Caterpillar could face fines as much as $10,000 per engine for not meeting the October 2002 emissions deadline.

According to published reports, analyst Stephen Volkman from Morgan Stanley Dean Witter obtained a copy of the Environmental Protection Agency's proposed schedule of fines. The proposal spells out penalties of $6,000 to $10,000 for each diesel engine sold after October that doesn't meet the tough emissions standard. The proposal is just that — a proposal, which will be subject to public comment and probably won't be finalized until this summer. Caterpillar officials told Copley News Service, “There's a lot of time between the time the proposed penalties are announced and enacted.”

Caterpillar surprised industry watchers when it broke from the pack in the way it would meet the new standards. Most other engine makers are using exhaust gas recirculation (EGR) to get their engines to meet the standards. Caterpillar, however, announced an entirely new approach, Advanced Combustion Emissions Reduction Technology (ACERT). The problem is, ACERT won't be ready until at least the middle of next year, putting Caterpillar nine to 12 months behind the deadline.