. The availability of NCPs:

• Provides a compliance pathway for manufacturers facing certification challenges
• Creates a cost-benefit calculation for manufacturers weighing NCP payment against technology investment
• May affect competitive dynamics if some manufacturers use NCPs while others achieve full certification

EPA expressly identifies the following as affected parties:

• Heavy-duty vehicle and engine manufacturers (OEMs)
• Medium-duty vehicle manufacturers
• Importers of heavy-duty vehicles and engines
• Parts manufacturers (aftermarket emissions-related components)
• Farm machinery manufacturers and importers
• Construction equipment manufacturers and importers
• Fleet operators (trucking, logistics, construction, agriculture)
• Equipment leasing companies

OEMs and engine manufacturers. The proposed changes to useful-life periods, warranty periods, and compliance testing will affect certification strategies for MY 2027 engine families. Manufacturers should model the cost implications of extended warranty obligations and assess whether NCP availability changes their technology investment calculus.

Importers of heavy-duty vehicles and engines. Importers must ensure that imported vehicles and engines comply with the revised standards as of MY 2027. Compliance certification, conformity of production testing, and warranty obligations apply to importers as well as domestic manufacturers.

Construction equipment companies. The proposal expressly covers construction equipment. Companies importing or distributing construction equipment in the U.S. market should assess the impact on product certification, DEF/SCR system requirements, and warranty reserves. Turkish construction equipment manufacturers with U.S. distribution should review the proposal carefully.

Fleet operators and leasing companies. Changes to DEF/SCR inducement requirements and warranty periods affect fleet maintenance planning, DEF supply logistics, and equipment procurement specifications. Purchase and leasing agreements should address emissions compliance obligations, software update responsibilities, and consequences of engine derating.

Contract drafting considerations. Equipment purchase and leasing contracts should clearly address:

• Emissions compliance certification — which party is responsible for ensuring the equipment meets applicable standards at delivery and throughout the useful life
• Software updates — responsibility for emissions-related software updates and calibration changes
• Warranty duration and scope — alignment with EPA warranty period requirements
• DEF/SCR maintenance — responsibility for DEF supply, system maintenance, and consequences of inducement events
• Nonconformance penalties — allocation of NCP costs if applicable
• Regulatory change — provisions addressing the effect of post-delivery regulatory changes on compliance obligations

Comment deadline: August 29, 2026. Comments must be submitted through the federal rulemaking docket.

Virtual hearings: July 29–30, 2026. Affected parties may request to present oral testimony.

Companies with significant exposure to the proposed rule — particularly OEMs, importers, and large fleet operators — should consider submitting comments addressing the technical and economic impact of specific provisions. EPA is required to consider and respond to substantive comments in the final rule.

ULF New York monitors U.S. environmental and regulatory developments affecting Turkish-American trade, manufacturing, and investment. This update is prepared for informational purposes and does not constitute legal advice. For regulatory compliance counsel, contact our New York office.